Change of Plans Creates Regulatory Confusion for Encore Boston Harbor

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Questions are swirling around Wynn Resorts’ proposed expansion to its Encore Boston Harbor property in Everett, Massachusetts. 

  • Can a massive shopping and entertainment development claim total independence from a casino to which it’s physically tethered?
  • Conversely, just how connected to a casino must one be in order to be permitted to offer gaming activities?
  • Does any of this matter if the project clogs the area with traffic, after the developer assured the community that it wouldn’t?

The Massachusetts Gaming Commission (MGC) must try to find answers to these issues, as Wynn attempts to change the plan it initially put forward.

Extending the Wynn Streak?

Wynn opened the Encore Boston Harbor in June 2019. The $2.6 billion integrated resort sits on a former Monsanto chemical site, which was cleaned up and redeveloped for the casino.

Encore boasts a 671-room hotel and a 210,000-square-foot gaming floor with approximately 3,000 slot machines and over 185 table games. Non-gaming amenities include:

  • 8,000 square feet of retail space
  • 15 restaurants, bars and lounges
  • 2,914 on-site parking spaces

Since opening, Encore has established itself as the most successful of Massachusetts’ three full-service casinos. The property has generated $1.89 billion in gaming revenue since opening and accounted for nearly two-thirds of statewide casino revenue in Oct 2022.

For comparison, the state’s next-largest casino is the MGM Springfield. It opened in 2018 and features a 125,000-square-foot gaming floor, but is still well below $1 billion in lifetime revenue and has yet to see a $25 million month.

It’s no surprise, then, that Wynn would look to expand Encore Boston Harbor’s footprint. However, the timeline and exact nature of that expansion are now in question.

What did Wynn Propose for the Encore Expansion?

One thing is clear, which is where the proposed expansion will sit. Wynn owns four blocks’ worth of land across the street from Encore, east of Broadway. In its 2013 Lower Broadway District Master Plan, Wynn stated its aim was to use this land to:

Transform Lower Broadway into a vibrant, mixed-use urban neighborhood with a strong identity, civic spaces, employment opportunities, recreational amenities, and public access to the Mystic River.

The 2015 Lower Broadway Urban Renewal Plan reiterated the same idea in different words, claiming the company would:

Create an environment with a strong identity that provides riverfront recreational activities, supports a high quality of life, encourages a mix of uses, provides employment and economic opportunities, and increases the city’s tax base.

All of this was included in materials provided to the MGC for a Feb 10, 2022 meeting. To this, the company added a more specific breakdown of what the development would include:

  • 800 hotel rooms
  • 50,000 square feet for food & beverage
  • 20,000 square feet for entertainment
  • A 999-seat events center
  • 20,000 square feet for retail
  • 20,000 square feet of warehouse space
  • An additional 2,900 parking spaces
  • A pedestrian bridge crossing the six-lane truck route on Broadway

Notably absent is any suggestion that the new development would include a gaming component.

In fact, in Wynn MA’s PowerPoint presentation and pre-meeting brief to the MGC, outside counsel Samuel M. Tony Starr from Boston law firm Mintz asserted that there would not be any gambling on the new site. He even stated that the properties have little to do with one another, as they’d be under different corporate ownership.

At that time, accepting the promise that it would not offer any gaming, the MGC concluded that the new development fell outside its authority. Now, it’s not so sure.

Mass Confusion

In a meeting last week with the MGC, Wynn suddenly seemed to be singing a different tune. Its plan for the new development now includes a standalone poker room and space for a retail sportsbook.

The company is trying to argue that constituents’ backing for the Encore Boston Harbor in 2013 should be interpreted to include gaming at any property directly connected to the original site, such as via a pedestrian bridge.

Starr, again representing the company, claims that:

The host community agreement between Wynn and the City of Everett does specifically contemplate that Wynn may undertake substantial new construction on property other than the current Encore Boston Harbor site.

However, what’s not specifically mentioned is whether the agreement’s definition of “project site” consists solely of the casino’s original footprint or whether it would include such future development. There is also the earlier argument to consider, whether the new development is an extension of the Encore or a separate entity.

A Premeditated Change?

This pivot by Wynn shouldn’t come as a shock. It was, in a sense, foreshadowed.

In that itemized list from Feb 10 materials above, the planned event space would have 999 seats. Earlier rumors had included an 1,800-seat estimate. That’s a substantial reduction and an oddly specific number.

In the interest of preventing casinos from dominating local entertainment, Massachusetts law forbids them from having mid-sized venues with capacities between 1000 and 3500. That is, any such venue must have a capacity of 3501 or more, or 999 or less.

MGC officials pointed to this as evidence that Wynn itself considers the expansion to be part of the casino. They also suggested that Wynn can’t be taken at its word in light of other inconsistencies and practices. These include circumventing the venue capacity rule by hosting events at the Encore’s Picasso Ballroom.

The Parking Issue

Another inconsistency highlighted by the MGC relates to parking. When Wynn initially got the green light to develop Encore Boston Harbor, it agreed to do so in a manner that discouraged people from driving to the casino.

However, with 2,914 parking spots on-site and another 3,714 nearby, it’s debatable whether Wynn has taken that promise to heart.

It’s now asking to add nearly another 3000 spaces across the street as part of the expansion. That would create room for almost 10,000 cars at Wynn-related facilities in a suburb with a population of about 50,000. 

In February, Wynn assured the MGC that this wouldn’t be an issue. Starr, while conceding that the new garage could ultimately be owned by Wynn, insisted that the garage would not serve the casino:

The hotels, restaurants, events center, parking garage, and utilities do not enhance Encore’s gaming area.

About three weeks later, Encore Boston Harbor SVP and general counsel Jacqui Krum echoed the sentiment:

We do not believe this garage will be used primarily by visitors to Encore Boston Harbor.

Both these claims run counter, rather explicitly, to comments made by Wynn CEO Craig Billings on the company’s Q4 earnings call on Feb 15:

Additional parking and complimentary non-gaming amenities that will drive Encore Boston Harbor to even higher levels of performance.. parking, particularly on weekends, remains a constraint for us.

What Now?

The MGC is understandably reconsidering its stance from March. It’s now weighing its options and may revisit that 2013 referendum to seek a more explicit definition of where gambling will and won’t be allowed.

The latest meeting with Wynn on Nov 16 ended without a vote. Wynn has requested a chance to present the Commission with information more clearly showing the boundaries of the former Monsanto site. This isn’t the first time its exact borders have been an issue. In 2013, the company sparred with the city of Boston over whether the casino would fall entirely within Everett or whether part of it would lie in the capital.

For now, this matter is still up in the air. What is clear, however, is that Wynn is determined to wring every possible dollar out of its Everett property. In the process, however, it seems to be jeopardizing a good-faith relationship with the regulator, which is always a dangerous game to play.

About the Author

Emile Avanessian

Emile is a one-time banker turned freelance writer. He previously worked in equity research and as a member of the Financial Sponsors Group with Goldman Sachs, where he worked on numerous casino- and gaming-related projects. His written work has focused largely on sports (NBA basketball and European soccer) and sports betting. Emile currently also writes for Squawka and Urban Pitch. His work has also been published in The Los Angeles Times, The Blizzard, Yahoo Sports, SI.com, and ESPN.

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