UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule
14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Filed by the Registrant
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Filed by a Party other than the
Registrant ☐
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, For
Use of the Commission Only (as permitted by 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §
240.14a-12
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GALAXY GAMING, INC.
(Name of
Registrant as Specified in Its Charter)
Payment of filing fee (Check the
appropriate box):
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No fee required.
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Fee computed on table below per
Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to
which transaction applies:
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Aggregate number of securities to
which transaction applies:
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Per unit price or other underlying
value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of
transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary
materials:
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Check box if any part of the fee is
offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
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(1)
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Amount previously paid:
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Form, schedule or registration
statement no.:
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Filing party:
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Date filed:
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On August 23, 2019, Galaxy Gaming,
Inc., a Nevada corporation, delivered the following letter to its
stockholders:
****
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Corporate Headquarters
6767 Spencer Street
Las Vegas, Nevada 89119
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compliance@galaxygaming.com
(702) 939-3254
(702) 939-3255 FAX
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August 23, 2019
Dear Fellow Shareholder:
As we stated in our letter to you
dated August 15, 2019, we believe that Robert B. Saucier and Robert
Pietrosanto’s purported Blue Proxy campaign is an invalid attempt
to elect directors who will undo the redemption transaction through
which he was removed as a shareholder of Galaxy Gaming, Inc.
(“Galaxy” or the “Company”). We believe that there will be serious
negative consequences to the Company and its shareholders if Mr.
Saucier becomes associated with Galaxy again, and we want you to be
aware of them as you consider how to vote your shares.
Galaxy Depends on Gaining and
Maintaining Privileged Gaming Licenses
Galaxy serves the regulated
casino gaming business in markets around the world. In most of
these jurisdictions, Galaxy must be found suitable to receive a
license to provide its products and services to the gaming
locations in those jurisdictions. In general, in order for a
company to be found suitable for a license, all of its executive
officers and board members, as well as any individuals or entities
that hold voting shares in an amount that exceeds a certain
ownership threshold, must be found suitable individually. The
thresholds vary by jurisdiction, but even 5% ownership can trigger
a licensing obligation in certain markets, including several of
those important to the Company. In addition, many jurisdictions
retain discretion to demand a suitability finding for a shareholder
with any amount of shares who acts in a manner whereby they are
considered more than a passive investor.
All of Galaxy’s officers and
directors – and those stockholders who have been required to apply
– have routinely been found suitable under the applicable
regulatory standards without impacting Galaxy’s gaming licenses.
However, Mr. Saucier has not been routinely found suitable. As
described in the Company’s various SEC filings, Mr. Saucier’s
regulatory difficulties are what led to his departure as a director
and officer of the Company and the determination of the Company’s
Board of Directors (the “Board”) to redeem all of the shares of
stock held by Mr. Saucier and his affiliates.
Mr. Saucier’s Licensing
Difficulties are Longstanding
Over the years, Mr. Saucier has
had regulatory problems in several jurisdictions, including Oregon
and Washington. But the most significant difficulties Mr. Saucier
has had are with the gaming regulators in California and Nevada,
which are among the largest target markets for Galaxy’s products
and services in the United States.
California
Mr. Saucier and Galaxy Gaming of California, LLC (a former
subsidiary of Galaxy) filed a licensing application in 2002 with
the California Gambling Control Commission (the “Commission”).
After an eleven-year-long investigation, and as part of an
extensive administrative law hearing resulting in an 103 page
opinion, on July 11, 2013 the Commission denied Mr. Saucier’s and
Galaxy of California’s applications on the basis that Mr. Saucier
was unsuitable for licensure under California law. Among other
things, the Administrative Law Judge stated:
“Mr. Saucier’s
repeated acts of dishonesty and evasiveness raise serious questions
about the likelihood that he would continue to engage in such
conduct in the future, if he found himself in similar
circumstances.”
The California Casino Control
Commission adopted the Administrative Law Judge’s decision as its
decision. Thereafter, Galaxy and Mr. Saucier challenged the ruling
and took a number of legal actions to attempt to overturn the
finding. Those actions were additionally detrimental to the ability
of Galaxy to be licensed in California.
The ruling - and many of the
Administrative Law Judge’s negative findings about Mr. Saucier -
was picked up by gaming regulators across the country, with the
result that California’s decision appeared to become prejudicial to
future applications made by Galaxy and Mr. Saucier.
Galaxy and Mr. Saucier filed a
second application for a finding of suitability in California in
2014. Despite the passage of another five years and the expenditure
of significant sums of money, California has delayed Galaxy’s
licensure as a result of Saucier’s then-existing relationship with
the Company. We believe that if Mr. Saucier is again associated
with the Company it would not be able to obtain licensing in
California.
