By Steve Norton

CEO, Norton Management

Why Would Wynn Resorts Consider Selling Encore Boston Harbor?

My comment:

This article questions why Wynn Resorts would consider selling its Boston Encore casino resort just weeks before its opening. The one economic question in the article centered around the lower financial performance of the MGM Springfield which will probably generate casino revenues of around $250 to $300 million annually, unless the Connecticut tribes are successful in developing a smaller casino in East Windsor.

But any market comparison needs a lot of study, beginning with the metro populations. Metro Boston has just under 4.9 million persons in 2018, while metro Springfield combined with metro Hartford was just over 1.85 million (62% less). But of even more significance to any comparison is nearby competition, which in Springfield includes two of America's largest casinos, Foxwoods and Mohegan Sun, both of which were estimated to win as much as $1 billion, before slots were allowed at Yonkers and Aqueduct racetracks, and full casinos were approved in Eastern Pennsylvania and New York.

My guess is with no major competition nearby, Encore should produce a casino win of $800 million to $1 billion annually, within 2 years, and have the largest win of any US commercial casino, behind only tribal casinos in Florida, Oklahoma and possibly California.

A Boston area casino will help increase the size and number of conventions and trade shows, while also creating new weekend hotel demand, from tourism visitors, both American and International.

I can understand why MGM, might want to buy the Boston Encore, even though they would have to dispose of their Springfield operation. But I expect they would find a willing buyer for MGM Springfield, from the two CT tribal operators.

I can also understand why Wynn’s CEO and directors might be discouraged by the unusual rules applied to their MA operations, but I can't see a sale being in the best interest of the shareholders - unless cash on the balance sheet is needed for the upcoming Japanese mega casino bid.