LV slot maker Sigma loses Missouri license

By Liz Benston (contact)

Friday, Jan. 24, 2003 | 10:52 a.m.

A Las Vegas slot machine manufacturer said it is considering filing suit against Missouri gaming regulators after the regulators Wednesday refused to reissue a gaming license that would allow the company to do business in that state.

The Missouri Gaming Commission refused to license Sigma Game Inc. based on the claim that Kazuo Okada -- chief executive of Aruze Corp. and one of Japan's richest men -- refused to submit to a background check.

Through Okada, Aruze -- Japan's biggest manufacturer of pinball-like gaming devices called pachinko machines -- loaned Sigma $20 million a few years ago.

The rejection effectively puts the company out of business in Missouri and may have a ripple effect throughout the country as other gambling states trigger their own investigations into the matter.

Nevada Gaming Control Board Chairman Dennis Neilander said he wasn't immediately aware of the issue. The board will initiate an investigation, he said.

"Any time a Nevada licensee has disclosure issues in another state, we will take a look."

Sigma attorney Donna More said the company has a "strong case" against the Missouri commission and expects it to renew the company's license.

"The fact is that we made sure that the commission had whatever it needed," she said.

"The problem is that Aruze and Okada are not employees of Sigma. We can't dictate what they do. And Missouri rules can't dictate what they do."

Sigma is controlled by Japanese businessman Katsuki Manabe, a former director of Aruze Corp.

In addition to the loan, Aruze announced plans a few years ago to acquire a controlling interest in Sigma.

Sigma is known for its "Game Of Life" slot machines based on the classic board game. That game is licensed in 13 states, including New Jersey and California. Other titles include "Easy Riches," "Throw the Dough" and "Big Top Circus."

Gaming regulators typically require major shareholders and investors to submit to background checks along with company executives, arguing that outside groups can influence the way a company does business.

Regulators investigate major business deals from the outset to make sure companies aren't skimming casino profits and that the state receives its share of revenue taxes.

More, Sigma's attorney, said administrative law cases have shown that a licensing agency can't use facts in pending disciplinary actions to refuse a license.

"That's like denying a licensee the right to a fair and impartial hearing and denying them due process," she said. "You don't impose a penalty before you get a hearing, even in gaming."

The commission last year initiated disciplinary action against Sigma in connection with the loan, she said.

The Missouri commission claimed it only became aware of the loan last year, though the timing of that news is still in question, she said. The disciplinary action is still pending.

Aruze and Okada already have submitted to investigations by Nevada regulators.

In 2000, Okada announced his partnership in Valvino Lamore, Steve Wynn's master plan of resort, casino and non-gaming developments at the site of the Desert Inn on the Las Vegas Strip.

Aruze also is a major shareholder in Wynn Resorts Ltd., Wynn's publicly traded development company with plans to build the major Strip resort Le Reve at the site by 2005.

Okada and Aruze are licensed in Nevada through the company's Las Vegas-based distribution arm, Universal Distributing of Nevada Inc.

Officials at Universal could not be reached for comment this morning.

Missouri regulators rejected Sigma's license application for 2003. Unlike Nevada licenses, which are permanent, Missouri gaming licenses must be renewed each year.

Sigma employs about 100 people in Las Vegas and another 30 or so in satellite sales offices across the country. The company offers more than 100 slot machine game titles and introduces about eight to 10 new machines each year.

The company was licensed in Nevada in 1984 and obtained its first Missouri gaming license in 1994.