Wynn Resorts Unlikely to Unload iGaming, Sports Betting Biz, Says Analyst

The sports betting equities landscape was rattled yesterday after reports surfaced on Sunday that Wynn Resorts (NASDAQ:WYNN) is contemplating selling its Wynn Interactive unit at the deeply discounted price of $500 million. At least one analyst doesn’t see that happening.

Wynn Interactive
Wynn Interactive
Wynn and Encore Las Vegas. An analyst says it’s unlikely the company sells its Wynn Interactive unit. (Image: CNBC)

The New York Post originally reported the speculation, but the gaming operator hasn’t publicly remarked about the speculation because it doesn’t comment on market rumors. Morningstar analyst Dan Wasiolek believes it’s unlikely the casino company parts with its iGaming and sports wagering arm, particularly at a rock-bottom price.

Sources cited in a Jan. 24, 2021, New York Post article claim narrow-moat Wynn is looking to sell its WynnBet online sports betting business for around $500 million, which we view as a rumor and unlikely to be the case,” he said in a note.

The speculated $500 million price tag floated in the Post article appears nine months after Wynn reached an agreement with special purpose acquisition company (SPAC) Austerlitz Acquisition Corp. I (NYSE:AUS) to bring Wynn Interactive public at a $3.2 billion valuation.

“Therefore, the rumored $500 million price tag for WynnBet strikes us as low and compares with the around $3 billion valuation the company and its prior partner, Austerlitz, set a year ago,” adds Wasiolek.

Sports Betting Opportunity Remains

One thing Wynn previously confirmed regarding sports wagering is that it’s unwilling to participate in the industry’s currently unfavorable economics.

Translation: Wynn won’t adhere to the template laid out by some competitors, which consists of lavish promotions and high marketing spending to attract customers because there’s little evidence to suggest that approach leads to profitability. In this environment, that’s likely a prudent approach and it doesn’t mean the integrated resort operator is looking to jettison its digital gaming arm.

“While Wynn’s near-term de-emphasis on WynnBet investment might cause us to lower our near-term revenue forecast for the business, we still see the division representing a low-double-digit percentage of its total revenue by the middle part of this decade (around $1 billion in total sales),” notes Wasiolek.

The analyst adds domestic iGaming and sports wagering remains “a multi-billion revenue opportunity” that could generate double-digit earnings before interest, taxes, depreciation and amortization (EBITDA) margins for operators by the middle of this decade, assuming current levels of exorbitant marketing spending normalize.

Other Signs Wynn Interactive May not Be for Sale

If Wynn Interactive is for sale, the parent company isn’t acting like it. For example, Wynn issued a statement earlier today, saying it’s starting pre-registration for the WynnBET app in Louisiana in anticipation of mobile sports betting launching there in the coming days.

Additionally, Wynn Interactive is waiting on final approval from the New York Gaming Commission to launch in that state.

Early data suggest New York is well on its way to becoming the US leader in mobile sports betting, indicating Wynn may not want to be hasty in abandoning its digital gaming unit before testing the waters in that state.

The post Wynn Resorts Unlikely to Unload iGaming, Sports Betting Biz, Says Analyst appeared first on Casino.org.

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