Despite fines, troubling behavior identified, MGC allows casino, Maddox to move forward for opening
The Massachusetts Gaming Commission (MGC), despite finding a troubling pattern in the Wynn Resorts leadership in the past and present, agreed to let the casino operators remain in control of their Everett project – clearing the way for a planned June opening with licenses, and CEO Matt Maddox, intact.
The decision came down on Tuesday evening after more than two weeks of deliberation by the MGC Commissioners. Those deliberations had followed an intense week of hearings April 2-4 at the South Boston Convention Center, as well as a year-long investigation by the MGC. The 54-page decision laid out the stipulations of the decision, including a record-setting $35 million punishment for the company and a $500,000 punishment for CEO Matt Maddox – who remained suitable by a majority Commission vote that was not unanimous.
The $35 million fine was far larger – nearly double – the fine levied by the Nevada Gaming and Control Board in February when they fined Wynn $20 million for similar breaches there. At the time, that was a record-setting penalty.
The great silver lining for the Wynn organization, however, was the first finding in the written report, which determined that no one in the Wynn organization intentionally provided false or misleading information to the MGC in 2013.
“…the Commission has determined that Wynn MA LLC, Wynn Resorts Limited, Matthew Maddox, Elaine Wynn and Patricia Mulroy remain suitable, subject to fines and conditions set forth in this decision, and all new qualifiers are deemed suitable,” read the decision. “While the Commission did not find substantial evidence that the company or any qualifier willfully provided false or misleading information to the Commission (during the licensing process) in 2013, the Commission did find numerous violations of controlling statutes and regulations largely pertaining to a pervasive failure to properly investigate…and to notify the Commission about certain allegations of wrongdoing.
“The Commission is deeply troubled by the circumstances of these findings,” it continued.
“Specifically, the corporate culture of the founder-led organization led to disparate treatment of the CEO in ways that left the most vulnerable at grave risk. While the Company has made great strides in altering that system, this Commission remains concerned by the past failures and deficiencies,” continued the commissioners’ decision.
Despite being troubled, the MGC indicated that it had decided it was in everyone’s best interest to move forward with the execution of the Region A gaming license in Everett.
“Given our findings, it is now in the interest of the Commonwealth that the gaming licensee move forward in establishing and maintaining a successful gaming establishment in Massachusetts,” read the report from the Commissioners. “One of the key metrics by which we will measure that success will be the overall well-being, safety, and welfare of the employees. A second but equally important metric is the importance of compliance and communication with the regulator. This penalty is designed to guarantee these practices.”
To help ensure future compliance and to punish for past transgressions, the Commission imposes the following penalties and conditions:
•The Commission will assess a $35 million fine on Wynn Resorts.
•Wynn Resorts shall maintain the separation of Chair and CEO for at least the term of the license (15 years).
•At Wynn’s expense, the Commission, as more fully described in the decision, will select an independent monitor to conduct a full review and evaluation of all policies and organizational changes adopted by the Company as part of the Adjudicatory record.
•The Board of Directors shall provide the Commission timely reports of all Directors’ attendance records of both Board and assigned Committee meetings.
•Wynn MA, LLC shall train all new employees on the Preventing Harassment and Discrimination Policy within three months of opening.
•Any civil or criminal complaints or other actions filed in any court or administrative tribunal against a qualifier shall be reported to the Commission immediately upon notice of the action.
•The Commission will assess a $500,000 fine on Wynn CEO Matthew Maddox.
•The Board of Directors shall engage an executive coach and any additional necessary resources to provide the coaching and training to Mr. Maddox focused on but not limited to (i) leadership development, (ii) effective and appropriate communication for internal, company-wide reporting and messaging, (iii) enhanced sensitivity to and awareness of human resource issues arising in complex workplace environments that, without limitation, relate to diversity (including disability), implicit bias, hostile work environments, inherent coercion, sexual harassment and assault, human trafficking and domestic violence and (iv) team building and meaningful collaboration.
“Ensuring public confidence in the integrity of the gaming industry and the strict oversight of the gaming establishments through rigorous regulation is our principal objective,” said Chair Cathy Judd-Stein in a statement. “Our licensees will be held to the highest standards of compliance, including an obligation to maintain their integrity. The law of Massachusetts affords the Commission significant breadth in our decision making. With that comes an equally significant duty of fairness. We are confident that we have struck the correct balance and met our legal and ethical burdens.”
The $35 million fine will be accompanied by a series of conditions, including an independent monitor to review and evaluate the company’s adherence to new and existing policies.
Maddox was levied a personal fine, and his suitability was confirmed by a majority vote that was not unanimous, the MGC said. The fine, they said, came from his “clear failure to require an investigation about a specific spa employee complaint brought to his attention.”
That complaint came from Hotel Operations Director Brian Gullbrants – now an employee of Encore in Everett – and the infamous “sensual massage” requested by Steve Wynn and his new wife in 2013 at the company’s Las Vegas resort spa.
That said, the Commission did acknowledge that Wynn Resorts had made voluminous changes to their corporate culture and structure – something that was hammered home for hours upon hours by the Wynn team during the MGC hearings.
The Commission concludes “[t]hese changes to the company’s philosophy, training, and operations show a new found commitment and focus on all levels of employees, which combined with the ongoing successful business operations, continue to demonstrate that Wynn is likely to be a successful operator in Everett,” read the decision.
Despite that determination, there was an undercurrent of “troubled” findings repeatedly spelled out in the report. Primarily, that related to information about settlements regarding Steve Wynn’s conduct in the 2013 licensing process.
The report said most of the time, the information withheld came at the advice of legal counsel, but that advice should not have been followed.
“One of the troublesome undercurrents driving this matter is that disclosure of information was often withheld reportedly on the advice of legal counsel, both in-house and outside,” read the report. “All persons involved should have known better.”
That troubling undercurrent also was expressed in the lengthy analysis of Maddox’s qualifier status. While Maddox was allowed to remain as head of the company, the decision was not unanimous – meaning that some on the Commission believed he shouldn’t remain and voted against him. However, they found that his shortcomings were due to incompetence rather than suitability issues, and they required that he take training classes on how to lead the company.
“Mr. Maddox presents a unique case given his longevity with the company, exposure to information pertaining to the alleged wrongdoings and settlements, and current role as CEO,” read the report.
“The Commission concluded that Mr. Maddox has, at critical junctures, demonstrated questionable judgment and other considerable shortcomings in many facets of his responsibilities as CFO, President and CEO,” it continued. “The majority of the Commission determined, however, that these shortcomings bear primarily on his competence, not his suitability…These shortcomings are largely not matters of honesty, integrity, good character or reputation…”
One of the most telling parts of the report was the Preamble at the very beginning, where it was apparent the Commission deliberated at length about the matter – and from the gut. In the end, though, it felt it had rendered justice.
“We are confident that we have struck the correct balance and met our legal and ethical burdens,” it read.