By Gary J. Nix
- Wynn Interactive appears to now be looking to sell its online betting property for $500M after receiving a $3B valuation
- Culturally relevant people on WynnBET’s roster included former USMNT goalie Tim Howard, and O’Neal
One-time belle of the sports betting ball, Wynn Interactive, appears to now be looking to sell the online betting property for $500 million. Factors contributing to the change of direction include the high costs of customer acquisition and a scrapped SPAC merger with Austerlitz Acquisition Corp. Even with cultural trendsetters including former USMNT goalie Tim Howard, and former NBA superstar, now serial entrepreneur Shaquille O’Neal being investors and pitchmen, the online betting sector needs to tap into a new playbook that in 2021 saw more than $52 billion wagered on sports bets.
Why This Matters: Wynn entered an agreement with the Bank of China to obtain a $1.5 billion line of credit. The company planned to use $100 million of the capital to market its sports betting app during this year’s football season, according to reports. However, with the entry pathways into this sector filled with online mainstays such as FanDuel and DraftKings, any route taken by a new player must be very specific.
Furthermore, it is common for companies upon launch to recruit celebrity personalities to assist in bringing awareness to your product. In the case of WynnBET, the roster of famous people included the likes of Chad “Ochocinco” Johnson, former USMNT goalie Tim Howard, and former NBA superstar, now serial entrepreneur Shaquille O’Neal. As a matter of fact, O’Neal even relinquished his minority stake in the Sacramento Kings when signing on to be a WynnBET ambassador to comply with the NBA’s rules regarding betting in preparation for the planned spring launch.
Yet, two questions loom: what happened, and why was the old-fashioned endorsement/ambassadorship tactic enough to convince Wynn Interactive to go with things as planned?
Situational Awareness: While Wynn possesses a known and trusted brand in the casino space, their equity did not spread into immediate allowance in the area of online sports betting. For WynnBET to make sufficient noise here, they’d have to battle with the aforementioned online sector starters FanDuel and DraftKings as well as a BetMGM, a more direct competitor with the advantage of hosting world renowned sporting events.
When you couple this with Wynn’s dependence on a merger deal that led to a multibillion-dollar valuation which didn’t come to be. Then, money earmarked for customer acquisition via somewhat disjointed yet surface-level celebrity or cultural influence, the business model as designed was not sustainable.
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