Wynn Resorts has a problem beyond just the resignation of founder Steve Wynn: a $5 billion problem. That's how much could be on the line in the lawsuit with his co-founder and former partner Kazuo Okada.
In 2002, the Japanese pachinko king was the money man behind the launch of the company, with Okada and Steve Wynn each owning approximately 20 percent of the shares.
But in 2010, when Steve and Elaine Wynn divorced, they and Okada signed a shareholder agreement limiting the sale and control of their shares. At the time, Okada was becoming the largest shareholder of the split in the Wynns' shares.
In 2012, Wynn Resorts pushed Okada out and forcibly redeemed his roughly 25 million shares, at a 30 percent discount, for $1.9 billion over allegations Okada had bribed Filipino gaming officials.
Now in 2018, with scandals swirling, Okada and Aruze USA, Okada's former holding company, are going to trial against Wynn Resorts. Aruze USA held the shares of Wynn Resorts.
Based on court records, Okada will argue the board was not acting independently and instead simply obeying the CEO's orders when it pushed Okada out.
In a 2013 court filing, Okada's lawyers wrote, "Mr. Wynn consistently refused efforts to consider Aruze USA directors for the board, in an effort to continue to monopolize control over Wynn Resorts."
When Wynn Resorts accused Okada of improper payments to Filipino officials, court documents show Okada punching back. Okada lawyers wrote in 2013, "Mr. Okada objected to donation by Wynn Resorts for $135 million to University of Macau," saying the chancellor was the head of the Macau government with ultimate oversight over gaming matters.
The court could determine the board of directors acted responsibly. After all, Nevada regulations give a wide berth to corporate boards who act in good faith. But if the court sides with Okada and Aruze USA, it would be a $5 billion decision.
Those 25 million shares are now worth $4.1 billion. If they're awarded to Okada/Aruze USA, Adam Trivison of Gabelli points out: "His shares dilute the future value to the company."
There's also the question of roughly $700 million in dividends that Okada has not collected. However, he has been earning 2 percent interest payments in escrow on the $1.9 billion promissory note. This is listed as a liability and brings the total down to the neighborhood of $3 billion. The court could also award damages.
The massive dollar amount is just one of the worries the Street has regarding the outcome of the hearing.
"It's a big check, but I'm less concerned about where Wynn gets the money than stability of the ownership of the company," David Katz, gaming analyst for Jeffries, told CNBC.
"I am keenly focused on what the ownership and control structure of the company is going to be," Katz said. "Where is this company headed? It will largely be determined by who its ownership base is."
The animosity between Okada and Wynn is well documented. But Okada's no longer at the helm of Universal Entertainment, which wholly owns Aruze USA, and Steve Wynn is out from his post. With the big warring personalities out of the picture, perhaps Wynn Resorts and Universal Entertainment will be motivated to settle this out of court.
In addition to the Okada suit, investors are looking at a number of other factors: Will Elaine Wynn, who's regaining control of her shares, sell or take a more active interest in the company's operation? Will shareholder and/or victim lawsuits hinder a sale of Wynn assets? And perhaps most importantly, can Wynn Resorts hold on to its gaming licenses in Massachusetts, Nevada and, especially, Macau?
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