The Massachusetts Gaming Commission has fined Wynn Resorts $35m for concealing allegations of sexual misconduct during the bidding process. However, the company is being permitted to retain its licence to run a resort casino in Everett, MA.
Allegations Against the Founder
Wynn Resorts has been experiencing significant problems since sexual misconduct allegations against former CEO and company founder Steve Wynn surfaced. The allegations dated back over the course of his career at the company.
An icon in the casino industry, Wynn began his career in Las Vegas during the 1960s. His company owns many high-profile casinos including the Treasure Island, the Bellagio and the Mirage. These days Wynn Resorts is focusing further afield, mainly in Macau.
In the US, the company is also focusing on a casino resort development in Massachusetts. It won one of three casino resort licenses up for grabs in the state during September 2014. The MGM Resorts Springfield is already up and running, while the third license is still under review.
However, a Wall Street Journal report in January 2018 threatened Wynn Resorts’ project in Massachusetts, outlining the allegations against the casino mogul. Wynn resigned from his company shortly after publication.
The development of the casino in Massachusetts was already underway, but Wynn Resorts was now at risk of losing its licence. During the bidding process, it had failed to disclose to the Massachusetts Gaming Commission that it had made a financial settlement of $7.5m to a woman in 2005. She had become pregnant, allegedly by Wynn. The regulator then opened a review of the Wynn Resorts casino license.
Multiple Lawsuits
Wynn Resorts’ attorneys made a request to the gaming commission in April 2018 to remove Steve Wynn’s name from the license for its development in Everett, Massachusetts. Its reasoning was that Wynn no longer had any role or financial interest in the corporation. The commission agreed to this request.
Wynn Resorts next changed the name of the casino from the Wynn Boston Harbor Casino to the Encore Boston Harbor Casino. But in November 2018 Steve Wynn began a lawsuit against the Massachusetts Gaming Commission, its chief investigator and Wynn Resorts.
Wynn’s lawsuit claimed that Wynn Resorts gave documents that were protected under attorney-client privilege to the commission’s investigation team. The Gaming Commission and Wynn reached a settlement, enabling the commission to pursue its investigation.
The debacle drew the wrath of Wynn Resorts’ shareholders, a number of whom jointly filed a lawsuit claiming that the corporation had acted negligently. The company’s share price tumbled.
Wynn Resorts was also hit with a record fine of $20m in Nevada for allegedly covering up the sexual misconduct allegations. This fine far outstripped the previous record fine of $5.5m given to CG Technology in 2014.
“Systemic Failures”
The investigation concluded with the publication of a 54-page report. The investigative team have issued a $35m fine for Wynn Resorts. The company will keep its license, despite the team believe the company did not fully appreciate receiving it.
The commission now believes that it is time to move on and Wynn Resorts’ $2.6m casino in Everett is now expected to open on schedule on June 23, 2019.
The hefty fine is due to the “systemic failures” within the higher levels of the company regarding the accusations of sexual misconduct. The regulator wants it to be a deterrent for potential wrongdoings in the future.
The CEO of Wynn Resorts Matt Maddox has personally been fined $500,000 and will have to hire an executive coach. The company has already made about 3,500 hires as part of this project, with this number set to rise to about 5,000.