Top Boardrooms For 2018 Gaming

The gaming industry is one of the most regulated companies in the world. With a colorful past, the industry has made every effort to earn a reputation as 'squeaky clean'. But has this translated into the boardroom and corporate governance in general?

We think so. Casino Journal and AETHOS Consulting Group have been analyzing management practices for more than ten years; gambling companies judge how well they are organized, managed, communicate with shareholders and pay themselves and executives. In this annual study, five categories are assessed and assessed:


This year's study included 26 companies that have significant business interests in the gaming industry. Of those 26, MGM Resorts took first place for a fourth year in a row and received 38 points. In particular, MGM led the board of directors on diversity, committee activity, performance appraisals and communication with shareholders. Interestingly, MGM Growth Properties, the MGM spin-off, received only 27 points and has a way to match the parent organization.

Meanwhile, last year Penn National jumped from the eighteenth to second place in this study with strong upward trends in board make-up and executive pay practices. Rounding off the top five boards were Everi, Gaming & Leisure Properties and Wynn Resorts.


In determining the effectiveness of the size and composition of the management of a company, we looked at six characteristics: total number of board members, duration of the term, the background of the chairman, the presence of a principal director, the ratio of insiders and outsiders on the board and the diversity policy of the board.

Total Number of Board Members: a board must consist of an odd number of members between five and eleven; a range that most experts consider optimal. We discovered that 15 of the 26 companies have an odd number; still leave 11 companies outside the norm in this area. Why more companies do not solve this is difficult to quantify.

Duration of The Term: Board members must be elected annually instead of a staggered multi-year term. Staggered terms is a strategy for dealing with activist investors. Unfortunately, drivers can also become entrenched and complacent when it comes to activism. Twelve companies had multi-year durations or nearly half of the industry. This is another easy solution if shareholders demanded this.

Characteristics of The Chairman: in the vicinity of today the chairman must be an independent director. There is only one reason why a CEO wants to be chairman, and that is the consolidation of power. Our democracy is based on power relations and when that is out of balance, bad things can happen. The responsibilities of the chairman and the CEO are just different and must be treated as such. Nineteen gambling companies of the 26 respondents had an internal chairman role. We suspect that most of these companies will have an independent proposal from the chairman next year in their proxies.

Principal Director: when a board of directors allows an insider as chairman, they must at least appoint an independent leader. Nine of the 19 companies with an inside chairman had a lead director. A step that the other 10 should think about.

Relationship between Insiders and Outsiders: boards of directors must have a vast majority of independent board members. Only eight companies in gaming had the vast majority of independent directors. There is still too much fun in the boardrooms of gaming companies.

Diversity: companies received points through a formal policy on gender and racial diversity. We believe that diversity in the board of directors is both socially responsible and good for business. Only MGM, Carnival and Boyd met all these criteria.

Committee Structure

The SEC stipulates that public companies must have the following four committees: audit, compensation, governance and nomination. Nine companies achieved a full score in this area, meaning that they had all four committees, had an official charter, were composed of all independent directors and met at least four times a year.

Transactions with Related Parties

If you want to sit on a board, do not do business with the company. This rule should be easy to follow, but 15 gaming companies had a form of transactions with related parties.

Evaluation and Communication

Issues relating to the effectiveness of internal management activities, management review and shareholder accessibility were measured in this section. Five companies received full scores in this area compared to only MGM Resorts last year. The best way to keep shareholders happy is to communicate with them.


The final part of our survey focused on how the CEO and the board are paid. This is the subject that the media likes to focus on. In reality, most gaming companies are doing well in this area. More transparency on how a gaming CEO is evaluated and paid is very clear. Many gaming CEOs earn significant amounts, but they also have large, highly profitable companies. The real issue that shareholders must look out for is the measurement criterion for reward, not just the amount of the reward.