The battle over gaming in the Boston area is heating up, and Wynn Resorts (NASDAQ:WYNN) CEO Steve Wynn isn't holding any punches in his effort to win one of two gaming licenses available in Massachusetts -- and the only gaming license available in the eastern portion of the state, or Boston area. Yesterday, Wynn mocked the Mohegan Sun proposal at Suffolk Downs as a three-star resort compared to Wynn's five-star properties, and said his resort would be a nightmare for competitors if he won.
The Mohegan Sun proposal centers on a $1.3 billion project next to the Suffolk Downs racetrack in Revere, Mass., just outside of Boston. Details of the project are sparse, which is understandable considering that the partnership came about just two months ago after Caesars Entertainment (NASDAQ:CZR) was forced out as Suffolk Downs' partner. State regulators questioned Caesars' financial wherewithal to complete the project given its massive debt load and an investigation that found Caesars had possibly done business with the Russian mob.
Since Caesars dropped out, the location of the project was moved from the southwest corner of the racetrack to the north side, which falls in Revere, Mass., and the project was completely redone. The accelerated time frame didn't even allowing time for Mohegan Sun to complete all of the paperwork needed. Some of the environmental documents submitted were still from Caesars Entertainment's bid, throwing into question whether Mohegan Sun's bid meets the letter of the law.
For its part, Wynn plans to build its resort in Everett, Mass., at a waterfront property that was formerly a chemical plant. The $1.2 billion plan includes 550 hotel rooms, a 600-seat outdoor amphitheater, and a 100,000-square-foot casino. Wynn's vision is to build a resort that's attractive to locals and have the casino be a bonus.
While Wynn is certainly ahead in terms of planning, Mohegan Sun and Suffolk Downs have the backing of many locals. They've promised not to shut down racing at the track, and Mohegan Sun operates a resort not far from there in Connecticut.
MGM Resorts (NYSE:MGM) is also seeking the other Massachusetts gaming license, although it's the sole bidder for a western license. Its $800 million project in Springfield is more of a go, no-go decision for regulators and could also serve to siphon off revenue from Connecticut's existing casinos.
Battle lines are drawn
The expansion in Boston is important for Wynn because it just withdrew its Philadelphia resort proposal and doesn't have any expansion planned outside of a resort going up in Macau. The Boston resort would be the first of the urban Wynn vision and could bring significant financial benefits as well. The Mohegan Sun resort in Connecticut generates about $900 million per year in revenue; considering that the new resort will be in the heart of greater Boston, I could see even more revenue there.
A decision on who will receive the license is expected by early summer. Investors shouldn't overlook the potential if Wynn wins.
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