A federal appellate court on Wednesday killed a case filed by the former owner of Suffolk Downs racecourse in East Boston that accused Wynn Resorts of racketeering in its pursuit of a casino license in Massachusetts.
A panel of judges from the First Circuit Court of Appeals upheld an earlier district court dismissal of the $3 billion lawsuit by Sterling Suffolk LLC.
The suit claimed the Las Vegas casino giant had “conspired to fix” the 2014 license bidding process, which paved the way for the construction of the Encore Boston Harbor.
In 2013, Sterling Suffolk partnered with Connecticut-based Mohegan Sun in a joint bid against Wynn for a sole east Massachusetts casino license. If successful, Sterling expected to earn rental income of $3.4 billion on a lease period of 99 years.
Massachusetts residents voted to change the constitution to allow casino gaming in 2011. Saving the historic Suffolk Downs thoroughbred track from financial ruin had been a big part of that conversation.
But the Massachusetts Gaming Commission (MGC) ultimately decided Wynn’s proposal better served the interests of the local area and the state. In November 2014, it granted Wynn a license and denied Mohegan’s application.
It was the final nail in the coffin for Suffolk Downs. In 2017, Sterling sold the 82-year-old racetrack to the McClellan Highway Development Company.
The MGC decision came despite several controversies around the Wynn application. Foremost of these, the company that sold the plot of land to Wynn on which the Encore Boston Harbor would be built allegedly had ties to the Mob.
The directors of FBT Everett Realty were accused of fraudulently hiding the interests of former director Charles Lightbody, who had convictions for assault with a dangerous weapon and for organizing an identity theft ring.
Sterling Suffolk claimed that Wynn Resorts knew about this and “failed to disclose the criminal records of project participants [and] provided false or misleading information about the true ownership of the project location,” in its application to the MGC.
The FBT Realty directors were later cleared of fraud by a federal judge in Boston.
The Sterling Suffolk lawsuit claims that that then Massachusetts gaming commissioner Stephen Crosby conspired with associate and business partner Paul Lohnes to steer the license towards Wynn Resorts as part of a “secret deal.”
It further alleges that Steve Wynn made “false or misleading” statements to the MGC to conceal alleged sexual misconduct when applying for the license. It also claims certain Wynn Resorts directors failed to declare to the MGC that they knew of Wynn’s behavior.
In November 2019, the district court tossed the case on the grounds that Sterling had failed to allege a “continuous pattern of racketeering behavior” by any of the defendants.
Not Injured Enough
On Wednesday, the panel of judges agreed with the decision but for a different reason. They ruled that Sterling Suffolk was too far removed from the competition for a casino license to be able to claim that it had been injured by MGC decision.
“Sterling has not and cannot meet the causation of injury requirements set forth in [federal law],” they wrote. “At minimum, Mohegan, which is not involved in this suit, is a ‘better situated plaintiff’ with ‘an incentive to sue.’”
“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,” the judges concluded.
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