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Wynn Resorts stated on Friday that WynnBET will cease operations “as soon as possible” in eight states. The latest indicator of the industry’s growing consolidation is the closing of Wynn’s online sports betting section in a number of key jurisdictions. In the near future, WynnBET intends to depart from Arizona, Colorado, Indiana, Louisiana, New Jersey, Tennessee, Virginia, and West Virginia. In order to develop an exit strategy, the operator will consult with state regulators. This strategy is likely to contain more information for consumers about how to withdraw any leftover cash, ideas for unfulfilled futures bets, and other practical information. With mobile license caps in Arizona and Virginia, WynnBET’s upcoming exits present opportunities for other operators to get mobile licenses in those states. Virginia will have one open seat, while Arizona will have four open licenses.
Julie Cameron-Doe, the chief financial officer of Wynn Resorts, noted on the company’s earnings call that “Sports betting’s a tough business,” “It’s about the game of commodity. They’re difficult businesses, but we’re very focused on managing this business.”
In Nevada and Massachusetts, two states where the business already has retail sportsbooks, the mobile sportsbook will continue to be available. Mobile activities are “under review” in New York and Michigan.
“While we believe in the long-term prospects of iGaming, the dearth of iGaming legislation and the presence of numerous other investment opportunities available to us around the globe have led us to the decision to curtail our capital investment in WynnBET to focus primarily on those states where we maintain a physical presence,” Cameron-Doe said in a statement Friday.
Wynn Resorts CEO Craig Billings was questioned about the company’s intention to lower Wynn Interactive’s cash burn by Macquarie Group analyst Chad Beynon during the company’s earnings call on Wednesday. Wynn Interactive is the umbrella company for Wynn’s online sports betting operation. In every area of its business, with the exception of Wynn Interactive, Wynn surpassed industry averages, according to the Macquarie Group’s assessment on the company’s Q2 earnings.
According to data from various states that provide operator handle and revenue, WynnBET lagged behind competitors in the market. DraftKings, BetMGM, Caesars, and Rush Street Interactive all reached profitability for the first time ever during the second quarter in their respective online gaming operations. As a metric of profitability, the businesses disclosed positive adjusted EBITDA or earnings (before the effects of interest income or cost, income tax provision or gain, and depreciation and amortization). Certain one-time, non-recurring expenses are removed from the calculation.
The market for online sports betting is fiercely competitive, necessitating large customer acquisition expenditures in order to stay at the top of the field. Wynn Resorts no longer considers the required investment and effort to be worthwhile given the outcome.
With the two operators controlling up to or more than 75% of the mobile sports betting market in the United States, FanDuel and DraftKings have a disproportionately large market share. Executives at PointsBet estimate that fewer than 10 U.S. sportsbooks are achieving market shares of at least 1%.
WynnBET is not the only operator to have scaled back operations or left the market entirely in recent months. FOX Bet will soon be shut down, according to recent announcements from Flutter Entertainment and Fox Corp. Churchill Downs Inc. withdrew from the online sports betting market, and MaximBET and Fubo went down last year.
