Wynn Resorts said today it is closing its online-sports-betting and igaming platform WynnBET in eight states and will consider doing the same in New York and Michigan to redirect marketing money to other opportunities.
Working with regulators and patrons, Wynn said it will seek to cease operations in Arizona, Colorado, Indiana, Louisiana, New Jersey, Tennessee, Virginia, and West Virginia as soon as possible. Operations in Nevada and Massachusetts will continue unaffected, while those in New York and Michigan remain under review.
“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,” said Julie Cameron-Doe, chief financial officer of Wynn Resorts.
“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, which include the United Arab Emirates, New York City, and Macau, 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 added.
The news isn’t a surprise, given Wynn’s announcement in the fall of 2021 that it was pivoting away from what it considered overzealous spending by sports-betting competitors; at the time, Wynn’s shift toward more conservative investment in digital was considered noteworthy.
Wall Street analysts said at the time that Wynn was making a sound decision on the pullback, in light of fourth-quarter losses expected to exceed $103 million in the third quarter of 2021.
Wynn conducted its second-quarter earnings call on Wednesday without focusing on their digital strategy, instead dwelling on Macau, Las Vegas, and a casino-resort in the UAE.
“Wynn reported modest interactive revenues of $25.9 million and an EBITDA loss of $15 million,” CBRE analyst John DeCree said in a note to investors after the call. “Looking forward, Wynn continues to spend responsibly there and is focused on ensuring the EBITDA loss continues to shrink until it eventually inflects.”
The post-call headline from David Katz with Jefferies Equities Research was Wynn’s $1.596 billion of revenue, beating its $1.428 billion and the Street’s $1.538 billion.
“Meanwhile, the company recorded $524.5 million of adjusted EBITDA, also beating our $413.4 million and the Street’s $450.8 million,” Katz wrote “The Macau properties generated the greatest upside to our forecasts, although Las Vegas posted strong results as well.”
Some analysts didn’t even touch on WynnBET and digital gaming in their reports and one brought it up during the earnings call.
Chad Beynon, an analyst with the Macquarie Group, asked about the interactive cash burn that continues to come down year over year. He asked executives whether Wynn was on track to turn profitable in the fourth quarter.
“I don’t think we ever said it would be breakeven in the fourth quarter,” said CEO Craig Billings. “But what we are focused on is making sure that it goes down every quarter.”
Cameron-Doe also weighed in on the question, providing a hint of what was to come a few days later.
“Sports betting is a tough business,” she said. “It’s about the game of commodities. They’re difficult businesses, but 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.”
