Nevada Gaming Commission fines Wynn Resorts record $20M

Updated February 26, 2019 - 5:26 pm

Wynn Resorts Ltd. executives collectively sank into their seats as the Nevada Gaming Commission zeroed in on the amount of the fine the company would pay.

After each of the four commissioners weighed in, the consensus amount became inevitable — $20 million, by far the highest fine ever assessed by Nevada gaming regulators. Wynn Resorts was punished for damaging the state’s reputation by the company’s failure to investigate claims from at least eight women that they were sexually harassed in the workplace.

The fine amount is 3½ times the previous high of $5.5 million assessed against what is now CG Technology in 2014.

Commissioners said their intent was not to wreck the company’s bottom line, as the fine was equal to about 4.2 percent of the company’s 2018 net income worldwide. But Wynn Resorts will now be strapped with the brand-damaging historical notoriety of the record fine.

During deliberations, commissioners praised Wynn Resorts for the multitude of changes the company has made at the board and executive levels as well as policy changes implemented to heal the company. But commissioners also concurred that they needed “move the needle” on corporate culture nationwide.

“It’s not about one man,” Commissioner Philip Pro said in reference to former Chairman and CEO Steve Wynn. “It’s about a failure of a corporate culture to effectively govern itself as it should,” said Pro, a former federal court judge.

Steve Wynn was not present at the hearing. He has denied all harassment accusations, even though the Control Board’s complaint against Wynn Resorts explicitly detailed his involvement.

Wynn Resorts CEO Matt Maddox and Board Chairman Phil Satre briefly addressed the commission, outlining the changes made since the sexual harassment reports first surfaced in January 2018.

In the past year, the company separated itself from Steve Wynn without paying any severance; remade the company’s board of directors with nearly 50 percent women; and recruited three new executives, all of them women.

In addition, the company launched sexual harassment training for all employees with a new independent compliance committee to oversee it. The company also launched a “Women Who Thrive” speaker series for employees and a new parental leave program that provides six weeks of paid time off for all new parents.

“We are pleased that the Nevada Gaming Commission has recognized the company’s transformation and ‘refreshed culture’ over the course of the last 12 months and acknowledged the ‘paradigm shift’ that has occurred within the company,” a company representative said in a release issued after the meeting. “The completion of the review by Nevada regulators is an important step forward, and we deeply appreciate the trust and confidence they have placed in the new leadership of Wynn Resorts to ‘grow and prosper.’”

The record fine amount sends a message that sexual harassment will not be tolerated, said local gaming attorney Kate Lowenhar-Fisher, partner with the Dickinson Wright lawfirm.

“I don’t know what the magic number is that sends a message, but $20 million certainly does,” she said. “These types of really big messages sent by our regulator are intended not only to punish the company involved, but to alert everybody else that if you need to clean up your act, then you better do it.”

Dennis Gutwald, partner at McDonald Carano, agreed but said the downside of the commission’s action was that it did not punish the perpetrators.

“It’s regrettable that many of the individuals that are involved are no longer there so that the fine affects the company much more so than any individual,” he said.

It is possible that the commission could also fine Steve Wynn, he said.

“They’ve left that as an option, so we’ll see where they go with it,” Gutwald said, adding that it could raise some potential legal issues, since Wynn is no longer an acting executive at the company.

Either way, Lowenhar-Fisher said Steve Wynn will likely “encounter a similar financial reckoning” one way or another.

Wynn Resorts isn’t done with regulators. The Massachusetts Gaming Commission could fine the company in that state as regulators there look at the same allegations.

The Massachusetts Gaming Commission is scheduled to meet Thursday to discuss litigation strategy involving Steve Wynn’s lawsuit against the commission, its lead investigator, Karen Wells, and Wynn Resorts. Commissioners already have authorized their attorneys to pursue a settlement. While Clark County District Court Judge Elizabeth Gonzalez has temporarily blocked release of the commission’s report, a court hearing is scheduled in Las Vegas Monday.

Once the order blocking release of the report is lifted, the commission can schedule an adjudicatory hearing in Boston to address the harassment issue there.

The company is working toward opening Encore Boston Harbor in June. Commissioners already have ruled that Steve Wynn is no longer officially involved with the project and the Wynn name was stricken from the building last spring.

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

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