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City’s Mohegan Sun Deal Protected by Failure to Reach Agreement With Wynn

A re-open clause in the city’s deal with Mohegan Sun will not be triggered by a deal with Wynn Resorts decided by the state’s gaming board.
A re-open clause in the city’s deal with Mohegan Sun will not be triggered by a deal with Wynn Resorts decided by the state’s gaming board.David L. Ryan/Globe Staff

The City of Boston’s decision to forego arbitration over a surrounding community agreement with Wynn Resorts last week comes with one big benefit: It keeps its existing agreement with Mohegan Sun in tact.

Wynn and Mohegan Sun are vying to open the only Boston-area casino in Everett and Revere respectively, a decision that will be made later this summer. (The effect of that decision, however, would be pending the outcome of a referendum initiative to repeal expanded gambling legislation.) Last week, Boston Mayor Martin Walsh signed a surrounding community agreement with Mohegan Sun that would pay the city $30 million upfront, plus $18 million annually.

With the city and Wynn seemingly far apart on negotiations for a surrounding community deal, the two sides were expected to enter into arbitration over a similar agreement. However, Walsh opted to boycott the process, leaving the decision about compensation to the city in the hands of the Massachusetts Gaming Commission. (The board is expected to discuss that process at a meeting today.)

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The Boston Herald reports that the city’s agreement with Mohegan Sun included a re-opener clause, which would allow for the compensation from the company to the city to be adjusted to be more in line with any agreement entered into voluntarily by the city with Wynn.

The city says such agreements are common and are put in place to keep negotiations with all parties in good faith.

But because the city did not reach a deal with Wynn, surrounding community compensation from the company would not be considered voluntary. So even if the gaming board chooses a compensation figure closer to the $650,000 per year that Wynn will pay Chelsea and Somerville, the re-open clause won’t be triggered.

“From a practical standpoint, the re-opener language no longer applies because the city of Boston is no longer engaged in arbitration,” city spokesperson Kate Norton tells the Herald.

A spokesperson for Mohegan Sun tells Boston.com the company reads the situation the same way. Mohegan Sun also released a statement saying, in part: “We reached this agreement through cooperation, as opposed to arbitration, and in that spirit are prepared to abide by every clause that the agreement dictates.”

Speaking for the city, Norton tells Boston.com that Walsh’s decision to forego arbitration was not related to the re-opener clause with Mohenan Sun.

Read the full Herald story here.

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