Steve Wynn is the subject of a formal Nevada Gaming Control Board (NGCB) investigation, as the state regulator confirmed this week that it’s reviewing the sexual misconduct allegations being made against the Las Vegas tycoon.
Steve Wynn continues to deny the sexual misconduct allegations being made against him, but gaming regulators aren’t simply taking his word. (Image: Jessica Rind/Getty)
Last week, the Wall Street Journal published a report with claims from numerous female Wynn Resorts workers that allege the billionaire sexually harassed them over several decades. One woman said she was forced to have sex with Wynn in 2005, and rumors surfaced that she was later paid $7.5 million to keep quiet.
The scandal has shocked one of Las Vegas’ most respected casino companies. And it’s prompting regulators from Nevada to Macau to review whether Wynn and his empire are suitable to hold gaming licenses.
On Tuesday, recently inaugurated NGCB Chairwoman Becky Harris announced that her Board would also be reviewing the allegations. “The Nevada Gaming Control Board will conduct its investigation in a thorough and judicious manner,” Harris noted in a statement.
Wynn Resorts stock has tumbled since the allegations broke last Friday. Shares have fallen from $200 to below $170 as of Wednesday afternoon, a more than 15 percent drop.
Penalties Significant
In addition to Nevada, gaming regulators in Massachusetts, where Wynn Resorts is building the $2.4 billion Boston Harbor, are investigating the accusations. And in Macau, where the gaming operator makes more than 70 percent of its revenue, officials are also looking into the sexual misconduct claims.
Steve Wynn has enjoyed a storied career, and is credited with resurrecting and expanding the Strip in the 1990s. The businessman also shifted Las Vegas towards a more luxurious high-end destination perception from its previous lower-brow vibe. Now the very town he helped build is investigating the merits of his continued business dealings there.
Disciplinary action, according to former NGCB Chairman AG Burnett, includes a six or seven-figure fine, plus the possibility of license revocation.
The investigation will determine if Wynn violated Nevada’s Regulation 5, which says all licensees must operate their casinos “in a manner suitable to protect the public health, safety, morals, good order, and general welfare of the inhabitants of the State of Nevada.”
The statute also mandates disciplinary action against those who “reflect discredit upon … the gaming industry.” Burnett told the Las Vegas Review-Journal there is no timetable as to when the NGCB investigation might conclude.
Taking Stock or Not
Wynn Resorts is coming off a great Q4 2017 performance, where revenues grew 335 percent to a net profit of $492 million. But the sex scandal engulfing Steve Wynn has now sent stocks reeling.
Investors and financial analysts are all over the map when it comes to trying to determine if the sudden drop creates a buying opportunity.
Standard & Poor’s Global Ratings downgraded the company to “negative” from “stable” this week. Union Gaming reduced it to a “hold,” while Deutsche Bank said the Wynn Resorts selloff is an “emotional response.”
Morgan Stanley believes the gaming operator could see earnings continue to rise, but added “management continuity is important.” CNBC stock guru Jim Cramer called Steve Wynn “one of the greatest executives of all time” this week, adding that “to be at one of his casinos is to feel like a king.”
Cramer says without Wynn’s leadership, the company is “just another casino chain with no leader,” and advised viewers to pass on buying shares.
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