News - May 8, 2018 - by Ray Hagar
By Ray Hagar
Former Las Vegas gaming mogul Steve Wynn is facing the 'no-escape clause' of Nevada gaming law, two gaming experts said on Nevada Newsmakers.
Wynn has resigned as chairman and chief executive of Wynn Resorts and has sold all stock in the company, in the wake of decades-long sexual misconduct charges against him, first reported by the Wall Street Journal.
Gaming regulators in Massachusetts have dropped Wynn's name from Wynn Resorts Boston gaming license after Wynn severed all ties to the company he founded.
In Nevada, however, despite losing his job, stock and status as the international gaming company's leading stock holder, there is no way for Wynn to get out of investigators' way.
"There is no escaping," said Sean McGuinness, partner, Butler Snow, who specializes in gaming law.
"The joke among gaming lawyers is the Gaming Control Act is a full employment act for lawyers and accountants," he said. "But it is a little bit like that, he said.
"When you are in their (Nevada gaming regulators) jurisdiction, you are in their jurisdiction. And that is pretty much where he finds himself," McGuinness said.
Despite his resignation and divestiture of stock, Wynn is still subject to punishment and hefty fine in Nevada, technically, because still holds a gaming license, experts said.
Wynn would probably not be allowed to just give up the license to avoid issues with gaming regulators, said former Gaming Control Board Chairman A.G. Burnett.
"More than likely, the board would not accept that surrender," Burnett said. "The board would maintain its jurisdiction by not allowing any surrender to occur. That way, he is still a current licensee until that investigation can be completed."
Even if gaming regulators allowed Wynn to surrender his Nevada license, he would still be on the hook because the sexual allegations allegedly occurred when Wynn was a licensee, leading Wynn Resorts, McGuinness said.
"Even if Wynn surrendered his license, he would still fall under discretionary jurisdiction with the gaming authorities," McGuinness said. "The actions (of sexual misconduct) that are in question took place while he was in a mandatory licensing setting, so ostensibly, the gaming jurisdictions would have jurisdiction over him for what he may have done at that time.
"You would not want a scenario where someone who had a license did something, committed a regulatory violation and then just said, 'Oh I am resigning and selling my shares so you can't do anything to me. That doesn't work with the way the gaming acts work."
Burnett said investigators in Nevada will be looking at Wynn's actions and the subsequent actions of Wynn Resorts leadership.
"In this case, that investigation probably revolves around two things: One, Mr. Wynn individually and how he conducted himself and; Two, the business, the corporation. There will likely be a vetting of that as well."
Elaine Wynn, now the largest shareholder, said in a recent letter to shareholders that she believes some members of the board of directors could be implicated by the Massachusetts Gaming Commission’s investigation into sexual harassment within the company.
Institutional Shareholder Services -- one of the world's leading independent proxy advisor firms, has recommended that Wynn shareholders "withhold" votes from legacy director nominee John Hagenbuch at the Company's annual meeting on May 16.
Hagenbuch, a friend of Steve Wynn’s, is one of three directors up for re-election this year, according to reporting by Todd Prince of the Las Vegas Review-Journal.
Investigators will probably look at Wynn's behavior because of "Regulation Five" of Nevada gaming law, Burnett said.
"Regulation Five 5 talks about operations of gaming establishments and acts by licensees that go against the moral health, safety and welfare of the state of Nevada, and that if it can cause disrepute to the state of Nevada or the gaming authority, " Burnett said. "Those are the kinds of things they will look at, to see if his actions -- or anyone's action under those circumstances -- cause disrepute to the licensee, to the operation of gaming and regulation of gaming."