Massachusetts Gaming Commission to Decide Wynn Agreement With Boston

by Goodwin

In the race for eastern Massachusetts’ sole casino license, Mohegan Sun and Wynn Resorts attempted negotiating Surrounding Community Agreements with the City of Boston. The agreements are designed to compensate surrounding communities for a casino’s potential impact on traffic, public safety, schools, and the like. While Boston ultimately reached an agreement with Mohegan Sun, the city refused arbitration discussions with Wynn — a boycott that Acting Chairman James McHugh called unprecedented.

Boston and Mohegan Sun signed their agreement on Thursday, July 10, 2014, which was the Massachusetts Gaming Commission’s deadline for exchanging best and final offers. In the agreement, Mohegan Sun promised to pay an upfront payment of $30 million and $18 million annually in mitigation fees. The agreement also included a “reopener” provision allowing Mohegan Sun to lower its proposed payout to Boston if the city’s agreement with Wynn Resorts ultimately promised less money. Mohegan Sun would exercise this provision only if Boston voluntarily entered into an agreement with Wynn.

Subsequently, Boston Mayor Marty Walsh announced that the city would not meet the deadline with Wynn Resorts and stopped all talks with the casino company. Instead, he asked the Massachusetts Gaming Commission to determine the mitigation fee. Michael Weaver, Wynn’s Senior Vice President of Marketing, said that Mohegan Sun’s reopener clause “appears to be an effort to stifle competition and inhibit a fair and honest negotiation process.” However, Mayor Walsh has said that the city is still missing critical information about the Wynn proposal, which is necessary in making an appropriate arbitration proposal.

During a meeting on Tuesday, July 15, 2014, the Commission reviewed Walsh’s decision to opt out of arbitration. While disappointed the parties could not reach an agreement, the Commission ultimately decided to move forward in setting the fee amount that Wynn Resorts would pay Boston. The Commission could have awarded Boston nothing pursuant to casino regulations, but Commissioner McHugh said, “We have an obligation to protect the city from the adverse effects of a gaming establishment on its borders even if the city does not want to participate in the process to protect itself.”

Commissioner McHugh said that the Commission will be aggressive about looking into various sources of information to come up with a fair compensation package for Boston. The Commission will likely review similar community agreements around the state and will consider public sentiment and the filings already made. In a statement made by Mayor Walsh’s spokeswoman, Melina Schuler, she said, “Common sense and sound reasoning should prevail, and the city is looking to the Massachusetts Gaming Commission to make a reasonable determination.” She was also confident the Commission would receive documents and other information from Wynn that Boston would be unlikely to get.

Despite Boston’s refusal to participate in arbitration with Wynn, the Commission will not let Walsh’s decision disrupt the licensing decision timeline. The Commission will meet on July 24, 2014 to further discuss the Boston-area license.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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