The recent announcement that WynnBET is planning to shut down its sports betting app in eight states has led to this question: “What is the future of WynnBET in New York?”
WynnBET NY is one of nine licensed NY sports betting outlets. While it isn’t among the market leaders, WynnBET does do a steady business. With WynnBET shuttering in numerous other states, it’s unclear how long this product may be available.
In its surprise announcement on Aug. 11, WynnBET revealed that in addition to those eight states, the company is evaluating operations in New York and Michigan. In July, WynnBET reported $6.7 million in total handle in New York. That ranks seventh among the eight current sports betting operators in the state.
Is New York sports betting too expensive?
WynnBET is owned by Wynn Resorts, a Nevada-based entertainment company that also owns and operates several casino/resorts. While the company has enjoyed tremendous real-world success, it’s foray into online sports betting has shown mixed results. In most states, WynnBET has lagged well behind industry leaders DraftKings, FanDuel, BetMGM and Caesars. Even Barstool, recently abandoned by parent company PENN, has outperformed WynnBET in some states.
WynnBET explained the primary reason for its action was the burden of acquiring customers in a competitive, highly-regulated market. In New York, that burden is heavy.
New York requires a $25 million license application fee just to enter the market. The tax rate on adjusted gross revenue from New York sports betting is 51%. That’s by far the highest rate in the country.
Last year, BetMGM’s CFO Gary Deutsch called New York’s tax rate for online sportsbooks “unsustainable.” Fanatics CEO Michael Rubin said his company “can’t make money” under the tax burden in the Empire State.
But operators are sticking it out. Even with FanDuel NY and DraftKings NY garnering 75% of the market share, several other sportsbooks are still available for download in New York.
But something may have to give, especially with the news that PENN will launch ESPN Bet this fall. That entity will most likely enter the multi-billion dollar NY sports betting market once it secures a license. Fanatics is also poised to offer its new sportsbook, replacing PointsBet NY.
With all that jostling for the crumbs that FanDuel and DraftKings leave behind, can WynnBET sustain operations in a state where 51% of profits go to the state coffers? The fact that WynnBET says it will “evaluate operations” in this state hint that a decision to shut down in New York may be forthcoming.
What happens if WynnBET NY closes?
Should WynnBET decide to shutter its sports betting app in NY, customers will be fairly warned. In other states where operators have ceased, they give a timeline for final bets and withdrawal of funds. Regulators in New York would ensure that WynnBET consumers were protected if their favorite sportsbook went away.
WynnBET does not seem like a candidate for a merger or acquisition. Wynn Resorts does not need to have a sportsbook in multiple states. It doesn’t even need a mobile sports betting app: Wynn is very successful in the resort business. But there are reasons for Wynn to keep WynnBET alive in a few jurisdictions.
The WynnBET app is still available in Nevada and Massachusetts, where Wynn has two of the largest and highest-rated casino resorts in the country (Wynn Las Vegas and Encore Boston Harbor). In those states, it makes sense to maintain a presence online to service customers who enjoy the Wynn resorts, and for brand awareness.
Wynn has likely determined that it was destined to be near the middle or rear of the pack of operators chasing far behind DraftKings and FanDuel. Doing that in a dozen states simply doesn’t make sense. But, maintaining a presence in the market is smart for those states where Wynn has a brick-and-mortar advantage over its rivals.
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