After nearly a decade, the Massachusetts Supreme Judicial Court (MSJC) has called for further investigation into the licensing and land acquisition processes between the Massachusetts Gaming Commission (MGC), Wynn Resorts’ Encore Boston Harbor casino and local developer FBT Everett Realty.
According to the court’s ruling, the MGC’s actions regarding Wynn’s licensure as well as the company’s acquisition of the Everett land that eventually became the Encore casino were “highly unusual,” and Justice Scott Kafker wrote that “further discovery” will be needed to evaluate whether or not the Commission “directed such a compelled transfer of property, or merely accepted it as a cure to its concerns about undisclosed criminal ownership interests at FBT.”
Essentially, the controversy began back in 2012 when FBT Everett agreed to sell the Everett lot in question to Wynn for $75 million, if the operator could successfully secure a state gaming license. Wynn was awarded the license by the MGC, but the property was ultimately sold for only $35 million.
FBT has since alleged that the MGC wrongfully suspected the developer of having connections to organized crime, thereby coercing Wynn to significantly reduce the sale price or face licensing issues. The suspicions were related to Charles Lightbody, a felon with suspected ties to FBT—Lightbody and two other FBT employees were indicted in 2014 after being accused of concealing Lightbody’s potential ownership stake in the Everett property, but the three were eventually acquitted.
Back when the property deal was still being negotiated, Wynn was told by the MGC that the price of the deal would be a factor in their licensing application. As such, the company had the land re-appraised for non-gaming use, which was valued at $35 million. After the deal was finalized, FBT then sued the MGC over the $40 million lost in valuation. The suit was dismissed by the state’s Superior Court, before proceeding to the MJSC.
Justice Kafker wrote in the MJSC’s recent ruling that the record “indicates that the commission intended to deprive FBT of any casino-use premium on the sale of the Everett parcel.” The court did, however, dismiss the claim that the MGC had interfered with contract negotiations.
MGC spokesman Tom Mills said in a statement that the Commission was “pleased that the SJC affirmed the dismissal of the intentional interference with a contract claim and will address the remaining claim through appropriate legal proceedings.”
This isn’t the first time the MGC has faced scrutiny for their dealings with Wynn and the Encore casino, as former chairman Stephen Crosby resigned in 2018 following accusations of bias related to the company’s handling of sexual harassment claims against former CEO Steve Wynn.
The recent ruling from the MSJC opens the door for a potential “regulatory taking claim” against the MGC. These claims arise whenever the actions and regulations of a governing body restrict property owners’ rights to the extent that it equates to an unlawful seizure of property. According to Kafker, it will only be possible to make a ruling on that claim once “the disputed facts surrounding the commission’s actions are fully developed and resolved.”
Kafker also said that the lower court was wrong to dismiss FBT’s suit without fully exploring the components that go into a regulatory taking claim, and that the matter was being sent back “to allow the completion of discovery and further proceedings consistent with this opinion.”
If the suit is ultimately successful and the MGC is hit with the proposed $40 million judgment, it is unclear where that money would come from. Attorneys for the MGC said during proceedings that the fine would likely be split between Wynn and other nearby operators, but there is a chance that taxpayers could foot the bill thanks to provisions in the state’s gaming laws.
