The Nevada Gaming Commission has put on hold the licensing approval for media mogul Barry Diller — the largest shareholder in MGM Resorts International — given a federal investigation involving stock purchases. 

The Wall Street Journal reported that federal authorities are probing stock acquisitions Diller, the chairman of IAC/Interactive Corp., made in a videogame company a few days before it was acquired by Microsoft Corp.

News of the investigation broke a week after the Gaming Control Board recommended licensing approval on March 2 for Diller and IAC, which controls 14 percent of the Las Vegas-based casino giant.

Gaming Commission Chairwoman Jennifer Togliatti cited several gaming regulations related to the suitability of a license applicant as the reason for referring the Diller and IAC licensing matter back to the control board staff for further investigation.

In an interview, Togliatti said she believed it was better to have the Control Board investigate the matter separately, rather than having the Gaming Commission ask questions of Diller.

“I don't think it's a best practice to have the (answers) unchecked before coming before us,” Togliatti said.

Diller, 80, is currently No. 206 on the Forbes 400 with a net worth of $4.6 billion.

IAC spent $1 billion to acquire its initial 12 percent stake in MGM Resorts in August 2020. The figure has grown larger, as has Diller’s influence. Diller and IAC CEO Joey Levin are both members of the MGM Resorts board of directors.

Neither Diller nor Levin appeared at the hearing.

On March 8, the Wall Street Journal reported Diller, entertainment industry titan David Geffen and Alexander von Furstenberg – the son of Diller’s wife, fashion designer Diane von Furstenberg – realized a $60 million profit after buying shares in Activision Blizzard.

The company was sold to Microsoft a few days after the purchase and Diller, in an interview with the WSJ, referred to the transaction as “simply a lucky bet,” saying none of the men had any material, nonpublic information about the deal. 

“It is one of those coincidences,” he said.

The newspaper reported that the Justice Department is investigating whether any of the purchases violated insider-trading laws. The Securities and Exchange Commission is conducting a separate insider-trading investigation.

The control board hearing in Las Vegas about Diller, Levin and IAC, was relatively routine.

Levin told the control board that MGM Resorts offered a “transformational omnichannel experience” and was the first IAC stock acquisition done with the intent of helping another company grow. Levin, who has been Diller’s right-hand man for almost two decades, said IAC’s commitment to MGM Resorts is long term.

“It checked all the boxes in terms of business opportunities,” Levin told the control board. 

Diller and Levin participated in the hearing virtually from a conference room at MGM Resorts’ corporate offices at Bellagio. A few hours later, MGM’s board approved a new $2 billion stock repurchase program.

When Diller acquired the stake in MGM Resorts, he told IAC shareholders about the company’s potential for online gaming. At the time, BetMGM – the 50-50 sports betting and online gaming joint venture between MGM and Entain plc – was in the early stages. Diller said MGM’s revenue from online gaming was “so small that it rounds down to zero.”

Today, BetMGM ranks among the top four online sports betting operators in the U.S.

“We believe MGM presented a ‘once in a decade’ opportunity for IAC to own a meaningful piece of a preeminent brand in a large category with great potential to move online,” Diller wrote in an August 2020 shareholder letter that accompanied the stock acquisition announcement. Diller founded Fox Broadcasting Co. and USA Broadcasting. He founded IAC in 1995 and is also chairman of online travel giant Expedia, which acquired its holding company, Liberty Expedia, in a $2.6 billion deal in 2019. Among IAC’s more than 150 brands are Angie’s List and The Daily Beast.

Updated at 11:45 a.m. on 3/17/2022 with comments from Chairwoman Jennifer Togliatti.