Wynn Resorts in Early Talks to Sell Boston-Area Casino Project to MGM
has been in talks to sell its partially built Boston-area casino project to rival
MGM Resorts International
according to people familiar with the matter, as Massachusetts regulators continue their investigation into the company’s handling of sexual-misconduct allegations against founder
The talks, which are over the Wynn Boston Harbor property and no other parts of the company’s gambling empire, are at an early stage and may not result in a deal, the people said.
Regulatory issues surrounding any potential deal would be complex, since Massachusetts forbids companies from operating more than one casino in the state, and MGM is planning to open one in Springfield soon, they added.
Wynn Resorts estimates the Massachusetts project, scheduled to open next year, will cost a total of $2.5 billion to build, making it one of the largest U.S. casino projects ever undertaken outside Las Vegas.
Mr. Wynn resigned from his roles as the company’s chairman and chief executive in February and sold off his entire 12% stake for $2.1 billion last month. The moves came after a January article in The Wall Street Journal detailed allegations that Mr. Wynn had engaged in sexual misconduct against employees for decades, and that he paid $7.5 million to a manicurist at his Wynn Las Vegas resort who in 2005 told people Mr. Wynn had forced her to have sex with him. Mr. Wynn’s ex-wife,
a former board member, said in a recent court hearing that a rape allegation had been made against Mr. Wynn in conjunction with the 2005 incident.
Mr. Wynn has said it is preposterous that he would assault a woman; he hasn’t responded to other allegations of sexual misconduct. An attorney for Mr. Wynn earlier sent a statement on his behalf saying he “declined to participate in The Wall Street Journal’s reporting because it is clear that the Journal has no intention of treating him fairly.”
Even though Mr. Wynn no longer owns shares in Wynn Resorts, a special committee of the company’s board is investigating the allegations, as are state regulators in Nevada and Massachusetts.
The Massachusetts Gaming Commission has said it is looking into who was told of Mr. Wynn’s alleged behavior and what, if anything, they did in response. The regulator has said the company failed to disclose the allegations related to the 2005 settlement involving the manicurist before the commission granted Wynn Resorts a license in September 2014, or at any point before the Journal report. Wynn has said that the application process didn’t ask for disclosure of that type of information. The regulator can revoke the Wynn license if it determines the company isn’t suitable as a casino operator.
Any negative determination by Massachusetts regulators could increase pressure on regulators in Nevada to act since the U.S. casino capital prides itself on providing a global model for gambling regulation, analysts say. There could also be ripple effects in the Chinese territory of Macau, Wynn’s most important market, they add.
The Wynn project, in Everett, Mass., is expected to generate $252 million in earnings before interest, taxes, depreciation and amortization in 2020, according to J.P. Morgan estimates. As of the end of 2017, Wynn said it had spent $1.1 billion on the $2.5 billion project, whose costs have ballooned from an earlier estimate of $1.6 billion.
Massachusetts is projected to earn $150 million in tax revenue from the casino in 2020, based on Wall Street consensus estimates for that year.
One potential hurdle associated with any MGM purchase is its plan to open a nearly $1 billion casino in Springfield, Mass., later this year.
MGM could try to sell the Springfield project to a buyer who passes regulatory muster, but the politics could be tricky in a city that is banking on this casino to help revive its downtown core. The company could also try to get permission to operate two properties in the state, or seek some other arrangement, according to the people familiar with the matter.
—Jon Kamp and Chris Kirkham contributed to this article.
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