Discipline against Wynn Resorts tied to gaming Regulation 5

Wynn Resorts Ltd. is in trouble with Nevada regulators — but not explicitly for its board of directors and executives turning a blind eye toward sexual harassment.

The state Gaming Control Board and Wynn Resorts agreed last month to settle a 10-count complaint saying the company failed to investigate allegations of harassment. On Tuesday, the company will learn what punishment it may receive from the Nevada Gaming Commission.

In its complaint against the company, regulators cited violations of Nevada Revised Statute 463 and the board’s Regulation 5 on all 10 instances cited. Yet Regulation 5 does not have anything mentioning sexual harassment.

“It has really broad language,” said Jennifer Roberts, associate director of UNLV’s International Center for Gaming Regulation. “Basically, if you affect the reputation of the gaming industry, if you impact the reputation of Nevada, that’s enough.”

NRS 463

NRS 463 requires that the commission be satisfied that an applicant be “a person of good character, honesty and integrity; a person whose prior activities, criminal record, if any, reputation, habits and associations do not pose a threat to the public interest of this state or to the effective regulation and control of gaming … and in all other respects qualified to be licensed or found suitable consistently with the declared policy of the state.”

Regulation 5, which addresses methods of operation and grounds for disciplinary action, specifically requires that a licensee’s employees must uphold “the public health, safety, morals, good order and general welfare of the people of the state of Nevada,” and prevent activities “that would reflect or tend to reflect discredit upon the state of Nevada or the gaming industry.”

Within the regulation’s list of unsuitable methods of operation are “failure to exercise discretion and sound judgment to prevent incidents which might reflect on the repute of the state of Nevada and act as a detriment to the development of the industry.”

One of the achievements of former Gaming Control Board Chairwoman Becky Harris in her year heading the board was to draft amendments to Regulation 5 that specifically address sexual harassment and underscore it as a practice that won’t be tolerated.

Harassment amendments

Harris conducted a series of workshop meetings for industry comment, refined the amendments over several months and convinced her board colleagues to unanimously recommend approval in November.

The proposed amendments would add a new section ordering licensees to maintain written policies and procedures addressing prevention, reporting and investigation of and response to sexual harassment in a licensee’s workplace.

The proposed regulation references a checklist every licensee would have to complete and file annually with the board.

In one of the regulation hearings, Harris said the harassment issue needed additional emphasis.

“I think the regulations are very vague,” she said in one of the hearings. “This is an attempt to highlight that sexual harassment prevention and awareness is important but that the board wants some parameters on what those policies would and should look like. The fact that we have a lot of federal legislation and state laws and that this is still an issue of concern for many would speak to the fact that perhaps those methods are not as effective as we would like for them to be.”

But opponents of the proposal said the additional harassment mandates went beyond the scope of gaming regulation.

Barry Lieberman, an attorney for Gaughan South, parent company of the South Point, said oversight of sexual harassment issues already are carried out by the U.S. Equal Employment Opportunity Commission and the Nevada Equal Rights Commission. He added that Regulation 5 already gives regulators the authority to discipline licensees.

“We believe that … sections in the current regulation provide the Gaming Control Board and the Nevada Gaming Commission with the authority to discipline a licensee who violated federal, state and local statutes and regulations which prohibit discrimination and harassment,” he said in a meeting last year.

The sexual harassment amendments are only proposals at this point and would have to be taken up by the commission.

Commission Chairman Tony Alamo said he doesn’t intend to review them until after the Wynn disciplinary matters are resolved.

That could take awhile.

While discipline against the company could occur Tuesday, Alamo has indicated that the Control Board could still file complaints against Steve Wynn and former Wynn executives that have left the company, but are still under regulatory scrutiny.

Those, too, would likely invoke NRS 463 and Regulation 5.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.