What you need to know about the Wynn decision
Las Vegas firm has 30 days to pay $35m
The Massachusetts Gaming Commission issued its decision about Wynn Resorts Tuesday night. On Wednesday, commissioners took questions from the press. Here’s a Q&A attempting to answer some of the questions around the decision.
Q: Is the Wynn Resorts casino in Everett going to open as planned June 23?
A: It looks that way. The Massachusetts Gaming Commission has demanded its pound of flesh – a $35 million fine on the company and a $500,000 fine on CEO Matt Maddox, plus a host of conditions – for the company’s handling of Steve Wynn’s sexual misconduct. Now Wynn Resorts has to decide whether it can live with the fine and the fact that the commission said the company’s CEO had a number of deficiencies that bear on his competency.
Q: Wynn Resorts has said it’s studying its options. Will the company pay up?
Q: How fast does Wynn Resorts have to pay the fines?
A: It has 30 days
Q: The commission said in its report that it was split on whether Matt Maddox was suitable to remain as CEO. How did the five commissioners vote?
A: They wouldn’t say.
Q: Isn’t the Gaming Commission a public body?
A: “Our deliberations are private,” said Cathy Judd-Stein, the former Baker administration aide who now chairs the commission. She wouldn’t even say whether the commissioners took a formal vote on Maddox. So it’s unclear whether the commission was split 4-1 or 3-2. Commissioner Gayle Cameron asked Maddox the toughest questions during an adjudicatory hearing in April, so it’s reasonable to assume she opposed his suitability. Gaming Commission Chairwoman Cathy Judd-Stein on Wednesday also deferred to Cameron when asked about the disagreement.
Q: What would have happened if Maddox was deemed unsuitable?
Q: Did the commission figure out whether Steve Wynn is guilty of any of the allegations against him?
A: No. The commission steered clear of that question. Steve Wynn has been accused of sexual harassment and rape, and the commission confirmed the existence of more than a dozen women who were “alleged to have been subjected to some form of sexual misconduct” by him. But the commission totally bypassed the veracity of those particular accusations and instead focused on how Maddox and others at the company responded when they learned about them.
Q: Aside from the fines, what are the other conditions?
A: The ruling requires the company to hire an executive coach to help Maddox in several areas. While the company’s board would oversee that coach, Wynn Resorts would also need to hire an independent monitor selected by the commission. The monitor would need to stay on for at least three years. The company would need to adhere to the monitor’s recommendations on human resource policy, the use of non-disparagement agreements, internal reporting, and the hiring of outside counsel.
Q: Why did the commission have a problem with Maddox?
A: While there was disagreement among commissioners over whether Maddox was suitable, there was a consensus that he had some troubling failings as a leader. The commission was “unanimous in its concern that [Maddox] routinely failed to exercise the proper diligence, express the requisite level of concern, and understands the magnitude of the risk and legal implications associated with much of the information of which he was, or should have been, aware,” the commissioners said in their decision.
Q: What did the commission have to say about Elaine Wynn, Steve Wynn’s ex-wife, who was told in 2009 about a 2005 rape allegation?
A: The commission was more forgiving of Elaine Wynn than Maddox, though it did fault her for not directly informing the corporate board or regulators about the rape allegation against her ex-husband when she learned about it. Even when she referenced the allegation and settlement in a 2016 legal filing amid contentious litigation with Wynn Resorts, Elaine Wynn did not notify the commission about it. Elaine Wynn did notify several others of the allegation, and the commission found her testimony credible that she alerted Kim Sinatra about the allegation soon after hearing it herself. Sinatra, who declined to appear for the adjudicatory hearing even though she was subpoenaed, denied that Elaine Wynn told her about it in 2009. The commission also credits Elaine Wynn with bringing the 2005 rape allegation – which was mentioned prominently in the January 2018 Wall Street Journal expose that sparked the commission inquiry – to light. “[B]ut for the actions taken by Ms. Wynn in 2016, the 2005 allegations may never have been exposed,” the decision says.
Q: Is there much new in the commissioners’ ruling?
A: One new tidbit is that in addition to informing Sinatra and other company executives about the rape allegation, Elaine Wynn told Russell Goldsmith, who was a board member from 2008-2012. For whatever reason, Goldsmith’s name was not mentioned during Elaine Wynn’s adjudicatory committee testimony. At that time, Goldsmith was referred to simply as a board member. At the hearing, Elaine Wynn said he was “married to a very close and personal family friend whose family had a stellar reputation, and I was particularly concerned about that.”
Q: Anything else?
A: The ruling also discloses that even when Maddox was considering whether to fire Sinatra, he was “still considering whether to find another role for her within the Company.” The former general counsel ultimately left Wynn Resorts last year with a lucrative severance, granting her more than $9 million in cash and stock.
Q: How did the commission come up with the $35 million penalty for Wynn and the $500,000 fine for Maddox?
A: The commission only offered up the most basic reasons for the amount of the penalties. “The size of the fine is commensurate with the scope of the violations, and designed to be sizeable enough to have a meaningful impact,” the ruling said. It is intended to punish the company and also deter it from any future bad behavior. Commissioners didn’t let on any more than that when meeting with reporters Wednesday. While hardly cheap, the $35 million fine is a fraction of Wynn’s overall revenues. Wynn’s 2018 revenues from its properties in Las Vegas and Macau totaled $6.7 billion, and its operating expenses were $5.9 billion. There hasn’t been much change to the company’s stock price since the fine was issued Tuesday night, and it has gone up since the adjudicatory hearing.
Q: What is the financial impact for the state?
A: Commissioner Enrique Zuniga told reporters the fines would go into the gaming revenue fund. That fund has a range of beneficiaries, including transportation infrastructure, education, state reserves, local aid, public health, tourism, and the race horse development fund. If the casino opens as expected, more money is expected to pour into state coffers.Q: How much revenue is the state expecting from gambling in the coming fiscal year?
A: The state’s total gaming tax revenues – from Encore, MGM Springfield, and the Plainridge Park Casino slots parlor – are projected to jump from $138 million in fiscal 2019 to $294 million in fiscal 2020, according to the Massachusetts Taxpayers Foundation.