The long-running fight between culinary workers and a casino owner in Las Vegas is about to go another round. And the workers are hoping the regulatory troubles faced by a German bank might give them the advantage they have been looking for.
Station Casinos, which operates 19 casinos in Nevada, filed for an initial public offering last month, with the securities division of Deutsche Bank leading the effort. The bank, through a subsidiary, is also a 25 percent owner of the casino company, which was founded in 1976 by Frank Fertitta Jr. and is still controlled by his family.The union’s issue: The initial public offering documentation fails to mention that Deutsche Bank has paid more than $2.5 billion this year to settle investigations into its capital markets activities. Specifically, Deutsche Bank paid $2.5 billion this spring to settle its part of a broad regulatory inquiry into how banks set interest rates in the interbank-loan market. More recently the bank paid $258 million to New York State regulators and the Federal Reserve over its dealings with customers in companies that are under sanction by the United States, like Iran and Syria.Photo
All of this led to questions about Deutsche Bank’s suitability as an owner of casino properties, the Culinary Workers Union, Local 226 said in a Nov. 3 letter to the Securities and Exchange Commission. The union asked the regulators to review Station Casinos’ Oct. 13 registration filing.
The failure to disclose Deutsche Bank’s regulatory issues in the I.P.O. filing is “particularly disturbing,” the union said in its letter, a copy of which was reviewed by The New York Times. It is signed by Maya Holmes, the union’s research director.
“We believe the S.E.C. requires a high degree of disclosure so that public investors can judge for themselves the risks associated with buying shares in an I.P.O. like Station Casinos,” her letter said.
A Station Casinos spokeswoman said the company had no comment, as did a spokeswoman for Deutsche Bank.
The letter is the latest salvo in the long-running tussle between Station Casinos and the Culinary Workers Union, which represents 55,000 cooks, housekeepers, cocktail servers, bartenders, porters and other casino staff. The casino company initially went public in 1993 but was taken private again in 2006.
For years the union has tried unsuccessfully to organize workers at the nonunion Station Casinos properties. It recently said it would try to unionize the athletes who participate in the mixed martial arts Ultimate Fighting Championship, a professional sports outfit also owned by the Fertitta family. It has staged protests in front of Station Casinos hotels and this summer waged war on what it called an “irresponsible” water fountain planned for the Ultimate Fighting Championship’s Las Vegas headquarters.
Deutsche Bank is a presence in Sin City. After stepping in to rescue the development of the flashy Cosmopolitan hotel and casino during the financial crisis, it ended up owning the development. The bank finally sold the casino to Blackstone Group last year for $1.7 billion.
Part of the proceeds of the Station Casinos I.P.O. will go to buy out Fertitta Entertainment, an affiliated company that owns the management contracts connected to Station Casinos’ holdings. That buyout is valued at $460 million, according to a regulatory filing. The Culinary Workers Union is examining the valuation, although it has not raised the issue with regulators, Ms. Holmes said in an interview.
Legal experts said the objections the union had raised over the bank might not gain much traction. While local gambling industry regulators could investigate any issue, “it’s really hard to imagine that this could end up being a big problem for Deutsche Bank,” said Bud Hicks, a lawyer in Reno who specializes in gambling industry law.
Still, should local gambling regulators deem Deutsche Bank unsuitable as an owner, a forced sale of its holdings in Station Casinos could negatively affect shareholders, the union argued in its letter.
Even before the initial public offering was announced, the union took its concerns about Deutsche Bank’s regulatory issues to the Nevada Gaming Commission and the Nevada Gaming Control Board in a letter in June, and to Gov. Brian Sandoval of Nevada in a letter in September.
“We ask the board to immediately start a review as to whether it is consistent with Nevada’s gaming laws for an investor with this record to have a significant ownership stake in the holder of an unrestricted gaming license,” the union said in the June letter to the gambling board.
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