Mob ties at Macau casinos?

March 9, 2012 12:32 pm

The rapid rise of casinos in the Macau region in China has received lots of media attention of late. Now, a Website that fashions itself after WikiLeaks said reams of public documents show possible ties to Chinese mobsters and some of the U.S. casino firms that have lucrative operations in Macau.

The Website,, urged casino regulators in the U.S. to take a closer look how casinos operate in Macau.

“We believe that the issues we raise are urgent public policy concerns that cannot be ignored given the huge sums of money involved and the danger that criminal involvement in gaming poses for the people of the United States,” wrote Jeffrey Fiedler, who helped launch the site with the backing of the International Union of Operating Engineers (IUOE). The union is focused on junkets the casinos provide high rollers. The Economist detailed some of the reasons for Macau’s rapid growth.

A spokesman for MGM Resorts, which operates in Macau, called the allegations “baseless.” Several casino firms have come under scrutiny and allegations have been raised in some civil suits.

For example, the Justice Department and the Securities and Exchange Commission are probing the Las Vegas Sands for alleged bribery of foreign officials. The investigation was launched after a civil lawsuit by a former company executive alleged the casino had “involvement with Chinese organized crime groups, known as Triads, connected to the junket business.” The Sands is headed by Sheldon Adelson, the billionaire casino owner who has given millions toward Newt Gingrich’s bid for the GOP presidential nomination. Adelson denies any wrongdoing.

At the same time, Steve Wynn is embroiled in a legal battle with former friend, investor and board member Kazuo Okada, who raised questions about a $135 million donation to the University of Macau. Wynn denies any wrongdoing and moved to dump his former friend from his board, alleging “unacceptable conduct” and “inappropriate payments” by Okada to government officials in the Phillipines.

Wynn’s high stakes fight

March 5, 2012 11:15 am

The New York Times provides an insightful overview into the high stakes legal fight between two billionaire casino moguls: Steve Wynn and Kazuo Okada.

The two have filed dueling lawsuits that contain accusations that have caught the attention of government regulators.The dispute offers a rare insight into the alleged dubious business practices of one of the best known casino operators, which should give U.S. lawmakers some pause about getting into the casino rackets.

Wynn alleges Okada gave a visiting Philippine gambling regulator and his entourage free use of the Wynn Macau casino-resort’s Villa 81 — a 7,000-square-foot pleasure palace that rents for $6,000 a night and has amenities including his-and-hers bathrooms with showers built to accommodate six people at a time. The Philippine chairman, Cristino Naguiat, said he accepted the free lodging, but denied there was anything wrong with it.

Meanwhile, Okada is questioning the propriety of a $135 million donation that Wynn Resorts made last year to the University of Macau, whose chancellor is also the head of Macao’s government. Okada’s lawsuit has prompted an inquiry by the Securities and Exchange Commission. Both Wynn and Okada deny any wrongdoing.

Okada joined Wynn’s board and became his largest investor at a time when his casino empire was under attck. But the piece raises questions as to whether Wynn and Okada were ever really close friends, or just played the part because of their shared casino interests. The stakes are high: Macau, the former Portuguese seaport colony now controlled by China, had annual gambling revenue four times that of the Las Vegas Strip. In fact, Macau was the source of all of Wynn Resorts’ $613.4 million in profit last year, offsetting losses in Nevada.

The piece also says a Nevada regulator warned Wynn about getting into business with Okada who was engaged in a series of tax disputes with Japanese authorities. ”At a 2004 regulatory hearing, a Nevada official told Mr. Okada that Mr. Wynn was putting his reputation on the line in allying himself with someone from the Japanese pachinko industry, even if regulators had never found ties between Mr. Okada and crime rings,” The Times reported.

Steve Wynn: tangled up in lawsuits

March 2, 2012 11:01 am

In fighting back against his former board member, Steve Wynn may win the battle but lose the war. That’s the gist of several pieces in The Wall Street Journal.

