Wynn Resorts Mulls Banning Founder
It’s not often you can choose your own punishment. However, that’s what Wynn Resorts International wants to do. It sent a brief to the Massachusetts Gaming Commission last week suggesting that the panel require that it ban Steve Wynn (l.) from all of its properties as a condition for keeping its casino license.
The board and executives team of Wynn Resorts International has come up with a novel formula for convincing the Massachusetts Gaming Commission that it is a changed company since found Steve Wynn resigned from the company and ended all ties with it more than a year ago: Banning him from all of the company’s casinos worldwide.
The company delivered a brief with this suggestion to the MGC last week. Banning Wynn from the casinos that each reflect his personality and ego could be considered a bitter personal blow to the ex-CEO.
The brief included 13 suggestions that the commission set as requirements for the company. According to someone who has seen the brief, it states: “Such measures if accepted by the commission and incorporated into a decision in this matter, will provide additional assurances that the allegations and misconduct that led to the investigations… do not occur again and ensure that the most important changes implemented by the company over the last year may be enforced as license conditions.”
It also reportedly says it was “deeply sorry that it failed to live up to its values and that, in doing so, it let its employees down.” It said that over the past year and more, it had “taken drastic and meaningful measures” to protect employees against sexual harassment.
They hope this may be sufficient to persuade the commission not to yank the company’s license to operate a casino in the Bay State. The $2.6 billion Encore Boston Harbor (which was originally named after Wynn) in Everett, overlooking the Mystic River and the Boston skyline, is set to open June 23.
The company will offer Wynn’s banning from all Wynn properties, including those in Macao as a condition for keeping the license. The company said it would also accept other conditions, such as forbidding any company executives to have social contact with the disgraced former CEO and founder.
The commission spent a year investigating the accusations of sexual misconduct against Wynn, but most especially how his subordinates, company executives and board members reacted when they first heard inklings of his conduct, and whether they did anything to cover it up and prevent the MGC from finding out about it when it was in the process of granting a gaming license to the company.
Two weeks ago the commission held three days of dramatic testimony when it grilled company executives and board members, and appeared to be especially intense in its questioning of current CEO Matt Maddox, demanding that he explain how, in his lofty position in the company he never had inklings of Wynn’s alleged misbehavior, something Wynn still denies.
The commission is now behind closed doors determining what it will do. This could include huge fines like the Nevada gaming board imposed on the company, it could include withdrawing the license, and possibly the banning proposal put forward by the company.
A decision is expected within a couple of weeks.
During the hearings executives detailed the extent to which the company has gone to jettison Wynn down the memory hole, including removing his recorded voice from hotel phone system and his image from every location in the Wynn Las Vegas resort.
The new chairman of the board, Philip Satre told the panel: “There was a concerted effort to make sure that the people who worked there did not have to see that on a daily basis.”
At the end of the hearings the company’s attorney Jed Nosal described the changes the company adopted on many levels to “enhanced accountability.”
Maddox by far underwent the harshest questioning, to an extent that many left the hearing feeling that perhaps he personally would be held unsuitable to hold his post with the company. Not that the commission has that authority. If the company chooses to defy the commission, it could sell its interests in Massachusetts, which amount to something like 2 percent of its total holdings.
After the hearings the company pushed back at the idea that the commission might require Maddox’s ouster. In a brief issued after the hearing, the company noted that commissioners did not believe their own investigators, who found no evidence that Maddox helped hide the allegations against his erstwhile boss, including that Steve Wynn did not disclose a $7.5 million settlement payment in 2005 to a woman who said she was forced to have sex with him and become pregnant.
The 49-page legal brief also criticized Commissioner Gayle Cameron for her questions to Maddox about his leadership during the days before Wynn left the company. Observers said that the brief could indicate that the company will take the commission to court if it withdraws its license. This could draw out in time the state’s hopes to have a functioning casino in the Boston Metro area and thus might be seen as placing a chip in a complicated chess game between the company and the commission.
It is, after all, of some concern to the commission that the casino open and begin paying taxes to the state on schedule. The commission wants to be perceived as being tough, but perhaps not so tough that it wants to dismiss millions of dollars in taxes. Not to mention the 5,000 employees, many of who are being interviewed three months ahead of the casino’s opening.
It cannot forced Wynn to sell the Encore building to another gaming company.
Meanwhile the House introduced a $42.69 billion budget last week that includes $264 million in anticipated gaming revenue for the next fiscal year, among that revenue from the Everett casino.
Rep. Aaron Michelwitz, chairman of the House Ways and Means Committee, told The Republican, “I think we are looking closely at what happens with Encore. It is assuming that Encore opens at the approximate time.” That statement may or may not put pressure on the commission, which is theoretically an independent commission beyond the reach of politicians.
An expert on risk management who advises clients on sexual misconduct investigations and compliance told the Las Vegas Review-Journal last week that in his opinion Wynn Resorts has done everything right to change the atmosphere of easy acceptable of sexual harassment that pervaded the company when Wynn headed it.
Nicole Lamb-Hale, a managing director of New York-based Kroll Inc., said the compliance program established, which includes an independent review by a former Boston police commissioner, ought to satisfy the commission if anything will.
“There’s not much you can do to turn back the clock, but you can, going forward, with some things that hopefully will set a tone within the organization that will prevent it (harassment) from happening in the future,” Lamb-Hale told the Review-Journal in a phone interview.
She added, “It’s important to elevate sexual misconduct prevention and compliance at the same level as any other enterprise risk issue. The #MeToo movement has taken sexual harassment out of the shadows. These issues have been around as long as men and women have worked together in the workplace.”
She noted that besides the enhanced workplace compliance and sexual harassment avoidance training, the company made it clear that any employee who knew about the allegations against Wynn and did nothing could not stay, and elected three new women to the board of directors.
It also hired a new general counsel and created the new position of senior vice president of human resources and named a new president to Wynn Las Vegas. These new officials, all women, testified at the hearings.
Lamb-Hale said that creating a new corporate culture is a long and drawn out process. “It’s something that you can’t just put together and put on a shelf,” she said. “You have to continue to refine it, you need to audit it and evaluate it to show the regulators they’re doing that.”
At the end of the last day of hearings, on April 4 commission Chairman Cathy Judd-Stein said she and her colleagues would need several days to reach a decision. The decision will be delivered in a written form.
Gaming analyst John DeCRee of Union Gaming told investors recently that he expects the Encore Boston Harbor to open as planned. “Based on the company’s clear and decisive transformation, we believe current management should be able to adequately prove current suitability to keep the license and open the property,” he said. “However, if the commission determines the company is unsuitable (even after appeal), and Wynn is required to vacate its license, we envision a trustee to oversee the opening of the property and an orderly sale process.”