Wynn Resorts “terminates” SPAC deal amid rising marketing costs
US casino operator switches to cost-effective user acquisition strategy for sports betting as competitive US market takes its toll
Wynn Resorts has abandoned its proposed reverse merger deal for its online business with SPAC Austerlitz Acquisition Corporation I as part of a strategic pivot.
It is understood the agreement is mutual in nature and will take effect immediately.
The deal would have seen Wynn Interactive business spun off into a separate entity, in an agreement which valued the combined business at $3.2bn when it was first announced in May.
The company operates the WynnBET, BetBull, and WynnSLOTS brands to players in both the US and the UK.
The combined business would then have relisted on the Nasdaq under the WBET name, with Wynn Interactive shareholders holding 79% stock in the combined business and Austerlitz stockholders holding the remaining 21%.
Following completion, the combined group would have had more than $640m in available cash to fund existing operations and support “new and existing growth initiatives” of Wynn Interactive.
In addition, plans were underway for a significant investment in broad-base marketing over the next two years aimed at scaling up the Wynn Interactive business with the overriding aim of going up against US sports betting’s heavyweights.
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.
In addition, Wynn Interactive pledged to actively increase its staffing levels over the next year.
Last week, Wynn’s outgoing CEO, Matt Maddox, who is due to leave the top job in 2022, recently admitted that the firm could not keep up with customer acquisition spend levels being deployed by the firm’s US competitors.
In the firm’s Q3 earnings call, Maddox suggested that Wynn was shifting its strategy to “think about the future” and to “think about cash preservation.”
Wynn Interactive CEO Craig Billings, who will succeed Maddox as Wynn Resorts CEO, outlined the firm’s decision to bring its SPAC discussions to an end, echoing much of his predecessors comments.
“With our continued roll out of product features and planned new state launches, including New York, we remain excited about WynnBET’s future.
“As we discussed on the Wynn Resorts third quarter earnings conference call earlier this week, in light of elevated marketing and promotional spend in the sports betting industry, we are pivoting our user acquisition efforts to a more targeted ROI-focused strategy.
“In so doing, we expect the capital intensity of the business to decline meaningfully beginning in the first quarter of 2022.
“WynnBET’s best days lie ahead of us,” Billings added.