Wynn Resorts & Golden Knights Owner’s SPAC Terminate $3.2B Merger Deal
Reinforcing company concerns about the escalating cost of customer acquisition in the online sports wagering marketplace, Wynn Resorts announced Friday it had mutually agreed to terminate a SPAC agreement that would have taken the digital division of the Wynn company public.
The SPAC, announced in May, would have seen Wynn Interactive/WynnBet go public as a result of a combination with Austerlitz Acquisition Corp. I, a special purchase acquisition company formed by Vegas Golden Knights owner William Foley.
The Wynn-Austerlitz deal was valued at about $3.2 billion, according to a news release in May. At the time, Wynn said the merged entity would include about $640 million from Austerlitz. The new publicly traded Wynn digital company would have traded on the Nasdaq.
Since then, as the online sports wagering market has evolved, it has become apparent the competition for customers is fierce and expensive for sportsbook operators, something Wynn Resorts noted in its third-quarter earnings call earlier this week.
Wynn’s online gaming app is called WynnBet. Wynn operates online sportsbooks in seven states and was one of nine operators to win a license in New York earlier this week, but it said its approach will be prudent.
WynnBET Online Casino also makes Wynn a player in states with legal online casinos.
’Pivoting Our User Acquisition Efforts’
In a news release announcing the mutually agreed upon termination of the SPAC, Wynn CFO Craig Billings, who is scheduled to replace Matt Maddox as Wynn CEO early next year, voiced optimism about WynnBet’s future. But, clearly, the company is concerned about the money that’s being spent in the digital sports betting market as sportsbook and top US online casino operators battle for customers with generous promotions and aggressive advertising campaigns.
“As we discussed on the Wynn Resorts Limited third quarter earnings conference call earlier this week, in light of elevated marketing and promotional spend in the sports betting industry, we are pivoting our user acquisition efforts to a more targeted ROI-focused strategy,” Billings said in the release. “In so doing, we expect the capital intensity of the business to decline meaningfully beginning in the first quarter of 2022.”
Wynn Resorts is traded on the Nasdaq (WYNN). The company is known for its luxury casino resorts and owns and operates Wynn Las Vegas (along with Encore), Encore Boston Harbor, Wynn Macau and Wynn Palace, Cotai.