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Caesars Acquires WynnBET’s iGaming Operations in Michigan
By Jeff Osienya Feb 23, 2024 IndustryWynn has sold out its internet wagering business to industry giant Caesars Entertainment as part of its bigger plan to exit the online gambling realm. As for Caesars Ent, this acquisition strengthens its presence as a leading brand in US gambling.Caesars Entertainment has taken another step to deepen further its already extensive roots in the US gambling industry. The iGaming juggernaut has moved to buy out Michigan-based WynnBET along with the latter’s business operations in the Wolverine State.
Additionally, Caesars Ent has expanded its command in the state’s gambling scene by signing a long-term extension to gain market rights with Michigan’s Sault Ste. Marie Tribe of Chippewa Indians. This Native American tribal nation is responsible for running operations in five brick-and-mortar casino venues located throughout the Upper Peninsula of Michigan.
As a result of the acquisition, existing WynnBET customers will now have to migrate to Caesars’ Michigan iGaming platform after all regulatory approvals are granted. While Caesars neglected to mention WynnBET sports wagering operations in the announcement of the latest developments, there have been indications that this pertinent entity is living on borrowed time. The company’s official statement read in part:
Quote“Wynn and Caesars will receive non-cash consideration, including extinguishment, reductions, and assignment of certain contractual obligations related to both parties’ businesses.”
Caesars Expresses Excitement Upon Its Entry in Michigan
Following its latest buyout agreement with WynnBET, Caesars expressed delight, particularly for its business prospects in Michigan. Caesars Entertainment SVP and Chief iGaming Officer Matt Sunderland opined:
Quote“As we continue to grow our iGaming franchise, the assumption of WynBet’s iGaming operations in Michigan allows us to tap into a significant market and customer base, providing a crucial step forward in growing our digital products and offering players more ways to play.”
Thus, Caesars will continue operating its online sportsbook, and for now, Caesars Palace Online Casino will operate alongside the WynnBET product before official rebranding. Austin Lowes, the chairman of the Sault Ste. Marie Tribe of Chippewa Indians also expressed confidence in the new partnerships that the tribe has found with Caesars. He stated:
Quote“It was paramount that our next partner in iGaming possessed both expertise in the US iGaming market and a history of strong partnerships in Indian country… We believe we found that Caesars and look forward to being part of the new iCasino offering.”
This new deal comes on the back of an impressive performance for Caesars Entertainment, which announced that it had finished 2023 with a shining performance of $38 million worth of adjusted EBITDA. The performance was a significant improvement from 2022, when the company closed the year with $666 million in losses.
It’s worth noting that the bulk of last year’s impressive performance can be attributed to Q4, when the iGaming giant posted a hefty EBITDA of $29 million. Comparatively, Caesars posted a $5 million loss in Q4 2022. Additionally, looking at the net revenue registered, it was up $304 million in Q4 2023, representing a 28% year-over-year jump, subsequently setting a new quarterly record.
Caesars’ earnings announcement also revealed a bright spot: that its efforts to reduce its debts are slowly bearing fruit. The closing liabilities in 2023 stood at $12.4 billion, a decrease from what was registered in 2022. The Company’s CFO, Bret Yunker, stated:
Quote“Since the Caesars merger closed in the third quarter of 2020, we have permanently repaid over $3.0 billion in debt, and we look forward to another year of strong debt reduction in 2024. We ended the quarter with total net leverage as calculated under our bank credit facility of 3.9x as of December 31, 2023.”
However, the sports betting wing of Caesars Entertainment has shown an indication of taking a backseat, according to the latest financials released by the iGaming operator. Last year’s sports betting handle was $12.09 billion, down 5.6% compared to 2022, a clear indication that the company has been majorly focused on the iGaming aspects of its operations.
CFO Yunker opined that Caesars was keen on improving its products and overall customer experience for its customers. In turn, the market has seemingly responded well to these improvements. For instance, there has been a steady increase in the percentage of customers taking parlays and the average legs per wager.
WynnBET’s Slow Death
While it essentially isn’t a traditional death, Wynn Sports has been showing signs of a struggling entity for a while now. For starters, the company has been moving to dramatically scale down the scope of its WynnBET sports wagering unit in the recent past. The company’s sports wagering arm will thus be halting its operations as soon as possible in eight targeted states: Arizona, Colorado, Indiana, Louisiana, New Jersey, Tennessee, Virginia, and West Virginia.
This news was brought forth by Wynn’s CFO Julie Cameron-Doe, who, in a statement, noted that:
Quote“While we believe in the long-term prospects of iGaming, death 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.”
Wynn has amassed a lifetime revenue of $176.4 million in Michigan, having had a 3.7% share of the Michigan online casino gaming market. While it peaked at 3.7% market share in February 2023, things however took a turn for the worse when this share dropped to 1.6% in November. January 2024’s $3.3 million revenue was a measly 1.8% of the market share, showcasing the iGaming company’s dwindling fortunes.
With WynBett exiting the iGaming market, it essentially announced the beginning of its death. This comes after the operator announced that it would be ceasing its mobile gaming business in Massachusetts after selling its New York license to another iGaming steamroller, PENN Entertainment. As such, by the end of it all, Wynn will only be operating its brick-and-mortar sportsbooks in its Las Vegas Strip Casino hotels and the Encore Boston Habor.
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