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Wynn Resorts Can Pay Its $35 Million Fine With Less Than 2 Days' Revenue

The Encore Boston Harbor Casino in Everett is seen from Somerville. (Jesse Costa/WBUR)
The Encore Boston Harbor Casino in Everett is seen from Somerville. (Jesse Costa/WBUR)

The $35 million fine that Wynn Resorts must pay to keep its Greater Boston casino license is "designed to be sizable enough to have a meaningful impact," according to the Massachusetts Gaming Commission.

While "meaningful" is subjective, this much is empirical: Wynn Resorts averaged $18.4 million in daily revenue last year, according to a securities filing, meaning the company can cover the fine with less than two days of revenue.

The commission also ordered Wynn Chief Executive Matt Maddox to pay a personal fine of $500,000.

Here are some additional metrics that put the penalties in context:

  • Wynn Resorts, a public company, added $180 million to its market capitalization Wednesday, more than five times the amount of the fine. A company's market cap is the total value of all outstanding shares and is a rough approximation of the company's value. Shares of Wynn Resorts traded up Wednesday, on news that the company could keep its license in Massachusetts.
  • In the scheme of the $2.6 billion Wynn Resorts spent to develop Encore Boston Harbor — now cleared to open as planned next month — the fine is equivalent to a cost overrun of 1.3%.
  • The fine represents about one month of projected gross gaming receipts at Encore. This can be calculated from budget proposals by Gov. Charlie Baker and state lawmakers, who project $98 million of gaming tax revenue from Encore in the fiscal year that begins July 1. Since the casino's gross gaming receipts will be taxed at 25%, the projected tax revenue suggests Encore's gross gaming receipts will be $392 million, or $32.7 million per month.
  • The $35 million fine levied by the Massachusetts Gaming Commission is 75% larger than the $20 million fine imposed by Nevada regulators in February.
  • These fines are not tax deductible, according to Tracy J. Noga, a professor at Bentley University who specializes in corporate taxation.
  • It is unclear how the $35 million fine in Massachusetts will compare with another anticipated penalty from state regulators — the one looming over Columbia Gas. In a quarterly report Wednesday, Columbia Gas parent company NiSource said, "It is not possible at this [time] to reasonably estimate the total amount of any expenses associated with government investigations and fines, penalties or settlements with certain governmental authorities, including the Massachusetts [Department of Public Utilities] and other regulators, that we may incur in connection with the Greater Lawrence Incident."
  • The Wynn fine is roughly double the $18.7 million (later reduced to $17.8 million by the state's Supreme Judicial Court) that the Massachusetts DPU imposed on National Grid for its "seriously inadequate response" to Hurricane Irene in 2011.
  • Maddox's $500,000 fine amounts to 2.9% of his total compensation last year, which was $17.1 million. His total compensation in 2017 was $24.8 million.
  • The value of Maddox's Wynn stock holdings rose $809,212.56 Wednesday. He owns 478,824 shares, according to a securities filing. Wynn stock rose $1.69 per share Wednesday.
  • Maddox's fine is identical to the one the NFL levied against Patriots coach Bill Belichick in the 2007 "Spygate" episode, which involved videotaping opponents' defensive signals.

Related:

Callum Borchers Twitter Reporter
Callum covers the Greater Boston business community for Bostonomix.

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