Construction continues on the Encore Boston Harbor in Everett, Massachusetts. Photo: EncoreResortBH

Openings & Closings | Regulation

Non-Indian firm keeps gaming license despite sexual misconduct scandal

Tuesday, April 30, 2019

A non-Indian gaming firm will get to open a casino in Massachusetts even though state regulators said it covered up a sexual misconduct scandal.

The $2.6 billion Encore Boston Harbor is due to open in June. But its backers will have to pay a $35 million fine and its top executive will have to pay a $500,000 fine for what the Massachusetts Gaming Commission said were "repeated systemic failures" and a "pervasive culture of non-disclosure" in connection with the misconduct allegations.

“With respect to honesty, integrity and good character, the commission is highly troubled by the evidence presented,” the commission said in a suitability decision issued on Tuesday.

The scandal focused on Steve Wynn, the billionaire gaming mogul who won the license for the casino after trashing tribes during the review process. He was forced to step down from his namesake company after The Wall Street Journal reported on numerous allegations against him.

Wynn denied wrongdoing but his company failed to disclose settlements that were paid out to former employees who had accused the mogul of sexual assault, misconduct and other inappropriate behavior. His name was eventually removed from the project -- it went from "Wynn Boston Harbor" to "Encore Boston Harbor."

News Alert: MGC Issues Decision and Order Regarding Suitability of Wynn Resorts and Wynn MA, LLC https://t.co/c1piAwhZJr pic.twitter.com/qC1A8JsZP2
— MA Gaming Commission (@MassGamingComm) April 30, 2019

During the bidding process, Wynn criticized the Mohegan Tribe, a rival bidder for the license. He claimed that the tribe was going to encourage big spenders to gamble at its existing casino in neighboring Connecticut rather than focus on Massachusetts.

“What do you think they’re going to do when it comes time to move a big customer, pay 25 percent to Massachusetts, or shovel them off to Mohegan Sun in Connecticut where they pay nothing," Wynn told the Massachusetts Gaming Commission, Bloomberg News reported in January 2014. He was referring to the 25 percent tax rate imposed on commercial casinos in Massachusetts, glossing over the fact that the tribe shares 25 percent of slot machine revenues under its Class III gaming compact in Connecticut.

Wynn even tried to lower his tax rate, citing competition from the Mashpee Wampanoag Tribe. He said he shouldn't be forced to pay any more than the tribe, whose compact includes revenue sharing rates between 15 percent and 21 percent.

“A Wampanoag casino in Taunton would be a mere 40 miles from our proposed investment in Everett and a real alternative for our patrons,” Wynn's company told the Massachusetts Gaming Commission stated, The Boston Herald reported in January 2014. “All (resort casinos) should operate pursuant to the same economic terms with the same tax applied to all operators of the same type of facility."

Wynn's argument failed to differentiate his project, which was authorized under state law, from the tribe's. The Indian Gaming Regulatory Act bars states from taxing tribal process, although tribes across the nation have entered into compacts to share a portion of their revenues with states.

Encore Boston Harbor is located in Everett, a city near Boston, the most populous metropolitan area in Massachusetts. It is the sole gaming facility in the eastern part of the state.

MGM Resorts International, another non-Indian company, won the license for the western part of the state. The Mohegan Tribe also tried to bid on that region but was knocked out of the running after losing a local referendum that was required under state law.

MGM subsequently engaged in a legal, political and lobbying campaign to prevent the Mohegan Tribe and the Mashantucket Pequot Tribal Nation from opening their own facility in neighboring Connecticut. The effort went all the way to Washington, D.C., and resulted in the Trump administration stalling the tribes for almost two years.

The Mashpee Wampanoag Tribe also has been dealt a blow by Washington when the Trump administration reversed course on the its land-into-trust application. The decision has prevented the tribe from resuming construction on a casino in the southeastern part of Massachusetts.