Some advice for Wynn Resorts, as the company mulls its next steps in Massachusetts: Declare victory and move on.
The Las Vegas company hasn’t announced yet whether it’ll accept the punishment meted out by the Massachusetts Gaming Commission, which last Tuesday set a combined fine of $35.5 million on Wynn Resorts and its CEO for mishandling sexual misconduct allegations against cofounder Steve Wynn. The commission also attached some unusual conditions to the company’s license for their casino nearing completion in Everett. Wynn Resorts has the right to appeal the penalties — or even to walk away from the $2.6 billion casino project entirely rather than accept them.
But the bottom line is that the company gets to keep its license. The commission rightly called out CEO Matt Maddox for showing poor judgment and leadership in dealing with Wynn’s alleged sexual misconduct — but the regulator didn’t bring out its big guns by deeming him “unsuitable.” While the commission and Wynn executives may have been on tenterhooks for months, now they have a common goal of ensuring that Encore Boston Harbor is a success, creating thousands of jobs and generating millions of dollars for the company and the Commonwealth.
The monetary fine is something a global
multibillion-dollar company can stomach, but some of the conditions might be giving the executives agita. Among other directives, the Gaming Commission ordered Wynn Resorts to keep the position of CEO and board chairman separate for 15 years, hire an independent monitor, and provide executive coaching for Maddox.
With those conditions, the state is butting into management and governance decisions that companies prefer to make on their own. State regulators determine suitability — that is, are executives ethical enough to run a casino? — but the companies themselves judge the business competence of their executives.
Wynn Resorts could choose to fight some conditions as a matter of principle. They shouldn’t. Yes, these are unusual demands by the state. But they grew out of serious corporate lapses.
Wynn Resorts fell under scrutiny after a report in The Wall Street Journal last year of multiple sexual misconduct allegations against the company’s founder by Wynn employees, dating back to 2005. Wynn himself denies all wrongdoing, but the report raised troubling questions about the safety of the workplace for manicurists, waitresses, and spa workers. It also raised questions about why the company failed to investigate the complaints. And it raised the question of whether the company should have informed Massachusetts regulators of the allegations when it applied for a state casino license in 2013. There is a unequivocal public interest in ensuring that state licensees have and enforce clear sexual harassment policies, making Wynn Resorts’ conduct a perfectly legitimate target for investigation.
The state’s inquiry showed multiple failures on the company’s part. But it also acknowledged that Wynn Resorts was never specifically asked about sexual misconduct allegations during the licensing process.
Part of the problem at Wynn was its identity as a founder-led company: Steve Wynn had so much power that he seemed to operate above the company’s HR policies, unassailable by other executives. The company sometimes resembled a cult of personality, with top executives dutifully singing the praises of the man universally referred to as “Mr. Wynn.”
Since the Wall Street Journal article came out, Wynn has resigned from his namesake company and the new leadership has broomed every executive who knew about the allegations and failed to act appropriately on them. Under Maddox, Wynn Resorts swiftly implemented new sexual harassment policies and training and remade the nine-member board with four female directors.
Investigators found no evidence that Maddox knew about the specific allegations against Steve Wynn, though the commission did fault Maddox for failing to investigate one complaint involving spa employees.
Revoking the license entirely — a power the commission retains for all casinos in Massachusetts — would have been excessive, but the fines are tough enough to signal to the gambling industry in Massachusetts that it must take workplace safety and sexual misconduct seriously. Going forward, the commission can reinforce the point by specifically asking license holders and applicants about such allegations and any legal settlements stemming from them.
Wynn Resorts is a company undergoing tremendous culture change, shedding its origins as one man’s vision and becoming a more conventional corporation. The conditions announced on Tuesday should help that transition. While Wynn Resorts might feel constricted in the short term, paying the commission’s fine, agreeing to its conditions, and opening its Everett casino on schedule on June 23 would be the best outcome for its workers, the state, and the company itself.