Federal Appeals Court Dismisses $3bn Lawsuit Against Wynn Resorts

Plaintiff “too far removed” from process

A federal appeals court has dismissed a $3bn lawsuit against Wynn Resorts which alleged that the company engaged in racketeering while attempting to secure a Massachusetts casino license.

claimed that Wynn Resorts won the bidding process for a casino license through bribery and fraud

On Wednesday, a US Court of Appeals for the First Circuit three-judge panel upheld the initial ruling from US District Judge Patti B. Saris to dismiss the lawsuit by Sterling Suffolk Racecourse LLC. The plaintiff is the former owner of East Boston’s Suffolk Downs racecourse and claimed that Wynn Resorts won the bidding process for a casino license through bribery and fraud.

The US District Court for the District of Massachusetts originally dismissed the lawsuit in November 2019 because the plaintiff did not prove a “continuous pattern of racketeering behavior.” The federal appeals court has agreed with the earlier dismissal, but not for the same reason. The judges stated that Sterling was too far removed from the bidding process for it to have suffered direct injury from the gaming regulator’s decision.

The judges said: “Because Sterling has failed to make a threshold showing that it suffered any direct injury entitling it to RICO relief, we affirm the dismissal of the complaint.”

They also mentioned that Mohegan Sun Massachusetts, which was not part of the lawsuit, would have more of a case to pursue as it was a direct competitor to Wynn in the bidding process and it possesses “an incentive to sue.”

Plaintiff’s allegations

Sterling had been working alongside Mohegan Sun Massachusetts in an effort to compete with Wynn Resorts in the bidding process for the license. The plaintiff owned the site where Mohegan was looking to develop the casino if the bid was successful.

Sterling believed that it would receive rental income worth at least $3.465bn over the course of a 99-year lease. The Massachusetts Gaming Commission (MGC) ultimately awarded the license to Wynn Resorts in November 2014; Sterling filed the lawsuit in September 2018.

One of the allegations in the complaint was that Wynn Resorts bought land for the casino project from a seller with links to organized crime. A former director of FBT Everett Realty had convictions on his record for organizing an identity theft ring and assault with a deadly weapon.

Sterling alleged that Wynn Resorts was aware of this link to organized crime but did not disclose this information in its MGC license application. Another allegation in the lawsuit was that former state gaming commissioner Stephen Crosby helped to steer the license to Wynn Resorts in a conspiracy involving a business partner.

More trouble for Wynn in Massachusetts

Wynn Resorts did receive another form of punishment for some of the allegations of the lawsuit. Founder Steve Wynn faced accusations of making “false or misleading” statements to state gaming regulators in an effort to hide the details of sexual misconduct allegations against him. The directors of the company also did not inform the MGC about the alleged behavior of its then-CEO. As a result of the company’s failures, the MGC issued a $35m fine against Wynn Resorts in 2019. The casino company was able to keep its operating license.

Encore Boston Harbor itself is currently the subject of another lawsuit. A class-action suit filed in 2019 claims that the casino has been shorting customers on blackjack payouts.

The specific issue cited is that the casino only pays winnings at some tables at a 6:5 rate rather than the industry standard 3:2 payout when a player hits blackjack. This complaint alleges that the casino makes “well in excess of $30m each year” as a result of the difference in these odds. The casino believes that the lawsuit does not have merit and a previous investigation by the MGC into the allegations found that the operator broke no rules.

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