Nevada
Prior to 2013, Galaxy conducted
business in Nevada without the need to have a license. However,
driven in large part by the California actions, the Nevada Gaming
Control Board took the unusual step in late 2013 of requiring
Galaxy to file for manufacturer’s and distributor’s licenses and
for Mr. Saucier to file for a personal finding of suitability. Over
the course of the next four years, and at significant cost to the
Company, Galaxy responded to Nevada regulators’ request for
information. In July 2017, Galaxy’s application was placed on the
Nevada Gaming Control Board (“GCB”) agenda, and the hearing was -
to our knowledge - the longest single agenda item in GCB history,
lasting more than eight hours over two days. One of the members of
the GCB called Mr. Saucier’s application a “train wreck,” and the
Chairman of the GCB indicated his support for a motion of
denial.
When it became clear that the GCB
would not recommend Galaxy for licensing, the Company asked the GCB
to table the license hearing so that it could consider
alternatives, which request was granted. The next day, two of the
Company’s largest clients, having read news accounts of the GCB
hearing, threatened to terminate business with Galaxy if something
was not done to remedy these issues. Under pressure from regulators
and clients, Mr. Saucier stepped down as Chairman of the Board and
as CEO, and reduced his ability to have voting control of the
Company. Following these changes, in September 2017, the GCB
awarded Galaxy its licenses but did not find Mr. Saucier
suitable. His application was referred back to staff for more
review.
Today, more than two years after
the July 2017 hearings, Mr. Saucier still has not been found
suitable by Nevada.
The impact of Mr. Saucier’s
effect on Galaxy’s licenses is further clearly illustrated by the
actions of gaming regulators in Maryland and Wisconsin. Prior to
the redemption, those regulators had indicated their unwillingness
to recommend Galaxy for licensure while Mr. Saucier remained
associated with the Company. Within a month of the redemption of
Mr. Saucier’s shares, the Company received licenses in Maryland and
Wisconsin.
The Hidden Agenda Behind Mr.
Pietrosanto’s and Mr. Saucier’s Proxy Campaign Could
Spell Disaster for Galaxy and its
Shareholders
Since Mr. Saucier and Mr.
Pietrosanto’s proxy materials go to great lengths to condemn the
redemption transaction, it seems logical to assume that the
director nominees share that view – otherwise why would Messrs.
Pietrosanto and Mr. Saucier have nominated them? The Company
believes that their director nominees would, if elected, unwind the
redemption and return Mr. Saucier to his status as a controlling
stockholder of the Company. The Company believes that the
consequences of Mr. Saucier returning as a shareholder would be
detrimental. In short, an individual whose character and past
actions that have hindered Galaxy’s previous ability to receive and
maintain its gaming licenses that are fundamental to Galaxy’s
business, would once again be a major stockholder of Galaxy, and -
as such - be back on the radar screen of gaming regulators
nationwide. At a minimum, the Company’s recently received licenses
could be revoked. Most importantly, it is almost a certainty that
the Company would not receive a license in California, and it is
very likely that Nevada will reactivate its review of Mr. Saucier’s
personal application. If Nevada were to find Mr. Saucier
unsuitable, Galaxy would be unable sell its products in Nevada
unless Mr. Saucier were to once again cease being a shareholder of
the Company. And the adverse effects might not be limited to
California and Nevada; their actions could start a domino effect of
license withdrawals around the country. In that circumstance, it
may be a foot race to see who can dump Galaxy faster – gaming
regulators or the Company’s customers.
We urge you to vote for the Board’s recommendations on the
white proxy card.
Sincerely,
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Mark Lipparelli
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Chairman of the Board
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President and CEO
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Forward-Looking Statements
Certain statements in this letter may constitute
forward-looking statements, which involve a number of risks and
uncertainties. Galaxy cautions readers that any forward-looking
information is not a guarantee of future performance and that
actual results could differ materially from those contained in the
forward-looking information due to a number of factors, including
those listed from time to time in reports that Galaxy files with
the Securities and Exchange Commission.
Important Information
Galaxy has filed with the SEC and furnished to its
stockholders a Proxy Statement in connection with the 2019 Annual
Meeting on July 29, 2019, and advises its stockholders to read the
Proxy Statement relating to the 2019 Annual Meeting because it
contains important information. Stockholders may obtain a free copy
of the Proxy Statement and other documents (when available) that
Galaxy files with the SEC at the SEC’s website at www.sec.gov. The
Proxy Statement and these other documents may also be obtained for
free from Galaxy by directing a request to Galaxy Gaming, Inc.,
Attn: Investor Relations, 6767 Spencer Street, Las Vegas, Nevada
89119.
Certain Information Concerning Participants
Galaxy, its directors and named executive officers may be
deemed to be participants in the solicitation of Galaxy’s
stockholders in connection with the 2019 Annual Meeting.
Stockholders may obtain information regarding the names,
affiliations, and direct and indirect interests, by security
holdings or otherwise of such individuals in Galaxy’s Proxy
Statement dated July 29, 2019, which is filed with the SEC. To the
extent holdings of Galaxy Gaming’s securities have changed since
the amounts printed in the Proxy Statement, such changes have been
reflected on Statements of Change in Ownership on Form 4 filed with
the SEC.
