The fate of Wynn Resorts’ license for a $2.4 billion gambling palace it is building in Everett now hinges on a state investigation that may not be resolved until sometime this summer.
But the company, it turns out, may not want to wait that long.
After Massachusetts Gaming Commission chairman Stephen Crosby said Wynn’s continued work in Everett is being done on an “at-risk basis,” speculation has swirled during the past week that the Nevada company might look for an exit. Wynn has already pumped more than $1 billion into the project, but one possible solution would be to find another owner to take it over.
Wynn officials declined to comment on the rumors — other than to deny a New York Post report that MGM Resorts had made an approach to buy the entire company.
On Friday, Bloomberg reported that new chief executive Matt Maddox has had informal talks about possibly selling the Wynn Boston Harbor project, citing an unnamed source. As of Saturday, a spokeswoman for the Massachusetts Gaming Commission said the agency had not heard from Wynn that anything had changed with its plans. Any license transfer would need the commission’s approval.
Richard McGowan, a gambling expert at Boston College, said he would be surprised to see another casino operator get involved in Everett, in part because of how much money Wynn has already sunk into the lavish project.
Many casino operators, McGowan said, are already stretched thin financially.
“Who could they sell it to where they recoup their losses?” McGowan said. “If they sell at a discount, even then I’d like to know who could pull it off. . . . You’re talking about a $2.5 billion project.”
The commission made it clear that Wynn’s license is at stake when it launched its investigation in January after The Wall Street Journal reported a number of sexual harassment claims against then-CEO Steve Wynn.
The agency is performing a new “suitability” review of the company’s integrity and financial stability. In particular, its investigators will want to know what other executives knew about the sexual harassment allegations that former female employees made against Steve Wynn, and how those complaints were handled. The checklist includes figuring out whether anyone else in the company knew about a $7.5 million settlement Steve Wynn reached in 2005 with a manicurist who used to work at Wynn, a settlement that the company didn’t disclose when it was applying for its casino license.
Steve Wynn stepped down as CEO after the Journal story broke. He subsequently sold all his stock in the company, and began packing his bags to leave his home at the Wynn Las Vegas resort.
It’s widely assumed that Wynn Resorts won’t hoist the name of its disgraced former CEO atop the Everett tower — the company could use its Encore brand instead. But there’s a new concern emerging among those behind the Wynn project, which is scheduled to open in mid-2019, that changing the name might not be enough.
First, on March 27, The Wall Street Journal published another story with more details about the harassment claims. The new twist: These claims were often dismissed or ignored by supervisors. That article was seen as an indictment not just of the flamboyant founder but also of the corporate culture.
Then, later that week, Crosby presided over a routine construction update from Wynn representatives. Crosby addressed the tension by saying at the start of the meeting that “as a practical matter . . . Wynn Resorts proceeds with this project on an at-risk basis.”
Wynn’s stock took a big hit after the first story broke in January, with the price plunging from $200 to $160 a share over the course of a few days. The stock is now trading in the $180 range, although takeover speculation may be fueling some of the increase.
The company had been considered one of the strongest financial performers in the industry, making huge money from casinos in Las Vegas and Macau. Its net revenue rose 41 percent last year, to $6.3 billion, in part because of a new casino in Macau. But the company also reported nearly $10 billion in debt at the end of the year.
The company also announced in March that it would pay $2.4 billion to settle longstanding litigation with Universal Entertainment Corp. of Japan. The company later that month sold more than $900 million in stock to another casino operator, Galaxy Entertainment, a move seen as a way to help pay for the Universal settlement.
Wynn is also being investigated in Nevada, and a failed suitability review in Massachusetts could have implications in the company’s home state.
Matt Maddox, the new CEO, was asked by the Globe in February whether the company would sell the Everett project. The response: “That is not part of the Wynn plan.”
But as everyone in the Wynn organization knows, plans can change.