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Wynn considering appeal of ruling by Massachusetts regulators

Updated May 10, 2019 - 1:05 am

Wynn Resorts Ltd. officials still haven’t determined whether they will appeal some of the punishment assessed last month by the Massachusetts Gaming Commission.

Company officials also gave their first indication Thursday that they might not open the $2.6 billion Encore Boston Harbor property by June 23 as planned.

Executives made their remarks in a conference call on the company’s first-quarter earnings posted Thursday. The company reported a 3.7 percent drop in revenue to $1.651 billion, mainly because of a 15 percent revenue decline in Macau, but net income swung from a loss to a profit for the quarter that ended March 31.

The company’s 2018 first-quarter loss was attributed to the payment of a court settlement.

In Macau, the company’s Wynn Palace property on the Cotai Strip had the best quarterly performance in its history, but the company’s Wynn Macau and Encore Macau resorts on the peninsula lagged because rooms and public areas are under renovation.

The company has been embroiled in a regulatory fight to keep its gaming license in Massachusetts for the past year and on Thursday reiterated that it could appeal the Massachusetts Gaming Commission’s April 30 ruling that fined the company $35 million and CEO Matt Maddox another $500,000.

It also said the company would be required to pay for an independent monitor to conduct a full review and evaluation of all policies and organizational changes adopted by the company.

The ruling followed an investigation and three days of hearings into how company executives and board members responded to allegations of sexual harassment leveled against former Chairman and CEO Steve Wynn. He has denied the allegations.

“We are still reviewing the decision as it relates to some of the secondary and tertiary conditions imposed by the commission,” Maddox told investors. “We do not believe if we choose to appeal that that will impact our ability to open the project at the end of June.”

Maddox wasn’t specific about what aspect of the commission’s discipline could be appealed to Massachusetts state courts.

Noncommittal on opening date

Maddox repeatedly used “late June” as a reference point for the Encore Boston Harbor opening, the first time in months the company hasn’t pointed to June 23 as the date the 671-room resort would open its doors in Everett, Massachusetts. Earlier this week, the commission met and began expediting the regulatory process for the opening. Still, Maddox was noncommittal about the date.

“I don’t know if the opening date will be June 23 or a week or two later, but we’re going to make sure that it’s flawless, and clearly the regulatory complexity we’ve been through has been a challenge,” Maddox said in the call. “So we’re now doubling back and the team on the ground there is terrific. We are ready to open. We may give ourselves another week, we may not, but the property there looks great.”

Wynn Las Vegas President Marilyn Spiegel also commented on a new local development: the removal of parking fees from the Wynn Las Vegas and Encore parking garages.

“Although if you came here and you spent $50, you had a validation, it was frankly an irritant to those folks who would drive into the parking garage, and most people who come here do spend more than $50,” Spiegel said in response to an investor’s question.

“Why upset them? So we did that, and it also helps us with our high-end local customers,” she said. “It’s been so well-received, we’re very pleased we’ve moved forward on that.”

Wynn’s departure from paid parking leaves most Caesars Entertainment Corp. and MGM Resorts International Strip properties and The Cosmopolitan of Las Vegas as the remaining properties to charge for parking on the Strip.

Las Vegas revenue down

Operating revenue from the company’s Las Vegas properties was down 7.1 percent to $401 million, and cash flow fell 24 percent to $108.3 million. The downturns were attributed to the Strip-wide decline in baccarat play.

Maddox was upbeat about the company’s future, particularly in 2020 when a new 430,000-square-foot Wynn convention facility will be open in Las Vegas, the Wynn Palace Crystal Pavilion area will be open and Encore Boston Harbor will be open.

“Customers with money and choice always go to the place that they enjoy most and you cannot replicate Las Vegas or Macau anywhere else on the planet,” Maddox said. “The number of hotel rooms, the entertainment options, the infrastructure, the service levels can’t be replicated. So our company and our growth profile are properly situated to bet on the future growth of the two best gaming jurisdictions in the world, Las Vegas and Macau, and I’m a very firm believer that our product is positioned perfectly in both of those markets.”

That confidence was also reflected in the board of directors increasing the company’s quarterly dividend 33.3 percent to $1 a share, payable May 30 to shareholders of record on May 22.

Wynn shares were up 37 cents, 0.3 percent, to $136.33 in Thursday trading with volume slightly above average. In the extended after-hours session, after results were announced, shares fell $6.09, 4.5 percent, to end at $130.24 a share.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.

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