Two years after being limited to a two-year gaming license, Aruze Gaming Global will go before the Nevada Gaming Commission July 24, seeking renewal of licensing.
The Nevada Gaming Control Board has recommended a limited license of five years for the company and two of its executives. The license would expire in July 2030.
The Aruze brand, which is now under Empire Technological Group Limited following Aruze’s bankruptcy proceedings, has an application for a license as a manufacturer and distributor. President Linyi Feng, the 100% owner, is also seeking a license, along with Tiehui Qiu as director/secretary.
There is also an application to issue a stock option to California gaming-industry executive and Feng friend Jeffrey Harris, CEO and president of Commerce Casino, to purchase an equity interest in Empire Technological Group. The Board recommended that.
Both Empire Technology and Feng, before it acquired assets of Aruze, were granted two-year limited licenses in July 2023 and were required to return in 2025.
Aruze gaming attorney Scott Scherer said the company has put any issues previously raised behind them and asked the Nevada Gaming Control Board last week to recommend to the Gaming Commission to grant them unlimited licenses when it meets next week.
“In the two years since Empire applied for a license in 2023, it has grown and matured as a company significantly,” Scherer said. “It has added a strong and stable compliance team and has an impeccable compliance record.”
Some of the issues that resulted in the limitation on the license two years ago have been answered, Scherer said.
Commission member Rosa Solis-Rainey had questioned who was funding the company and whether those were the people appearing before regulators.
“There were concerns about the separation between Empire and (Hong Kong-based) Paradise Entertainment Limited and its subsidiaries,” Scherer said. “The only way the right individuals would not be before you today is if Paradise or its controlling shareholder Jay Chun had management control or undisclosed ownership interest in Empire.”
Scherer, who said Feng is the controlling owner, disputed any suggestions that the money for the company came from Chun. He said they provided detailed records and fund transfers to regulators to prove it. Feng, Chun’s brother-in-law, previously worked for Paradise, which sold gaming equipment and systems in North America under LT Game Canada.
Feng later created LT Game International in 2011 to serve as a distributor for Paradise in North America. Feng didn’t have the financial resources to do so and sought funding from a Chinese businessman in the chemical industry.
Once Paradise struck a licensing deal with IGT, Scherer said Feng eventually bought from the Chinese investor the two companies he helped form under the LT brand and renamed them Empire Technological Group in 2013.
“I hope that clears up the confusion,” Scherer said. “The fact is that Empire was never owned by Paradise. It’s always been its own independent company that used similar names.”
Scherer said that was made clear when Paradise sent a letter to Feng in August 2023, making claims that it owned Empire Technological.
“Feng said these claims are false and we need to fight them publicly and be transparent about it,” Scherer said.
Empire filed a declaratory judgment action in state court in Las Vegas to establish that all the claims made by Paradise and Chun were false, including copyright violations and that Paradise had an exclusive arrangement.
Paradise filed a federal court action to remove the state court action and the case was eventually refiled in federal court where the case is ongoing. Empire argued that since Paradise had no ownership claim, it wasn’t required to seek approval to purchase assets of the Aruze, which filed bankruptcy in February 2023.
Scherer pointed out that Empire provided overwhelming evidence in court discovery that Paradise didn’t own Feng’s company based on contracts and supply agreements. Filings in Hong Kong also showed that Paradise didn’t own Empire, he said.
As for the funding, Scherer pointed out that Chun is married to Feng’s sister and got his start in gaming with Chun. Any funding received from Chun in the past in excess of $1 million was repaid.
“As Empire has grown, it has matured and become fully independent and put in place more formal controls and limits in place on advances, transfers, and other transactions,” Scherer said. “It’s not as nimble as it once was, but it also has better accounting and stricter controls.”
Since it last appeared before Nevada regulators, Scherer pointed out that Empire acquired the assets of Aruze Gaming America, including its name, since many of the products sold by Empire were developed by Aruze.
Empire is licensed in more than 150 jurisdictions and has placed more than 500 units in more than 50 casinos in Nevada. Empire is responsible for 2,400 units alone in Nevada, including those previously placed by Aruze Gaming America.
“This is a good company providing a good product that Nevada casinos want,” Scherer said.
In North America, Empire has sold or leased 2,700 units in more than 120 license locations. Globally, it has more than 4,700 in about 200 locations and had no regulatory violations, Scherer said.
“These two years have been quite a journey,” Feng told the Board. “Aruze’s business is growing rapidly and two years ago our revenues were $16 million to $18 million. In 2024, we achieved $50 million in revenue in the first year we ran as Aruze Gaming Global. We do see a strong trajectory for our business growth this year. We’re looking at more than a 50% increase this year.”
But there’s some hangover from the Aruze bankruptcy as people are learning who they are, Feng said. They have retained most of the talented employees for research and development and designer teams.
“They turn out strong products,” Feng said. “If you look at the industry reports, we always have new gaming titles in the top 25. Last month, our new-game performance was No. 2 behind Aristocrat.”
Feng said they have the funding to grow the business. Aruze has launched a new slot cabinet for beta testing and is strategizing new game releases.
Empire has 80 to 90 employees and about 350 globally, Feng said.
Board member George Assad said he was in favor of the full licensing, saying the staff investigation didn’t show any inconsistencies in what Feng has testified to in the past.
“I support your application,” Assad said. “I think you’re extremely suitable, as I did two years ago.”
Board Chair Mike Dreitzer then recommended a three-year license. The compliance needs to be tested over time and he described the industry as cash intensive and that presents continuous financial challenges. As for the federal lawsuit, some “core existential issues” could potentially result in new findings. “It looks like the Aruze acquisition is going well, but then again, it’s capital intensive and there are a lot of moving parts there,” Dreitzer said.
Scherer said a license limitation makes it more difficult to raise funds. Aruze is seeking a refinancing of existing debt to provide more working capital to the company.
“The limitation makes it less attractive for lenders to step in and provide that working capital,” Scherer said.
As for the litigation, Scherer called it a “domestic dispute” within the family and called the move more about control. He called the claims “frivolous” and said the litigation could go on for more than five years. It would be an inconvenience to have to spend money and come back and get a renewal without having that case resolved, he said.
Board member Chandeni Sendall then suggested five years. She said the history makes her pause on approving an unlimited license.
Assad said he respects his colleagues, but contended that a limitation hinders the company. It could cause some employees to want more security. “It’s a big thing whether you have a limited license or unlimited license,” Assad said. “The real question is suitability.”
Feng said he owns a lot of real estate and is willing to use that to acquire working capital. He argued a limited license will hurt him in attracting talent and raise more funds to compete.
“There aren’t too many small gaming companies in Nevada,” Feng said. “I need a level ground to compete with them. Right now, I’m going to the market and we only need to raise $30 million. It’s not for daily operations, but investing in the future in R&D, new products, and attracting people. They’re not cheap here.”
Scherer said it’s a private company and Aruze can provide updates on its finances on a quarterly basis to satisfy concerns instead.
Dreitzer countered that he doesn’t want a limited license to interfere with attaining capital, but that he doesn’t think it would impact recruitment. He then changed to a five-year limitation.
“Any type of limitation, whether it’s five years or three years, puts a scarlet letter on the company and Mr. Feng and I don’t think that’s necessary in this case,” Assad said in response, before siding with his colleagues for the sake of unanimity despite opposing a limitation.
