Question of the Day - 08 December 2020

[Editor's Note: This answer is provided by David McKee.]

Stranger things have happened but, no, probably not.

First things first, it isn’t that Elaine Wynn cannot be on the Wynn Resorts board, it’s that — at age 69 — she’s bumping up against the corporation’s prohibition on casino board members being 70 and older. Now, you can apply for a waiver of that rule, which Ms. Wynn did. However, she apparently had a change of heart and withdrew her application. As Global Gaming Business put it, “For the first time in its history, Wynn Resorts will not have someone named Wynn on its board.”

Ms. Wynn remains a force within the company, however. With nine percent of WYNN shares, she is the single largest shareholder and thus in a position to still influence Wynn Resorts’ future. While she could always sell that stock, there is no indication that this is in the offing and the Wall Street analysts I contacted didn’t want to speculate on the matter.

She certainly has more power than ex-husband Steve, who has nary a share in the company and would have to be (among other planetary alignments) licensed in Nevada as a gaming executive of suitable character. But that is highly unlikely for the 78-year-old Wynn, who now lives in Palm Beach, Florida.

Columnist, former regulator, and one-time casino executive Richard Schuetz showed uncanny prescience when, opining on the case in January, he wrote, “The only question that remains is how much time and money will be wasted before someone sane stops this Moby Dick-themed epic being fueled by chairpersons [Sandra] Morgan and [Tony] Alamo. My goodness, there is a huge probability that by the time this case is resolved, neither of them will even be in their existing positions.” True that. Morgan and Alamo were gone before the court ruled in the Steve Wynn matter.

Had the Nevada Gaming Commission gotten its druthers, Steve Wynn would have been fined and proactively barred from gaming in Nevada, ever. This punishment was deemed a bridge too far by Clark County District Court Judge Adriana Escobar. Her decision boiled down to the fact that Wynn was no longer involved in any way in the Nevada gambling industry, putting him beyond regulatory punishment. Or in Escobar’s words, “Because [he] has no material involvement, directly or indirectly, with a licensed gaming operation, this court finds that respondents have no jurisdiction to impose discipline or fines against him.”

Escobar elaborated, “Importantly, [regulators] fail to support their position that they have jurisdiction over a person with no intent to be involved in Nevada’s gaming industry in the future. Why? There is none. In fact, the Commission conceded that Respondents have never sought to investigate, discipline, or fine a person that has completely divested themselves of the gaming industry with no intent of returning prior to the Board’s filing of this underlying complaint.”

Still, Silver State regulators may not be done trying to sanction Wynn. Their official reaction to the ruling was a curt, “The Nevada Gaming Control Board is reviewing the substance of the court's ruling, and, in consultation with its attorneys, will make decisions regarding its next steps soon.”

However, I. Nelson Rose, one of the world’s foremost authorities on gaming law, writes, “The court’s decision is consistent with the way most regulatory bodies work. Regulators can only fine or otherwise punish people who fall within their jurisdiction. So, Nevada regulators only have this type of direct power over individuals who are licensed or have at least applied for a license. Once those individuals are no longer licensed, they fall outside the regulators’ jurisdiction.”

So what can the NGC do? “Once wrongdoers resign, the only way to go after them is through civil lawsuits by their victims or criminal prosecutions. But both may be barred by statutes of limitations.”

That being said, the Nevada Gaming Control Board’s enforcement procedures are not hamstrung by Escobar’s ruling, says Rose. “Nevada’s Black Book would not be affected by this decision. Similarly, Nevada regulators can declare individuals undesirable and prohibit casino licensees from doing business with them. These are done to protect the industry and are not considered direct punishments." 

So it seems that Wynn's options in Nevada are slim to none. It's rumored that he's considering building a casino-resort in Macau. But except for Elaine’s stock, Wynn Resorts is “Wynn” in name only now.