LAS VEGAS, May 1, 2019 /PRNewswire/ -- Investors in Red Rock Resorts lack the necessary information to know if they lost a business opportunity to Fertitta Capital, the investment firm founded in 2017 and run by Red Rock Resorts controlling owners, according to letters sent by the Culinary Union to the U.S. Securities Exchange Commission (SEC) and NASDAQ Stock Market.
"Both the SEC and NASDAQ have rules promoting fair disclosure and ethical handling of business opportunities," said Zachary Poppel of UNITE HERE Gaming Research. "But when it comes to Fertitta Capital, Red Rock Resorts investors may have a hard time knowing where loyalties lie and if the Company is enforcing its code of ethics."
In the letters to regulators (available here), the Culinary Union asks for a determination if potential conflicts of interest for those with dual roles at Red Rock Resorts' and Fertitta Capital should be disclosed to investors, and questions whether Fertitta Capital's investment in The Action Network, a sports betting media company, means the family firm receives opportunities owed to shareholders and now competes with Red Rock Resorts' sports betting business.
The Action Network announced in February that Fertitta Capital led a $17.5 million Series B funding round, and then in March The Action Network hosted a "Madness Welcome Party" at the Red Rock Resorts owned Palms Casino Resort.
To date, Red Rock Resorts has not informed investors that its principals, brothers Frank and Lorenzo Fertitta, and its Senior Vice President of Government Relations, Michael Britt, have dual roles at a firm whose business interests are similar to Red Rock Resorts, including in gaming, sports betting, leisure, live events, wellness, and food and beverage. The company's proxy statement, released this week on April 29, makes no mention of Fertitta Capital at all.
UNITE HERE represents 270,000 hospitality workers in gaming, hotel, and food service industries in North America and provides analysis from the perspective of those who work in these industries. Culinary Workers Union Local 226 and Bartenders Union Local 165, Nevada affiliates of UNITE HERE, represent 60,000 workers in Las Vegas and Reno, including at most of the casino resorts on the Las Vegas Strip and in Downtown Las Vegas.