Boston Costing Wynn Millions

Lawsuits, including one launched by Boston Mayor Martin Walsh (l.), challenging everything that Wynn Resorts is doing in Massachusetts is rapidly eating up cash. At the same time, the uncertainty in the competition for the final license in the state is impacting the cities involved in the contest.

The passel of lawsuits that have resulted from the awarding of the Boston metro license to Wynn Resorts is costing all those involved millions so far, with no end in sight.

The Massachusetts Gaming Commission, which has been sued by the city of Boston, Revere and Somerville in separate lawsuits, between them spent more than $1.4 million so far since the lawsuit was filed last October.

The suits accuse individual members of the commission of misconduct and corruption in awarding the license to the $1.7 billion proposal. Wynn is not a party to the lawsuits, although his attorneys have hinted that he might jump in with defamation suits against Boston Mayor Martin Walsh.

The commission was expected to file a motion by July 31 to dismiss the lawsuits. The judge has scheduled September 22 to hear the arguments in the case.

Somerville Mayor Joseph Curtatone defended his city’s lawsuit, “We are a nation of laws, not men. Yet throughout the greater Boston area licensing process, we have seen the Massachusetts Gaming Commission and the Commonwealth itself change the rules.”

Boston’s legal costs are the lion’s share at $684,718. This expenditure has been necessary to protect the interests of the neighborhood of Charlestown, according to Walsh. One of the lead attorneys for the city is Thomas Frongillo, a former assistant U.S. Attorney for Massachusetts.

Revere’s legal costs of $350,000 are being borne by the Mohegan Sun, which had partnered with Suffolk Downs for a casino proposal that lost to Wynn. Mayor Daniel Rizzo declared, “We do not believe that the residents of Revere received a fair outcome. The city has lost many millions of dollars in improvements, revenue and jobs as a result of the Gaming Commission’s flawed and tainted process.”

A spokesman for Wynn accused the Mohegan Sun of trying to delay competition to its casino in Connecticut for as long as possible.

The commission has spent $320,000 on five attorneys from the Cambridge-based firm of Anderson & Krieger.

The lawsuit is spilling over into a federal prosecution against three men accused of trying to hide the fact that a convicted felon, Charles Lightbody, was a part owner and silent partner in the property Wynn purchased for the casino. Lightbody and fellow defendants Dustin DeNunzio of Cambridge and Anthony Gattineri have petitioned the court to compel disclosure of the records that Boston’s attorneys allege exist, including records of a “wiretap room,” where information was passed to private investigators working for Wynn.

Michael Connolly, Gattineri’s attorney argued that it should be determined whether Wynn was a party to covering up Lightbody’s participation.

“Wynn had every reason to support this criminal investigation where it is an alleged victim,” said Gattineri. “If it was known to have willingly tolerated the presence of a felon, it might have run the risk of losing its license.”

Accusations that representatives for Wynn were given unauthorized access to information from that investigation prompted federal prosecutor Kristina Barclay, an assistant U.S. attorney, to tell the judge, “Without a shred of evidence, and despite having been warned that the ‘alleged incident’ never happened, the defendants seized on a rumor spewed and spun by the City of Boston in a vicious civil lawsuit against the Massachusetts Gaming Commission (MGC) and filed…a motion questioning the integrity of this criminal prosecution.”

Barclay introduced sworn affidavits from two retired state troopers who worked for Wynn as private investigators and who are alleged to have been granted access to information in the investigation. Both deny having access to information from the combined state and federal investigation.

Boston’s lawsuit cites the existence of a so-called “wiretap room,” that the two troopers deny ever existed.

“There are no unanswered questions,” said Barclay. “It’s hearsay.”

Walsh spokesman Bonnie McGilpin fired back, “The City of Boston sharply disagrees with the Assistant US Attorney’s characterization regarding the merits of this case. The City maintains that the Gaming Commission has not followed the law in its awarding of the Region A license and it is the City’s responsibility to fight to protect the rights of Boston’s public and the neighborhood of Charlestown.”

Wynn is not waiting around for the case to be decided. Last week it requested design and construction bids, which Wynn Everett President Robert DeSalvio declared, “mark the official start of the construction process of the Wynn Resort in Everett.”

The bids are sought in four areas: off-site roadway improvement design, environmental cleanup, building demolition design and site preparation, for a total of $50 million in contracts.

The environmental cleanup will account for the lion’s share of that amount: $30 million, and will include cleanup of the 33 acre former Monsanto chemical site. Wynn is promising to “go beyond what is required.” The process will require removing heavily contaminated soil, introducing stabilizers to prevent contaminants from leaking into the Mystic River, and isolating some contaminants within dry concrete.

The work includes restoring the shoreline to its natural state, plus landscaping. According to DeSalvio, “Along with the economic impact, this initial work will lead to tangible improvements like better roadways, faster commutes and a waterfront park that will benefit everyone in the community, not just Wynn guests.”

The Wynn project is expected to generate 4,000 construction jobs and 4,000 permanent jobs.

Southeastern Casino Zone

The mayor and residents of New Bedford reacted with shock and dismay last week to the news that the would-be developer of a $650 million casino resort along the city’s waterfront had pulled out due to a lack of funding. However, Mayor Jon Mitchell declared that the city wouldn’t “wallow in self-pity” but would pursue other economic development projects.

