Craig Billings, chief executive of Wynn Interactive and soon-to-be chief executive of Wynn Resorts after Matt Maddox announced his departure from that role, said Wynn made the decision as it pursued a new strategy for its online WynnBet brand. This strategy, it said, would involve lower marketing spend, and so did not align with the capital-intensive approach that the merger would have offered.
“With our continued roll out of product features and planned new state launches, including New York, we remain excited about WynnBET’s future,” he said.
“As we discussed on the Wynn Resorts, Limited 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.”
Wynn had initially agreed in May to spin off its Wynn Interactive subsidiary, which would combine with Auterlitz, a special purpose acquisition company (SPAC) founded by William P. Foley II, that would allow the business to list on the Nasdaq Stock Exchange. At the time, Wynn said that Austerlitz’s $640m in cash reserves would “help fuel growth”.
The combined company was estimated to have a post-transaction value of $3.2bn (£22.6bn/€26.3bn), a total 4.5 times the revenue projected by Wynn Interactive by 2023.
However, in the wider business’ third-quarter earnings call, Billings revealed Wynn would not pursue the approach heavy on marketing spend that most rivals had opted for.
“While sports betting remains an exciting high-growth market and will potentially be a $30 billion to $40 billion total addressable market over time, the marketplace is proving to be very competitive with multiple operators deploying meaningful marketing dollars, driving high cost per acquisition, and significant customer bonus offers,” he said. “In light of this dynamic, we are intentionally pivoting our approach to scaling. taking a more measured and long-term focus to grow healthy and sustainable business.”