After Steve Wynn’s recent resignation from his various officer and director positions at his name sake company, I was asked “why the various regulating bodies would even bother to investigate the various allegations around Mr. Wynn if he resigned from the company” and separately “why didn’t the regulators know about these allegations earlier?”
First off, while Mr. Wynn has resigned his positions he still owns or controls more than enough stock to require a Nevada gaming license. In Nevada, not only does a person need to be licensed if they are in a key management, officer or board of director position but also if they, in general, own or control more than 5% of a publicly traded gaming company, which Mr. Wynn most assuredly does.
There is also another oddity in Nevada gaming license regulations, you can not simply quit a gaming license, you need to request a withdrawal of a gaming license application, which requires the approval of the Nevada Gaming Commission on recommendation of the Nevada Gaming Control Board.
Toss in that the United States Securities and Exchange Commission frowns on large shareholders deemed insiders dumping stock, even if Mr. Wynn wanted to quickly get rid of his Nevada gaming license he would need time to gradually reduce his shareholdings to a point such that a license was not required and request the Control Board and Commission allow him to withdraw his gaming application.
So, while resigning his positions took pressure and attention off the company, it did not void the attention from the gaming regulators nor make all his gaming license obligations go away.
In some ways, if Mr. Wynn is truly innocent of the allegations, having the Control Board do a complete investigation would have benefits. Unlike police and other governmental bodies that have limitations in how far they can investigate someone, particularly in a civil matter, to apply for a Nevada gaming license an applicant basically comes about as close as you can get to surrendering their civil rights and fundamentally opens their entire life to the scrutiny of the investigators from the Control Board.
Having held multiple gaming licenses myself I can assure you they are quite exhaustive in their examination, including not only full background investigations but examining all financial transactions, and I mean all, including each and every check written, account transfer, stock sale, stock purchase, partnership, etc., following every dollar, looking for any hint of undisclosed interest or activity – legitimate or otherwise.
As their examination is so exhaustive a clean bill of health usually means something and carries great credibility, so if Mr. Wynn is good to his word about his innocence their examination should be a welcome event toward his desires for exoneration of reputation.
The depth of the Control Board investigations also begs the second question referenced above about “why didn’t the regulators know about these allegations earlier.” Who said they didn’t? Due to the private and secretive nature of the investigative division of the Board we may never really know what they did and did not know, unless of course the current Board and Commission decide to share details of past investigations.
It is hard to believe, given the depth of their license investigations, the allegations of actions and settlements would not have been found during the licensing of the Wynn Resort. Perhaps they were aware, and simply decided the economic benefits of Mr. Wynn’s efforts exceeded any negative concerns such as has been done with other people with other issues, or they simply at the time did not find anything and so to them there was nothing to then be concerned about at that time.
Normally the Gaming Commission and its subordinate Control Board like to stay out of addressing or getting involved in civil disputes involving gaming licensees. Perhaps that is why they seemingly did not pay the same attention to the legal battles between Elaine and Steve Wynn as the Wall Street Journal did and which triggered the very public exposure and interest in the allegations against Mr. Wynn. Given what has since come out from the Wynn case and other current ongoing civil cases with lesser publicity that practice may now be changing.
What current and future gaming licensees – especially those with skeletons, big or small, in their closet – should be paying attention to, is that civil and non-prosecuted criminal claims that slipped past the statute of limitations, no matter how many years old, that may or may not have been previously considered by past Control Boards may not be truly closed issues but subject to being revisited and reconsidered both in the court of public opinion and by now embarrassed regulators.