Wynn Shares Q3 Report As It Focuses On iGaming/Betting

Wynn Resorts, the casino operator, focuses hard on its shiny new digital division while its land-based activities remain in a COVID coma.

Figures released on Thursday show that in the three months ending September 30, Wynn generated revenue of $370.5 m, a 77.5 percent decrease from the same duration last year. Albeit booking a net loss of $758.1 m (although $407.4 m of this was a tax provision), Wynn posted negative earnings of almost $66 m versus a positive $397 m in Q3 2019.

The Wynn Macau resort in Macau saw sales fall 89.2 percent to $51.4 m, resulting in $34.5 m of negative earnings. At Wynn Palace, where sales fell 97.4 percent to just $15.7 m for an earnings loss of $77.6 m, the situation was even worse.

Although both properties suffered from steep falls in the VIP gambling turnover of the market, Wynn Palace suffered twice due to its VIP win rate falling to just 1.04 percent, well below the estimated range of 2.7-3.0 percent, while the rate of Wynn Macau reached an outsized 3.95 percent. Mass table win decreases have also been reported by both properties.

Turning to Las Vegas, Wynn ‘s income from Las Vegas dropped 53.3 percent to $186.7 m while profits fell 77 percent to $20.3 m. Due to decreased demand, a fate that has yet to befall the Wynn Las Vegas casino, Wynn’s Encore property recently reduced its operating schedule to five days / four nights per week.

The Encore Boston Harbor casino in Massachusetts posted revenue of $116.7 million , down one-third year-on-year, but earnings more than tripled to $26 million as the house, which opened only in summer 2019, no longer dealt with its start-up expenses. This week, Massachusetts announced new curbs on operating casino hours beginning Friday, and Wynn said Thursday that as a result of this order, Encore “will change its operations.”

Wynn was pleased to have something good to speak about in Wynn Interactive, its nascent iGaming / sports betting division, considering the parlous state of its land-based operations. Last Friday, when it announced an Approved Gaming Operator deal with NASCAR, the WynnBET brand had its coming out party.

Technically, Wynn Interactive was born in 2018 when the company struck a joint venture with BetBull Ltd. licenced in the UK. Following a reorganisation that incorporates the UK-facing activities of BetBull, Wynn Sports Interactive and the social casino sector of Wynn Slots, Wynn said it controls “approximately 71 percent” of the JV and “will consolidate Wynn Interactive going forward.”

Wynn is providing around $80 m in “robust cash funding for fuel growth and expansion” as part of this reorganisation. Already involved in Nevada and New Jersey, WynnBET plans to apply for “standalone” licences in Tennessee and Virginia (where no land-based casino or racing partnership is required).

Wynn Interactive claims to have gained market access in nine states in addition to Tennessee and Virginia, but some of these states (Florida, Massachusetts) have yet to legalise online operation and another (Illinois) needs more legislative tweaks to take place for Wynn ‘s access, while five other states are” in discussions.”

Matt Maddox, CEO of Wynn, serves as the chair of Wynn Interactive, while Sadok Kohen, founder of BetBull, has been elected president (pending a recount in Pennsylvania, natch). Wynn VP Ellen Whittemore, former NYX Gaming chairman Craig Billings and former Bwin.party CEO Norbert Teufelberger, who has been a director of Betbull since 2019, are the team’s directors.

“Maddox, speaking on the analyst call, called Teufelberger part of the” stub equity “of Wynn Interactive, which we think was a compliment, and said that with its new European partners, the Wynn camp had” a great cultural match. Probably, but Wynn may want to ensure that those goals really need to be reached by any reward incentives.

In 2019, the individual companies that were folded under the Wynn Interactive tent reported combined revenues of $21 million, but Maddox boldly predicted that “that number is going to grow at an exponential rate as we move forward.”

Billings said the strategy was to” understand what the customer wants … build a product to it and … scale into that.” Billings added that as long as it continues to drive the required customer lifetime value , the company will deploy marketing spending at scale.

As for those lagging land-based events, Maddox said October saw visitor volumes in Macau go from 10 percent of the usual pre-pandemic to “almost 30 percent,” even after the end of the annual Golden Week holiday. The mass market tables of Wynn Macau have fallen to “roughly 40 percent” of their pre-COVID rate, while junket-based VIP turnover was “between 25 percent and 30 percent.”

Maddox was equally positive about Vegas, saying that the handle and table decrease of Wynn ‘s Q3 slots both beat the industry average and Wynn saw “new domestic customers” that “previously were lifers at some of our competitors.”

Maddox reported that October had long been “our best month, “but cautioned that the usual holiday decline in the market meant “October will not be repeated in in November and December.”