Mohegan Sun beefs up suit over Boston-area casino license

Mohegan Sun renewed its attack Wednesday on Massachusetts gaming regulators’ 2014 awarding of the sole Boston-area casino license to Wynn Resorts, a decision that eventually led to Encore Boston Harbor’s June opening in Everett.

Encore, its gaming revenues lagging projections, announced a shakeup of top management Wednesday, with Robert DeSalvio, a former Foxwoods Resort Casino executive, stepping down as president.

Mohegan, which lost out to Wynn in a two-way competition for the coveted license, filed an amended lawsuit that repeats its claim that the Massachusetts Gaming Commission botched the original application process and alleges the panel compounded the misstep by failing to revoke Wynn’s license after investigating sexual misconduct allegations against Steve Wynn, the company’s namesake and former chairman.

After hearing oral arguments, a state Superior Court judge ruled Tuesday in Boston that Mohegan Sun was entitled to amend its original suit.

“To be clear, Mohegan does not seek any judgment from this Court either directing the Commission to grant Mohegan the Region A Category 1 License or otherwise granting Mohegan a gaming license,” the suit says. “Rather, all Mohegan seeks is the overturn of the license grant to Wynn ... after which Mohegan would seek a fair hearing and opportunity to participate in the lawful execution of the (Gaming) Act.”

A spokesman for the Mohegan Tribe, which owns Mohegan Sun, declined to comment on the latest filing in the case.

In 2013, after unsuccessfully pursuing a casino project in western Massachusetts, Mohegan Sun proposed building a Revere casino in a partnership with the Suffolk Downs racetrack, which has since been sold. The five-member commission sided with Wynn's Everett proposal in a 3-1 vote.

Legal and gaming experts have given the Mohegan suit little chance of succeeding, particularly with Encore, a $2.6 billion resort casino, open and operating for more than three months. Through September, Encore has generated nearly $167 million in gaming revenue, with table-games revenue outstripping that of slot machines. Given its current earnings pace, Encore could fall well short of the more than $800 million in gaming revenue Wynn projected it would generate annually.

DeSalvio, who spent a decade at Foxwoods before leaving in 2006, chose to resign, according to a statement by Matt Maddox, Wynn Resorts’ chief executive officer. Brian Gullbrants, who most recently led hotel and food-and-beverage operations at Encore, was named to succeed DeSalvio.

Mohegan’s amended suit alleges that the gaming commission’s decision in April to uphold its earlier finding that Wynn Resorts was "suitable” to hold a gaming license was “arbitrary, capricious and an abuse of discretion.”

The commission’s review of Wynn Resorts’ suitability followed a Wall Street Journal report in January 2018 of allegations against Steve Wynn, including his 2005 payment of a $7.5 million out-of-court settlement to an employee who had accused him of sexual misconduct. Casino regulators in Nevada, where Wynn Resorts has long operated, also began investigating Steve Wynn, who soon resigned from Wynn Resorts and divested himself of all holdings in the company.

After a probe that lasted more than a year, the Massachusetts commission fined Wynn Resorts $35 million and fined Maddox $500,000 for transgressions related to Wynn Resorts’ mishandling of workplace sexual misconduct allegations, but concluded the company deserved to keep its license.

The findings followed the Nevada Gaming Control Board’s decision to levy a $20 million fine against Wynn Resorts, which it allowed to keep operating in Nevada. Earlier this week, the board sought to permanently ban Steve Wynn from the casino industry.

b.hallenbeck@theday.com

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