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Could Sexual Misconduct Allegations Derail This Mega-Project?

Could Sexual Misconduct Allegations Derail This Mega-Project?
Rendering of Wynn Boston Harbor

The sexual misconduct allegations against Wynn Resorts CEO Steve Wynn could cancel the largest single-phase construction project in Massachusetts history. 

The future of the $2.4B Wynn Boston Harbor casino currently under construction depends on how the company proceeds with its internal review of the matter. The Massachusetts Gaming Commission discussed the allegations for the first time Wednesday and signaled it was watching how Wynn Resorts handles the allegations against its namesake leader in its review of whether the company should be able to operate in the state. The Massachusetts agency can revoke the company’s license if it determines Wynn is not suitable as a casino operator, the Wall Street Journal reports

“Now is a critical moment to find out whether the board conducts itself with appropriate best practices and lives up to its fiduciary obligations,” MGC Chairman Stephen Crosby said to the WSJ.

The paper first reported Friday several allegations against the CEO relating to sexual misconduct, including a $7.5M settlement paid to a manicurist who told people Wynn had forced her to have sex with him. Employee accounts reported decades of alleged misconduct at multiple casinos. Wynn, who stepped down as the Republican National Committee finance chair in light of the controversy, has denied any wrongdoing.

The MGC’s review of the casino company’s Massachusetts license returns the spotlight to a project already mired in controversy. 

The casino, which is in the neighboring city of Everett, Massachusetts, faced numerous legal and environmental challenges after it won a highly competitive bidding process for the rights to build the only casino in Greater Boston.

The city of Boston spent $2M fighting the casino, as the city wanted a host community designation that would have given it more money for mitigation and the power to kill the casino deal. Boston had a community agreement with Mohegan Sun, which competed with Wynn Resorts in the bidding process, when it was pursuing a casino at Suffolk Downs. That property is now being touted as the city’s preferred site for Amazon HQ2.

If the MGC revoked Wynn’s casino license, the company and state could suffer. Wynn Boston Harbor is expected to open in 2019 and is forecast to bring in $252M, or 9% of the company’s total earnings, in pre-tax earnings in its first year. Massachusetts is expected to earn $150M in tax revenue in the same period. 

While it is unclear what would happen to the unfinished casino if the state were to revoke Wynn’s operating license, it would not be the first time a state gambling agency pulled the plug on a yet-to-open casino. New Jersey regulators denied Hilton Hotels Corp. its license for a casino in Atlantic City due to some involved in the project allegedly having ties to organized crime. Hilton denied the involvement, but it sold the unopened project to Donald Trump in 1985.