MGM breaks off talks with Wynn Resort to buy the $2.6 billion Encore Boston Harbor, citing concerns voiced by various stakeholders
MGM Resorts International has pulled out of talks to potentially buy the troubled Encore Boston Harbor casino resort from its rival Wynn Resorts, citing concerns raised by various stakeholders, the company said in a statement released on Tuesday.
News about the duo of Las Vegas casino and hospitality powerhouses being in early talks over the future of the $2.6 billion resort emerged late last week. Encore Boston Harbor is slated to open doors at the end of June in the lucrative Greater Boston area.
The nearly finished property and Wynn Resorts as a whole were roped in a scandal of massive proportions that stemmed from multiple sexual misconduct allegations leveled against the casino operator’s ex-boss and founder Steve Wynn.
In a Tuesday statement, MGM said that they “have noted the anxiety raised by various stakeholders regarding a transaction” and that they think “the best course of action is to discontinue discussions” concerning the opportunity to buy Encore Boston Harbor. The statement further read that the company wishes to have “a positive impact on communities in which we operate.”
MGM potentially buying Encore Boston Harbor was not welcome news for Everett Mayor Carlo DeMaria and other local officials. The Mayor of the city where Encore Boston Harbor is being developed said last week that he did not want Everett to be taken for granted and that a sale of the property could not take place without his written authorization under the terms of a 2013 host community agreement signed between the city and Wynn Resorts.
Wynn Resorts said in a statement on Tuesday that it has agreed to cease discussions with MGM “after careful consideration.” The company added that it is committed to opening and running the 671-room hotel and casino resort located along the Mystic River in Everett.
MGM Springfield’s Future
MGM currently operates MGM Springfield in Massachusetts. The company invested more than $960 million into the property, which opened doors last August. If the company had agreed to buy Encore Boston Harbor, it would have had to sell MGM Springfield as under Massachusetts gaming laws, a locally licensed operator can only manage one casino resort on the territory of the state.
MGM Springfield was launched last summer to great fanfare, but has so far missed early gaming revenue predictions. Explaining the failed performance prognoses, MGM has said that revenue would improve as the company gets to know its customers in the region and is thus able to implement the right marketing strategies for gaining and retaining clientele.
As for Encore Boston Harbor, now that it seems it will remain under Wynn Resorts’ stewardship, the property is being prepared for late-June grand opening. The resort is nearly finished and as per previous announcements, is scheduled to welcome its first patrons on June 23.
However, Wynn Resorts CEO Matt Maddox said during an earnings call earlier this month that they could push back Encore Boston Harbor’s opening by a week or two to ensure flawless start of operation.
Wynn Resorts also has an important decision to make in relation to the recent record fine imposed by the Massachusetts Gaming Commission, following a lengthy investigation into the sexual misconduct allegations leveled against its former CEO. MassGaming fined the company $35 million for failing to address the incidents of sexual misconduct involving Mr. Wynn, but was allowed to keep its license in Massachusetts. The casino operator now has until May 31 to either pay the fine or appeal it.
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