The legalization of sports betting in Massachusetts could give WynnBET a shot in the arm, according to the owner of the online bookmaker.
Bay State lawmakers recently advanced a bill that would bring legal sports betting to the commonwealth, although a compromise still needs to be struck by members of the state’s House of Representatives and Senate before that can happen.
The proposed legislation at this point would allow wagering at casinos in Massachusetts and online sportsbooks, such as Wynn Resorts’ Encore Boston Harbor and the company's WynnBET app. Being able to offer both brick-and-mortar and internet-based betting options in the state is something Wynn sees as an advantage.
“With the Massachusetts Senate passing a sports-betting bill several weeks ago, and now in reconciliation with the House, we're looking forward to the potential for a significant catalyst for WynnBET in the commonwealth,” Wynn Resorts CEO Craig Billings said Tuesday during a conference call for analysts and investors.
Bay State bargaining
The Massachusetts Senate did pass a sports-betting bill late last month, but compromise legislation will have to be worked out and approved by both chambers of the legislature before Gov. Charlie Baker can sign anything into law. However, there are still around eight months for lawmakers to hammer out an agreement.
In the meantime, fellow New England state Maine has approved sports betting and the industry continues to grow in other nearby jurisdictions. The rising tide of legalization has put pressure on Massachusetts legislators to follow suit.
The comments from Billings also come as Wynn has been pivoting its digital division to what the CEO described as a more “long-term, shareholder-friendly” direction. The company started to make the move late last year amid big spending by sportsbook operators to sign up customers, which Wynn’s previous CEO warned was not sustainable.
In answering a question about the path of its WynnBET-related division, Billings said Tuesday that there is still “irrational behavior” in the sports-betting business.
“Though I will say that irrationality seems to be ebbing as valuations have come down, so I think that's good for everybody,” the Wynn CEO said.
Wynn is starting to see its change in direction show up in its financial results as well.
The casino and hotel operator reported Tuesday that the adjusted loss for Wynn’s interactive division (which houses WynnBET) was $31.5 million for the first quarter of 2022, down from $43.5 million a year earlier amid lower customer-acquisition spending. The net loss attributable to Wynn as a whole for the three months ended March 31 was $183.3 million, down from nearly $281 million for Q1 of 2021.
Wynn now sees an opening for itself in Massachusetts, which is home to the operator's Encore Boston Harbor luxury resort. The company reported Tuesday that operating revenues from Encore Boston Harbor shot up by $60.7 million year-over-year for the first quarter, to $190.8 million, and that adjusted earnings from the facility were up almost $25 million to $55.3 million.
Billings told analysts that Wynn has always viewed the legalization of sports betting in Massachusetts as “an important bootstrapping event” for WynnBET. The online sportsbook is operational in nine states but it hasn’t claimed the same level of market share as bigger rivals such as BetMGM, DraftKings (which is based in Boston), and FanDuel.
Editorial: By passing a bill to legalize sports betting by a voice vote instead of a roll call, the Massachusetts Senate failed in their duty to be transparent. https://t.co/BzUmIMx5vk
— Boston Globe Opinion (@GlobeOpinion) May 9, 2022
Billings' comments also hinted a Massachusetts launch could affect the amount of cash Wynn's interactive division burns for the rest of the year. If the state doesn't legalize and launch this year, though, the Wynn CEO suggested the unit's burn rate for adjusted earnings would be at or below the level reported for the first quarter.
But if the commonwealth does finally authorize sports betting, Wynn expects WynnBET will be taking wagers there as soon as possible.
“If you look at some of our competitors and their market share in states where they have a physical presence, it's clear that bricks and mortar is an advantage,” Billings said. “So with a bill in reconciliation between the House and the Senate in [Massachusetts] now, we're preparing to be there day one, and that’ll be an important event for the business.”
