Only a few months after launching an advertising campaign that featured the gigantic presence and personality of former NBA star Shaquille O’Neal, online sportsbook WynnBet is for sale. The move signals what may be a thinning out of the online sports betting industry, which currently has a crowded field of apps vying for market share.
The WynnBet app is owned by Wynn Resorts, based in Las Vegas. According to the New York Post and other news sources, Wynn Resorts is shopping its Wynn Interactive division, which largely consists of the WynnBet sports betting app. The asking price is $500 million, the report says. In 2021, the company placed a valuation on Wynn Interactive of $3 billion.
The news comes as the U.S. gambling market is seeing tremendous growth. It could also mark the first sale of a license among the nine initial sportsbooks that received approval in New York. Earlier this month, online sports betting launched in New York, while Louisiana is poised to be next. There are now 18 states that have legalized online sports betting operational, with others ready to launch this year.
Cost of Acquiring Sports Betting Customers is High
Late in 2021, the CEO of WynnBet, Matt Maddox was frank in his assessment of the online sports betting market.
“The market is really not sustainable right now,” Maddox told investors last November. “Competitors are spending too much to get customers. And the economics are just not something that we’re going to participate in.”
Maddox left the company in January, but Wynn Resorts began making the WynnBet Interactive division available to prospective bidders last year, seemingly due to the high costs associated with building a brand and client base in new sports betting states.
In New York, where the tax rate is 51% on sports betting revenues, and the license fee is $25 million per sportsbook, making a profit is not the initial goal of sportsbooks. WynnBet New York is expected to launch in the near future despite the high cost of doing business in the Empire State. The sportsbooks active there now are offering lucrative promos and bonuses that carve deep into revenue.
Even with the tight margins for profit in New York, the large market in that state is likely attractive to a buyer, and WynnBet could be gobbled up by a competitor who did not receive a license there. Both Bet365 and Fanatics applied for New York online sportsbook licenses and have not been granted one, for example.