Wynn Resorts has survived its brush with the punishment end of the Massachusetts Gaming Commission with a $35 million fine that it can pay with two days of operating. revenue Now it is putting all its efforts into “bringing Greater Boston and New England a luxury hospitality and entertainment experience unlike anything the region has ever seen,” according to a company statement. Its $2.6 billion Encore Boston Harbor is scheduled to open in Everett on June 23, but may be delayed by a week or two, according to Wynn Resorts CEO Matt Maddox.
The company is bragging that it will outdo the “Red Sox, Celtics, Bruins, and Patriots combined” and attract more than eight million visitors in the next year.
Now that the shadow of having its license yanked has passed, the company is working at breakneck speed to hire and train about 5,500 employees, with 1,550 already hired. Not that it ever stopped, even in the midst of the investigation. The company says it expects to have all team members hired by June 1. “We’re bringing in people very quickly at this point,” said a spokesman.
To emphasize that fact, Wynn issued a statement last week noting that “Wynn Resorts CEO Matt Maddox and the board of directors have worked diligently to make the important and necessary changes to the company’s corporate leadership, governance, compliance programs and human resources policies,” all the while preparing to open its signature tower casino.
The statement continues, ”There is no place in the world like Encore Boston Harbor,” which sits on 33 formerly contaminated acres along the Mystic River in Everett. The 27-story hotel will include 671 rooms (104 of them luxury suites), 15 restaurants, spa, convention center, and a public harborwalk and park.” It notes that the casino will have 3,158 slots, 242 gaming tables, VIP poker, private gaming.
In the latest earnings conference call held late last week, Maddox commented on the reported interest in buying Crown Resorts, the Australian gaming giant. While he didn’t say that anything was happening with that deal, he did allude to possible purchase.
“While we are not pursuing any acquisitions at this stage, we will be looking at opportunities that you cannot replicate through development,’ he said.
“We believe that Asia will continue to grow faster than the West and if there are opportunities in those areas, we will take a look at it, but we do not have anything right now that we are focused on,” he said.
Wynn stock fell in the aftermath of the call after the company reported lower EBIDTA in both Macau and Las Vegas.
But the focus for the next month at least will be on Boston.
The Encore Boston Harbor will have 15 food and beverage venues. They include an elegant steakhouse; the Sinatra, high end restaurant and bar serving Italian cuisine; the Mystique, a casual Asian fusion restaurant; the Waterfront, serving seafood, snacks, craft beer and spirits; Oyster Bar; Bru, a fast-casual restaurant; Red 8, casual Chinese next to the gaming floor; Fratelli, casual Italian; The Buffet, all-you-can-eat dining next to the gaming floor; Dunkin’; Garden Café, casual dining serving locally grown seasonal cuisine; Garden Lounge, upscale craft cocktails; On Deck, a sports and burger bar; Memoire, an elevated boutique night club; Center Bar, a cash bar that caters to non-gaming guests.
“The investigation consumed a great deal of resources, at both the company and with the regulators,” said Maddox. “We feel very confident that it will be the nicest integrated resort on the east coast. We’re ready to open, but we may give ourselves another week, or not. We do not believe if we choose to appeal it will impact our ability to open the project at the end of June.”
The state is already spending the $100 million in taxes it expects to collect from the casino in the next fiscal year. It has included that amount in the upcoming budget.
As part of the ramping up toward the June opening, and with an eye towards even larger profits, the casino has asked special permission to serve alcohol until 4 a.m., but only on the gaming floor—and to playing customers. Most businesses in the state must cease serving alcohol at 2 a.m., but state law does allow exceptions. The commission already granted permission to the MGM Springfield, which opened in August. The commission requested public comment on the request before issuing an answer.
Less than a week after hitting Wynn with its record fine, the commission met to do everything to make the planned opening in June a smooth event. The five members listened to reports and issued needed approvals.
Peter Campot, in charge of Wynn Resorts’ design and construction arm, told commissioners, “We’re essentially on schedule and we expect to be in very good shape by the first of June.” He continued, “All of the slot machines are on the floor now and I think all of them are installed and we’re also installing gaming tables throughout. So if you walk through the facility right now it actually looks like a casino, which is pretty neat.”
The company plans to have all construction completed by June 1 and turn the facility over to operations managers. The city of Everett is expected to issue a certificate of occupancy on June 10.
In the intervening weeks, employees will be “in the final throes of finishing spaces throughout the facility” said Campot.
The commissioners learned that the hotel is almost completed and furniture is being installed. The convention center is also near completion. State inspectors are at work inspecting elevators and escalators.
Also nearly finished is the parking structure. Paving around the casino is about three-quarters complete. Landscaping will continue until the facility opens, said Campot.
On opening day, the casino will initiate an action plan it developed over the last year with law enforcement agencies from the state and surrounding communities.
President Robert DeSalvio says he was intimately involved in developing this plan. “I’m a little more than five years into the project and this was probably the number one topic we had at all of our public meetings, so I wanted to stay close to this one personally,” he told the commission.
