A very smart man once said, “If you want to make money in a casino, own one.”
The quip is credited to legendary casino man Steve Wynn. It’s probably as true a line as has ever been spoken about gambling. It speaks to the player’s fantasy of winning, of beating the House. It also tells of the stark mathematical realities of the games themselves, which favor the House the dreamers imagine breaking.
Wynn wasn’t wrong. But, lately, I’m beginning to think there are other ways to make money in a casino, or at least a casino company. From the look of the controversy that continues to swirl around Wynn Resorts in the wake of its namesake’s departure in a multi-layered sexual harassment scandal that has rippled throughout the gaming industry, it also appears litigation may be another way of making money around a casino.
Workers walk past banners they hung with the new name, Encore Boston Harbor, at the casino construction site.
In addition to the lawsuits that are in various stages of litigation and settlement in connection to the scandal inside the company, Wynn Resorts is now accused of unfairly securing a coveted and singular casino license for eastern Massachusetts, home to its sparkling new, $2.4 billion gaming property still under construction in Everett.
The civil racketeering lawsuit filed in federal court by former Suffolk Downs owners Sterling Suffolk Racecourse, which lost its battle for the casino license, is seeking up to $3 billion. In short, the litigation accuses Wynn Resorts of conspiring “to fix the application process, circumvent laws in place to present the infiltration of mob elements, and interfere and eliminate various regulations aimed at protecting the public at large.”
The company’s response was terse, accusing Suffolk’s Richard Fields of being a sore loser whose “claims are frivolous and clearly without foundation.” Wynn Resorts promised a vigorous defense.
The fact it’s mounting a vigorous defense when it ought to be measuring drapes for its new resort can’t be lost on casino industry observers, who have watched with mouths agape as the company once considered a business leader has been rocked to its foundations.
Wynn’s swift departure from the company he co-founded followed a series of ugly sexual misconduct accusations first outlined in a Wall Street Journal article, but it was the revelation that he failed to disclose to Massachusetts Casino Control authorities a confidential $7.5 million settlement with a resort manicurist that is a focus of the lawsuit.
The company was licensed in Massachusetts in 2014. Under the influence of Wynn’s ex-wife Elaine Wynn, the company has essentially cleaned out much of its top floor and corporate board.
The company went to the extreme and absolutely essential extent of pulling Wynn’s name off the new casino project. The casino resort has been renamed Encore Boston Harbor. Who knows, perhaps “Elaine’s Landing” was taken. But, the lawsuit alleges, “this does not change the fact that the license could not have been awarded to the Wynn defendants in the first place but for the RICO predicate acts which include those described herein.”
Subtle, the lawsuit is not. It alleges the company built on a site that remains toxic and the purchase of the real estate was done in a deal tied to mob associates. It doesn’t take an expert legal mind to see the intention is to rough up Wynn’s own image as well as well as the company as it tries to move forward into a new era. It also attempts to connect the dots in the land deal and link it to a friend of current Massachusetts Gaming Commission Chairman Stephen Crosby.
But that’s not the only lawsuit worth watching. One of the former owners of that Everett land, Anthony Gattineri, is suing Wynn Resorts for breach of contract for failing to hold up its end of a bargain that has blown up a dozen ways. That lawsuit seeks a mere $18 million.
With so much litigation flying, it’s bound to make some observers wonder whether someone isn’t trying to destroy the company despite its many successes and history of profitability. And, sooner or later, the Nevada Gaming Control Board will be compelled by law to ask its own questions. At least in theory, a casino license is at stake.
Although “If you want to make money in a casino, own one” remains true as far as it goes, these days there’s also plenty to be made representing one of those troubled casinos in a court of law and the court of public opinion.
Contact John L. Smith at jlnevadasmith@gmail.com. On Twitter: @jnevadasmith.
