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.
Original link:
Roll On: MGC Clears Wynn Resorts