The chief executive officer of Wynn Resorts says he expects a quick start for some sports betting in Massachusetts, but cautioned that the casino operator won’t be hitting previously high levels of spending on marketing its digital business.
Las Vegas-based Wynn Resorts owns the Encore Boston Harbor hotel and casino and 85% of Wynn Interactive Ltd., through which it runs the WynnBET online sportsbook.
However, it may be the brick-and-mortar side of Wynn's business that gets the first pick-me-up, and possibly sooner rather than later, according to its chief executive.
“We were happy to see the Massachusetts legislature pass a sports-betting bill,” said Craig Billings, CEO of Wynn Resorts, during a conference call for analysts and investors on Tuesday. “And having already constructed a sportsbook at Encore Boston Harbor in 2021, we expect that retail sports betting will soon be a significant opportunity for property-wide customer acquisition in Boston.”
Not feeling the burn
On Wednesday, Massachusetts Gov. Charlie Baker signed the compromise sports-betting bill that was recently passed by the legislature.
The legislation that was approved by lawmakers on August 1 would allow for both retail and online sports betting. Bettors will have to be 21 or older, and most events that Massachusetts colleges play would be off-limits for wagering, as that was a major sticking point during the lengthy deliberations in the legislature.
When exactly legal wagering will launch in Massachusetts remains unknown, with members of the state’s gaming commission making noises last week that suggest it will take some time.
Wynn’s Billings issued his own words of caution on Tuesday, as the company had already reoriented its digital unit in a more "shareholder-friendly" direction that involves burning less cash in trying to acquire customers. Previously, Wynn had called in the likes of actor Ben Affleck and others as it threw around millions to promote WynnBET.
While Wynn intends to go live with sports betting in Massachusetts at the earliest opportunity, it’s not currently planning to spend the kind of money it had previously been burning.
“That burn could go up modestly with the launch of Massachusetts because we will do some user acquisition,” Billings said. “I don't think we'll ever be back in the position that we were in at the launch of last NFL season.”
Vegas up, Macau down
The comments came after Wynn reported results for the second quarter, which ended June 30. Despite setting all-time quarterly earnings records in Vegas and Boston, Wynn Resorts turned in a mixed Q2 earnings report due to losses at its Macau properties which continues to act as a drag on group revenues.
Wynn's overall loss for the period came to $130.1 million in its second quarter, and its adjusted losses per share were 82 cents, a figure that beat Wall Street analysts' forecasts of a 94-cent per share Q2 loss.
Operating revenues from Wynn’s Las Vegas operations were $561.1 million for the second quarter of 2022, a gain of $206 million from the $355.1 million in revenues recorded in the second quarter of last year.
NEW: Gov. Baker sign sports betting and mental health care access bills. #maplli— State House News (@statehousenews) August 10, 2022
Meanwhile, operating revenue from Wynn's Encore Boston Harbor came to $210.2 million for Q2, an increase of $44.9 million from $165.2 million for the same period in 2021.
Receipts from Wynn Interactive were up slightly for the second quarter as well, to $20.4 million from $15.4 million in 2021. The adjusted earnings loss for the unit shrunk too, to around $20.9 million from $40.9 million a year earlier.
However, operating revenues for Wynn Macau were $58.6 million for the three months, down $125.4 million from a year earlier.
"Our second quarter financial results reflect continued strength at both Wynn Las Vegas and Encore Boston Harbor,” Billings said in a press release. “In Macau, while COVID-related travel restrictions continued to impact our results, we remain confident that the market will benefit from the return of visitation over time."
Massachusetts poised to be big catalyst
In the earnings call that followed the release of Q2 results, Billings expressed continued optimism about the potential of Massachusetts — where online and retail sports betting looms as a possible “significant catalyst” for WynnBET — as well Wynn’s ability to keep its digital costs in check.
"We've learned a lot in terms of which marketing channels work and which don't,” Billings said. “[Wynn Interactive] has been really executing in that portion of our business, and we're watching the market very, very closely. We'll be in Massachusetts from Day 1."
In the eyes of Wynn, at least, the days of “irrational” marketing and promotional spending are over.
In response to an analyst's question, Billings noted that irrationality "has markedly declined, and that's encouraging.”
"Our goal is really to make sure that we are consistently running the business as best we can from a lifetime-value-to-cost-per-acquisition perspective,” he added. “So, increased retention, decreased CPA, increased handle per customer.”
-with files from Geoff Zochodne