Here’s the state’s dilemma: Massachusetts is counting on the $2.6 billion Encore Boston Harbor casino rising on the banks of the Mystic River for jobs, tourism, and a bonanza of tax revenue. At the same time, it’s also counting on the state Gaming Commission to uphold the integrity of its strict casino rules and a rigorous licensing process that was supposed to keep a notoriously shady industry on the straight and narrow.
How the five-member commission juggles those two responsibilities faces its biggest test yet, as the panel agonizes over whether the Everett casino’s owner, Wynn Resorts, is still suitable to operate the facility in light of the way the company handled egregious sexual misconduct allegations against its founder and former CEO, Steve Wynn. Also up in the air: whether its top executives and shareholders can remain “qualifiers” under Massachusetts law, a designation that allows them to hold casino leadership positions.
Under state law, gambling licensees have to be cleaner than a whistle. The commission considers the license a “revocable privilege” — and it can revoke the license for just about any reason. A decision is expected soon.
Massachusetts isn’t the first jurisdiction to confront these questions, which arose from an explosive Wall Street Journal investigation, published last year. Regulators in Nevada, where Wynn operates its flagship casino, have already finished a similar review, fining the company $20 million but allowing the company and its executives to keep their licenses. Wynn denies any nonconsensual sex but nonetheless left his namesake company last year in the wake of the article’s publication.
All of the executives known to have mishandled the multiple sexual misconduct allegations have resigned or been fired, and the company has remade its senior leadership and board. The drastic step of revoking the casino license, Nevada decided, would be excessive.
The Massachusetts Gaming Commission, which conducted its own investigation, shouldn’t revoke the casino license here either. If the company were unrepentant and unreformed, no amount of lost tax revenue or jobs would be enough to save them. But that’s not the reality. With two exceptions — more on that later — the company has severed ties with its past.
Nor would it be fair to revoke the license because the commission wasn’t informed of sexual misconduct allegations when Wynn initially applied in 2013. With the benefit of hindsight, the company agrees that the (now former) executives who knew about them should have informed the commission, since these allegations against the company’s founder bear on the organization’s character and integrity.
But there’s also no indication that the commission asked Wynn about sexual misconduct allegations back then. The background investigation at the time was focused on issues such as organized crime and finances. We’ll never know what might have happened if sexual misconduct allegations had been one of the subjects of the commission’s investigations in 2013.
Revoking the license would also put the state in uncharted territory: The casino would remain Wynn’s property, and it presumably would have to find a buyer (or battle the commission in court). How that would play out, and how it would affect the property’s financial viability and thousands of employees, is anyone’s guess.
The casino is scheduled to open June 23 — it’s already taking hotel reservations — and the commission should allow it to open on time, under its current ownership and local management team, with payment of a large fine that should be put to an appropriate use to combat sexual misconduct in the workplace.
The question of the two holdovers from the Steve Wynn era is murkier. CEO Matt Maddox was Wynn’s right-hand man. The single largest shareholder is Elaine Wynn, his former wife. While the rest of the company’s old leadership has been sent packing, the two of them remain. In terms of optics, the company would definitely look better if these two reminders of its tumultuous past were gone. The company’s revamped board of directors could end that drama by firing Maddox and forcing Elaine Wynn to reduce her ownership stake, but has chosen not to.
In Elaine Wynn’s case, she is the only qualifier left who withheld information from the commission, although she had an understandable reason. She learned about one of the allegations against her husband a few years after the fact, but did not inform the company’s board. She did tell the company’s general counsel at the time, which, based on the advice of her lawyer, she believed fulfilled her responsibilities. Later, when Wynn Resorts was up for the Massachusetts license, she did not tell regulators about the allegation.
In contrast, the commission could find no evidence that Maddox knew. That conclusion raised some eyebrows: How could Maddox, who had been the company’s chief financial officer as well as a member of one of Steve Wynn’s wedding parties, possibly have been unaware of the allegations and settlements? Maddox’s stumbling appearance before the Gaming Commission earlier this month certainly didn’t help his standing. He seemed unable to answer basic questions. In the absence of evidence that he withheld information in the past, though, the case against Maddox is that he may not be the ideal CEO at the moment.
The Wynn board feels that whether Maddox is a good leader is a business decision for them to make, not a legal question of suitability. But if he’s unable to implement the new sexual harassment policy — he couldn’t recall its details at the hearing — that does affect the broader suitability of the company.
If Wynn Resorts were unrepentant and unreformed, no amount of lost tax revenue or jobs would be enough to save them. But that’s not the reality.
Ultimately, though, the law says “substantial evidence” must support the revocation of suitability, and that doesn’t exist for either Elaine Wynn or Maddox. But it has other options under the gaming law; for instance, the commission could levy a fine on individual qualifiers or impose conditions. In the case of Maddox, it could also send the message, whether called probation or a warning, that his suitability is on the line when it comes to the company’s ability to implement and enforce sexual misconduct policies. The commission should make Maddox go through another public hearing in a year. There’s a chance for Wynn Resorts to become a model for how an organization handles sexual misconduct complaints. The company is proposing to file a quarterly report to the commission cataloguing reports of sexual assault and harassment made by a Wynn employee. The commission should then make that document public.
There is no resolution to the Wynn case that’s going to satisfy everyone, and for gambling skeptics, the whole saga has reinforced doubts about the wisdom of allowing casinos in the first place. The Commonwealth must keep up its vigilance to monitor the positive and negative impacts of gaming — not just economic gains but also social ills.
As for the suitability of Wynn Resorts, the evidence gathered by the investigation isn’t damning enough to apply the corporate death penalty. A sizeable fine for the company — and some kind of personal consequences for two of the qualifiers — would best balance fairness, accountability, and the state’s desire to keep the casino on track.