Court order potentially scrutinizes $75M Encore Boston casino land deal

Wynn Resorts' purchase of land in Everett and the company's casino license award are back in the news again.

A deal was struck in 2012 between FBT Everett Realty and Wynn Resorts to sell the site on which Encore Boston Harbor now stands for $75 million if Wynn received a state casino license. However, after receiving a lucrative casino license in the Boston area, the Everett property only sold for $35 million.

FBT claims the Gaming Commission was concerned that someone with ties to organized crime unfairly forced Wynn Resorts into decreasing the purchase price of FBT's Everett site by threatening to harm Wynn's licensing application.

FBT's lawsuit dismissal

Justice Scott Kafker noted in an opinion filed Monday that a lower court judge erred by dismissing FBT's lawsuit last summer. He referred the matter back to the Superior Court for a new round of fact-finding.

"Whether the commission directed such a compelled transfer of property, or merely accepted it as a cure to its concerns about undisclosed criminal ownership interests at FBT, cannot be decided without further discovery," Kafker said.

For years, the Gaming Commission has been plagued by different legal difficulties involving the Everett land, the Boston-area licensing procedure, and Wynn Resorts. The commission said they are analyzing the recent SJC opinion on Monday.

"We are pleased that the SJC affirmed the dismissal of the intentional interference with a contract claim and will address the remaining claim through appropriate legal proceedings," said Gaming Commission spokesman Tom Mills.

Highly unusual regulatory action

To recoup the $40 million "casino use premium," FBT sued the Gaming Commission. On Monday, the SJC said that a lower court was right to throw out tortious interference claims with a contract.

However, the Superior Court should look more closely at whether the Gaming Commission's actions constitute a "regulatory taking." This means that the commission's actions and regulations limit the owner's rights to the point where it's the same as taking the property away physically.

"Only when the disputed facts surrounding the commission's actions are fully developed and resolved will it be possible to properly decide FBT's regulatory taking claim," Kafker said.

The judge agreed with the lower court judge that FBT didn't have a "reasonable investment-backed expectation" to sell the parcel for $75 million because casino gaming was banned when the first FBT investment was made.

According to him, the "economic impact of the commission's measures here was substantial," and the justice repeatedly emphasized how "highly unusual" the regulatory action of the Gaming Commission was.

Kafker noted that while FBT didn't expect a casino-use premium when selling the Everett parcel, the commission's actions had a $40 million economic impact on FBT. The highly unusual commission's activities, forcing the transfer of $40 million from one private party to another to get a government license, favors finding a taking.

The SJC (with Justice Serge Georges recused) remanded FBT's regulatory taking claim to the Superior Court for discovery and further proceedings.

The outcome of the case is still up in the air. During oral arguments in February, the SJC justices and a Gaming Commission lawyer addressed the prospect of a $40 million verdict against the commission. If that happened, the Gaming Commission's counsel and FBT's attorney said it would likely be up to Encore, MGM Springfield, and Plainridge Park Casino to pay it.