Dearth of igaming legislation prompts major WynnBet roll-back

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Wynn will cease operations in Arizona, Colorado, Indiana, Louisiana, New Jersey, Tennessee, Virginia and West Virgina as soon as possible. 

Operations in New York and Michigan remain under review. Only Nevada and Massachusetts operations are guaranteed to continue, states where it operates land-based properties. 

‘Better uses of capital deployment’

There are better uses of capital deployment for Wynn shareholders than the high levels of marketing spend required for online sports betting, chief financial officer Julie Cameron-Doe explained.

“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,” she said.

‘Sports betting’s a tough business’

Speaking earlier this week on the operator’s H1 earnings call, Cameron-Doe said Wynn Interactive reduced its EBITDAR burn rate to $15m in Q2.

CEO Craig Billings denied any commitment to break even by the fourth quarter of 2023, instead saying Wynn was instead focused on reducing cash burn quarter-over-quarter.

“Sports betting’s a tough business. It’s about the game of commodity,” Cameron-Doe said on the call. “[we’re] very focused on managing this business. We’ve got a very long-term shareholder-friendly view on it. So that’s our focus.”

As market leaders such as DraftKings and FanDuel turn-EBITDA positive for sports betting, competition is set to ramp up rapidly. Fanatics Betting and Gaming and Penn Entertainment’s ESPN Bet are both preparing for major pushes across the US.

WynnBet’s history

WynnBet, Wynn Interactive’s lead brand, may ultimately be rolled back to just two states. Of the two, only Massachusetts publishes operator-level market figures.

In Massachusetts, players staked $69.9m on the WynnBet app since the state’s mobile betting market launched in March. Amounts wagered via market leader DraftKings, in contrast, stand at $930.5m.

Moving to Michigan, WynnBet’s year-to-date handle is just $12.3m, for adjusted gross revenue of $537,533. It fares better in igaming, generating revenue of $28.2m from $30.2m in stakes. In New York, handle for 2023 so far stands at $31.4m for revenue of $1.9m.

In 2021, the operator was preparing to spin off its interactive arm as a separate business, through a combination with special purpose acquisition company Austerlitz Acquisition Corporation I.

Wynn scrapped these plans after Wynn Interactive CEO and group CFO Craig Billings took over as CEO.

Wynn’s big UAE opportunity

Among the other investment opportunities Cameron-Doe cites is a pioneering project in the Middle East. In the United Arab Emirates, Wynn is on track to open the region’s first integrated resort.

Wynn released renderings of its property in Ras al-Khaimah earlier this year

The Wynn Resorts property will be located on the man-made Al Marjan Island in the Emirate of Ras Al-Khaimah and will cost approximately $3.90bn.

The venue is not due to open until early 2027. Construction partners were appointed in March, followed by property renderings, while Thomas Schoen heads up the development as project president.

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