Tensions between former Wynn Resorts Ltd Vice Chairman Kazuo Okada and the casino operator were first revealed by Inside Asian Gaming in January 2011.
Back then in our story ‘Disposal Option’ we reported that a Wynn Resorts filing to the US Securities & Exchange Commission on 15th December 2010, referred to Aruze—Mr Okada’s gaming equipment company—being willing to dispose of up to one million Wynn shares. It didn’t immediately make sense, given that Wynn was about to embark on its second project in Macau—the single biggest individual gaming jurisdiction by gross revenue in the world.
At the time there was speculation Mr Okada needed funds for his own, independent, Manila Bay casino project in the Philippines—a scheme that had already swallowed up US$100 million in escrow from Mr Okada over the previous two years with no sign of the project coming to fruition.
What we didn’t report back in January 2011—because we couldn’t independently verify it, despite the fact it came from a very well-placed industry source—was that the episode was part of a deeper disagreement between Mr Okada and Steve Wynn, Chairman of Wynn Resorts, about Wynn’s Asia strategy. The rumours were that Mr Okada was actively courting Wynn’s involvement in a Philippines project, but that Mr Wynn and his board—mindful of the company’s status as a Nevada gaming licence holder and a Macau gaming licence holder—didn’t want to touch the Philippines because of its international reputation for corruption. Additionally IAG was told that the Wynn and Okada camps also had disagreements over how to approach Japan as a potential casino market. Subsequently it’s been suggested there have also been differences about Mr Okada’s possible involvement in a potential South Korea casino project.
It seems the grumbles cut both ways. It’s emerged that Mr Okada recently sued Wynn Resorts in Nevada for access to financial records in a dispute with the company over the use of funds. Mr Okada, 69, Chairman of Tokyo-based Universal Entertainment Corp., reportedly brought his suit in a state court in Clark County, Nevada, to force the company to produce spending records. Mr Okada is said to have opposed Wynn Resorts’ HK$1 billion (US$129 million) pledge in July 2011 to the University of Macau Development Foundation, according to the complaint. The pledge was widely seen in Macau as part of Wynn Resorts’ strategy to ensure political support and goodwill for the company’s Cotai project. The timetable for that project became stalled during 2011 because of the Macau government’s desire to cool the growth of the local gaming market, which expanded by 57% year-on-year in gross revenue terms in 2010. Mr Okada said in a related regulatory filing that he is seeking to protect his investments of US$380 million in Wynn Resorts dating back to 2000.
Wynn Resorts said on Thursday that Mr Okada was “removed” as vice chairman of Wynn Resorts in October last year in a dispute over his development plans. Mr Okada and his slot manufacturing company Aruze America—are the biggest single shareholders of Wynn Resorts’ voting stock, although other shareholders—when working in concert—have greater voting rights. If the breakdown in the Wynn-Okada relationship is irremediable—as appears to be the case from his removal as vice chairman—it seems Mr Wynn and his investors will have to buy Mr Okada out.
Mr Okada’s parent company, Tokyo-based Universal Entertainment Corp., specialises in making pachinko equipment. It has so far declined to comment.
RelatedPosts
