Steve Wynn’s departure doesn’t make Wynn Resorts suitable
Precedent suggests the firm should lose its Mass. license
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What is suitability? In short, it is the good character, honesty, reputation, integrity, and financial wherewithal to stand behind your investment in and management of a casino in Massachusetts. One could fairly argue that, in its application, the definition is subjective. But it is baked into the laws that authorized casinos licenses here and that require strict, ongoing regulation of the license holders and their principals. Massachusetts set out to have the “highest possible standards” for suitability, the Massachusetts Gaming Commission has often said. It was part of the bargain for introducing expanded gaming here.
My views on the suitability standard are informed, even colored, by my experience as part of the losing bid for the license Wynn won. But the casino horse is out of the barn for Suffolk Downs, as our company sold the track property to a developer last year and is looking at options for new racing and simulcast facilities in the state. And, since the day in October 2013 that I informed Caesars Entertainment officials we were terminating their company as our gaming partner because the Gaming Commission had told us the company was not suitable for licensing here, perhaps no one has thought more about the Gaming Commission’s suitability standards.
Giving teeth to the highest possible standards, the commission disqualified two applicants right out of the gate in 2013: Caesars, even though it was licensed in many other jurisdictions in the US, and Ourway Realty, the prior owner of the Plainridge harness racing track.
The commission did not accept a remedy or potential cure in either matter. Ourway Realty initially tried to remedy its suitability issue by replacing its president and promising to do better. Not good enough, said the commission. With Caesars about to be deemed unsuitable, our only option was to ask the company to step aside (less than three weeks from our initial local referenda in East Boston and Revere) and to find a new partner (Mohegan Sun) the commission would find suitable before the deadline for license applications.
In both cases, the commission was clear: it wasn’t just the offender’s conduct, but also “systemic issues,” an underlying lack of controls, lack of oversight, and questionable management practices that would undermine public confidence in the company’s ability to responsibly hold a license here.
Where does that leave Wynn Resorts? If one believes the Wall Street Journal and other reporting, Wynn Resorts cannot possibly be suitable even though Steve Wynn has stepped aside. Several senior, longtime Wynn officials and board members are also “qualifiers” for suitability on Wynn’s Massachusetts license, including some who knew about his $7.5 million settlement with a former employee. The Wynn qualifiers also include people who may have observed the alleged decades-long pattern of misconduct reported by the Journal and other outlets. And it is not clear whether Wynn is still planning to keep his ownership interest in Wynn Resorts.
The Gaming Commission’s investigative bureau will rightfully ask serious questions about whether Wynn’s company enabled, looked the other way, or covered up workplace misconduct. If the settlement, which Wynn’s lawyers confirmed to the Commission, involved an employee and an incident on company property, why was the case settled privately? Was the Wynn board aware? If yes, that’s pretty damning. If not, well, that’s not good either. It means lack of controls, lack of oversight, bad management, weak corporate governance.
Another question the commission might ask: given the recent revelations, how can it possibly trust anything this licensee tells it? This isn’t the first time the company has failed to disclose an important fact to the commission in a timely manner.Until the commission told them and local media started asking questions, company officials claimed they had no idea a convicted felon was likely a part owner of the land they purchased in Everett, even though the individual’s name had reportedly come up more than once in discussions with Wynn officials and representatives present. And Wynn Resorts didn’t reveal it was under investigation as part of federal probe of money-laundering in Macau, another jurisdiction where it operates, until the Journal reported that in November 2014, shortly after Wynn had been awarded the Boston-area license.
But wait, the building is half finished and scheduled to open next year — what about the jobs? Some ask: Isn’t there a way to keep this project going? Having a billion dollars in the ground does not excuse a licensee from suitability. If that were the case, what’s the sense of having suitability standards? Steve Wynn stepping down from his public company, which many people applaud, may satisfy the politics of the moment, but it won’t satisfy the justifiably high, established suitability standards for a company to hold a gaming license in Massachusetts.