Wynn Resorts Looks To Sell Interactive Division At Steep Discount

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WynnBET, the online casino and sportsbook arm of Wynn Resorts, is for sale.

It, along with WynnSlots and BetBull, are all part of Wynn Interactive. The parent company, Wynn Resorts, is looking for a buyer for the entire subsidiary.

The news comes just days after the CEO of the online casino market leader, BetMGM, said promotional spending in the online gambling space needed to become more rational. That competitive marketing environment may be a large part of the reason Wynn is unloading its iGaming and sports betting subsidiary.

The exact motives for the sale remain a matter of speculation, though. Wynn representatives had little to say today to Online Poker Report about the New York Post‘s reporting. On Sunday, the newspaper said Wynn Interactive was “quietly” being shopped around for the “fire sale” price of $500 million.

Plummeting valuation

That figure represents a night and day difference from Wynn Interactive’s announcement in May last year. At that time, it said it would be going public in what it expected to be a $3.2 billion deal. In the process, it was slated to raise $640 million in new operating capital. None of that happened.

By November, that IPO deal with Austerlitz Acquisition Corporation I was canceled.

As another point of comparison, the current proposed sale amounts to just $50 million more than the $450 million that market leader BetMGM recently allotted for its 2022 online casino and sports betting operations. This is despite BetMGM being considered a conservative spender in the customer acquisition cost arena.

At the moment, WynnBET is trailing badly in the race for US online casino and sports betting market share. Competitors like BetMGM, DraftKings and FanDuel are far ahead of it.

Wynn Resorts shareholders reacted negatively to the news. Its stock dipped from  $85.67 at closing on Friday to a low of $79.49 on Monday, though it has mostly recovered since then.

What Wynn Resorts says about selling Wynn Interactive

Deanna Pettit-Irestone, executive director of public relations for Wynn Las Vegas and Encore, provided OPR with this statement today from Wynn Resorts:

“We have no comment on any specific market rumors or speculation regarding Wynn Interactive. We were clear on our last earnings call about the current highly competitive nature of the online sports betting market and our desire to operate that business in way that will actually create long-term shareholder value.”

What she referenced was Wynn CEO Matt Maddox‘s statement about online gambling during the Q3 2021 earnings call:

“The market is really not sustainable right now. Competitors are spending too much to get customers. And the economics are just not something that we’re going to participate in, in the short term. So while we built the brand, we launched the product in the third quarter, we’re going to be focused on building a long-term business that’s sustainable, that is not losing lots and lots of money. So we are shifting our strategy to think about the future, think about the long term, think about cash preservation. And we remain very confident that we’ll create significant value for the Wynn Resort shareholders with our digital strategy.”

Possible reasons WynnBET is on the auction block

Industry customer acquisition costs may be too expensive for WynnBET.

BetMGM CEO Adam Greenblatt said on Jan. 19 that his company was bringing its promotional and marketing expenditures into line, with joint owners of the brand spending $450 million on it this year. Entain and MGM Resorts International jointly operate BetMGM.

BetMGM estimates it will soon lower its acquisition costs to $250 per online customer. The Post notes online gambling operators are spending $300 to $500 per online gambler acquired.

In June 2021, Caesars Entertainment announced it planned to outlay $1 billion during the next 2.5 years to acquire new online wagering and land-based casino gamblers.

Wynn Interactive’s expenditures, however, haven’t come anywhere closed while promoting WynnBET. In 2021, before the IPO announcement in May, Wynn Interactive saw revenue of $42 million in January more than double to $103 million in March. The main note in that revenue report was that the company wasn’t doing much marketing or promotion.

Indeed, WynnBET debuted in what may have been New Jersey‘s quietest online casino and sportsbook launch in state history. WynnBET started accepting wagers in August 2020, which was a late entry into the US online gambling space.

So it seems there’s little change in Wynn Resorts’ historic attitude toward online gambling.

Asked what he thought about the industry in 2014, then-Wynn Resorts Chairman and CEO Steve Wynn said:

“Not much.”

What WynnBET offers a buyer

What’s interesting about WynnBET is that its main selling point may be its online sports betting market access in New York. That market launched on Jan. 8, with only four of the nine approved operators ready to go. BetMGM went live on Jan. 17 to make it five, but WynnBET is not among the currently active operators.

So, although access to that huge market is appealing, it’s anyone’s guess how much WynnBET’s share is actually worth.

PlayNY reported that the day before, the already launched books — FanDuel, DraftKings, Caesars and BetRivers — “produced a staggering $603.1 million in combined online sports betting handle through Jan. 16.”

That, of course, means a company looking to launch an online sportsbook may want to buy WynnBET. The main name thrown around is Fanatics, an e-commerce sports apparel company looking to get into the online sports betting business and rumored to be interested in the Empire State.

Currently, WynnBET is available in seven states:

Arizona
Colorado
Indiana
Michigan
New Jersey
Tennessee
Virginia

WynnBET takes online casino wagers in the Wolverine and Garden states.

Author: wpadmin

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