Posted on: August 11, 2023, 02:14h.
Last updated on: August 11, 2023, 02:14h.
It's not a death in the traditional sense, but Wynn Resorts (NASDAQ: WYNN) is dramatically reducing the scope of its WynnBet sports wagering unit, announcing the business will halt operations as soon as possible in eight states in which it currently books bets.
The Las Vegas-based casino operator announced today that WynnBet is working with regulators in Arizona, Colorado, Indiana, Louisiana, New Jersey, Tennessee, Virginia, and West Virginia to halt its sports wagering business in those states. The news arrived less than two months after the gaming announced the debut of WynnBET in West Virginia.
While we believe in the long-term prospects of iGaming, the dearth of iGaming legislation and the presence of numerous other investment opportunities available to us around the globe have led us to the decision to curtail our capital investment in WynnBET to focus primarily on those states where we maintain a physical presence,” said Wynn CFO Julie Cameron-Doe in a statement.
Not being able to gain traction in Arizona, Colorado, Indiana, Louisiana, and New Jersey is undoubtedly a disappointment for any mobile sportsbook operator because New Jersey is one of the largest sports betting markets in the US while the other four are among the fastest-growing.
WynnBet Brick-And-Mortar Focus, Long Road Down
As Cameron-Doe pointed out, WynnBet will focus on the states in which Wynn Resorts operates land-based casinos — Massachusetts and Nevada.
The gaming company noted its sports wagering arm is under review in Michigan and New York. Save for a surprising acquisition, it's unlikely Wynn will run a casino hotel in Michigan anytime soon, but the company is viewed as one of the leading contenders for one of three downstate casino licenses New York regulators are expected to award in 2024.
Wynn has been consistent in stating it won't spend excessively to gain sports wagering market share, a sentiment echoed by Cameron-Doe in the press release.
“In light of the continued requirement for outsized marketing spend through user acquisition and promotions in online sports betting, we believe there are higher and better uses of capital deployment for Wynn Resorts shareholders,” she said.
News of the operator's departures from the aforementioned eight states is perhaps close to the last chapter in WynnBet's turbulent history. In May 2021, Wynn announced a plan to merge Wynn Interactive with a special purpose acquisition company (SPAC) controlled by Las Vegas Golden Nights owner Bill Foley, assigning an enterprise value of $3.2 billion to the business. In November of that year, the deal was called off.
In early 2022, speculation surfaced that Wynn was shopping its digital betting unit at $500 million, but the company never confirmed that rumor and no deal materialized.
Wynn Looking Beyond Sports Betting
While some land-based casino operators, namely Caesars Entertainment (NASDAQ: CZR) and MGM Resorts International (NYSE: MGM), have found success in the sports betting segment, the cut-throat industry isn't for all companies, including high-end integrated resort operators like Wynn.
There's something to focusing on the core competency of running casino hotels and taking a pass on sports betting. It's a template deployed by Las Vegas Sands (NYSE: LVS) — one of Wynn's most direct competitors.
On that note, Wynn posted record adjusted property earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) in the second quarter at its Las Vegas Strip properties and at Encore Boston Harbor.
Additionally, the operator is close to breaking ground on its Wynn Al Marjan Island project in the United Arab Emirates (UAE). On a conference call with analysts earlier this week, CEO Craig Billings told analysts he believes the UAE will soon approve a gaming license for the property, making it the first regulated casino in the Arab world.
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