Barry Diller, who is being investigated by the SEC for past options trading, is applying for a full gambling license in Nevada under the representation of IAC. Notwithstanding the situation, MGM maintains Diller's integrity. The previously granted limited license is awaiting the SEC's decision. Diller highlights the development prospects for the tourism and leisure sector in his continued optimism over IAC's ownership in MGM.
Renewal of Diller's License: Impact of IAC on MGM
Main Body
The largest shareholder in MGM Resorts International (NYSE: MGM), Barry Diller's IAC/InterActiveCorp (NASDAQ: IAC (Nasdaq: IAC), will make another attempt to obtain a full gaming license from the Nevada Gaming Control Board (NGCB) during the upcoming Wednesday session.
For Diller, this hearing represents a significant turning point because it comes almost two years after his initial license was revoked because of federal antitrust concerns. Diller was allegedly involved in questionable options trading in a video game firm, together with his stepson Alexander von Furstenberg and entertainment executive David Geffen. This is what caused the delay.
The US Department of Justice and the Securities and Exchange Commission (SEC) are investigating these trades to determine whether they qualify as insider trading, it was disclosed in March 2022. The NGCB, which is still investigating the matter, had earlier approved Diller's complete licensure.
IAC began to purchase a portion of MGM about two years ago, in August 2020, and has since expanded to own almost 20% of the company's outstanding shares. According to a Nevada law, everyone or any entity owning five percent or more of a publicly traded gambling company must obtain a license.
Diller's presence at the NGCB hearing sends a strong message to IAC in its fight for permission to engage in gaming activities as well as to himself.
Amid an SEC investigation, the Nevada Gaming Commission grants Diller and Levin limited licenses
The Nevada Gaming Commission (NGC) approved the authority motion in May 2022 by a vote of 4 to 1. The permit formality came next. However, the outcome of the SEC inquiry could influence the decision. On May 16, Diller is expected to testify before the NGC.
Commissioner Ogonna Brown was opposed to only granting Diller and Levin a license. Instead, she recommended that they obtain a complete license. She expressed her conviction that Tiller's probity is unquestionable, hence there is no cause for concern. Of all the contenders vying for the top position, Brown was the only one who had severed ties to the NGC.
Two years prior, Diller refuted any allegations of improper behavior by arguing that his Activision-related options trade, which proved profitable, was just a lucky break. The NGC chose to wait until the SEC investigation to be finished in case Diller was implicated in any new information. But as of yet, no such proof has surfaced.
Further demonstrating their ties to the gaming sector, Diller and Levin are also members of MGM's board of directors.
MGM's Attitude and Levin's Hopefulness
Regarding the NGC's decision, MGM has remained silent. Nevertheless, the enormous casino operator supported Diller in 2022, telling authorities that he had not been found guilty of any crimes and had not even been wrongly accused of any horrible deeds.
The Bellagio owner went on to say that limited licenses are linked to negative things and that Diller and Levin's two-year wait for a full license in Nevada might be viewed as a risk to the stability of permits in the state with the highest concentration of gambling.
Regarding IAC's MGM ownership, Levin remains upbeat despite the uncertainty surrounding Diller's and his complete Nevada permits.
Joey Levin stressed the importance of MGM Resorts International as their largest investment in a letter sent to IAC investors in February. He emphasized MGM's competitive advantage in the growing travel and leisure sector, which over the last 20 years has routinely exceeded general trends in consumer spending. Levin ascribed this rise to consumers' increased use of social media, which has exposed them to more unique experiences and heightened their "fear of missing out (FOMO)."