In a riveting courtroom showdown, two Massachusetts justices found themselves grappling with a $19 million handshake agreement tied to the land designated for Wynn Resort's highly-anticipated Boston-area casino. The legal battle not only challenged state restrictions on side deals but also raised crucial questions about the integrity of the gambling industry.

Oral Arguments Intensify at Massachusetts Supreme Judicial Court

As the oral arguments unfolded, the Massachusetts Supreme Judicial Court found itself immersed in a legal saga revolving around the Encore Boston Harbor Casino. The dispute, reignited by former owner entities, revolved around a state-ordered haircut of a staggering $40 million on the land, which they claimed constituted a regulatory taking.

At the heart of Wednesday's proceedings lay a federal lawsuit initiated by Anthony Gattineri, a partial owner of FBT Everett Realty LLC. Gattineri alleged that a Wynn executive had offered him a guarantee of being "made whole" in the face of a $19 million price reduction, provided he signed the necessary paperwork for Wynn to pursue a state-issued casino license.

Gattineri's stake in FBT Everett Realty stood at 46%. The company had initially sold the land to Wynn for $35 million, a significant markdown from the initial agreement of $75 million. This change came about after concerns were raised by the state gaming commission regarding potential ties between the seller and organized crime.

First Circuit's Call for Clarity Leads to Supreme Court Showdown

The First Circuit, seeking clarity on the enforceability of Gattineri's side deal with Wynn, deferred to Massachusetts' highest court. They sought to determine whether this agreement violated the state's ban on undisclosed side deals, a breach of transparency, and a potential "casino premium" for the land.

In their defense, Wynn Resorts, in collaboration with the Massachusetts Gaming Commission, argued that Gattineri's handshake agreement flagrantly violated the state's prohibition on such secret arrangements, which bypass commission scrutiny and raise concerns about public policy.

However, Associate Justice Serge Georges cast doubt on this argument. He found merit in Gattineri's claim that the provision applied only to deals made after the issuance of a license. "Could you go through the math for how that provision could apply when the license was still extant?" he inquired, pressing Wynn attorney Emily Kanstroom Musgrave for answers.

Associate Justice Scott L. Kafker chimed in, further challenging Musgrave's interpretation, suggesting that the law appeared directed at the transfer of licenses from existing operators to new ones. "It seems like [the law] is directed at, 'OK, we agree to give you the license, you honest and good guy, but you transfer it to someone, that makes us nervous.'"

The court, however, seemed to be more concerned with the second of the First Circuit's certified questions: whether the side deal compromised the perception of integrity within the casino industry.

$19M Casino Land Deal : Integrity Under Scrutiny

Justice Kafker posed a critical question: did it matter if another court eventually ruled that the Massachusetts Gaming Commission had erred in reducing the sale price of the Everett property?

Musgrave's response was clear: "That case is completely unrelated. Whatever the commission did, whatever the commission's actions were, has no impact on the propriety of ... resorting to this kind of self-help, secret side deal designed to circumvent its process."

In a final probing question, Justice Kafker sought clarity: "The problem is the secrecy, not the substance?"

Musgrave's reply left no room for ambiguity. "It's both," she asserted. "It's the secrecy of the deal, and it's the substance, which goes directly to when the commission approved" the price reduction and other stipulations to the land sale.

$19M Casino Land Deal :  Awaiting the Court's Verdict

With the courtroom drama reaching its zenith, the Massachusetts Supreme Judicial Court took the matter under advisement, leaving the fate of the $19 million casino land deal hanging in the balance.

Representing Gattineri in this high-stakes legal battle are Michael J. Connolly, Kelley A. Jordan-Price, and John A. LeBlanc of Hinckley Allen & Snyder LLP.

Wynn and Wynn Resorts have enlisted the legal prowess of Samuel M. Starr, Emily Kanstroom Musgrave, Caitlin A. Hill, and Catherine S. Lombardo of Mintz Levin Cohn Ferris Glovsky & Popeo PC.