The dueling lawsuits between billionaire casino moguls Steve Wynn and former board member Kazuo Okada promises to be a big, costly distraction that will hamper future growth and dirty up both high-powered execs, Wall Street Journal columnist John Bussey writes. Meanwhile, another WSJ piece takes a look at the university in Macau that is at the center of the lawsuit Okada filed against Wynn.

Wynn’s lawsuit alleges Okada gave gifts to Asian regulators overseeing his company, Universal Entertainment, and told several Wynn directors there was nothing wrong with that practice. Bussey turns that around and wonders what that says about the governance at Wynn’s casino empire.

“The litigation won’t just examine what Mr. Okada did or didn’t do. It will scrutinize Wynn Resorts, too. For example: If Mr. Okada so egregiously violated compliance rules for years—as Wynn Resorts contends and Mr. Okada denies—why didn’t the company discover it sooner?” Bussey writes. “And why over the years didn’t Wynn Resorts require its board, including Mr. Okada, to sign Wynn’s existing code of conduct or take its standard antibribery-law training, just as other senior managers did? That requirement, says  a company spokesman, wasn’t made of the board until months after the troubles with Mr. Okada emerged in February 2011.”

At the same time, Okada’s lawsuit raises questions about the $135 million gift Wynn’s company gave to a foundation that supports the university, which has become a pet cause for top government officials in Macau and China. Essentially the suit hints at whether the gift - which represented 70% of the foundation’s overall endowment – was made to curry favor with officials as Wynn expands his casino operations in the booming gambling market of Macau.

Beyond that the two pieces offer some troubling insight into how casino moguls operate. The takeaway is that it is not a pretty business. That should serve as a further cautionary tale for lawmakers who get in bed with casino operators.

Sheldon Adelson up close

February 23, 2012 11:52 am

Just three years ago, Sheldon Adelson’s casino empire was deep in debt and facing default. But the Sands owner has bounced back, largely by investing in casinos in Macau, the booming casino market in China.

Now Adelson is reshaping the presidential race by giving $21 million to a Super PAC that is supporting Newt Gingrich and threatening to spend as much as $100 million in campaign contributions to try and unseat President Obama.

Not many people had even heard of Adelson until recently. He has largely operated behind the scenes. But at 78 years old, the billionaire has stepped into the spotlight with large campaign donations. Forbes magazine has a largely positive profile of Adelson that is worth reading to see how he operates.

Steve Wynn goes to the mattresses

February 23, 2012 10:50 am

Casino mogul Steve Wynn has gone to war with his former friend and major investor, Kazuo Okada. Wynn has put Okada on the defensive by moving to buy him out and remove him as a director from his casino company. But it is unclear if Wynn will win the battle but lose the war.

Indeed, the falling-out between the two tycoons could impact their respective multibillion-dollar gambling empires. (Okada made his fortune in pachinko machines, a Japanese gambling device that is a combination of pinball and a slot machine.) Each claims the other made improper payments to win favor in their respective Macau and Philippines casino markets. The dueling lawsuits has caught the attention of federal authorities, prompting the Securities and Exchange Commission to open a probe.

Reuters has a good take here. Meanwhile, The Wall Street Journal reports that Wynn was prompted to act to appease Nevada gaming regulators after learning that Okada allegedly made improper payments to officials in the Phillipines. Details of the payments are part of an internal report Wynn commissioned that was done by Former FBI director Louis Freeh. Read Freeh’s report here.

Of course, Okada fired the first shot by questioning $135 million in donations that Wynn made to a university in Macau, a booming casino market. After Okada’s suit was filed, an analyst invoked The Godfather by asking Wynn if he going to make Okada “an offer he can’t refuse.” Well, it looks like Wynn has decided to “go to the mattresses.”

Is it just a coincidence that such ganster phrases seem to pop up when discussing casino moguls?

