The Indiana Gaming Commission has issued a fine of $150,000 to Boyd Gaming after the regulator established that the company did not reveal a former executive and license holder was under internal investigation. This is now a small setback for the company, which recently extended its reach in Louisiana.
Boyd’s Anti-Fraternization Rules Were Broken
As the order, which was approved at the commission meeting last Tuesday, states, the executive that was under internal investigation had a sexual relationship with another executive, which went against the company’s rules on anti-fraternization.
The issue was brought to light on June 23 the IGC was notified by Boyd that it made an agreement with the Pennsylvania Gaming Control Board for not letting the PGCB know about the issue at hand.
Even though the IGC didn’t reveal the identity of both executives in question, it did reveal that the male executive was Boyd’s secretary, general counsel, and executive vice president. A search of Boyd’s Securities and Exchange Commission disclosures revealed that Brian Larson was a perfect fit for the profile and he retired on the same day.
Larson’s retirement was reported to the IGC on December 16, 2019. He did hold a Level 1 license in the state but the report didn’t include any information on whether Larson was part of an internal investigation.
Hence, IGC’s order stated that the licensee did not report information that could question the Level 1 licensee’s sustainability to even hold a license in Indiana. Even though the male executive retired and in doing so, surrendered his license, that type of information should’ve been given to the commission and thus, allow it to conduct a comprehensive review.
The Internal Investigation Started in July 2019
On July 1, 2019, the board of directors of Boyd received a letter from a female executive that elaborated on the issue. Allegedly, the female executive was forced to be in a sexual relationship with the male executive, who was not named. That was enough for the company to form a special committee and investigate the issue.
The investigation ended in December 2019 and the claims were confirmed. The male executive was charged with violating Boyd’s anti-fraternization policies, which is why he was denied his annual cash bonus and career-restricted stock shares. However, the investigation did not succeed in determining whether the female executive was forced into the relationship or not. Boyd’s male executive ended up retiring on December 9.
According to the latest financial health report of Boyd, the company had a pretty strong Q3 as its adjusted earnings improved by more than 42%, which is much better than the 36.6% that was recorded in the same period in 2020.
In Las Vegas alone, the company’s revenue increased by 35% compared to 2020, and thanks to the great results, the company stated that it is ready to spend more money on its growth. However, with the latest developments, some of that money will have to go towards the fine as Boyd did not report the internal investigation.