Massachusetts Gaming Commission Hopes Record $35M Wynn Fine Serves as Deterrent

The Massachusetts Gaming Commission came to a 54-page decision Tuesday to fine the Nevada-based company for allegations of sexual misconduct against its founder

The record $35.5 million in fines Massachusetts imposed on Wynn Resorts and its CEO reflect the many violations uncovered but are also meant to serve as a deterrent as the nascent state casino industry takes shape, Massachusetts regulators said Wednesday.

The state's Gaming Commission on Tuesday levied a $35 million fine on Wynn Resorts and another $500,000 on new CEO Matthew Maddox for failing to disclose years of allegations of sexual misconduct against company founder Steve Wynn. But the five-member panel allowed the company to retain its state casino license and open its $2.6 billion Encore Boston Harbor resort as planned in June.

"We do feel like that fine reflects the scope and multitude of the violations," Commission Chairwoman Cathy Judd-Stein said as the panel met in Boston the morning after delivering its long-awaited decision. "We were very mindful that it should serve as punishment to really address the violations. We also thought it was necessary to provide a message of deterrence to ensure future compliance."

The commission was focused on how long company officials were aware of the allegations and how they responded, rather than the truth behind the claims. Steve Wynn, who resigned as CEO last year, has denied the allegations.

The fines are due within 30 days and will be allocated according to the same formula all state gambling proceeds are distributed, she said.

That formula outlines 12 spending priorities, the largest of which are aid to cities and towns (20%), transportation (15%), education (14%), the state's reserve fund (10%), and state debt and long-term liabilities (10%).

And while there is no commission process for appealing fines, the company can seek a state court review, Judd-Stein acknowledged. Wynn Resorts said Wednesday it is still reviewing the decision and considering its next steps.

"We are confident that we have struck the correct balance and met our legal and ethical burdens," Judd-Stein added.

The fine is the biggest imposed by any state casino regulatory agency, commission staff and industry experts said. The Nevada Gaming Commission in February levied a $20 million fine on Wynn Resorts that was the largest imposed at the time, they said.

The $35 million will certainly affect the company's bottom line this year, but it's a relatively small sacrifice, said Richard McGowan, a gambling expert at Boston College.

"Yes, the fine will hurt," McGowan said. "But the fact that the casino is a $2.6 billion project kind of dwarfs the fine."

Commission members Wednesday declined to elaborate on how they arrived at the specific dollar value for the fine.

But WBUR reports $35 million represents about a month's worth of projected gambling revenues at the soon-to-open casino, based on state budget estimates. It's also equivalent to what the company, which also owns casinos in Las Vegas and Macau, generates in revenues companywide in less than two days.

And while the fine on Maddox, the company CEO, is also significant, the ultimate decision about whether he should continue to lead the company is up to Wynn Resorts' board of directors, not regulators, said Kabrina Krebel Chang, a Boston University business professor.

"Is a $500,000 fine and a requirement that he develop more effective leadership and communication skills and participate in sensitivity and implicit bias training enough to change his leadership and understanding?" she said, referencing other requirements imposed by the commission. "Time will tell."

Copyright AP - Associated Press
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