Wynn First to Fall in Sports Betting Arms Race, Slashes Price of Online Business to $500m

  • According to a source, Wynn Interactive floated its valuation at $3bn under a year ago
  • A source cited “painful losses from stiff taxes and costly promotions” as a reason for the drop
  • Wynn CEO hinted at pulling the plug on his firm’s online arm during a November earnings call
  • Penn Interactive and Fanatics are said to be the “most logical suitors” for Wynn Interactive
  • Despite gaining an online betting license, WynnBET hasn’t yet launched in New York
Wynn Las Vegas
Citing tax and promotional cost pains, a source close to Wynn Resorts has said the gaming giant has slashed the price of its online sports betting and iGaming business to $500m. [Image: Shutterstock.com]

Astonishing 83% discount

After an NFL weekend in which three out of four underdogs savaged sportsbooks, a source cited by the New York Post has confirmed Wynn Resorts has slashed the asking price for its online sports betting and iGaming business to $500m.

Author and business journalist Josh Kosman shared the news via Twitter on Sunday night:

The $500m asking price for Wynn Interactive — parent brand of sportsbook and iGaming app WynnBET — represents a staggering 83% discount for a business that, according to the Post’s source, floated its valuation at $3bn less than a year ago.

Providing some reasons for the fire sale, the New York Post source pointed to “painful losses from stiff taxes and costly promotions needed to lure customers.”

The first to fall

Outgoing Wynn Resorts CEO Matt Maddox hinted at pulling the plug on his firm’s online arm during a November 10 earnings call. Despite a 163% rise in Q3 year-on-year revenue for the company, Maddox noted that WynnBet was on course to consume $100m in both Q3 and Q4. He described the online gambling market as “not sustainable.”

Maddox stated that rivals, such as DraftKings and FanDuel, were “spending too much” to gain market share. He added that “the economics are just not something that we’re going to participate in.”

US sportsbooks have engaged in an unprecedented arms race in order to capture market share. Frontrunners FanDuel, DraftKings, and Caesars have pumped millions into their advertising and marketing campaigns, saturating the media to the point state regulatory bodies have mulled taking action.

According to the Post, a Wynn spokesman said his firm would not comment on what he deemed market speculation and rumor. “We were clear on our last earnings call about the current highly competitive nature of the online sports betting market and our desire to operate that business in a way that will actually create long-term shareholder value,” the spokesman affirmed.

According to The Post’s banking sources, Penn Interactive and Fanatics are the “most logical suitors” for Wynn’s online business, although neither has shown visible interest.

All happening in New York

While WynnBET is one of nine operators to have gained a much-coveted New York online betting license, it hasn’t yet rolled out its sportsbook in the state. Rivals BetRivers, Caesars, DraftKings, and FanDuel launched on January 8.

Despite 51% of online gaming revenue going to state coffers, sportsbooks have dangled substantial offers to sign up new customers in New York. Caesars in particular went for the kill, offering a huge $1,500 deposit match for new players signing up.

As XLMedia editor Robert Linnehan shared via Twitter on Saturday, Caesars’ aggressive strategy seemed to have paid off:

New York’s four active sportsbooks raked in over $600m in bets in their first week of operations, which gaming analysts are attributing in part to the attractive promotions. Estimated costs to acquire iGaming customers are high — between $300 to $500.

When WynnBet does finally launch in New York, with or without new owners, it will hope its rivals’ customers aren’t too brand loyal.