Roll On: MGC Clears Wynn Resorts

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.

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New Wynn CEO Maddox Ready to Lead Wynn Organization, Wynn Boston Harbor

New Wynn CEO Maddox Ready to Lead Wynn Organization, Wynn Boston Harbor

Matt Maddox has been no stranger to the Everett casino, and above anyone else, the new CEO of Wynn Resorts – which includes Wynn Boston Harbor – is probably the one person most responsible for bringing the $2.4 billion resort casino across the Mystic River to Everett.

It was Maddox, who last month became the CEO in the wake of the sexual misconduct allegations against former charismatic CEO Steve Wynn, who happened to see a small news clipping in his e-mail talking about a potential casino site being touted to Hard Rock Casino developers in Everett.

Fresh off a humbling casino proposal loss in Foxborough, the Wynn organization had pulled out of Massachusetts. As the story is told, though, Maddox hadn’t removed the Boston news alerts from his computer.

So it was he saw that little story about Everett that piqued his interest about another run at a Boston casino.

A phone call to Steve Tocco of Mintz Levin, and then a few phone calls around Everett, and shortly after that Maddox was taking a walking tour of the site, which he was very excited about. Soon after that, Steve Wynn and Maddox were sitting in Everett Mayor Carlo DeMaria’s office at Everett City Hall.

The rest, of course, is history.

Maddox has rarely told that story, but it’s one that has become more appropriate for the Wynn Boston Harbor venture as Maddox, 42, has now taken charge of the Wynn company.

According to a biography provided by Wynn, Maddox grew up in a very small town in Arkansas with a  population of just over 5,000 people. With a keen interest in investment banking since he was a small child in Arkansas, Maddox pursued that career early in life and worked for Bank of America and, later, for the predecessor of Caesar’s Entertainment.

That job caught the eye of the Wynn team, who formed Wynn Resorts in 2002 and made Maddox one of their first hires. He served as treasurer and vice president of investor relations when he came to Wynn, with one of his first tasks being to secure the financing for the Wynn Las Vegas project.

However, his claim to fame with the company was forging a path in Macau to secure a casino property there – a property that has become a major revenue source for the company.

“Maddox was among the first of the Wynn executive team to relocate to China in 2003, becoming the Chief Financial Officer of Wynn Resorts Macau,” read the company bio. “During his three years in Asia, he was a key leader on the pre-opening team that built the organization from ground breaking through the resort opening in 2006. The resulting Wynn Macau has proven to be one of the most successful integrated resorts ever created, and remains the only resort in the world with eight Forbes Five Star awards. In 2005, Mr. Maddox was named Senior Vice President of Business Development for Wynn Las Vegas, and later for Wynn Resorts.”

In 2013, after being promoted to president and chief financial officer, he focused on China once again and led the financing for the $4.2 billion Wynn Palace in Cotai. That hotel has also won awards from Forbes and has more than 1,000 rooms.

Last month, during the scandal that rocked the Wynn empire, Maddox assumed the duties of CEO of the company from Steve Wynn, who resigned his position. The Massachusetts Gaming Commission (MGC) continues an investigation into the suitability of the company, as well as who knew about settlements and payments made by Steve Wynn for alleged sexual misconduct in 2005.

Maddox told the Boston Globe in a recent interview that he did not know about the settlement allegations during the vetting process in Massachusetts, and said the company has an investigation going on right now that is looking into who knew what and when.

Maddox has not been available to local reporters, but in an interview with the Boston Globe, he affirmed his support for Wynn Boston Harbor, and also said that the Wynn company is more than one person.

“Wynn is not about one person, it’s not about management, it’s about the 25,000 people that work here,” he told employees recently during a meeting following the fallout, according to Wynn.

He told the Globe that they are still committed to the Boston project fully, and have no intentions to sell it off to another developer.

“Absolutely,” he told the Globe. “We have spent $1.3 billion out of $2.4 billion [budgeted for Everett]. There are between 1,200 and 1,400 construction workers on site every day. I’m telling you, this is going to be the nicest integrated resort in the Northeast. It will have the biggest ballroom in the Northeast, 671 hotel rooms, 13 food and beverage outlets. It’s full steam ahead.”

Another hot topic has been the name of the property. While many believe that the Wynn brand name is now tainted beyond repair, Maddox told the Globe emotions are too raw right now to make that kind of game-changing decision.

“Emotions are so raw right now around this topic,” he told the Globe. “What I’m telling people is you don’t look at those things right now in this state. Because Wynn is a brand — it’s not about a person, it’s about the 25,000 people that work here. Our Chinese customers — we had one of our biggest Chinese New Year’s ever last week — they understand the Wynn brand. They don’t associate it with a person; they associate it with luxury and with service and with first class.”

Finally, he told the Globe that the Everett casino will still have the luxury cache that all Wynn properties have, even without the personal touch of Steve Wynn.

He told the Globe that Roger Thomas has been the company’s chief designer for several years, and Steve Wynn had not been involved at the detail level for some time. The last two casino openings, Maddox said, have been handled chiefly by Thomas.

“Roger is the author and Steve was always the editor,” Maddox told the Globe. “Steve had very clear ideas about how he wanted to do things. But Roger is the person — along with his quite large team — who specifies where we get the granite. Steve Wynn — he is a visionary. It is a fact. You can look up and down Las Vegas. But we have people who have worked on all these projects, in the design, conception, and execution, for over 30 years. There are no better-trained people in the world to execute new projects. We’re the ones who have done it.”

Maddox is expected to travel to Everett to take a tour of the resort casino project in the next month or so.

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