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Erik Gibbs January 24, 2022 3 min read
Rewards Don’t Outweigh the Costs as Wynn Looks to Unload Wynn Interactive
Wynn Resorts wants to sell its online sports betting arm, Wynn Interactive, according to the New York Post. The move comes as a surprise to many, given the attention the online gaming industry is receiving. Adding to the puzzling situation is the fact that Wynn is willing to let it go in what can only be deemed a fire sale. The Wynn Interactive unit is being quietly sold for only around $500 million.
Wynn to Dump Wynn Interactive
The sale comes six months after Wynn had been publicly preparing a splashy spring launch of WynnBET and signed up Shaquille O’Neal as a brand ambassador. O’Neal also sold his minority stake in the Sacramento Kings to Wynn so that he could collaborate with Wynn and not violate the league’s gambling rules.
It’s a far cry from last spring when online sports betting companies traded at 25 times their projected revenues. Then, tech investors like Cathie Woods Ark Invest hyped stocks by arguing that the pandemic was poised to bring an explosion of mobile gaming.
Former CEO Matt Maddox stated that the market was not sustainable on a November 10 earnings call. Morgan Stanley analysts then stated that WynnBET was valued at $700 million and that the app would win 2.5% of the North American market.
Even the most highly-valued companies are now trading close to six times. DraftKings is the largest pure-play, listed sports-betting company. It traded in the mid-$50s back in May and fell to the low $40s this November. Its shares closed Friday at $19.46.
Wynn Puts On the Brakes
Wynn announced in November that it had abandoned its plans to merge Wynn Interactive and Austerlitz Acquisition Corp., a blank-check company controlled by Bill Foley, the billionaire owner of Las Vegas Knights.
WynnBET would have been able to create a public company valued at $3.2 billion and also had $640 million in marketing cash. Maddox stated at the time that the app was expected to burn $100 million each quarter.
FanDuel and DraftKings together hold a large share of online sports betting markets. They have been offering $1,000 credits to new members. Caesars has also been promoted aggressively in New York, despite the fact that online gaming revenue is subject to a 51% state tax.
The New York Gaming Commission announced Friday that mobile sports betting had made a strong start. It saw more than $600,000,000 in bets placed by Caesar’s, FanDuel, and DraftKings. Gaming analysts believe that this huge haul was partially due to “heavy promotion by the operators.” Wynn holds a New York-based online gambling license but hasn’t introduced any services. Perhaps now we know why.
According to banking sources, Penn Interactive and Fanatics are the most likely suitors for Wynn Interactive. WynnBET also owns BetBull and Wynn Slots, which would likely be included in the deal.
Erik brings his unique writing talents and storytelling flare to cover a wide range of gambling topics. He has written for a number of industry-related publications over the years, providing insight into the constantly evolving world of gaming. A huge sports fan, he especially enjoys football and anything related to sports gambling. Erik is particularly interested in seeing how sports gambling and online gaming are transforming the larger gaming ecosystem.
Business January 24, 2022