The Nevada Gaming Commission punished Wynn Resorts with a $20 million fine—the largest in the history of gaming in the state—for years of inaction by former executives in the face of repeated allegations of sexual assault and harassment against founder and former Chairman and CEO Steve Wynn.
“We have a responsibility to send a message to every licensee. Zero tolerance,” said Commissioner Philip Pro, a former federal judge. “Penalties will be severe. This fine won’t break the bank of Wynn but sends an important message.”
The fine was the commission’s response to a settlement reached between Wynn Resorts and the Nevada Gaming Control Board on a 10-count complaint arising from a yearlong investigation by the board.
The company admitted as part of the settlement that at least seven former executives knew of Wynn’s alleged misconduct over the course of more than 10 years and repeatedly failed to do anything about it. A host of employees were victimized, including cocktail servers, salon and spa workers and flight attendants on the company’s private airline.
Though known to top management in no instance did the accusations result in timely investigations and other steps required by company policy, Nevada law and state gaming regulations.
The primary count in the complaint centered on an allegation that in 2005 Wynn raped a salon worker who became pregnant and that executives knew that Wynn had paid the woman $7.5 million in secret through an outside entity set up for that purpose. They also knew that in 2006 he paid a cocktail server $975,000 after “pressuring her into a non-consensual sexual relationship,” the complaint said, and that he regularly harassed and pressured massage workers into performing sexual favors.
“It’s not about one man,” said Pro. “It’s about a failure of a corporate culture to effectively govern itself as it should.”
Commission Chairman Tony Alamo Jr. said, “There are no winners here today, just losers on both sides,” saying both the state’s reputation and that of Wynn Resorts have suffered. The company’s shareholders have suffered enormously as well.
Wynn Resorts stipulated as part of the settlement that none of the executives in question are still with the company. The complaint did not identify them by name. The Control Board, in turn, agreed not to act against current Wynn executives and not seek to revoke the company’s Nevada gaming license.
The accusations first came to light in an explosive Wall Street Journal report published last January that was filled with testimony from women who claimed they were victimized by the casino tycoon when they were employed at the company’s Las Vegas Strip resorts.
Wynn denied the allegations but resigned two weeks later and subsequently sold all his stock.
His departure was quickly followed by a shakeup of upper management and a near complete purge of the board of directors, which now includes four women, as the company sought to save the license it Mount Airy had been awarded in Massachusetts to build a $2.5 billion megaresort outside Boston that is scheduled to open in June. The company has a new chairman, a new CEO, a new president, a new general counsel and a newly created position of senior vice president of human relations. Several new policies have been installed, many directed toward sexual harassment prevention. A compliance committee was created with numerous procedures to prevent any harassment allegation from going unchecked.
“This is a case about one person’s misconduct and the alleged mishandling by a small handle of people,” attorney Greg Brower, the company’s outside legal counsel, told the commission. “None of those people are with the company anymore. In response to these allegations, the company did not run and hide. The company stepped up and faced the very ugly accusations.”
How all this will play in Massachusetts is as yet unknown. Wynn’s name has been removed from the Boston-area project, which is now called Encore Boston Harbor, but Wynn Resorts’ continued suitability for a gaming license remains under investigation by the state Gaming Commission.
At issue is whether Wynn Resorts concealed information about the sexual abuse allegations to obtain the license.
The commission was expected to release its findings at the end of last year or early this year, but Steve Wynn sued, charging that investigators obtained certain documents related to the case that are protected by attorney-client privilege.
Last week, the MGC unanimously voted to settle its lawsuit with the disgraced Wynn Resorts founder Steve Wynn in such a way that will allow it to wrap up its investigation of the company Wynn founded and its suitability to continue to hold a license to operate a casino in Everett.
Details of the settlement, which were made in Clark County District Court in Nevada, were not made public immediately. The commission issued this statement: “Today the Massachusetts Gaming Commission voted to authorize its legal counsel to finalize an agreement guaranteeing that commissioners have access to important investigative information relevant to the Wynn Resorts suitability review.”
It added, “This action also eliminates the uncertainty of protracted litigation and allows the MGC to commence its preparations for an adjudicatory hearing and a robust, public review of its investigatory findings.”
Wynn Resorts issued this statement: “We have worked closely with attorneys for the Massachusetts Gaming Commission and for Steve Wynn to reach a resolution that allows the commission to receive the information it believes is necessary to complete its investigation.” It concluded, “We are hopeful a hearing before the commission will be scheduled soon.”
The commission is gathering information to determine if the company is still suitable to hold the license in light of sexual misconduct allegations that surfaced against the founder last year, and which forced him to resign and divest himself of all of his holdings.
At question now is whether the company was sufficiently tainted by Wynn’s many years to be able to meet the state’s standards for suitability. The current leadership of the company argues that it is essentially a different company than it was a year ago.
The commission had planned to vote on the matter in November, but Steve Wynn sued, saying that the commission was relying on information it obtained from company records that were, in essence protected by attorney client privilege.
Wynn sued the commission, its lead investigator, Karen Wells and the company he founded. Wynn continues to deny that he sexually harassed anyone, and sought to keep records relating to him from being released to the public record.
Now that the settlement has been reached the commission will finally be able to read its investigators’ report.
This comes none too soon since the $2.6 billion Encore Boston Harbor is planning to open in June.
But according to CommonWealth, a non-profit media outlet based in Boston, the MGC could be overruled for appearing to indicate the commission intends to rubber-stamp Nevada’s action and settle for a fine.
The flap has prompted Attorney General Maura Healey to weigh in, telling WGBH radio that her office might get involved.
“They need to do their job, they need to do it well and to do it right, and I don’t care that a building’s been built,” she said. “The fact that this structure is built or near-built should not be what drives the decision-making of the commission.”
