Wynn Resorts announced Friday that WynnBET will shut down operations in eight states “as soon as possible.”
The closure of Wynn’s online West Virginia in the immediate future. The operator will work with state regulators to determine an exit plan, which will likely include further details for customers about withdrawing remaining funds, plans for outstanding futures bets, and other logistical details.
WynnBET’s impending exits open mobile licensing opportunities for other operators in Arizona and Virginia, states with caps on mobile licenses. Arizona will have four open licenses, while Virginia will have one open spot.
“Sports betting’s a tough business,” Julie Cameron-Doe, Wynn Resorts’ chief financial officer, said on Wednesday’s earnings call. “It’s about the game of commodity. They’re difficult businesses, but we’re very focused on managing this business.”
The Michigan are “under review.”
“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,” Cameron-Doe said in a statement Friday.
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On Wednesday’s earnings call, Wynn Resorts CEO Craig Billings was asked by Macquarie Group analyst Chad Beynon about the company’s desire to reduce the cash burn of Wynn Interactive. Wynn’s online sports betting division falls under Wynn Interactive.
“I don’t think we ever said it would be break-even in the fourth quarter,” Billings said. “But what we are focused on is making sure that it goes down every quarter.”
The Macquarie Group’s report on Wynn’s Q2 earnings noted that the company outperformed industry averages in every sector of its business except Wynn Interactive.
Data from several states that report operator handle and revenue suggests WynnBET was lagging behind industry peers. Over the second quarter, Rush Street Interactive achieved profitability within their respective online gaming divisions for the first time ever. The companies reported positive adjusted EBITDA or earnings (before the impact of interest income or expense, income tax provision or benefit, and depreciation and amortization) as a measure of profitability. The figure strips out certain one-time, non-recurring expenses.
WynnBET has ed for 3.68% of mobile wagering handle in Massachusetts. It has generated less than 1% of legal mobile wagering in 2023 in Arizona (0.91%), Indiana (0.67%), New York (0.62%), Michigan (0.59%), and Virginia (0.56%). WynnBET’s 2023 win rate in all six of those states is below 6%, with 7% long considered an industry standard.
Several operators, thanks in part to single-game parlay offerings, have improved their hold. WynnBET isn’t finding that same success.
In Arizona in 2023, BetMGM has reported a 9.89% win rate, FanDuel has reported a 9.74% win rate, DraftKings has reported an 8.26% win rate, and Caesars Sportsbook has reported a 5.6% win rate. During that same period, WynnBET’s hold was 5.34%.
While Caesars Sportsbook’s Arizona win rate isn’t much higher than WynnBET’s, its mobile handle is more than 10 times that of WynnBET.
In New York in 2023, WynnBET’s win rate is 5.23%. FanDuel’s during that same period is 11.12%.
Despite lagging behind competitors in of win rate and handle, the unexpected announcement of exiting the multiple markets comes after the operator rolled out its new “multi-state app” across six states earlier this month.
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WynnBET VATHE NEW APP IS LIVE pic.twitter.com/jguNJv09Qo
— Matt Lindeman (@lindetrain) August 4, 2023
Industry-wide consolidation 9485w
FanDuel and DraftKings dominate U.S. market share, with the two operators ing for as much as 75% or more of the mobile sports betting space. Fewer than 10 U.S. sportsbooks are attaining market share of at least 1%, according to an assessment by PointsBet executives.
The online sports betting space is highly competitive, with substantial spending on customer acquisition costs needed to compete atop the industry. Wynn Resorts no longer sees the necessary spend and effort as worth the end result.
“In light of the continued requirement for outsized marketing spend through acquisition and promotions in online sports betting, we believe there are higher and better uses of capital deployment for Wynn Resorts shareholders,” Cameron-Doe said.
In early 2022, the New York Post reported Wynn Resorts floated the potential sale of Wynn Interactive for $500 million. Previously, the company valued its interactive branch at closer to $3 billion.
WynnBET isn’t the only operator to either reduce its role or leave the industry completely in recent months. Flutter Entertainment and Fox Corp. recently announced plans to shutter FOX Bet in the immediate future. MaximBET and Fubo Sportsbook each shut down last year, and Churchill Downs Inc. has backed out of the online sports betting industry.
approved Fanatics’ $225 million acquisition of the company’s assets in June. Fanatics is in the process of converting PointsBet’s U.S. subsidiaries on a state-by-state basis. Under the deal, Fanatics has the option of completing the acquisition of PointsBet’s operations in three states by Aug. 31.
ESPN and PENN Entertainment will launch ESPN BET as PENN’s newly branded sportsbook in November, as PENN announced this week the end of its partnership with Barstool Sports.
WynnBET’s reduced role could benefit both Fanatics and PENN. WynnBET’s shutdown would leave an additional license open in Arizona, potentially paving the way for Fanatics’ entrance. PENN Entertainment CEO Jay Snowden, meanwhile, mentioned a desire to enter New York, and a license could be possible there for ESPN BET or another operator if Wynn backs out of the state as one of nine entities that were authorized in 2021.
Chris Altruda and Matt Rybaltowski contributed to this report.
