Nevada Gaming Commission fines Wynn Resorts a record $20 million to settle a 10-count complaint

Nevada Gaming Commission fines Wynn Resorts a record $20 million to settle a 10-count complaint

  • Howard Stutz, CDC Gaming Reports
February 27, 2019 5:01 AM
  • Howard Stutz, CDC Gaming Reports
  • Other

Wynn Resorts was assessed a $20 million fine by the Nevada Gaming Commission Tuesday to settle a 10-count complaint that detailed years of failure by former company executives to “report and/or investigate” numerous allegations of sexual assault, sexual harassment and sexual misconduct by former CEO Steve Wynn.

The fine was the largest handed down in Nevada history, nearly four times larger than the previous penalty, $5.5 million levied in 2014 against Cantor Gaming, now known as CG Technology.

Nevada Gaming Commission members Phil Pro, left, Tony Alamo, chairman, and John Moran Jr. listen while Wynn Resort executive, CEO Matt Maddox, testifies during a sexual misconduct hearing at the Nevada Gaming Commission. The regulators fined the company $20 million for its failure to report and investigate sexual harassment allegations against former CEO Steve Wynn. (Jeff Scheid-Nevada Independent)

 

“There has to be a fine like this state has never seen,” said Gaming Commission Chairman Tony Alamo, Jr., who initially wasn’t in favor of accepting the settlement, but came around following the numerous changes made to the company’s hierarchy and corporate structure. “The fine needs to move needles outside our borders”

Alamo added, “There are no winners here today, just losers on both sides,” saying both the state’s reputation and the company’s suffered with shareholders “losing half their value.”

Wynn Resorts agreed to settle the complaint in January with the Gaming Control Board, leaving the amount of the fine up to the Gaming Commission.

In the settlement, the Control Board agreed not to act against current Wynn executives, said that it will not seek to revoke the company’s Nevada gaming license, and agreed that conditions on the license could be imposed by the Gaming Commission.

“We also have to send a message beyond the confines of Wynn,” said Gaming Commission member Phil Pro, a former federal judge. “We have a responsibility to send a message to every licensee. Zero tolerance. Penalties will be severe. (This) fine won’t break the bank of Wynn but sends an important message.”

The complaint, following a year-long investigation by the Control Board, named several former Wynn executives, who gaming investigators said were aware of the numerous allegations leveled by employees against Steve Wynn going back to 2005, including rape and non-consensual sexual relations.

The executives did not conduct mandatory investigations into the allegations, which violated the company’s human resource policies, Nevada law and Nevada gaming regulations.

In addressing the complaint, Senior Deputy Attorney General John Michela told the Gaming Commission the actions by Steve Wynn and company executives, “tarnished the reputation of the gaming industry and Nevada to a level not seen since organized crime.”

A Wall Street Journal article a year ago uncovered years of sexual misconduct and harassment allegations by Wynn against employees.

The primary count of the complaint dealt with the allegation that a Wynn Las Vegas salon employee was raped by Steve Wynn and became pregnant. Senior Wynn executives were made aware that the CEO reached a “private, confidential settlement with Employee 1 and paid her and her husband $7.5 million through a separate legal entity funded by Steve Wynn.”

According to the complaint, Steve Wynn also paid a cocktail server $975,000 after “pressuring her into a non-consensual sexual relationship.” Other counts in the complaint involved sexually harassing salon employees, cocktail servers and flight attendants working for the company private airline.

“It’s not about one man,” Pro said. “It’s about a failure of a corporate culture to effectively govern itself as it should.”

Wynn resigned as chairman and CEO last February and sold his stock in the company. Seven company executives named in the Gaming Control Board complaint left the company.

“Isn’t it strange that the people that are the subject of this aren’t even in the room today?” said Gaming Commission member John Moran Jr. “The people that are in this room now … they’re left with the train wreck to try to fix it.”

Wynn Resorts highlighted the numerous changes in the company’s make-up and structure over the last 12 months, including a complete revamp of the company’s nine-member board of directors, four of whom are women, and the appointment of longtime gaming industry veteran Phil Satre as chairman. The company also named Matt Maddox as CEO.

“This is a case about one person’s misconduct and the alleged mishandling by a small handle of people,” attorney Greg Brower, the company’s outside legal counsel, told the commission. “None of those people are with the company anymore. In response to these allegations, the company did not run and hide. The company stepped up and faced the very ugly accusations.”

In a statement released following the hearing, Wynn Resorts said the 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.”

In addition to installing Maddox as CEO, and Ellen Whittemore as general counsel, the company named Marilyn Spiegel as president and hired Rose Huddleston to the newly created senior vice president of human resources.

The company also added several new policies, many of directed toward sexual harassment prevention. A compliance committee was created with numerous procedures to prevent any harassment allegation from going unchecked.

Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.