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Wynn Resorts’ Record Fine Leads A Momentous Month For The Gaming Industry

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(AP Photo/John Locher, File)

This June 17, 2014 file photo shows the Wynn Las Vegas and Encore resorts in Las Vegas, both owned and operated by Wynn Resorts.

There’s never a dull moment in the gaming industry, and the past few weeks have been no exception.

From record-breaking fines from the Nevada Gaming Commission and the cancer diagnosis of the Strip's richest magnate to the palace intrigue happening at two of the biggest names in gaming, it’s been a momentous winter for the local casino industry.

Wynn Resorts $20 million fine

“It was surprising to a lot of us in the room that watched. I think it was very surprising to the Wynn Resorts folks,” Howard Stutz with CDC Gaming Reports told KNPR's State of Nevada.

Stutz said that before the fine was announced Wynn Resorts had agreed to a fine and it was up to the gaming commission to decide what the amount was going to be.

“Wynn went in with their whole list of how they changed the company in the last 20 months or so since Steve’s downfall and all the allegations surfaced, all the changes in management, changes in policy,” he said.

He believes the company was hoping for a $2 million fine but the chair of the commission decided to quadruple the last record fine, which was given to CG Technology. 

While the gaming commission fined the company, Stutz said the whole thing is not entirely over.

“There may be some activity here in Nevada against Steve Wynn. They put his license on an administrative hold," he said, "So, there may be some type of disciplinary action brought there.”

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In addition, gaming regulators in Massachusetts still have to make their decision. Stutz said the company wants to pay that fine so it can move forward on opening the Encore Boston Harbor project.

Sheldon Adelson's battle with Non-Hodgkins lymphoma

“[Las Vegas Sands] were very cryptic about what was going on with Adelson,” Stutz said.

Suspicions started to rise when Adelson missed an earnings call in January, which is unusual for a CEO that is known for being as hands-on as Adelson. Stutz said reporters were told Adelson was "under the weather."

After the earnings call, the company said Adelson couldn't testify in a court case, which is when the company said he had cancer.

“Las Vegas Sands has said, ‘yes Sheldon Adelson is still serving as chairman and CEO but he is not overseeing the day-to-day operations of the company,'” Stutz said.

For now, the company is working along business as usual with longtime president Rob Goldstein overseeing day-to-day operations with the help of CFO and Adelson son-in-law Patrick Dumont.

MGM Resorts International introduces MGM 2020

“They believe this plan that they’re working on – MGM 2020 – will increase cash flow by about $300 million by the time this is over with,” Stutz said.

Already, there have been efforts to reduce costs at the gaming giant with some executives leaving and plans for some workforce reductions.

However, Stutz made it clear that the company was not struggling. Instead, it is investors who are guiding the company's decisions.

“These activist investors, what they’re saying is they don’t believe what management is doing is working. They want to go in and tinker with it and see if it can help make the stock go up even higher,” he said.

Stutz said that instead of starting a big fight with the investors, the company put some on the board of directors and is now working with them to decrease costs and increase stock price.

Carl Icahn makes moves at Caesars Entertainment

Speaking of activist investors, Carl Icahn has purchased large amounts of stock in Caesars Entertainment over the past couple of weeks, signaling some big changes for the gaming conglomerate. “We don’t know if it’s going to be a good thing because Carl Icahn has come in. He’s not an operator. He doesn’t want to own something and operate it. He comes in, makes an investment and then he wants to sell that investment for hopefully twice what he paid for it,” Stutz said.

Stutz pointed out that Icahn did the same thing at the Tropicana and at the Stratosphere. Caesars Entertainment stock is very low - under $10 a share. Icahn made a big investment in the company. He controls 15 percent or more of the stock. He has some of his people on the board of directors and if he doesn't like the new CEO the company hires, he'll get another board member, Stutz said.

“He’s said he either wants to sell the entire company or merge it with another company. The question is: Who could he merge it with?” he said.

There are some options for a merger but Stutz said any big move like that is far in the future.

Guests

Howard Stutz, executive editor, CDC Gaming Reports.

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