The Encore Boston Harbor has hired more than 100 police to work at the casino during the opening. That includes 84 state police, plus officers from Everett, Boston Medford and the MBTA Transit Police. The U.S. Coast Guard and other police units will patrol the Mystic River and adjacent waterways. Other transportation officials will be on hand to deal with signal issues at the Alford Street Bridge.
DeSalvio told the commission “We’ve got this covered—air, land and sea,” adding, “We know that first week for sure is going to be a challenge, after that we’re going to wait and see what the midweeks are like … There’s clearly going to be a new kid on the block syndrome, you’re going to have a lot of initial trial and all of our partners have said that they will work with us all the way through that.”
Although signs will direct drivers to the correct routes to reach the casino, its advertising campaign will emphasize using public transportation the first week. “We’re trying anything and everything to make it easy for folks to hopefully choose anything other than using their automobile,” he said.
Meanwhile the MCG has piled up $1.2 million in fees by five law firms that it accrued from defending itself from a lawsuit by Wynn founder Steve Wynn. He sued the commission to try to prevent some personal information he says were protected by attorney-client privilege about allegations of sexual misconduct from finding their way into the report that the commission’s investigators provided to the panel.
Wynn’s lawsuit alleged that the company he founded had illegally turned over documents to the commission’s Investigations and Enforcement Bureau that were covered by attorney/client privilege. Eventually the suit was settled, with the commission agreeing to withhold some of the information that Wynn objecting to including in the report, which was later released to the public.
The year-long investigation was launched after an expose by the Wall Street Journal in January 2018 that detail allegations of sexual misconduct by Steve Wynn. The allegations led to his quick departure from the company a month later and complete divestiture of his interest in the company. The biggest scandal was that Wynn had paid a $7.5 million settlement to a manicurist who claimed he raped her and made her pregnant. This fact was kept from most of the company’s executives, and from the commission. Eventually just about every executive and attorney touched by the scandal was jettisoned and, under new CEO Mike Maddox, the company remade its image and corporate culture.
MGC has no intention of paying the bill itself. State law allows it to dun Wynn itself for the costs of any investigations associated with its gaming license. The Boston Herald found out about the expense through a public records request. Commission spokesman Elaine Driscoll told the Herald that Wynn Resorts would be responsible for covering the expenses, while adding that the invoices the paper uncovered, “might not be an accurate reflection of the true total.”
The $1.2 million Wynn will pay will be added onto the $35 million it was fined, and the $500,000 that CEO Maddox was fined personally. Presumably he will pick up that tab himself.
Officially, Wynn has not yet stated whether it will pay the fine. It has the option of appealing the fine in the courts. It has until May 31 to pay the fine, and a company spokesman said last week that it would make an announcement of its decision within that time.
Despite the frenetic activity leading up to the opening, there is a possibility that Wynn will decide not to accept the fine, and will instead choose to leave the Bay State.
Despite the personal fine on Maddox, the commission made clear that it doesn’t consider present company responsible for past sins. In its decision it wrote, “After a careful review of the record in this matter, the commission concludes that there is no substantial evidence to support a finding that Wynn MA, LLC, Wynn Resorts, Limited, or any of its associated qualifiers willfully provided false or misleading information to the Commission at any time during the RFA-1 licensing process.”
However, it added this significant comment, “… it is difficult to fathom why the existence of the allegations and settlements was not disclosed to the Commission in 2013 and 2014 during the RFA-1 and RFA-2 reviews.”
Those comments could provide fodder to the ongoing lawsuit by the Mohegan Sun, which has asked a Massachusetts state court to throw out the license awarded to Wynn. It also accuses the commission of not sufficiently investigating Wynn before it granted the license.
The Mohegan tribe reviewed the commission’s suitability investigation and then issued this statement from Chief of Staff Chuck Bunnell, “Mohegan Sun’s ongoing litigation challenging the award of the Region A license continues, and certain evidence from the suitability proceeding will likely be material to our litigation.”
The tribe lost the competition for the Boston metro license to Steve Wynn in 2014. It now claims the commission “arbitrarily and capriciously” awarded the license to Wynn over its proposal for a casino in Revere next to Suffolk Downs racetrack.
Proving that contention enough to win a judgment is a tough haul, says Richard McGowan of Boston College, a professor who studies gaming. He told the Day, “When you look at the legislation that established the commission, you see the commission has a lot of latitude.” He added, “The suit’s more of a nuisance than anything. At best, it’s a long shot.”
So, Wynn could be facing unknown expenses much higher than the $35 million it knows about.
Board Chairman Phil Satre laid out the possibility that his company might leave depending on the conditions imposed upon it during the three days he and other company officials were grilled by the commission. At that time he said, “Conditions on our license would depend on what they are, of course. I mean we have to evaluate that at that point in time …. If the conditions make it impossible for us to succeed here, then I think our board of directors is going to have to take that under consideration.”
Later, when Satre was asked by Commissioner Zuniga what the company would do if it was found “not suitable” to retain its license, he bristled somewhat: “Why would you care about that. I mean our financial condition at that time would not be an issue for you. It’s an issue for our shareholders … but why is it an issue for you?”