Steve Wynn fights back

February 20, 2012 6:14 am

The casino cat fight between Steve Wynn and his largest shareholder and director is heating up.

Wynn has accused Kazuo Okada of improper payments to foreign gaming regulators and moved to buy back his 20 percent stake in the casino company and remove Okada from the board. Wynn Resorts sued Okada and his company in Nevada District Court for breach of fiduciary duty and related offenses.

Last month, Okada sued Wynn for denying him financial information related to a $135 million donation the company made to the University of Macau, which he had termed “inappropriate.” The lawsuit caught the attention of the Securities and Exchange Commission, which has launched a probe.

The dueling lawsuits and SEC could open a window into the business dealings of Wynn’s casino company, which is pushing to open casinos in Macau and the Philippines. The dispute is a stunning turning for two casino moguls who were close friends. In 2008, Wynn said: “I love Kazuo Okada as much as any man that I’ve ever met in my life. He’s my partner and my friend. And there is hardly anything that I won’t do for him.”

Read an earlier post here about Wynn and other casino moguls under investigation for their dealings in Macau.

SEC probing Wynn’s casino company

February 14, 2012 9:21 am

The Securities and Exchange Commission has opened an inquiry into the activities of Steve Wynn’s casino company in China. This is the second Las Vegas casino company to come under recent scrutiny for its dealings in China. Sheldon Adelson’s Las Vegas Sands Corp. disclosed in March the SEC and Justice Department are investigating possible violations of the Foreign Corrupt Practices Act.

The Wall Street Journal reported the SEC asked Wynn Resorts Ltd to preserve documents related to a donation to a university in China’s booming Macau gambling region, as well as information related to other charitable donations to Macau educational institutions and to its operating licenses there, the company said in a securities filing Monday.

The probe is in the informal stage and stems from a dispute between Wynn and a board member. The inquiry follows a lawsuit filed by Kazuo Okada, a Wynn Resorts director and shareholder, who alleged he was blocked by Wynn from seeing certain company financial records. The request came after Okada last May contested the company’s plans to make a $135 million donation to a Macau university. Okada said in his suit that he questioned whether the donation was “an appropriate use of corporate funds.”

The dispute also has focused a spotlight on Wynn’s spending in Macau. The market is a red hot area for casino growth, which has helped offset sluggish spending at casinos in U.S. gambling markets. The spending in Macau by Wynn and other casino operators shows the stakes are high. Wynn said in the company donated $25 million and made a commitment to donate an additional $10 million a year for 11 years to the Asia-Pacific Academy of Economics and Management at the University of Macau, calling the territory “a critical market” for the company.

Steve Wynn’s casino catfight

January 13, 2012 11:27 am

Casino mogul Steve Wynn is in a legal fight with a board member who is the biggest shareholder in his company. Now, two rich casino guys fighting over money isn’t really news.

But here’s the interesting detail that shows how casino owners buy their way into communities so they can then fleece the residents. According to the lawsuit filed by Kazuo Okada, Wynn will not show him financial records after he challenged the company’s donation of $135 million to a university in Macau.

Donation? For the uninitiated, Macau is the wild, wild west, er east of casinos. It’s the huge and growing gambling mecca in China. A $135 million donation to a university there sure sounds like a good way to generate some feng wei for a new casino. Or maybe Wynn just wanted to fund some tenured department chairs at the university to research how gambling destroys lives, increases social ills and produces no real economic spinoff.

Okada, who is a director in Wynn’s company and its largest shareholder, also wanted to see the records of how Wynn Resorts used $30 million of his money in its Macau developments. That money probably went to permit fees.

Okada is chairman of Japanese casino company and arcade-game manufacturer Universal Entertainment Corp. He and Wynn were good friends but now they are legal adversaries. The lawsuit hints at some insights into how casino deals get done. In some respects, things seem like they work the same in Macau as in Albany. See post below on Genting.