Vegas slot maker lets Missouri license lapse

Tuesday, March 2, 2004 | 11:01 a.m.

A Las Vegas slot machine manufacturer has allowed its casino supplier license in Missouri to expire.

But a spokeswoman for Sigma Game Inc. said the company would soon announce an agreement with a third-party distribution company that already is licensed in Missouri to sell and service Sigma products, which include the Game of Life and the Treasure Wheel and Treasure Tunnel series of reel slot machines.

The company allowed a temporary license first approved by Missouri regulators in June to lapse Monday rather than seek a fourth extension.

"Their temporary license expired as of March 1, but they're still an applicant for a regular license," said Mike Bushmann, general counsel for the Missouri Gaming Commission. "They can't do business in the state until they've gotten that resolved."

Sigma agreed in June to seek a new casino supplier license as part of a settlement with the state. But that process has taken much longer than Sigma officials anticipated.

"At this point, commissioners' patience is wearing a little thin, so they've just said, 'Get your problems cleaned up and come back to us later,' " Bushmann said.

Missouri regulators recommended Sigma seek a third-party distributor as an interim measure until the company could get its permanent license.

Carolan Pepin, a spokeswoman for Sigma, said Monday that the company decided to allow the temporary license to lapse to save attorney fees required in seeking additional extensions.

She said Sigma does not have to remove any machines or equipment as an unlicensed company, but can't sell anything there. She added that an announcement on an agreement with a distributor is "imminent," but she would not say what company privately held Sigma is in talks with.

The June settlement was supposed to have ended an eight-month dispute between Sigma and Missouri regulators. The dispute centered around the company's interpretation of disclosure requirements on lenders to the corporation.

Sigma's parent company is KM Inc. of Japan, owned by Katsuki Manabe, Sigma's largest shareholder. Missouri officials learned in 2002 that Manabe received a $20 million loan from Japan's Aruze Corp. in 2000. Regulators said Sigma did not disclose that loan.

Aruze, which manufactures pachinko gambling machines in Japan, is headed by chief executive Kazuo Okada. Manabe served as a director on Aruze's board.

Okada also is a major investor in the Wynn Las Vegas resort on the Las Vegas Strip, having invested $75 million in Wynn Resorts Ltd.

In the Sigma matter, Okada would not submit to a background check, forcing Missouri regulators to refuse the company's license renewal based on rules requiring that key personnel submit to background checks.

As part of Sigma's settlement, Manabe agreed to place his controlling interest in a blind trust to be administered by retired New Jersey Supreme Court Justice Gary Stein, assuring that Aruze would not control Sigma's interests. Sigma also was fined $25,000 as part of the agreement.

Several gaming jurisdictions in which Sigma is licensed have to sign off on the plan for a trustee. That's where the delay has occurred. Each state's gaming regulators must investigate and approve the deal, but so far, only New Jersey regulators have given the OK.

Nevada gaming officials could not be reached for comment on the status of the state's investigation of the plan.

The Missouri Gaming Commission initially gave Sigma a four-month temporary license to operate. Commissioners extended that license twice with the latest expiration date being March 1.

Pepin said Sigma intends to reapply for a license as soon as the gaming regulators in other states sign off on the trustee plan.