The CEO of Las Vegas-based slot machine provider GameCo was denied a license by the Nevada Gaming Commission Thursday and will be required to divest his interest in the small company.
Blaine Graboyes, whose legal last name on his state gaming application is Goldman, spent more than four hours answering a barrage of questions from Commission members that focused on a nearly 300-page investigative report concerning the two years he spent as the consultant/CEO of Ohio-based Beyond Gaming from 2012 to 2014.
The company was liquidated in a Chapter 7 bankruptcy but a former executive accused Graboyes of engineering the bankruptcy and using Beyond’s intellectual property to start up GameCo.
Gaming commissioners voted 4-1 to deny the recommendation made two weeks ago by the Gaming Control Board to give Graboyes a one-year limited license that would allow him to provide answers and to fully review the findings in the investigative report.
Graboyes said GameCo’s compliance committee had reviewed the findings and he had only read the report since the Control Board meeting.
“My goal was to have the best outcome for everyone involved,” Graboyes said Thursday when asked about the bankruptcy. He said Beyond Gaming’s largest investors and shareholders pushed the bankruptcy when the company became insolvent.
“I spent more than a year working to try and salvage this company,” Graboyes said. “I’ve been incredibly transparent through this process. There was nothing that I was aware of that I needed to disclose.”
Gaming commissioners, however, believed Graboyes was trying to play both sides after his offer of $50,000 to acquires the assets of Beyond Gaming was rejected. He told the Gaming Commission the value of the company at the time was zero.
He was also in the process of starting up GameCo as the bankruptcy was proceeding.
“It doesn’t feel right, and I can’t reconcile it,” said Gaming Commission Member Ogonna Brown. “I have trouble with the veracity of the statements he has made today. I don’t feel like he has been truthful. I believe denial is an appropriate step.”
Deborah Fuetsch, the only Gaming Commission member to vote against the denial, agreed the report was damaging but believed Graboyes should be given the time to respond, rather than just two weeks.
“To me, the report is not complete,” Fuetsch said. “What Mr. Goldman brings to the market is unique and exciting. He deserves a year to respond and come back to us.”
It’s unclear the future of GameCo, which currently offers casinos five slot machine games that have a skill-based component where players can win additional jackpots.
Graboyes told the Commission the company has just 16 games currently in the field – four slot machines at Choctaw Durant Casino in Oklahoma and 12 in Nevada, divided between the Atlantis in Reno, and the Park MGM and MGM Grand in Las Vegas.
The company employs 31 people, primarily at its Las Vegas headquarters.
Two-year license expiring
The issues concerning Beyond Gaming surfaced at the Gaming Control Board hearing on Feb. 3. Graboyes’ two-limited license was set to expire and he seeking an unencumbered license. Control Board members said he cleared up tax liabilities, lawsuit issues, and liens that came up during his 2019 suitability hearing.
However, former Beyond Gaming Vice President Justin Yamek, in a letter that was read into the record during the public comment section, accused Graboyes of mismanagement with the company. Yamek re-submitted the letter on Thursday.
The Control Board was told the Dickinson Wright law firm had been hired to investigate allegations raised by Yamek and a report was submitted to GameCo’s compliance committee, which reviewed the findings.
The Control Board recommended the one-year license to allow Graboyes to answer the report’s findings. Graboyes’ attorney, Sonia Vermeys of Brownstein Hyatt Farber Schreck, called the report a “prosecutorial document” and told the Control Board the findings should be dismissed. Graboyes said he didn’t review the report in order to maintain his independence as CEO.
However, following the Control Board meeting, Nevada Gaming Commission Chairman John Moran Jr., demanded Graboyes review the report ahead of Thursday’s hearing. Graboyes told the commissioners he spent all of the past two weeks going over the report, and he disputed its findings.
Graboyes said some of the information in the report was incomplete and took portions of emails and other internal documents out of context.
Vermeys read sections of the report to the Gaming Commission that seemingly cleared Graboyes of any wrongdoing. However, she said two weeks was not an adequate time to answer the document.
Moran, who a member of the Gaming Commission in 2019, said he agreed with the license denial because of Graboyes’ prior hearing.
“I felt like we gave him a chance before, but those issues turned into new issues,” Moran said.
Graboyes did not respond to an email seeking additional comment.
On its website, GameCo lists Art Hamilton as chief financial officer and a four-person board which includes Chairman Robert Montgomery, Fifth Street Gaming CEO Seth Schorr, and private investment executive Adam Rosenberg.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at email@example.com. Follow @howardstutz on Twitter.