Mohegan Sun has expressed its interest in acquiring Wynn Resorts’ $2.5bn Encore Boston Harbor project if the latter is found unsuitable to hold a casino licence following an investigation by the Massachusetts Gaming Commission.
Connecticut-based Mohegan Sun has set out its stall in a bid to buy the $2.5bn Encore Boston Harbor development, as Wynn Resorts awaits the outcome of an investigation by the state regulator as to whether it is suitable to hold a gaming licence for the property.
“If that determination finds Wynn Resorts unsuitable to hold a gaming licence in Massachusetts, Mohegan Sun is prepared to participate in a process that would assign that license to another operator – and enter into negotiations with the appropriate parties to acquire the facility under construction in Everett,” the company said in a statement.
“Mohegan Sun has always believed it is the best choice as gaming operator and license holder for a Region A resort casino, and will be committed to opening the Everett facility in a timely manner should it get the opportunity.”
Mohegan Sun’s play for the licence comes 10 months after the Massachusetts Gaming Commission (MGC) initiated an investigation into whether Wynn Resorts improperly hid allegations of sexual harassment and assault against its former CEO, Steve Wynn, with the final decision as to whether the company remains suit- able to operate its casino in Everett still pending.
MGC was expected to publish its investigation into Wynn in December, in the wake of which it would make a finding as to the company’s suitability.
But this process was delayed after Steve Wynn managed to secure a temporary injunction blocking its release in November on the grounds that it contains information he shared with his former company which he contends is protected by attorney-client privilege. On 20 December, Clark County District Court judge Elizabeth Gonzalez set a date in early January to hear arguments on whether to permit the MGC to publicly release its report into what Wynn Resorts executives knew about any allegations against the company’s founder while the firm was pursuing the Massachusetts licence.
Mohegan Sun’s bid has not been well received in all quarters. Everett mayor Carlo DeMaria rejected the idea of the firm taking over the project – still slated to open in mid-2019 – and argued that the city’s agreement with Wynn Resorts allows it to approve or reject the sale to a new company.
“Mohegan Sun is not welcome to operate a casino in the City of Everett. We made a deal with Wynn Resorts to operate a five star international destination resort and I will never accept anything – certainly not a gaming parlor that would be used to protect their interests in Connecticut at the expense of our community and residents,” DeMaria asserted. “Wynn Resorts’ partnership with Everett and the Commonwealth runs far deeper than a building with slot machines.”
In the case that Wynn is found unsuitable to hold the licence, Massachusetts law allows it to be transferred. It’s likely the company would be able to finish construction of the property, but this process would be overseen by a conservator appointed by the MGC until a new licensee was approved.
Commentators suggests that Mohegan Sun’s decision to throw its hat into the ring now indicates that the company is betting on a negative outcome for Wynn.
“This sends a signal you have an immediate and willing buyer who has already been found suitable. It would open up a fairly expedited path for them to re-allocate the license and move forward,” said Clyde Barrow, a professor at the University of Texas.
Despite this, it’s not clear how Mohegan plans to finance such a purchase, in light of the fact that the company’s net revenue for 2017 amounted to $1.38bn.
“They certainly don’t have the resources right now, unless somebody is backing them up,” clarified Richard McGowan, adjunct professor in Economics at Boston College.
Mohegan Sun has been arguing in a three-year-old lawsuit that the MGC illegally favoured Wynn Resorts after it awarded the company the Region A licence after a vetting process that began in 2013.
Back in September 2014, the commission chose Wynn Resorts’ Everett proposal over Mohegan Sun’s plan to build a resort casino in Revere adjacent to the Suffolk Downs racetrack.