The Nevada Gaming Commission has approved the licensing of holding company IAC, the suitability of its CEO Joseph Levin -as a beneficial owner of MGM Resorts International-, and has given a two-year conditional licensing for media mogul Barry Diller to be a board member for MGM, reports Las Vegas Review-Journal.
Commissioners granted the approvals on Thursday, finding InterActiveCorp, a holding company for dozens of media and internet companies worldwide, suitable for a license. But they did not give full approval to Diller, an IAC director and MGM’s largest shareholder with 14% of the shares, voting instead 4-1 to approve conditional licensing following a nearly two-hour hearing.
While regulators stressed they had no problems with Diller’s integrity or suitability for licensing, they balked at approving unconditional licensing because the Securities and Exchange Commission hasn’t made any statements yet on an insider-trading investigation involving the mogul, further reports the cited source.
Earlier this year, federal prosecutors and securities regulators launched an investigation over alleged “large bets” that Diller, along with his stepson-in-law Alexander von Furstenberg and entertainment industry mogul David Geffen, made on Activision Blizzard Inc. shares in January, days before the videogame company agreed to be acquired by Microsoft.
The Microsoft acquisition shortly after prompted the company’s shares to become more valuable, leading to the insider-trading investigation. News of the inquiry broke a week after the Nevada Gaming Control Board recommended licensing approval for Diller and IAC, but before the Gaming Commission considered final approval of the matter.
In March, the Gaming Commission put the licensing approval on hold and the application was sent back to the Nevada Gaming Control Board for “investigation.” Jennifer Togliatti, Gaming Commission Chairwoman, cited at the time gaming regulations related to the suitability of a license applicant as the reason for referring the application back to the Control Board.
According to Togliatti, it was best to have the Control Board investigate the matter separately instead of having the Gaming Commission ask questions to Diller. She further described referral to the GCB as “procedural” at the time.
Jennifer Togliatti, Gaming Commission Chairwoman
On Thursday, Diller appeared in person before commissioners and said he’s received no indication of any kind of investigation underway, and denied any impropriety in his stock trades, according to Review-Journal. Levin and Diller further said there are no plans for IAC companies to capitalize on the MGM investment.
Meanwhile, MGM Resorts General Counsel John McManus and other company attorneys argued with Commission members that Diller should receive a full gaming license. “A limited license would send the wrong message about the stability of the environment here,” McManus said, according to The Nevada Independent. But commissioners found the conditional licensing would grant the billionaire investor enough time to comply with the federal investigation.
Diller said the stock purchase was a “lucky” move and that he knew nothing of the Activision takeover, declaring the timing was purely a coincidence. On their part, commissioners praised Diller for his experience in media -including the founding of Fox Broadcasting Company-, with Commissioner Steven Cohen saying he would be “a wonderful fit” with MGM.
“There isn’t any indication that there’s anything that happened. I have no reason to believe you did anything wrong,” Cohen further told Diller, according to the Independent. However, he argued regulators needed to place some type of limitation on Diller’s gaming license until the matter is cleared up.
Under conditional licensing, Diller can proceed as a director for MGM, but would need to return for reconsideration by regulators within two years. The mogul, who self-reported the insider-trading allegations, could potentially request a new hearing before the two years are up if he receives new information, reports Review-Journal.
The IAC has a 14% stake in MGM Resorts after an initial $1 billion investment made in August 2020. Diller, who is listed as No. 206 on the Forbes 400, has grown his stake from an initial 12%, as well as his influence in the company.
Prominent casino shareholders and executives must be licensed to operate in Nevada’s gambling industry, with the Gaming Control Board tasked with investigating backgrounds. On their first hearing with the Board, Levin told commissioners that MGM Resorts offered a “transformational omnichannel experience.”
The words echo statements Diller made in an August 2020 shareholder letter. “We believe MGM presented a ‘once in a decade’ opportunity for IAC to own a meaningful piece of a preeminent brand in a large category with great potential to move online,” he said at the time.
Original article: https://www.yogonet.com/international/news/2022/05/20/62702-nevada-regulators-grant-media-mogul-barry-diller-conditional-twoyear-licensing-as-mgm-board-member
