Wynn CEO reiterates confidence in interactive division as sale links subside
Craig Billings reveals Massachusetts plans as resorts operator looks to brick-and-mortar to encourage online growth
Wynn Resorts CEO Craig Billings has downplayed speculation regarding a potential sale of the Wynn Interactive business, suggesting the resorts operator “believes” in the longer-term potential of the online market.
Wynn was linked with a high-profile sale of its Interactive division following the termination of a deal to take the company public via a reverse SPAC merger in November over rising marketing costs.
Reports in the New York Post at the time claimed Wynn was shopping for prospective suitors for the business, with a cut price enterprise value of $500m.
In February, Billings elaborated on the marketing cost issues, suggesting that the sports betting industry was in the grip of “irrational behavior” involving marketing practices.
In particular the Wynn CEO cited the New York market, where operators threw free money and promotional offers at consumers despite the Empire State’s 51% tax rate on sports betting.
He also 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.
Elaborating on how things have developed during Q1 2022, Wynn Resorts Billings suggested the business had turned a corner. “We’ve been pleased with the business over the course of the quarter. We really do believe in the industry in the longer term,” he said.
“Sports betting is where the majority of the total addressable market is today, and it’s also where a lot of the irrational behavior is taking place.
“I will however say that our rationality seems to be ebbing as valuations have come down, so I think that’s good for everybody,” Billings added.
Releasing its financial results for Q1 2022, the firm revealed $727m in turnover from Wynn Interactive.
However, the Interactive division reported an operating loss of $105m, increasing almost 100% year on year from the same period in 2021. Wynn Interactive’s adjusted EBITDA losses decreased from a Q1 2021 high of $43.4m to a more palatable loss of $31.5m.
One potential area of expansion and cross-synergy for Wynn Resorts is the Massachusetts market, where Wynn operates the Encore Boston resort property and where legislators are currently debating the legalization of online sports betting.
Addressing the Bay State specifically, Billings confirmed the potential for a launch of the WynnBET brand in the market, should the online market be greenlit.
“We’ve always viewed Massachusetts as an important bootstrapping event for WynnBET,” he said.
“If you look at some of our competitors and their market share in states where they have a physical presence, it’s clear that brick-and-mortar is an advantage.
“So with a bill and reconciliation between the House and the Senate in Massachussets now, we’re preparing to be there day one, and that will be an important event for the business,” Billings added.