Taking a different route
Wynn Resorts is no longer planning to spin off its online gambling division, Wynn Interactive. The casino company previously had plans to merge Wynn Interactive with the Austerlitz Acquisition Corporation 1 special purpose acquisition company (SPAC) to turn it into a publicly traded company on the Nasdaq.
Wynn Interactive chief executive Craig Billings spoke about how a decision was made to take a new approach with the online division. The company wants to spend less money on marketing, which was not in alignment with the proposed merger’s capital-intensive plans.
Wynn Interactive will change its user acquisition approach to become more ROI-focused.
Instead of following the “elevated marketing and promotional spend” model that many of the sports betting sector’s big hitters are doing, Wynn Interactive will change its user acquisition approach to become more ROI-focused. Billings said: “We expect the capital intensity of the business to decline meaningfully beginning in the first quarter of 2022. WynnBET’s best days lie ahead of us.”
Focusing on more sustainable long-term growth
Wynn Resorts had originally agreed to spin off the Wynn Interactive subsidiary in May in a reverse merger with the Austerlitz SPAC. The SPAC had cash reserves of about $640m at the time, with these funds earmarked for fueling growth. The post-transaction value of the new entity was to be about $3.2bn, 4.5x the Wynn Interactive revenue projection for 2023.
In a Wynn Resorts Q3 earnings call this week, Billings acknowledged that sports betting is still a high-growth market and will likely grow to be a $30bn to $40bn total addressable market in time. He noted, however, the significant competition in the sector and the high cost per acquisition due to significant marketing spending by rivals. As a result, Wynn Interactive is looking to pivot in order to scale with a “more measured and long-term focus” with the goal of creating a sustainable and healthy business.
Plenty of changes at Wynn
WynnBET is the flagship brand of Wynn Interactive. It currently has sportsbooks up and running in Virginia, Tennessee, New Jersey, Michigan, Indiana, Colorado, and Arizona. Billings spoke about the exciting future for the operator, including an upcoming launch in New York. WynnBET was one of nine operators to get the green light from New York gaming officials for an online sports betting license. Online betting in the Empire State is set to kick off in early 2022.
Billings is soon to become the CEO of Wynn Resorts. Current CEO Matt Maddox announced earlier this week that he would be stepping down from his position at the end of January 2022. The news came shortly after the reveal that Wynn Resorts’ revenue in the third quarter rose 168% year-on-year to $994.6m, generating a net loss of $166.2m.