The $2.6 billion Encore Boston Harbor in Everett, Massachusetts, the largest commercial casino on the East Coast, opened its doors on June 23. The Massachusetts Gaming Commission reports that Encore took in $16.79 million in revenue its first week, which translates to $2 million a day, compared to $20 for the entire month at MGM Springfield and $13.5 for June at Plainridge Park.
Analysts are paying close attention to room rates, which can provide a clue to how well a casino is doing. They note that average daily rates have hovered around $690 in July and are increasing to $706 in August. That runs counter to Boston ADRs, which typically decrease from July to August.
About half of the Encore’s revenues came from its 3,158 slot machines, which generated a 90.25 percent return on wagers. The facility’s 242 gaming tables collected another $7.67 million in the first eight days.
The first week’s revenues, if extrapolated to annual revenue, would produce $870 million in revenue. But that’s highly unlikely to happen. Nevertheless, the results indicate that it is entirely doable to achieve Wynn Resorts’ announced goal of $1 billion and EBITDA of $275 million by the third year of operation.
As the late H. Ross Perot might have put it, the “sucking sound” heard in New England was the profits from Indian casinos in Connecticut being Hoovered in the direction of the Encore.
Foxwoods’ slots revenue declined 11.8 percent in June and the Mohegan Sun’s revenues fell 5 percent. Closer to home, the Plainridge Park slots parlor, located 35 miles away in Plainville, saw its profits fall 8.86 percent.
June also represented the worst revenue month for MGM Springfield: it was the second month since it opened that the resort didn’t earn a minimum of $21 million from gaming.
On the other hand, Encore generated new revenues completely disconnected from other casinos, making casino revenues statewide grow 238.44 percent the first week of operations.
In reaction to the smooth launch, Encore Boston Harbor President Robert DeSalvio told WGBH Great Boston, “So far, so good.” He added, “However, I will tell you that it takes a while to ramp up and build these properties up to full potential—you have to build a database—so for us, there’s an expectation that it doesn’t come automatically, but it will come over time.”
Boston basketball legend Larry Bird is the spokesman for the newly opened casino. In a series of ads, he promotes the luxury casino and hotel with his erstwhile rival Magic Johnson.
The two hoops greats clashed numerous times in the 1980s, when Bird played for the Celtics and Johnson was a star for the Lakers. But they appear together in the TV ads along with the musical group the Chainsmokers, showcasing the Wynn property’s unique collection of fine arts, great food and luxury appointments.
Class Action Lawsuit
Meanwhile, a class-action lawsuit has been filed against the Encore alleging that it’s cheating blackjack players and “willfully and intentionally” withholding slot winnings. The lawsuit was filed in Middlesex County Superior Court early last week.
The court papers were filed by the lawyer Joshua N. Garick on behalf of the plaintiffs, New York resident Richard Schuster. The suit alleges that the Encore paid players odds of 6 to 5 when they drew a blackjack, i.e. 21. The suit contends that state regulations mandate that blackjack should be paid at 3 to 2 odds. In an example given by the lawsuit, a wager of $50 should win $75 under Bay State law. However, it says, the Encore actually would pay $60. However, state regulations actually permit the 6-5 blackjack payout.
The lawsuit also alleges that the casino further bends the odds in its own direction by only paying out slots winnings by whole dollars, rounding down on the ticket redemption machine.
The Massachusetts Gaming Commission initially issued a statement saying that “since opening, Encore Boston Harbor (has followed) the Massachusetts Gaming Commission regulations for blackjack payouts.”
It followed this statement a few days later with a statement that a preliminary investigation showed that the casino wasn’t cheating players.
Regarding the lawsuit’s contention that the casino only pays out slot winnings in round numbers, the MGC noted that the slots don’t dispense coins, and to collect winnings that are not rounded up or down, players must cash in at the casino’s cashier.
The commission suggested better signage to advise customers of this fact. In response, the Encore says it may add redemption machines that dispense coins, as the Plainridge Park and MGM Springfield casinos do.
Pushback on Payment Claims
Reacting to Boston Herald and Telegram & Gazette accounts of complaints by Coghlin Electrical Contractors Inc. that it’s owed $30 million in change orders for work it did on the Encore Boston Harbor, the overall contractor for the project, Suffolk Construction, strongly disputed Coghlin’s claims last week.
Suffolk accused Coghlin of engaging in “unfair business practices.” Linda Dorcena Forry, vice president of diversity, inclusion and community for Suffolk, issued this statement: “Despite Suffolk’s numerous requests for information over several months, Coghlin has consistently failed to provide supporting documentation for a majority of its remaining claims, as required by the subcontract Coghlin signed.”
She added, “In fact, Coghlin recently and unexpectedly added millions of dollars to its list of claims without providing any meaningful documentation to substantiate those claims. We have learned that this is not the first project on which Coghlin has engaged in these unfair business practices.”
Coghlin owner and president Sue Mailman countered that the claims could not be calculated until the project was over. She said in a statement, “The recent additions to our change order requests are claims which can never be calculated until the project is done.” Mailman added “Suffolk forced Coghlin to sign documents to get paid. Suffolk nor Wynn did not let Coghlin bill for additional work. Now that Suffolk has settled with Wynn and Wynn has the doors open, Coghlin is not being paid by Suffolk. Suffolk and Wynn knew to expect claims.”
Plainridge Park Casino
Meanwhile, legislators representing the Bay State’s southeast are advocating that the Plainridge Park Casino, which was always envisioned as a slots parlor, be allowed to add table games.
Rep. Shawn Dooley has filed a bill that would allow but not require MGC to allow the slots casino to add up to 30 tables and 250 slot machines. The bill touts the casino’s “employment and revenue benefits to the commonwealth, community, and surrounding communities.”
Speaking of the impact the casino has had on its host community and environs, Rep. Elizabeth Poirer told the Economic Development Committee, “There is no bad news. It’s good news all the way around.” North Attleboro town councilor Keith Lapointe said, “All we’re seeing right now are benefits.”
Referring to the hot competitive gaming environment in New England, Rep. Jeff Roy described “a community which borders the state of Rhode Island; just 10 miles away we have Twin River and about 26 miles away we have the Tiverton casino and these casinos were put in place to directly compete with Plainridge. Neither of them had the table games when Plainridge was given its slot license, but they now have those in place and they are directly competing for Massachusetts dollars.”
