Wynn 1, Massachusetts casino regulators 0
Not to worry, Massachusetts legislators said in 2011 when they legalized casino gambling in the Commonwealth: The state could have Las Vegas-style casinos, but without Las Vegas-style regulation, where deference to a powerful industry is the norm.
But as Massachusetts is learning, what happens in Las Vegas doesn’t always stay there. When casinos come to town, protecting jobs and the tax windfall associated with them becomes the priority, no matter what the cost to integrity and transparency. That’s shaping up to be as true here as it has been in Nevada.
What else can we conclude from Wednesday’s disappointing decision by the Massachusetts Gaming Commission? First, the commission, headed by new chair Cathy Judd-Stein, met for a five-hour closed-door executive session. Then the panel voted swiftly, unanimously, and without explanation, to authorize their lawyers to settle a lawsuit filed against the commission by former Wynn Resorts CEO Steve Wynn.
The deal will mean that parts of the commission staff’s probe into Wynn Resorts will remain secret — even to commissioners — and will turn the board’s eventual ruling on Wynn Resort’s fitness into a farce.
When the agreement is finalized, there will be adjudicatory hearings — based on a redacted version of the investigation — to officially determine the company’s suitability to keep its license to operate Encore Boston Harbor, a casino scheduled to open in Everett in June. The smart money is betting that in the end, Massachusetts will do what Nevada did: Fine Wynn Resorts but let the company operate its casino here.
Yes, there are thousands of jobs on the line, and millions in tax revenue that the state can’t wait to get its hands on. But the commission should have held out and insisted on seeing the full report.
Last year, The Wall Street Journal reported on sexual misconduct allegations against Wynn, the company’s founder and former head. The report raised obvious questions for regulators in both Nevada and Massachusetts: Did company executives know about Wynn’s conduct and, if so, does that affect their suitability to hold a casino license in Massachusetts?
Nevada’s investigation ended in January, when Wynn Resorts paid an unspecified amount to settle an investigation by Nevada regulators. The 22-page Nevada report detailed multiple examples of Wynn employees being coerced into sex or being sexually harassed by Wynn, including one employee who received a $7.5 million settlement in 2005. That report also concludes that Wynn executives knew about their CEO’s behavior but did nothing. But the Nevada Gaming Control Board bought into the premise that with Wynn gone from the company (he resigned after the allegations came to light) and a reshaped board of directors put in place, Wynn Resorts is suitable to do business there.
Massachusetts had its own investigation. But Wynn felt it was going too far. Last fall, Wynn, who denies all the allegations, filed suit in Nevada against his former company and the Massachusetts Gaming Commission for using what he said were privileged attorney-client communications to investigate the allegations and write a report about them.
With the settlement, it’s clear that Wynn’s legal ploy to keep the full story out of the public domain worked.
Only two people from the original Wynn Resorts license application remain as “qualifiers” who must pass review by Gaming Commission investigators. One is Elaine Wynn, the ex-wife of Wynn, who is now the largest private shareholder. The other is Matt Maddox, the current CEO of Wynn Resorts, who had worked at Steve Wynn’s side since 2002.
What Maddox and Elaine Wynn knew, and when they knew it, are critical issues that should be fully and publicly addressed — no matter how many jobs Wynn Resorts holds out as bait in Everett.