The Massachusetts Gaming Commission ruled Tuesday that Wynn Resorts can retain its state license to open a resort casino in Everett, while imposing a $35 million fine against the gambling giant for the actions of former executives who covered up sexual misconduct accusations against the company’s founder and former CEO, Steve Wynn.
The decision appears to lift a cloud of uncertainty over the company’s $2.6 billion casino, the largest single-phased private development in state history. The company’s Encore Boston Harbor resort is scheduled to open June 23 with a workforce of more than 5,000 people, and is expected to generate hundreds of millions of dollars in tax revenue.
The ruling follows a protracted investigation that began after the Wall Street Journal in January 2018 detailed sexual misconduct allegations against Steve Wynn, which he denied, and three days of hearings in early April. And it ends widespread speculation about how regulators might respond, which continued even as the trademark curved glass building became a fixture of the skyline.
The fine was far steeper than the $20 million penalty levied against Wynn Resorts by Nevada regulators in February, a record for that state.
“We are confident that we have struck the correct balance and met our legal and ethical burdens,” commission chairwoman Cathy Judd-Stein said in a statement.
In its 54-page written decision, made public at 6:45 p.m., the commission found that “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.”
The commission found that while “there was a lack of substantial evidence to disrupt the licensee’s suitability status, commissioners were profoundly disturbed by ‘repeated systemic failures and pervasive culture of non-disclosure . . .’ ”
Wynn Resorts chief executive Matthew Maddox will be fined $500,000, according to the decision. Maddox, along with all the company’s current crop of top leaders, is suitable to run a gambling company in Massachusetts, the commission concluded.
In a statement Tuesday evening, Wynn Resorts said it received the commission’s decision late in the day and would not comment before thoroughly reviewing it.
Maddox was elevated to CEO from company president after Steve Wynn’s resignation in February 2018. Under blistering questioning from commission members at a three-day public hearing in early April, Maddox maintained he was not aware of misconduct allegations against Steve Wynn. The commission’s investigators found no evidence that Maddox was among the former executives who helped cover up the allegations, but the commission decided that Maddox should have done more to investigate a complaint that came to his attention about comments Steve Wynn made to spa employees.
Wynn Resorts had defended Maddox, saying there was no evidence “he was aware of any of the allegations of sexual misconduct at the time that they were made to other executives.”
The commission also imposed several conditions on the license, including that Wynn Resorts pay for an independent monitor “to conduct a full review and evaluation of all policies and organizational changes adopted by the company.” The company’s board of directors must also provide training for Maddox in leadership development and other executive skills.
After some 15 months of investigations, hearings, and deliberations, the commission said it is now time to get the resort open.
“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,” the commission wrote. “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.”
The five commissioners also acknowledged that the company “has introduced a multitude of policy and organizational changes to address employee safety,” and that these changes “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 [Resorts] is likely to be a successful operator in Everett.”
The Everett resort is roughly 96 percent done, according to Peter Campot, director of construction. The company has spent more than $2 billion of its $2.6 billion project budget. About 800 constructions workers are working on site — down from a peak of more than 1,800 — now mostly handling the finishing touches, such as the final carpet installation, stone and tile work, exterior planting and landscaping, and punch-list items. The hotel tower and its 671 hotel rooms are close to finished. Much of the room furnishings and art has been installed, as well as the voice-activated systems that can control lights and drapes and other functions.
Campot said the goal is to finish work by June 1, so the building can be turned over to its managers to train the workforce before the anticipated opening.
Getting the workforce on board and trained will be one of the biggest challenges left before opening. The total workforce will be about 5,800, said Robert DeSalvio, the property’s president; the company has already made job offers to about 5,000 people. They need background checks and drug tests, some need licensing from the Gaming Commission. Employees need to be fitted for uniforms, to undergo general training, and then whatever training is specific to their position.
Before his fall, Steve Wynn was one of the most revered names in the casino industry, known as the visionary behind Vegas landmarks such as The Mirage (with its exploding volcano), Bellagio (where the dancing water fountains are still one of the most popular attractions on the Strip), and the high-end Wynn and Encore resorts. He was founder, chief executive, and chairman of Wynn Resorts.
In late January 2018, the Wall Street Journal reported that Wynn had been accused of a pattern of abusive behavior. Wynn quickly resigned, sold his stake in Wynn Resorts, and moved off company property in Las Vegas. The company’s board of directors launched an internal inquiry, and regulators in Nevada and Massachusetts began to investigate. Wynn, 77, has denied the allegations.
Massachusetts investigators delivered a scathing report, saying that some former Wynn Resorts executives, aided by outside lawyers, covered up allegations against Steve Wynn and created a culture in which employees were afraid to pursue complaints or thought that speaking up would be pointless.
The report found that in 2005, a manicurist at the Wynn Las Vegas alleged to management that Steve Wynn had raped her and she had become pregnant. The manicurist reached a $7.5 million settlement with Wynn that was “structured for utmost secrecy” and prohibited her from speaking about the matter, the report found. Several people told investigators that Steve Wynn paid the settlement himself.
Over the past year, the company made significant changes, turning over much of its board, removing executives accused of not following up on complaints, and instituting new training and policies.
Construction of the Encore Boston Harbor has been expensive and complex, beginning with an enormous excavation and environmental cleanup of the polluted site. On the day Wynn Resorts won the license, the price tag for the resort was pegged at $1.6 billion — about a billion dollars less than what the actual costs will be.
Just as construction seemed to be turning toward the homestretch last year, the Wall Street Journal’s revelations about Steve Wynn plunged it into uncertainty.