The highest court in Massachusetts has directed a lower court to re-examine the “highly unusual” actions of the state’s Gaming Commission in granting a casino permit to Wynn Resorts.
This ruling follows a legal challenge brought by FBT Everett Realty against the regulatory body, initiated in 2016, arising from a land transaction between FBT Everett and Wynn Resorts.
Wynn and FBT Everrett had an agreement that granted Wynn the right to purchase a portion of land in Everett, where Wynn intended to construct a casino. However, Wynn’s exercise of this option was dependent on obtaining a casino permit from the commission.
However, FBT Everett claims that the commission “illegally coerced Wynn by informing them that they could only secure a license if they renegotiated the option agreement to lower the purchase price from $75 million to $35 million.” The $35 million figure was based on an assessment of the land’s “highest and best non-gaming use.”
Following the receipt of grievances, the panel determined that FBT Everett should not be granted a “casino use bonus” from the land sale. The panel asserted that if Wynn permitted FBT Everett to receive this bonus, Wynn’s license application could be “impacted.”
Consequently, the firm asserts it incurred a $40 million loss due to the panel’s actions. Furthermore, FBT Everett contends that the premium’s worth was actually transferred from itself to Wynn.
As a consequence, FBT Everett initiated legal proceedings against the panel, alleging that it constituted a breach of agreement and regulatory seizure. This is defined as when regulations restrict the use of property to such an extent that the landowner is effectively deprived of all economically reasonable use or value of their property.
The case initially commenced in the Superior Court Division but was appealed to the Supreme Judicial Court. The Superior Court dismissed the tortious interference claim – it stated that this did not apply to public entities like regulatory agencies – and the regulatory taking claim, through summary judgment, before a full trial.
The Supreme Judicial Court concurred with the tortious interference claim. However, regarding regulatory taking, it stated that the matter could not be resolved through summary judgment.
It discovered that the panel “began to concentrate on and examine whether FBT had concealed criminal ownership interests.”
In particular, authorities believed that Charles Lightbody, a convicted criminal with connections to organized crime, possessed concealed ownership in FBT. Furthermore, the court observed that the commission’s actions were “highly irregular.” “When confronted with an individual with a criminal history, who held unrevealed shares in land a gambling license applicant intended to acquire for developing a casino, the commission did not pursue their investigation until they could confidently establish whether there was indeed some undisclosed criminal ownership,” the court declared. The agency believes this played a significant role in their decision to encourage Wynn to reduce the land price. Notably, FBT Everett asserts that the commission’s actions were primarily driven by “their perception of FBT leadership’s lack of transparency and obstruction” towards the investigation, although regulators refute this. “Interpreting the evidence in the most favorable light for FBT, the commission, by pressuring third-party Wynn into action, caused a $40 million reduction in the value of the FBT property,” the court stated. “Considering that this represents a value decrease of over 50%, the economic impact of the commission’s actions is considerable.”
The judicial body stated that it was unable to ascertain whether the regulatory body “directed” Wynn to pay only $35 million, or “merely acknowledged it as a resolution to concerns regarding concealed criminal ownership stakes.”
Nevertheless, the court concluded that there was sufficient justification to suspect regulatory appropriation, thus preventing the dismissal of FBT Everett’s legal action through summary judgment.
Consequently, the court instructed the Superior Court to proceed with “additional proceedings” to thoroughly determine whether the commission had engaged in regulatory appropriation.
This decision arrives shortly after Steve Wynn, the founder of Wynn Resorts, became the target of a legal action initiated by the US Department of Justice, alleging that he acted as an unregistered foreign representative for the Chinese government.
The legal action claims that between June 2017 and August 2017, Wynn discussed a businessman who had departed China in 2014 with the then-US President Donald Trump and members of his administration. Wynn allegedly proposed that the individual be expelled from the United States or have his travel permit revoked. Subsequently, they were accused of corruption by Chinese authorities.
Steve Wynn stepped down from his position at Wynn Resorts in 2018 following accusations of sexual harassment, which he has refuted.
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