Big news keeps coming in the competitive world of online sports betting. On Friday, Wynn Resorts announced that very soon it will close down its WynnBET Sportsbook in Arizona and seven other states.
The WynnBET sports betting app will cease to be available in Arizona, Colorado, Indiana, Louisiana, New Jersey, Tennessee, Virginia, and West Virginia, according to an announcement made by the company in an earnings call this morning.
Four states, Massachusetts, Nevada, New York, and Michigan, will still have WynnBET Sportsbook. However, the latter two will be evaluated for sustainability, Wynn Resorts said.
Large sports betting market cause of shutdown
The New York tax rate for sports betting operators is 51%, and while it’s proven to be the biggest market for online sportsbooks in the U.S., the cost of doing business there is high.
But tax rates aren’t the only thing that led to Wynn’s decision to close down in many states.
Chief Financial Officer of Wynn Resorts Julie Cameron-Doe cited the “outsized market spend through user acquisition and promotions in online sports betting” for the sudden shuttering of operations in more than half of the states where WynnBET was licensed.
“While we believe in the long-term prospects of iGaming,” Cameron-Doe said Friday.
“The dearth of iGaming legislation and the presence of numerous other investment opportunities available to us around the globe have led us to the decision to curtail our capital investment in WynnBET to focus primarily on those states where we maintain a physical presence.”
Cameron-Doe and Wynn are the first gaming operators to specifically and so clearly state that the refusal by many states to legalize online gaming as the reason for pausing the expansion of mobile products.
According to an email sent from the sportsbook, WynnBET Sportsbook Arizona is discontinuing sports betting offerings effective immediately. Accounts are accessible for 60 days to allow for outstanding bets to settle and allow time to withdraw any funds from your account. If any futures bets and parlay legs are not settled within 60 days, WynnBET will contact you. All promotions are also discontinued immediately.
The U.S. and Arizona online sports betting market has been carved up essentially between two heavyweights: DraftKings and FanDuel. Challengers BewtMGM and Caesars are also performing well in several states. But the top two sportsbooks have grabbed as much as 50-70% of the total handle in many states, including Arizona.
WynnBet couldn’t compete in Arizona
Through February of 2023, WynnBET reported $173 million in lifetime total handle in Arizona. That compares to $2.4 billion for DraftKings Sportsbook Arizona, $22 billion for FanDuel Sportsbook Arizona, and$1.4 billion for BetMGM Sportsbook Arizona.
Both Caesars Sportsbook Arizona and Barstool also rank ahead of WynnBET in Arizona for total handle from online sports betting. WynnBET has reported revenue of $15.5 million lifetime in Arizona. In the end, those types of returns clearly aren’t enough for Wynn to keep operating at a high cost of doing business in so many states. WynnBET had a partnership with the San Carlos Apache Tribe. With the sportsbook shutting down, this leaves an open spot for the Tribe to enter a partnership with a new sports betting operator.
Wynn’s downsizing of its sportsbooks by halting operations in eight states comes after a shocking announcement earlier this week. PENN Entertainment, which owned and operated Barstool Sportsbook Arizona, entered into a licensing deal with ESPN to launch a new sports betting app. ESPN Bet will replace Barstool and could challenge FanDuel and DraftKings for supremacy in the markets it enters. Fanatics Sportsbook is also lurking, after a purchase of PointsBet earlier this year. It’s possible Fanatics could enter the Arizona market later in 2023 or early in 2024.