High-end casino resort operator Wynn Resorts announced yesterday the company has agreed to pay $2.4 billion in a settlement with Japanese game manufacturer Universal Entertainment Corporation and its US-based unit Aruze USA Incorporated. The legal dispute between the two sides dates back as far as 2012, when the Tokyo-based game maker filed a lawsuit against Wynn Resorts over the forced redemption of its shares in the Las Vegas-based company back in 2012. The two sides reached an agreement for this sum to be paid by March 31, 2018.
The dispute started six years ago when Kazuo Okada, founder of the Japanese company, was pushed out from Universal after it was discovered he made improper cash payments to offshore gambling regulators. The Japanese game manufacturer held nearly 20% stake in the Las Vegas-based company through its US unit Aruze USA Incorporated. At the time, the Japanese tycoon was also involved in another casino-resort project in the Philippines.
The investigation of the case was headed by Louis Freeh, who formerly occupied the position of Director of the FBI. It was established the Japanese tycoon and his associates benefited from their “improper activities” on multiple occasions over a period of three years. According to the findings of the investigation, overseas gaming regulators received gifts and payments to the total value of $110,000.
The shares of Universal’s US subsidiary were estimated at $2.7 billion when the Las Vegas-based company redeemed them forcibly in February 2012. A ten-year promissory note was issued by Wynn Resorts to the amount of $1.9 billion. Okada was expelled from his position at Universal in 2017 due to fraud accusations, which he denied.
Wynn Resorts Suffers a Tumultuous Start of the Year
Wynn Resorts suffered a tumultuous start of 2017 after several female employees accused the founder of the company Steve Wynn in sexual harassment in January. As a result, Wynn reached a $7.5 million settlement with a nail technician, who claimed the casino tycoon had touched her while she was doing her job.
According to the manicurist, Wynn continued to pay visits to the salon even after he was publicly accused of sexual misconduct this past January. Apart from that, Wynn was also accused of propositioning two massage therapists while they were performing their duties. Mr. Wynn denied the accusations of sexual misconduct and attributed them to a campaign his ex-wife Elaine Wynn is allegedly leading against him.
Following the sexual harassment accusations, Wynn Resorts also suffered the scrutiny of gaming regulators in Nevada, Massachusetts, and Macao, where the company manages two gambling venues. Regulators in the Chinese enclave also inquired about the sexual harassment allegations on behalf of the employees.
The accusations were widely reported in the news which caused a temporary drop in the shares of Wynn Resorts. Additionally, the gambling mogul and Wynn Resorts’ Board of Directors were sued by the state of Oregon for their alleged failure to prevent sexual harassment at the company and to ensure the best interest of its shareholders.
Mr. Wynn officially resigned from his position of Chairman and Chief Executive of Wynn Resorts on February 6, 2018. A shareholder agreement between Mr. Wynn, his ex-wife Elaine, and a business partner of his from 2010 has prevented the casino mogul from selling his stocks in the company.