Casino company Donaco International has finally settled the ongoing lawsuit over the Star Vegas casino on the territory of Cambodia.
The legal case against the Thai vendors of the casino was brought to an end yesterday, with Donaco’s shareholders probably being relieved by the resolved legal action. Unfortunately for the casino operator, it is leaving the legal fight with the same monetary assets as when the litigation started.
It was in 2017 when Donaco International first took the Thai vendors of the Star Vegas casino to court, following the expiration of a management agreement for a neighboring casino venue. The latter, called Star Paradise, is property of a family of the same Thai vendors of Donaco International. According to allegations, a clause in the aforementioned management agreement prevented the same vendors from the further operation of the gaming room at Star Paradise without getting official permission from Donaco. However, despite the provisions in the contract that were aimed to prevent competition, Star Paradise continued to operate the casino.
The violation of the non-compete provisions resulted in an AU$290-million lawsuit filed by Donaco International and the legal action started in November 2017.
The two years that followed saw an ugly legal battle between Donaco and its Thai vendors, with the action putting on stake the future of the Star Vegas casino. At first, the arbitrator issued a ruling in favor of the vendors. Last August, five separate appeals were filed by Donaco to the Appeal Court in Phnom Penh.
The Appeal Court granted the casino operator with an appeal that gave a new start to the litigation.
The Settlement’s Result Can Be Described as Controversial
Now, the legal battle is finally settled with the aforementioned agreement, under which Donaco is to receive a payment worth AU$58 million ($38 million) in return to the annulment of the non-competition and non-solicitation clauses in the sales agreement of the Star Vegas casino.
Almost half of the money, $18 million, will be used by Donaco International to settle the claims for unpaid management fees, including interest. The remaining $20 million are set to be received by Lee how Property to pay for any outstanding rent and additional lease payment. Basically, these payments would see the money paid straight back.
In addition, as part of the final settlement, the management agreement between the casino operator and its Thai vendors will be terminated. The overall result of the tough and long-lasting litigation process is controversial because not only Donaco is practically left empty-handed, but its Thai vendors are permitted to continue operating the game room at the Star Paradise casino as they did in the past with no legal consequences.
On the positive side of all this, Donaco International has revealed that the Star Vegas venue managed to remain profitable during the legal case, bringing positive cash flow for the company. In case no settlement was reached, the lease contract of the Star Vegas casino was at stake and could have been terminated. That is exactly the reason why the gambling operator has prioritized maintaining control of the casino.