Last updated: May 01, 2024
Barry Diller, represented by IAC, seeks a full gaming license in Nevada, facing scrutiny over a past SEC probe into options trading. MGM stands by Diller’s integrity despite controversy. The limited license granted previously awaits the SEC outcome. Diller remains optimistic about IAC’s stake in MGM, highlighting travel and leisure sector growth prospects.
Main Body
Barry Diller, whose IAC/InterActiveCorp (NASDAQ: IAC (Nasdaq: IAC), MGM Resorts International’s largest (NYSE: MGM) shareholder, will again attempt to get a full gaming license from the Nevada Gaming Control Board (NGCB) in the upcoming Wednesday session.
This hearing is a milestone for Diller, as it takes place about two years after his original licensing was suspended due to federal antitrust concerns. Diller, along with his stepson Alexander von Furstenberg and entertainment executive David Geffen, is said to have been involved in suspicious options trading in a video game company; the delay was due to this factor.
In March 2022, it was revealed that the US Department of Justice and the Securities and Exchange Commission (SEC) are examining these trades to establish if they can be thought of as insider trading. Despite the ongoing scrutiny from the NGCB, the same bureau had previously endorsed full licensing for Diller.
The ownership of MGM started with IAC almost two years ago, in August 2020, and it has since grown to hold nearly 20% of the outstanding shares of the casino operator. A Nevada regulation requires the provision of licensing for entities or people holding 5% or more shares of a publicly traded gaming company.
The attendance of Diller at the NGCB hearing sends a meaningful message to both himself as well as IAC in its attempt to be allowed to actively participate in the gaming domain.
The permit formality followed the Nevada Gaming Commission (NGC) ‘s 4 to 1 authority motion in May 2022. The decision, however, might depend on whether the SEC investigation ends favorably or not. Diller is subject to an appearance before the NGC on May 16.
Commissioner Ogonna Brown was against giving merely a license to Diller and Levin. She suggested they should get full licensing instead. She stated her faith that there is nothing to Tiller’s probity, which means there is no reason to doubt. Among all the candidates running for the highest post, Brown was the only one who was not affiliated with the NGC anymore.
Two years ago, Diller maintained that his successful options trade involving Activision before Microsoft’s takeover bid was merely a stroke of luck, refuting any suggestion of impropriety. The NGC opted to await the conclusion of the SEC probe, anticipating any potential developments implicating Diller. However, no such evidence has emerged thus far.
Both Diller and Levin hold positions on MGM’s board of directors, further underscoring their involvement in the gaming industry.
MGM hasn’t said much about the NGC’s ruling. Still, in 2022, the massive casino operator backed Diller, informing authorities that he hadn’t been proven guilty of any crimes or even falsely accused of any heinous acts.
The owner of Bellagio further stated that limited licenses are associated with bad things and that the two-year period that Diller and Levin are presumably waiting to obtain a full license in Nevada may be seen as a risk to the stability of permits in the biggest gaming state.
Levin is still optimistic about IAC’s MGM stake despite the ambiguity surrounding both his and Diller’s full Nevada permits.
In a letter addressed to IAC investors in February, Joey Levin emphasized the significance of MGM Resorts International as their largest investment. He highlighted MGM’s advantageous position within the expanding travel and leisure industry, which has consistently outpaced broader consumer spending trends over the past two decades. Levin attributed this growth to consumers’ heightened engagement with social media, which has increased exposure to novel experiences, fueling a sense of “fear of missing out (FOMO).”
