MGM in Talks to Buy $2.6 Billion Encore Boston Harbor from Wynn Just Weeks Before Grand Opening
Posted on: May 19, 2019, 05:56h.
Last updated on: May 19, 2019, 05:56h.
Wynn Resorts is mulling the sale of its $2.6 billion Encore Boston Harbor in Everett, Massachusetts, to MGM Resorts.
The two companies confirmed a sale could be in the cards in a joint press release late Friday after The Boston Globe reported discussions between Wynn CEO Matt Maddox and MGM CEO Jim Murren had kicked off in early May.
The companies described talks as “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.”
Were such a transaction to occur it would reconfigure the New England Gaming market. Under Massachusetts law, no single operator is permitted to hold more than one gaming license in the state, which would mean MGM would have to sell its MGM Springfield property if it were to acquire the Encore.
Good Deal for MGM?
MGM Springfield opened last year and is currently the only other full-scale casino in Massachusetts. But the property has so far failed to generate the kind of revenues initially projected and remains under threat from a satellite casino that Connecticut’s tribal operators plan to build just across the state line.
The Mohegans and Mashantucket Pequots believe their p[lanned casino, 16 miles away in East Windsor, will blunt competition posed by the MGM Springfield to their Mohegan Sun and Foxwoods properties in the south of the state and prevent Connecticuters from boosting MGM’s — and Massachusetts — coffers.
Encore Boston Harbor would be attractive to MGM because it is the only casino license available in east Massachusetts and therefore better protected from competitive threats.
Meanwhile, the Springfield property would no doubt be attractive to Connecticut’s tribal operators because it would preclude the need for the satellite casino.
The Mohegans have already shown an interest in a Massachusetts casino, having unsuccessfully bid for the license that Wynn Resorts won in 2015.
Why is Wynn Selling Encore Boston Harbor?
But why would Wynn Resorts sell a project it has spent four years building, just weeks before it is scheduled to open and only weeks after it had been cleared by the Massachusetts Gaming Commission (MGC) in a yearlong suitability investigation?
The MGC launched its investigation following press reports of explosive allegations of sexual misconduct by Wynn Resorts’ founder, former chairman and CEO, Steve Wynn.
While the billionaire resigned from his position within the company and divested his ownership, the MGC wanted to determine whether current Wynn Resorts executives had withheld information about their boss during the initial licensing process — specifically, a $7.5 million payment to buy the silence of a former manicurist who had accused the billionaire of sexual assault.
The MGC found “no substantial evidence” of culpability in the case of Wynn’s current board, although it imposed a $35 million fine on the company. But the regulator said it believed former chief counsel Kim Sinatra, who left the Wynn Resorts last year and declined to participate in the investigation, knew of the settlement.
$3 Billion Lawsuit
This could potentially add fuel to a $3 billion lawsuit filed against Wynn Resorts last by Suffolk Downs — the racecourse that partnered with the Mohegans to bid for the east Massachusetts license against the Las Vegas-based company.
Suffolk Downs believes the license was improperly awarded and that Wynn Resorts “conspired to fix” the process.
It may be that Wynn would rather bow out of Massachusetts while the going is good than face what could become a legal headache in the future.
Wynn Resorts has yet to pay the MGC its $35 million fine.
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