Mass. Gaming Commission Speaks Out On Wynn Resorts Fine, Decision To Allow Matt Maddox To Stay In Charge
The Massachusetts Gaming Commission said it will maintain a hands-off approach to its casino industry going forward despite fining Wynn Resorts $35M for missteps based around its founder’s alleged bad behavior.
“Our goal is not to micromanage corporate affairs or to substitute our judgment for theirs,” Massachusetts Gaming Commission Chairwoman Cathy Judd-Stein said during a Wednesday hearing. “Instead, our role is of a gatekeeper standing guard to ensure that the gaming license is operating consistent and with an obligation to integrity.”
Transparency and the self-reporting of wrongdoing is also a key part of the process and will be expected of Wynn Resorts going forward, she added.
After a yearlong investigation into the alleged sexual misconduct of Wynn Resorts founder and ex-CEO Steve Wynn and how the company handled the allegations, the MGC fined the company $35M and current CEO Matthew Maddox $500K. The fines were among other conditions for the company to keep its license to operate a casino in Greater Boston.
The Massachusetts fine is considerably higher than the $20M penalty Nevada levied on Wynn Resorts, which was that state’s gaming regulator’s highest recorded fine.
The commission pointed out the fines were levied both for the alleged bad behavior and the lengths Wynn Resorts went to cover it up. Judd-Stein noted the decision is “so detailed it speaks for itself.”
Leading up to the MGC’s decision, many in Boston real estate circles speculated whether Massachusetts was willing to pull the plug on a project that is expected to employ 5,000 and is the largest single-phase construction project in state history. Everett Mayor Carl DeMaria had also said he held veto power over any potential sale of the Wynn casino.
DeMaria’s comments and unwillingness to work with a non-Wynn operator had no impact on the commission’s decision, Judd-Stein said.
Wynn Resorts has gone to great lengths to prove it is a changed company, including changing the name of the Everett casino from Wynn Boston Harbor to Encore Boston Harbor. The company removed board members with ties to Steve Wynn — except for Maddox — and has added an internal panel to review sexual harassment allegations going forward.
Those steps helped the commission reach its decision, Massachusetts Gaming Commissioner Enrique Zuniga said.
One step that had no bearing on the decision was Wynn Resorts considering banning Steve Wynn from stepping foot on any of the company’s properties, barring executives from having a business relationship with him and requiring executives who have an inadvertent contact with the ex-CEO to report it within 10 days to Massachusetts regulators, Judd-Stein said.
The MGC’s questioning at a three-day adjucatory hearing in early April left industry analysts speculating whether one condition of the then-pending Massachusetts decision would be for Maddox to step down from his role as CEO.
The decision memo indicates the panel was split on that decision, calling it the most challenging analysis in the entire matter. The commission said Wednesday its vote was private and declined to reveal who in the minority vote wanted Maddox removed.
“The Commission concluded that Mr. Maddox has, at critical junctures, demonstrated questionable judgment and other considerable shortcomings in many facets of his responsibilities as CFO, President, and CEO,” the MGC decision reads. “The majority of the Commission determined, however, that these shortcomings bear primarily on his competence, not his suitability.”
Wynn Resorts and Maddox will have 30 days to pay the fines unless they request judicial review, the regulatory body explained during Wednesday’s press conference.
The 54-page memo outlines Steve Wynn’s alleged sexual misconduct, including how a manicurist at Wynn Las Vegas reported in 2005 the casino mogul had raped and impregnated her. She was later paid a $7.5M settlement.
The MGC report outlines how several executives at the company knew of the settlement and other allegations that came forward following the 2005 matter.
After the Wall Street Journal released its story in early 2018 about the years of bad behavior and cover-ups, the MGC reports former Wynn Resorts executive and general counsel Kim Sinatra along with Maddox approved a request to conduct undercover surveillance of a named source in the WSJ article. At the time, Wynn Resorts was conducting an internal investigation on the claims made in the story.
The surveillance plan halted after the MGC’s Investigations and Enforcement Bureau was concerned that might have a “chilling effect” on witnesses, according to the MGC decision.
Steve Wynn has denied all allegations of his sexual misconduct.
“We do feel that the fine reflects the scope and multitude of the violations,” Judd-Stein said.
Wynn has yet to comment on if it will pay the fine but did issue a statement following the release of the decision and hearing.
“Wynn Resorts CEO Matt Maddox and the Board of Directors have worked diligently to make the important and necessary changes to the Company’s corporate leadership, governance, compliance programs and Human Resources policies,” Wynn Resorts said. “With the Massachusetts Gaming Commission review complete, our company is now focused on a successful launch of Encore Boston Harbor, and the recruiting and training of 5,500 team members who will be bringing Greater Boston and New England a luxury hospitality and entertainment experience unlike anything the region has ever seen.”