Barry Diller, CEO of IAC, receives complete Nevada gaming permit.
Barry Diller, the Chairman of IAC/InterActiveCorp, obtained an unrestricted gaming license in Nevada today after the Nevada Gaming Commission (NGC) voted favorably by 4 to 1. This decision ends a long-standing two-year odyssey during which Diller had a restricted license due to a federal inquiry into accusations that he might have engaged in insider trading in options deals related to video game publisher Activision Blizzard (NASDAQ: ATVI) ahead of Microsoft's (NASDAQ: MSFT) announcement of a $68.7 billion acquisition bid for the company.
The Securities and Exchange Commission (SEC) had looked into options transactions conducted by Diller, his stepson Alexander von Furstenberg, and entertainment tycoon David Geffen. This inquiry motivated the NGC to issue Diller a restricted license, but two weeks prior, the SEC brought its investigation to a close. This consequently permitted Nevada authorities to reconsider Diller's licensing status in America's biggest gaming state.
The meeting took place over Zoom, with Diller participating from New York.
The Importance of Nevada Licensing for Diller
Although Diller doesn't manage the daily operations of Nevada casinos, he requires a Nevada license because IAC/InterActiveCorp is the single largest shareholder in MGM Resorts International (NYSE: MGM).
IAC's CEO, Joey Levin, highlighted in his quarterly investor letter that IAC currently owns 20% of all outstanding MGM shares, making it the largest shareholder in the gaming company. By virtue of Nevada law, outside investors who control 5% or more of resident-based gaming entities are mandated to possess a license. Having concluded their examination of the SEC's decision, the NGC seemed eager to grant Diller an unlimited license.
"You're remarkably qualified," Commissioner Brian Krolicki remarked during the Thursday meeting. "Serving on the Coca-Cola board and others, you possess experience that only a few people can boast of. It's beneficial for MGM to have you on their board."
Diller and Levin are MGM board members. Despite Commissioner Rosa Solis-Rainey's reservations, she was the sole NGC member voting against Diller's full licensing. She expressed concerns that if the SEC were to resume its insider trading probe, the NGC would potentially revoke his license.
"I want to offer him a non-restricted license with some proviso," she said. "If there's any settlement or prosecution, he returns before us. I in no way want to disparage his character or history of service to communities or his businesses."
The Benefits of IAC's Long-term Stake in MGM
One factor that may have helped Diller's case is the fact that IAC has embraced an enduring role as a long-term shareholder in MGM and avoided a contentious activist posture. Four years ago, in August, IAC first purchased MGM shares. Some months later, it increased its stake. The company's ongoing investments, combined with MGM's aggressive share repurchases, have propelled IAC to its position as the largest investor in the casino titan, and the NGC seems content with this arrangement.
NGC Chair Jennifer Togliatti commended Diller for his honest testimony, while Commissioner Abbi Silver — the newest addition to the NGC — lauded him for the clarity provided by the SEC's announcement.
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Source: www.casino.org
