Bostonomix Bostonomix

Support the news

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

The Encore Boston Harbor Casino in Everett as seen from Somerville. (Jesse Costa/WBUR)
The Encore Boston Harbor Casino in Everett as seen from Somerville. (Jesse Costa/WBUR)
This article is more than 1 year old.

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.

This article was originally published on May 01, 2019.

Related:

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

More…

+Join the discussion
TwitterfacebookEmail

Support the news