Crown Resorts Buyout Partner Maintains Gaming License
Wynn Resorts, which earlier this month made a buyout offer to Crown Resorts, maintained its Massachusetts gaming license on Tuesday. At the same time, the Massachusetts Gaming Commission issued a record $US35 million fine. The MGC fined Wynn CEO Matt Maddox $500,000 for his role in a coverup.
Andrew Orbach, a gaming analyst for Taylor Collison, said Wynn’s victory in Massachusetts clears the way for an Australian deal with Crown Resorts. Orbach said, “If Wynn wants to proceed with its Crown purchase it is unlikely to have any problems with Australian regulators.”
The Taylor Collison analyst added that Wynn Resorts would have to come to deals with each of the Australian state governments where Crown has casinos. At present, those would be Victoria, New South Wales, and Western Australia.
Mr. Orbach added that the decision helped Wynn if it tried to buy Crown Resorts using equity. In the original A$10 billion offer, half of the deal was in cash and half was in Wynn shares. Keeping its Boston casino license means Wynn shares are worth more, so the buyout offer would be worth more to shareholders.
Orbach said, “If you’re a Crown shareholder and you’re going to end up with Wynn scrip, you want to make sure there’s no overhang. So in that sense, it gives some clear air.”
Encore Boston Harbor
The fine brings to an end a year-long controversy of the Wynn board’s role in the Steve Wynn sexual harassment and misconduct cases. Wynn was in the crosshairs of the MGC because of its US$2.6 billion Boston casino, Encore Boston Harbor.
Wynn plans Encore Boston Harbor’s grand opening in mid-June, so this week’s ruling clears the way for the opening. Had its license been pulled, Wynn Resorts would have sold the casino at a cut-rate price. Wynn would have sold Encore Boston Harbor in a fire sale to recoup money, though. Now, Wynn Resorts is set to open a first-ever legal casino in the Boston area. It should be hugely lucrative.
The decision goes beyond that, though. Had US state leaders stripped Wynn Resorts of its license, it would have hurt the company in other jurisdictions.
Massachusetts Gaming Commission Probe
Last May, Massachusetts regulators announced a probe into the board’s actions over a 13-year period. The probe focused on 13 current and former Wynn Resorts leaders. Investigators studied charges by Steve Wynn’s estranged ex-wife, Elaine Wynn. Specifically, the MGC studied whether the board ignored the former CEO’s misconduct over the years. At heart of the charges were a 2005 case, in which the board approved a $7.5 million settlement with a former employee who alleged Steve Wynn assaulted and impregnated her.
Earlier this month, the MGC held three days of hearings in which Matt Maddox, Elaine Wynn, and a series of Wynn execs discussed their role in the scandals. During that time, the Boston Globe and Boston Herald each ran op-ed pieces calling for Matt Maddox to resign. One influential pundit called for Elaine Wynn to sell her shares of Wynn Resorts.
Matt Maddox Receives $500k Fine
At the time, Matt Maddox assured regulators he had purged the company’s board of Steve Wynn allies. He pointed out that he brought on a respected former Harrah’s Entertainment chief executive as Wynn presidents. Maddos also added three female outside directors. Wynn Resorts claimed Maddox had “refreshed” the board.
Part of their PR effort was to note all members of the board (but one) who covered up Steve Wynn’s misconduct were no longer connected to the company. Columnists pointed out that Matt Maddox was the lone board member who remained from the Steve Wynn era.
Matt Maddox stays on in his position, but he received a remarkable $500,000 fine. In US gaming oversight, companies often receive fines, but executives rarely do.
Wynn Resorts US$55 Million in Fines
Overall, Wynn Resorts sustained $55 million in fines in the past three months. Earlier this year, the Nevada Gaming Commission fined Wynn Resorts $20 million, which was over three times the previous record fine.
Nevada regulators released a report in which it pointed to 10 cases of misconduct by the Wynn board. Many of those instances involved ignoring or covering up alleged misconduct by Steve Wynn. Nevada alleged the board members fostered a hostile work environment by allowing sexual harassment to go unchallenged.