New Bedford Chamber of Commerce Chairman Joe Michaud declared, “We’re going to continue to focus on developing South Coast Rail. This is not the time for a pity party. This city has been knocked down before, and it will be knocked down again in the future.”

The Massachusetts Gaming Commission formally accepted the withdrawal of KG Urban from the competition for the Region C license. That leaves one bidder for the southeastern zone, Mass Gaming & Entertainment, which proposes a casino resort on the Brockton Fairgrounds in Brockton.

The commission briefly discussed whether it ought to leave alive the possibility that another developer might step forward with a different New Bedford proposal—but quickly decided against it.

“I think we have too many hypotheticals here,” said Commissioner Enrique Zuniga. “I don’t see us listening to what the market and the applicant are plainly telling us. What is wrong with accepting what they’re telling us?”

Commissioner James McHugh addressed KG Urban, although no representative of the company was present. “We bent over backwards to accommodate you,” he said, and emphasized that the company’s $400,000 application fee is now forfeit. He noted that the commission granted several extensions while the company sought backing. “This application did extend the process to this point, and I was in favor of extending it on the assertion and assurance that there was funding there and this could be done,” he said. “And now that turns out to be untrue.”

McHugh advocated informing KG Urban that if it does return it will have to go to the beginning of the line and undergo the whole process from scratch.

Mass Gaming & Entertainment had expressed frustration in recent months at the many breaks the commission cut KG Urban as the Brockton proposal moved farther and farther along in the approval process while New Bedford lagged.

The commission opened the meeting to comments from the public. New Bedford attorney George Leontire commented later that he interpreted the commission’s position as leaving open the possibility of a new round of applications if the Brockton application is not judged suitable.

Leontire said, “What I heard today was that the commission did not foreclose the potential that they could not grant the license this round and re-open the process.” He added, “I think they communicated that very subtly, but I believe that’s consistent with the commission’s statements about wanting to see real competition in the region before awarding a license.”

The commission has said that it hopes to award a license next March but could issue on as early as January.

The commission has awarded a license to a single bidder before: MGM Springfield, although when the process started out the city had multiple bidders. Nevertheless they all dropped out until only MGM was left.

Despite the fact that Brockton is the only remaining bidder, New Bedford Mayor Mitchell said he wouldn’t support a casino for any location in Region C unless it is in New Bedford.

Former Somerset Selectman Donald Setters, who unsuccessfully tried to bring a casino bid to his town, told the Boston Herald that he was not surprised the New Bedford bid faltered. “The word was, they never had a bona fide financial package,” he said. “It’s a lot more difficult to raise $600 million than what people thought it was.”

Mitchell blames KG Urban principal Barry Gosin. “KG Urban’s decision to abandon the Cannon Street project is an extreme disappointment and a great shock given that its CEO Barry Gosin had led everyone to believe he would have the necessary funds to build the project.”

In the withdrawal letter to wrote to the commission, Gosin said, “The reluctance of lenders to provide the requisite financing is due to several factors, including the possibility of competition from a nearby Indian casino which would pay no taxes or other compensation to the Commonwealth.”

He added, “Given the uncertainty of obtaining viable financing for the project and the time constraints of the license application process we cannot justify investing any additional funds in the project beyond the significant amount already invested.”

That difficulty was compounded by the possibility that the Mashpee Wampanoag tribe might eventually obtain a ruling from the Bureau of Indian Affairs to put its land in Taunton into trust, giving it the right to operate a casino there. Its gaming compact signed by former Governor Deval Patrick would give it a considerable competitive advantage over any commercial casino in the area.

Another wrinkle is that state law mandates a minimum $500 million investment in a regional casino.

However, Rush Street Gaming, which is the developer of the Brockton casino proposal, says that it can be profitable whether or not the Taunton casino opens. It argues that its geographical location is one factor in its favor: It’s nearer to Boston than New Bedford. Moreover, it already has obtained financing and has operated multiple casinos for many years in Philadelphia, Pittsburgh and Chicago.

The Brockton proposal calls for a casino resort on the Brockton Fairgrounds, owned by George Carney, with 2,000 slots, 100 gaming tables, a poker room, hotel and spa.

A Return of Racing at Suffolk Downs?

The Stronach Group told the Massachusetts Gaming Commission last week that it is interesting in reviving racing at Suffolk Downs, either by leasing or buying the property.

Their proposal is supported strongly by Horsemen Seeking Solutions, a group of people in the racing industry who are trying to bring the closed racetrack back to life.

Suffolk Downs exists as a racetrack in name only at the moment. It is seeking to hold three days of racing this year just to keep its license alive.

Since losing the bid for the Boston metro license to Wynn, the owners of Suffolk have said many times that the facility needs gambling to keep it alive.

Suffolk COO Chip Tuttle was skeptical about Stronach’s involvement. Tuttle told WBUR News, “They’ve had nine, 10 months to express legitimate interest. We’ve never seen a proposal from them. We’ve had only the most glancing conversations … We’d entertain any legitimate proposal. We haven’t received one from anyone.”