Wynn Resorts Receives Record $20 Million Fine in Nevada Gaming Probe
The Nevada Gaming Commission fined Wynn Resorts $20 million for failing to investigate claims against its former chief executive, Steve Wynn. It is the largest fine ever assessed by Nevada gaming regulators.
Wynn Resorts will keep its license to operate casinos in Nevada, which is the key takeaway for Wynn shareholders. The company, which owns world famous resorts like Wynn Las Vegas, Encore Las Vegas, and Wynn Macau, claims it has changed its corporate culture.
The NGC fine covers conduct ranging from 2005 until 2018, when Steve Wynn’s alleged misconduct forced him to resign his CEO position at Wynn Resorts and divest himself of company shares.
NGC said Commissioner Philip Pro, who served as a federal judge, said of the $20 million fine against Wynn Resorts, “It’s not about one man. It’s about a failure of a corporate culture to effectively govern itself as it should.”
Saying he and his fellow Nevada regulators are “guardians of the integrity of gambling,” Philip Pro said the fine was needed to set a standard among Nevada casino operators. Pro said Nevada casino companies “don’t do things that bring disrepute on the industry.”
Steve Wynn Allegations
In January 2018, the Wall Street Journal first published an article in which a variety of accusers claimed Steve Wynn had sexually harassed them. Only months after the #MeToo movement began, the WSJ report led to a deluge of media reports about alleged misconduct.
Less than two weeks after the first report, Steve Wynn stepped down from the board. Due to longstanding claims by Wynn’s estranged ex-wife, Elaine Wynn, that the Las Vegas Strip company’s board members ignored prior complaints, the Nevada Gaming Commission opened a probe into former Wynn board members’ conduct.
$7.5 Million Payout in 2005
A key case in the investigation was a 2005 payout worth $7.5 million to a woman who alleged Steve Wynn raped her and impregnated her with a child. Whether the accusations were true or not, it was difficult for Wynn’s board to claim they knew nothing of the allegations when they signed off on a $7.5 million payment.
As Philip Pro noted, that was one isolated case in a long pattern of ignoring or tacitcly approving Steve Wynn’s alleged conduct.
The Nevada Gaming Commission released its findings last month, which included 10 separate areas in which the Wynn board of directors were derelict in their duties. After the report came out, new Wynn CEO Matt Maddox released a statement admitting the company’s wrongdoing and noting that the board members cited in the report no longer were with the company.
2014 Fine of CG Technology
The previous highest fine for a Nevada casino operator was $5.4 million, which was assessed to CG Technology in 2014. CG Technology’s large fine involved failure to uphold gambling standards in the company’s sports betting business.
Like the Wynn Resorts fine, CG Technology’s penalty was the result of a pattern of misconduct. Commissioners Deborah Fuetsch and John Moran Jr. claimed they considered an even bigger fine for Wynn Resorts, though they did not specify how high their proposed fine was.
Tony Alamo on Record Fine
Tony Alamo, the chairman of the Nevada Gaming Commission, was comfortable with the fine levied. Alamo said Nevada record penalty “makes it clear to all licensees that this culture cannot be tolerated.”
The NGC commissioner said the $20 million has to send a signal not only to Nevada casino groups, but also casino operators across the United States. Alamo added, “It needs to move needles here. It needs to ring across the entire country.”
At the same time, Nevada’s highest ranking gaming regulatory official said the fine brings closure to the issue and allows Wynn Resorts to “heal”.
Changes to Wynn’s Board
After Steve Wynn left in February 2018, the Wynn Resorts board underwent significant changes. Phil Satre, the former CEO of Harrah’s Entertainment, was brought in as vice president and an inside director. The board also added three female independent directors, including Dee Dee Myers, Wendy Webb, and Betsy Atkins.