Wynn Interactive Eyes IPO And Long Game In Online Gambling Sector

SPAC merger will result in a public listing for Wynn Interactive
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Wynn Resorts got a relatively late start to the U.S. online gambling market, but the market is still very nascent and Wynn is now moving more chips into the center of the table.

Wynn Resorts, Limited and Austerlitz Acquisition Corporation I on Monday announced that they have entered into a definitive agreement under which Austerlitz I will combine with Wynn Interactive, a subsidiary of Wynn Resorts, to create an independent public company.

The combined company will relist its shares on the Nasdaq under the new ticker symbol “WBET.”

Wynn Interactive said that it currently has online gambling market access to 15 states covering about 51% of the U.S. population. It said it expects to gain access to additional states “in the near-term.”

Matt Maddox, CEO of Wynn Resorts and Chairman of Wynn Interactive, said the IPO will “unlock the tremendous potential” of the business. Maddox will remain chairman of the new company.

Wynn estimates that the North American online sports betting/casino market will “ultimately” be worth $45 billion. It estimates that it will grow at a 10-year CAGR of about 32% to $45 billion by 2030.

WynnBET is valued at $3.2 billion and will raise $640 million in new capital through the IPO.

“Wynn Interactive plans to accelerate growth through customer acquisition initiatives, executing a broad-based, national marketing and branding campaign, including investment in mass media and partnerships, and continued product enhancements leveraging BetBull’s proprietary technology,” the presser stated.

Wynn Interactive’s current shareholders will retain an equity interest of as much as 79%, depending on how the deal closes. The deal is expected to close by the end of 2021.

An IPO date has not yet been set.

Bet on WBET?

Retail investors have seen a rough spring for some key gaming stocks. DraftKings and Penn National Gaming (which owns the Barstool-branded sportsbook), arguably the two most talked-about sports betting stocks, have seen their respective share prices fall steeply in recent weeks and months, though as of mid-May they were about back to the prices per share they started the year with, so there’s no investor panic.

On Wednesday, the CEO of FanDuel, Matt King, unexpectedly announced that he’s stepping down from the company, a move that is expected to delay a Flutter IPO.

Wynn is a top rival of the aforementioned brands, as well as others such as MGM and Caesars, both of which have their own fledgling online gambling businesses. The online gambling sector is crowded.

Wynn is the owner of prominent properties in Las Vegas, as well as a top casino outside Boston. Massachusetts, which is also the home base of DraftKings, has yet to legalize sports betting. Wynn is able to gain access to other state markets through revenue-sharing deals with other operators.

Wynn has a much more minimal casino footprint than rivals like Caesars, MGM, and Penn, and it lacks the sports betting brand strength of a DraftKings or FanDuel. From the vantage point of 2021, it doesn’t appear WBET is going to be a barnburner for retail investors anytime soon, if ever.

One thing to consider is the Wynn brand. The brand comes from founder Steve Wynn, who was ousted from the company after being accused of sexual misconduct during his time running Wynn Resorts from Sin City. Gaming regulators in Massachusetts forced Wynn Resorts to drop the Wynn name from the casino because of the allegations, and it’s called Encore Boston Harbor today.

Wynn the man is long gone from the business and it appears the toxicity of the brand has subsided, but who knows if that scrutiny will ever be revisited and cause head winds for WBET. It’s something retail investors should at least be aware of if looking at individual gaming stocks.

It’s unclear what IPO share price Wynn is eyeing. Wynn Resorts went public in 2002 at $13 per share.

Wynn Resorts was trading at about $127 a share prior to Monday’s announcement. It was at around $122 a share midday Tuesday, amid the broader market having a rough week.

Image credit: Casimiro PT / Shutterstock.com

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