Wynn Resorts plots cut-price Wynn Interactive sale
Reports suggest US hotel and casino operator is looking to unload its interactive business for $500m
Wynn Resorts has reportedly put up its Wynn Interactive business for sale at a heavily discounted $500m (£371m) amid rising costs and competition in the US market.
Citing sources close to the US casino resort operator, the New York Post has suggested that the unit is being shopped around at a lower price to potential suitors to encourage a possible quicker sale.
The Post suggests the desire to sell comes amid so-called “painful losses” at the firm caused by high taxation and a significant increase in CPAs in the US sports betting market.
The $500m represents just a sixth of the $3.2bn value of the business given as part of its proposed SPAC merger with Austerlitz Acquisition Corporation I, a deal first announced in May 2021.
The $3.2bn valuation represented 4.5x Wynn Interactive’s projected 2023 revenue and would have seen the firm make a significant investment in broad-base marketing over the next two years, aimed at scaling up the Wynn Interactive business.
Areas slated for investment included performance marketing, mass media awareness campaigns and an investment in generating more partnership agreements with affiliates.
Wynn’s app and bonusing products were also slated for investment, as well as the deepening of integration between the app and the Wynn Rewards loyalty programme.
However, merger proposals were abandoned with immediate effect in November.
At the time of the termination, Wynn Resorts CEO Matt Maddox, who has since stepped down from the role, suggested the firm was “thinking about the future” and would “think about cash preservation”.
Referencing the US market, Maddox suggested WynnBet could not compete with operators like DraftKings and FanDuel in respect of customer acquisition spend and that the market was becoming “unsustainable” for Wynn.
“Competitors are spending too much to get customers. And the economics are just not something that we’re going to participate in, in the short term,” Maddox told investors at the firm’s Q3 results last year.
“So while we built the brand, [and] we launched the product in the third quarter, we’re going to be focused on building a long-term business that’s sustainable, that is not losing lots and lots of money,” he added.
One area where marketing costs have recently been in the news is the New York sports betting market, which has seen a significant rush for customers from operators following its debut on 8 January.
Four operators, Caesars, DraftKings, FanDuel and Rush Street Interactive (BetRivers) have all launched in the Empire State, with Caesars reportedly leading the way in early competition between the quartet.
In contrast, WynnBet, which has received a licence to operate in New York, has yet to launch due to not fulfilling final checks made by the New York State Gaming Commission required to do so, with the firm facing an uphill battle to acquire customers when it eventually launches.
In addition to these potentially high marketing costs, WynnBet also faces the impact of New York’s controversial 51% tax rate on sports betting, something which could cripple the firm’s profits in the state even further.