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Why Is WynnBet Ceasing Operations In Eight States, Including Two With Online Casino?

Written By Derek Helling on August 14, 2023
woman scratches head next to the wynnbet logo

The online gambling industry in the United States just produced its latest and greatest example of a moment that has everyone saying, “wait, what?”

A week after announcing the introduction of a revamped app in six states, WynnBet has now announced that it is shutting down its operations in eight states, including the states it just debuted the new app in.

The cessation also includes two of the current six legal real-money online casino states with the possibility for a stoppage in a third as well. While a news release offers comments on the decision, the explanation raises more questions than it answers.

WynnBet shutting down in as many as 10 states

A Friday news release confirmed that WynnBet is shutting down in eight states. Those are:

  • Arizona
  • Colorado
  • Indiana
  • Louisiana
  • New Jersey
  • Tennessee
  • Virginia
  • West Virginia

The release also states that “operations in New York and Michigan remain under review.” Should WynnBet decide to shutter those operations as well, that would leave it operational in just Massachusetts and Nevada. In both of those states, Wynn only offers online sports betting.

It isn’t a coincidence that those are the only two states that Wynn Resorts runs a brick-and-mortar casino within. That’s the whole point of this move according to Wynn Resorts CFO Julie Cameron-Doe. In the release, Cameron-Doe provided some explanation for the decision.

“In light of the continued requirement for outsized marketing spend through user acquisition and promotions in online sports betting, we believe there are higher and better uses of capital deployment for Wynn Resorts shareholders,” Cameron-Doe said. “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.”

There’s so much to unpack.

A reversal of epic proportions

This might be the most monumental and complete 180 within the span of a week in the history of US online gambling.

On Aug. 4, WynnBet shared details of the launch of its new app in six sports betting-only states. That excluded New York at that moment. At that time, however, it said it intended to make the new app available both there and in New Jersey “in the coming weeks.” The app had already gone live in West Virginia.

Now, all of that is off and the closure might spread to Michigan and New York. It might never become public knowledge exactly what occurred internally to take the company from investing in a new app to a massive retraction of its online gambling business.

Cameron-Doe’s comments are a word salad for certain but that’s common for corporate press releases, especially ones that are certain to draw scrutiny like that announcement. The main messages of Cameron-Doe’s comments are:

  • Wynn decided there were better uses for the money it is currently spending on online sports betting
  • Wynn is disappointed that more states haven’t legalized online casino play on a faster timeline
  • Wynn believes that it can put its online gambling product on the back burner and it will survive

Given those statements from Cameron-Doe, it’s fair if shareholders have some questions. In fact, if many shareholders aren’t at least curious right now, that would be just as surprising as the reversal of fortunes for WynnBet.

Shareholders might want to know more

Perhaps most pressing for shareholders are the opportunities that Cameron-Doe spoke of that Wynn’s leadership decided was a better use of funds than its spend on online gambling. There are possible legitimate reasons for Cameron-Doe to have been vague about them.

Those include not wanting to hurt Wynn’s chances in a potential competitive bidding process. Another possibility is avoiding promising results to investors that the company ultimately can’t deliver on. In business, under-committing and over-delivering is always preferential to the opposite.

Wynn has to accept, at least in the short term, that investors might see the explanation of “we decided there are better uses for the money” without stating what those uses are as an amorphous cop-out. Wynn could point to nearly any future developments regarding its brick-and-mortar operations anywhere in the world and retrofit them as part of the plan all along.

Other questions might pertain to the future of WynnBet, like whether it actually has a future at all. A possible read of the press release in regards to that facet of the situation is more confusing than revealing.

Anything that follows “while”

In “public relations speak,” an antecedent or leading clause that begins with the word while is typically a loaded premise. Essentially, it usually means the speaker acknowledges that everything appears to the contrary so it’s necessary to state what the speaker does not want to communicate to the intended audience.

An example could be a company representative saying “while we do not support deforestation” then proceeding to explain why it’s necessary to cut down a bunch of trees in a forest as that action is happening.

In this case, Cameron-Doe seems to be trying to assure investors that Wynn isn’t completely giving up on online gambling. Cameron-Doe’s statement seems to point to Wynn viewing its online gambling product as a mere customer acquisition and retention tool instead of a significant revenue generator in and of itself.

Essentially, WynnBet is an interactive commercial for Wynn’s physical casinos. The first question out of a shareholders’ mind might be, is that really going to be effective?

Why not shut WynnBet down completely?

If Wynn is pulling out of two of the four most lucrative online casino states and considering exiting a third, why maintain operations in Nevada and Massachusetts? Those are comparatively limited markets next to Michigan, New Jersey and West Virginia.

In June, Wynn collected just over $508,000 in revenue from online sports betting in Massachusetts. That same month, WynnBet’s online casino in Michigan alone reported more than $4.8 million in win. While Wynn has to pay taxes and a share of that revenue to its land-based partner in the state out of that money, it still likely was several times what it made from its online gaming products in Massachusetts and Nevada that month.

The inclusion of the “dearth of iGaming legislation” seems to suggest that Wynn doesn’t want to exit the online gambling space altogether, just shift resources until a time when it sees the landscape as more favorable to being able to compete at the level of investment that it prefers to commit.

Another question out of an investors’ thoughts might be, is that even really possible?

Can Wynn really ramp things back up when conditions are more favorable?

Wynn could be waiting years for Massachusetts to legalize online casino play. It might be even longer before it decides to take advantage of the legal status of such gaming in Nevada to its full potential.

In the meantime, WynnBet’s lack of presence anywhere outside of those states (assuming an exit from Michigan and New York) could severely limit consumer awareness of WynnBet. Should that prove the case, it would take a good amount of capital to build awareness back up when conditions match what Wynn is looking for.

Furthermore, Wynn would be fighting the strength of consumer habits at the reengagement stage. While WynnBet goes on the back burner, its competition is spending to acquire and retain customers. Thus, even if all Wynn sees WynnBet as is an interactive commercial for the brick-and-mortars, its usefulness in that regard might be minimal.

The bottom line for Wynn is that investors are likely to be watching closely over the coming quarters amid a murky future for WynnBet. Due to the events of the past two weeks, it’s difficult to blame any shareholder whose confidence is currently shaken.

Photo by PlayUSA
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Derek Helling

Derek Helling is the assistant managing editor of PlayUSA. Helling focuses on breaking news, including finance, regulation, and technology in the gaming industry. Helling completed his journalism degree at the University of Iowa and resides in Chicago

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