Wynn Resorts Ltd. won’t appeal sanctions imposed by the Massachusetts Gaming Commission and on Tuesday paid $35.5 million in fines.
After more than a year of investigating the company, commissioners decided in late April that Wynn Resorts could keep its gaming license but it would pay fines for former company Chairman and CEO Steve Wynn’s and other executives’ failure to disclose a $7.5 million settlement payment in 2005 to a woman who said Wynn forced her to have sex with him. Steve Wynn has denied harassing anyone.
Wynn Resorts had until Friday to appeal the fines and other punitive measures it took against the company. Doing so could have delayed the planned June 23 opening of Wynn’s $2.6 billion Encore Boston Harbor.
A spokeswoman for the Massachusetts Gaming Commission confirmed the fine payments and said the company has accepted the conditions commissioners outlined in April, including the appointment of a monitor by the Massachusetts Gaming Commission to oversee Wynn Resorts’ operations of the property for three years at the company’s expense. The commission has begun the process of selecting a monitor.
“The five-member commission will now ensure compliance with the imposed requirements as they look forward to a successful June 23 opening of Encore Boston Harbor,” a statement from the commission said.
In Wynn Resorts’ statement, the company said it disagreed with the commissioners’ findings of CEO Matt Maddox.
In addition to a $35 million fine and punitive measures against the company Wynn CEO Matt Maddox was individually assessed a $500,000 fine and determined to be in need of management training.
The company’s board of directors was directed to hire an executive coach and any additional necessary resources to provide coaching and training to Maddox in four areas: leadership development; internal and company-wide communication; enhanced sensitivity to and awareness of human resource issues arising in workplace environments; and team building and meaningful collaboration.
“The board of directors disagrees with a number of the commission’s comments and conclusions regarding Matt, and believes they are not supported by the evidence,” the company said in an emailed statement. “Therefore, we would support his decision to exercise his rights and appeal the fine imposed upon him, and believe he would rightly prevail in his appeal. However, that appeal would delay the final conclusion of this matter, and therefore we appreciate Matt’s decision to forego an appeal in order to allow closure for the company.”
The company paid Maddox’s $500,000 fine.
Wynn officials noted findings reached by the Nevada regulators — which fined the company $20 million in February — in their explanation of why they believed Maddox would have prevailed in an appeal.
“The Nevada Gaming Control Board, under whose jurisdiction the alleged activities of our founder occurred, conducted its own year-long investigation and recently reaffirmed Matt Maddox’s good standing in Nevada, and praised him for creating a ‘paradigm shift’ and for taking ‘corrective actions that (have) been impressive,’” the Wynn statement said.
“We believe Matt’s leadership has been, and will continue to be, essential in our transformation from a founder-led company to an innovative global corporation,” it said. “Matt has created a more diverse, inclusive and respectful workplace culture – all while maintaining focus on executing the company’s business plan.”
Macquaire analyst Chad Beynon said the $35.5 million in fines won’t pose significant financial harm to the company.
“While the fine is certainly larger than we had anticipated, it’s minor compared to the projected $1.3 billion to 1.5 billion that we expect the company to generate in 2020 cash flow,” Beynon told the Review-Journal.
The investment community is forecast over $200 million in profit in Encore Boston Harbor’s first year of operation, he said, and eventually a 10 percent return.
“Clearly, the property’s first-year free cash flow can take care of this fine,” Beynon said.
Shares of Wynn Resorts closed down 9 cents to $114.11 Tuesday.
Additional punitive measures levied by the Massachusetts Gaming Commission
-At Wynn’s expense, the commission 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.
-The Massachusetts subsidiary will be required to train all new employees on preventing harassment and discrimination 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.