Wynn Resorts CEO slams “irrational behavior” in sports betting acquisition war
Craig Billings reiterates company stance of avoiding marketing blitzkrieg amid longer-term focus on igaming growth
Wynn Resorts CEO Craig Billings has questioned the “irrational behavior” exhibited by sportsbook operators in the drive to acquire new US players.
Speaking as part of the operator’s Q4 2021 earnings call, Billings, who stepped up to the top job in January, reiterated the firm’s prior Q3 stance that it would stay out of the acquisition war occurring in US sports betting.
This drive to acquire has seen sportsbook operators offer free money and free bets in emerging sports betting markets like New York, which has generated record revenue despite a crippling 51% tax rate.
“We were pretty explicit on the third quarter call about not engaging in the unsustainable user acquisition blitz that has emerged this NFL season and that we would take a more measured approach,” Billings told analysts.
The Wynn Resorts CEO cited the desire not to engage in order to generate a long-term shareholder-friendly environment for the business.
As part of this, Billings confirmed a shift in the firm’s user acquisition mix, beginning in early November, and focusing on “proven performance” marketing channels where Wynn can achieve a positive return on investment (ROI).
“By doing this, we meaningfully reduced our overall burn rate and as our remaining brand advertising commitments tailed off with the Super Bowl, I expect EBITDA burn levels to reduce even more drastically,” he explained.
“Overall, we estimate Q1 2022 burn should be down some 60% from Q3 2021 to the $40m range, and I expect Q2 2022 to be even lower,” Billings added.
Addressing the likely alternative destination for monies saved as part of the reduction in marketing, Billings continued: “The igaming business, where we have actually seen pretty reasonable success, is a more logical place for us in that business longer term.
“Unfortunately, it’s not a humongous TAM right now. Sports betting is most of the total addressable market and sports betting is where most of the irrational behavior is taking place.
“So, we will generate shareholder value from that business. The way we think about it is, we’re going to be really focused on the user acquisition side,” Billings concluded.
Wynn Interactive’s Q4 2021 revenue grew by 29% quarter on quarter, punctuated by the “meaningful curtailment” in marketing spend undertaken by the firm in the final two months of 2021.
Total turnover generated by Wynn Interactive amounted to $785m, a 20% quarter on quarter increase on Q3’s figures.
As a result of the decreased marketing spend and other metrics, Wynn has reported a quarter on quarter decrease in its EBITDA burn rate to $79m in Q4 from a prior high of $104m in Q3.