The sexual misconduct allegations against Steve Wynn obviously will need to play out on their merits, but investors also must start thinking about what to do with their shares of Wynn Resorts, or whether they should consider buying if the stock continues to sink.
The biggest issue is what happens if Wynn resigns.
There are several ways in which that can play out:
Wynn can battle for his good name. That process could take a while and, it would be expected, the stock would pay the price.
If Wynn is cleared, anyone buying shares at that point would be rewarded.
If Wynn resigns the impact would most likely be determined by how long he had held on. A quick resignation might rattle investors and cause WYNN stock to fall further. If he resigns after a long period of the stock’s decline, there likely would be a relief rally.
Wynn’s hand might be forced by the Massachusetts Gaming Commission’s investigation into the matter.
Chairman Steve Crosby and his commission have been sticklers on ethical issues. They even disqualified Caesars for a license several years ago based on what they considered a questionable investor on a Caesars project beyond the Bay State. And they will be under a national microscope in the Wynn case.
If Massachusetts suggests Wynn isn’t suitable, Steve Wynn might have no choice but to resign or see his company lose its $2.5 billion Boston casino now under construction.
And if Massachusetts takes a hard line, it would put Nevada regulators in an uncomfortable position.
The impact could also be felt in Macau where Wynn Macau’s gaming concession will come up for renewal. There are some in Asia who would like to see some new players in Macau—perhaps Chinese players—get a gaming concession. Trouble for Wynn Resorts could be the excuse they need, or a cause to sell Wynn properties there.
As is being widely reported, Wynn has no succession plan. But the difficulty brought by his absence would be greater than that. Steve Wynn is Wynn Resorts. He is the driven genius who makes certain that each new property is the finest ever built and that everything in his properties meets the nth degree of quality.
That obsession with detail and quality, and his aesthetic eye, cannot be replicated.
So, if Wynn Resorts were to continue without Steve Wynn, it’s likely the company would lose its special qualities over time.
Another question would be what happens to the Wynn name? It is possible the name could become so tarnished that new management might be tempted to change it. There is tremendous value in the Wynn name and losing it might be as costly as keeping it.
An out-of-the-blue possibility could be bringing in ex-wife Elaine Wynn as titular CEO, allowing her and her philanthropic reputation to rehabilitate the name.
A more probable course would be to sell the company at some point. MGM Resorts, Las Vegas Sands, Caesars and/or VICI Properties could probably finance such a deal. Or maybe an international player could do it, such as Genting.
Of all possible suitors, Las Vegas Sands might be the most logical. Steve Wynn and LVS CEO Sheldon Adelson have developed a good relationship. They are neighbors in Las Vegas. Together, they would own less of the Strip than MGM and Caesars do now, reducing concerns about over concentration. Boston native Adelson would be a natural owner of Wynn’s Boston casino.
Longer-term, Wynn could be out of the running for a Japanese casino, thereby strengthening the chances of other applicants.
Finally, more shoes might fall.
The pattern of sexual misconduct allegations has been that the initial headline-grabbing allegation starts a round of charges as happened in Hollywood after Harvey Weinstein was outed. More allegations in the gaming industry would not be a surprise.
