Wynn Resort could sell Encore Boston Harbor just weeks after it was allowed to keep its license in the lucrative Greater Boston market
Wynn Resorts has been in talks with rival Las Vegas casino operator MGM Resorts International to sell its Encore Boston Harbor to the latter, the two companies said in a joint statement on Friday after word about such discussions possibly taking place spread earlier this week.
The full statement released by the two casino and hospitality powerhouses read:
Over the past several weeks, we have engaged in conversations around the potential sale of Encore Boston Harbor. They are very preliminary and of the nature that publicly traded corporations like ours often engage in, and in fact when opportunities such as this are presented, we are required to explore. We cannot say today where these conversations will lead, however we can reaffirm our commitment to the communities where we operate today.
The discussed sale of the Greater Boston property, which is slated to open doors at the end of June, to MGM quickly raised questions what is going to happen with the company’s resort in Massachusetts – MGM Springfield.
Under state law, an operator can run only one casino on the territory of Massachusetts. If Wynn and MGM agree on a transaction, the latter will most certainly need to sell the $960 million MGM Springfield resort which it launched last summer in downtown Springfield.
Wynn went through fire and water to keep its license for a casino resort in the lucrative Greater Boston area after the Massachusetts Gaming Commission launched an investigation into the company and its top executives. The probe was prompted by the publication of a devastating Wall Street Journal report that detailed a decades-long pattern of sexual misconduct by its former CEO Steve Wynn.
MassGaming wanted to know whether the company and its management had any previous knowledge of the sexual misconduct allegations leveled against its ex-boss and how those were addressed.
Gaming Commission Slaps Record Fine
The gaming regulator’s investigative team spent long months probing into the matter and trying to discover whether members of Wynn’s upper management team had any involvement in the coverup and settlement of the multiple sexual misconduct incidents Mr. Wynn was involved in.
Depending on the results from the probe, Wynn could have even lost its license in Massachusetts. The Gaming Commission ruled earlier this month that the company could keep its license for the nearly finished Encore Boston Harbor. Wynn was slapped with a record $35 million fine. Its CEO Matt Maddox got an individual penalty of $500,000 for failing to address properly the sexual misconduct allegations against Steve Wynn.
Mr. Maddox was President of Wynn, but was elevated to CEO when Mr. Wynn stepped down and left the company. It is still unknown whether Wynn will appeal MassGaming’s ruling. The casino giant has up until May 31 to either pay the fine or appeal it.
Commenting on Friday’s announcement that Wynn and MGM have engaged in early talks for the sale of Encore Boston Harbor, MassGaming’s spokeswoman Elaine Driscoll said that the focus of the commission remains on the opening of Encore Boston Harbor and not on possible sale discussions.
If Wynn and MGM enter into agreement for the latter to buy Encore Boston Harbor, the transaction will need approval from the Massachusetts Gaming Commission, as stated in the state’s gaming law.
The Fate of MGM Springfield
As mentioned earlier, MGM will most certainly need to sell MGM Springfield if it opts to buy Encore Boston Harbor. The company spent more than $960 million on the Springfield property which opened doors last August.
While MGM Springfield has certainly revived downtown Springfield, its gaming revenue has so far proved a bit disappointing. MGM has said that revenue will improve once the complex gets to know its customers and deploys the right marketing strategies based on what these customers like.
As to who could be a potential buyer of the Springfield property, the first name that pops into mind is Mohegan Sun, a tribal casino in neighboring Connecticut that previously pursued the Greater Boston gaming license, but lost that race to Wynn. The Mohegan Tribe, which owns the Connecticut gaming venue, and the Mashantucket Pequot Tribe are looking to build a casino not far from their home state’s border with Massachusetts to offset competition from MGM Springfield. If the Mohegans buy the Springfield resort, that would earn them an important competitive advantage.
However, the potential sale of the multi-million hotel and casino complex would need regulatory approval as well as approval from the host community. Commenting on news about the discussed sale of Encore Boston Harbor, Springfield Mayor Domenic J. Sarno told news outlet the Boston Herald that Wynn has initiated the ongoing talks.
The official also pointed out that MGM’s President, Bill Hornbuckle, reached out to him Thursday night to inform him about the ongoing discussions and that MGM is committed to Springfield. Mr. Hornbuckle further pointed out that “if anything was to be entertained, and/or occurred,” Mr. Sarno and MassGaming “would have a big and ultimate say in what might or might not happen.”
How Have Everett Officials Reacted to the Sale Talks?
Encore Boston Harbor has entered the final stages of preparations to open doors along the Mystic River in Everett on or around June 23. The property will feature a 27-story hotel tower with 671 rooms, including 104 luxury suites, 15 food and beverage facilities, a casino with more than 4,000 gaming positions, convention and meeting facilities, including a 37,000-square-foot waterfront ballroom, and a public harborwalk and park, among multiple other amenities.
Wynn has invested more than $2.6 billion in what has been dubbed as the largest single-phase private development project in Massachusetts’ history.
Everett Mayor Carlo DeMaria said Friday that he is not happy with the ongoing sale talks. The official told The Boston Globe that he does not want his city to be taken for granted. Mr. DeMaria also pointed out that a sale cannot take place without written authorization from Everett under a 2013 host community agreement his city has reached with Wynn Resorts.
Encore Boston Harbor is scheduled to open doors on June 23, but Wynn’s CEO said during an earnings call last week that the launch might be pushed back a week or two so that they make sure everything is “flawless.” A potential appeal of MassGaming’s penalty would not affect the property’s opening, Mr. Maddox also pointed out.
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