Wynn Switches Sports Betting Plan, Aims Not To Lose ‘Lots Of Money’

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Wynn Interactive is dialing back its sportsbook marketing spend until the sector calms down.

The digital business is on track to lose around $200 million across Q3 and Q4 thanks to new state launches. But it will scale back spending dramatically next year.

“The market is really not sustainable right now,” said outgoing Wynn CEO Matt Maddox at the company’s Q3 earnings on Tuesday  “Competitors are spending too much to get customers. And the economics are just not something that we’re going to participate in.

“We are focused on building a long-term business that’s sustainable, that is not losing lots and lots of money. So we are shifting our strategy to think about the long term, and think about cash preservation.”

New person in charge of Wynn sports betting strategy

Incoming CEO Craig Billings said WynnBet would focus on its core strengths: brand and customer database. From there, Wynn could potentially get more aggressive on marketing again as it grows.

“There are certainly opportunities for us to do ROI-positive acquisition,” Billings said. “It is really a question of scale. If you are not trying to drive headline market share with large-scale brand spend, performance spend, hyper-aggressive customer promos, there are absolutely opportunities to grow the business over the course of the longer term.”

Wynn Interactive is run-rating $170 million in gross revenue, per the Q3 report. In Arizona, WynnBet signed up 26,000 first-time depositors through September 30.

Spend or save?

The Wynn comments feed into a growing debate about customer acquisition costs (CAC) and lifetime value (LTV) in US sports betting.

Penn National CEO Jay Snowden said earlier this year that LTVs were being calculated incorrectly.

“People are calculating lifetime value as if that customer is going to be loyal to you forever,” Snowden said

He argued that switching costs and friction were coming down across the sector as the market matured. That would suggest operators should not be spending so much to acquire customers.

Cash burn continues for some

On the other hand, DraftKings pledged to keep investing heavily because its models say customers are still profitable despite high acquisition costs.

Of course, every company has different variables in their models, based on:

And no-one is sharing their exact CAC and LTV costs.

Will aggression be rewarded, or could slow and steady win the race?