Back in February, Realty Income Corporation announced a foray into the gaming industry with plans to acquire Encore Boston Harbor. The company finalized the sale of the casino from Wynn Resorts earlier this month on Dec. 1 in a $1.7 billion cash transaction. The sale comes just months before Massachusetts sports betting is expected to launch.
Encore Boston Harbor will offer retail sports betting and two sportsbooks, including WynnBet and Caesars Sportsbooks. Wynn Resorts will continue to operate the property in the sale-leaseback deal.
Basics of the Transaction
Realty Income is a leading real estate investment trust (REIT) with approximately 11,000 real estate properties owned under long-term net lease agreements with commercial clients. Its transaction with Wynn Resorts is a 30-year long-term net lease agreement.
“Our investment philosophy centers around generating favorable risk-adjusted returns by investing in strategically important properties with partners who are leaders in their respective industries,” Sumit Roy, Realty Income’s President, and CEO, said in February. “We are pleased to cultivate a new relationship with Wynn Resorts as we expand our universe of net lease investments.”
Per Realty Income, the advantages of the transaction include the following:
- Generation of immediate returns
- Healthy contractual rent growth
- Partnership with a leading gambling operator in a healthy industry
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Encore Boston’s Finances
In the deal, Wynn Resorts gains with the monetization of its assets, gaining liquidity, and retains its 13 acres of land in Everett, where the casino sits.
Encore Boston outperforms the other two casinos in the state, MGM Springfield and Plainridge Park. In fact, the Boston-area casino is now exceeding its pre-pandemic gross gaming revenue. Before all casinos in the state shut down for three months in April 2020 during a COVID lockdown, Encore Boston’s highest GGR was $54 million for December 2019, five months after it opened for business. In 2022, the casino is averaging nearly $60.2 million GGR per month, with a high of $64.8 million in March. October’s GGR was $62 million.
This revenue growth was one of the purchase factors mentioned in Realty Income’s release about the acquisition in February.
“Nationally, gaming revenues have recovered to pre-COVID levels and the two-year growth rate of gross gaming revenue in Massachusetts was double that of the overall industry in 4Q21.”
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Sports Betting in the Commonwealth
Encore Boston Harbor submitted its application to offer sports betting to the Massachusetts Gaming Commission (MGC) in November. The MGC is currently creating regulations for sports betting in the state, reviewing applications, and holding public meetings that enable citizens to voice their concerns about sports wagering.
The tentative launch for Massachusetts retail sportsbooks is late January, right before the Super Bowl. Mobile betting apps are expected to follow in late February or early March.
When the industry gets the green light, Encore Boston Harbor will be ready for retail and online sports wagering with a WynnBet-branded sports bar that includes betting windows, banks of large viewing screens, and an LED score ticker.