As WynnBet winds down some of their gambling operations throughout the United States, their Massachusetts sports betting services reportedly will not be impacted.
The news, while not unexpected, comes as a sigh of relief for anyone materially invested in The Bay State’s sports wagering operations. WynnBet’s parent company, Wynn Resorts, recently announced they’ll be shutting down most of their sports betting services in most of their active markets. They will continue to offer sports betting in Massachusetts as well as sports betting in Nevada, but plan to shudder their presence everywhere else in the United States.
Wynn Resorts’ Chief Financial Officer, Julie Cameron-Doe, explained the decision in a press release: “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.”
Implications of this development abound. For Massachusetts, specifically, will WynnBet’s pledge to stick around actually pan out? Or could they inevitably decide to move out of this market too?
Then, on a larger scale, why is WynnBet opting for mass closures? And what might this say about the state of legal sports betting throughout the USA?
Why WynnBet Is Not Leaving the Massachusetts Sports Betting Market
Continued investment in Nevada sports betting is a no-brainer for WynnBet. Even if they’re not thrilled with their market share, it’s almost impossible not to make worthwhile profits if you’re among those offering sports betting services in Las Vegas.
With that said, Massachusetts is not Nevada. It does not have Las Vegas. So why is Wynn Resorts committing to retain its presence in this market?
This question can be answered in one word: convenience. WynnBet already operates one of the most popular brick-and-mortar casinos in Massachusetts. It doesn’t make sense for them to vacate a market in which they have an established retail and online sports betting presence.
To that end, this likely means their decision to stay isn’t temporary. Bigger online sportsbooks may still eat into their market share, but when you have an entrenched customer base, you’re fairly inoculated against the most damning effects.
Plus, there’s also the scarcity of Wynn Resorts’ on-site business to consider. They do not have any casinos stationed in other states. Their brick-and-mortar operations are limited to Massachusetts and Nevada alone. It makes sense that they want to keep both retail locations up and running.
WynnBet has Sent Mixed Messaging About Their Commitment and Interest in Online Sports Betting
This, of course, brings us to the markets in which WynnBet is pulling out. To this point, they have confirmed closures in six states: Arizona, Colorado, Indiana, Louisiana, New Jersey, Tennessee, Virginia and West Virginia. They are reportedly still reviewing their operations for sports betting in New York and sports betting in Michigan. A decision on those markets is expected to be reached relatively soon.
While WynnBet has telegraphed this pull-back a little bit in recent months, their messaging overall has been a little inconsistent outside the Massachusetts sports betting market. Over the past year, they have reiterated a commitment to competing with the best online sportsbooks in the United States. Pat Evans outlined all of this for Legal Sports Report:
“Wynn invested $80 million in BetBull in 2018 and created its Wynn Interactive division. In 2021, Wynn Interactive was slated to go public in a SPAC deal but eventually fell through.
In February 2021, Wynn expected to spend heavily on sports betting ahead of the 2021 NFL betting season, seeing it as ‘quite an opportunity.’ By November 2021, however, Wynn changed its tune and decided to scale back marketing to preserve cash. Recently, Wynn was said to be interested in the new Kentucky sports betting market. In fact, the company announced a relaunch of its multi-state WynnBet app just this week.”
This timeline of events reads like a company that couldn’t make up their mind or gain the traction necessary to remain active in all of their existing markets. And apparently, that’s exactly what happened.
What’s Behind WynnBet’s Decision to Shudder Most of their United States Sports Betting Operations?
Shareholders drive every decision made by large corporations. That’s to some extent always been the case. But it’s truer than ever now. And as things currently stand, online sports betting in the United States wasn’t a lucrative enough sector for WynnBet to spend the necessary cash to market themselves.
According to a Legal Sports report, WynnBet has a 0.97 percent handle market share inside states where their services are operational. When it comes to pure revenue, it has a 0.57 percent market share.
These numbers climb when looking at Massachusetts sports betting. WynnBet holds a 3.7 percent handle share and 2.1 percent revenue share inside The Bay State.
Yet, even WynnBet’s best numbers are infinitesimal relative to what’s available. Like many other companies, they find their online operations getting squeezed by DraftKings and FanDuel. These two sportsbooks handle the vast majority of legal United States sports betting business. It has so far proven difficult for other companies to hang with them. We’re not just talking about boutique or start-up sportsbooks, either. Companies like Wynn Resorts, Caesars, BetMGM, etc. are the larger side. In most markets, they all struggle to match the ubiquity of FanDuel and DraftKings.
With this in mind, it wouldn’t surprise us if we see other well-known sportsbooks close up shop in certain markets moving forward. Between licensing fees, higher sports betting taxes and the expenses associated with mass promotion, it takes a lot of cash to remain active and competitive. And if all you’re competing for is a 1 percent or lower market share in the end, is the capital needed to operate really worth the profit up for grabs? WynnBet, in some markets, has just decided it’s not. We’ll have to wait and see whether others follow suit.
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