Sports betting investment with Wynn Interactive will test Bill Foley’s track record By Howard Stutz, Executive Editor, CDC Gaming Reports May 11, 2021 at 6:45 pm Las Vegas is well acquainted with Bill Foley. He’s not afraid of swinging away at multimillion-dollar deals. He also doesn’t like to lose. In 2016, Foley paid $500 million to the National Hockey League for the expansion Vegas Golden Knights. At the time, Foley predicted the Golden Knights would win the Stanley Cup Championship within six years. Bill Foley in an interview in 2017 with LVSportsBiz.com Editor Alan Snel. Photo via LVSportsBiz.com In the team’s inaugural 2017 season, Vegas reached the Stanley Cup Finals in what has been called the most successful first year by a modern expansion franchise in any sport. The Knights are once again a favorite in the upcoming Stanley Cup Playoffs. Through his Cannae Holdings, Bill Foley has decades of experience in acquisitions, sales, and spinoffs of public companies. He has sponsored six blank-check/special purpose acquisition companies, creating more than $140 billion in value through the investments. The names include Fidelity National Financial, Fidelity National Information Services, software and data provider Black Knight, business services provider Ceridian, and business insight provider Dun & Bradstreet. All are successful. Now, Foley, 76, has turned his attention to the gaming industry. Last month, Cannae was the lead investor in a $100 million worth of funding for Las Vegas-based financial technology provider Sightline Payments. The money is supporting the company’s growth efforts in several gaming markets. But Monday’s announcement in conjunction with Wynn Resorts might be Foley’s most challenging investment effort. Austerlitz Acquisition Corp. I, his latest blank-check company, announced a merger with Wynn Interactive, which would take the casino operator’s sports betting and online gaming subsidiary public. Through the merger, Wynn Interactive would have approximately $640 million in cash to fund operations and support new and existing growth initiatives. In its statement Monday, Wynn Resorts, which will retain 58% ownership in Wynn Interactive and continue to operate the business, said the venture could have an enterprise value of more than $3.2 billion. J.P. Morgan gaming analyst Joe Greff, without commenting on its overall enterprise value figure, suggested none of the current value ascribed to Wynn Resorts shares considers the company’s interactive business. At the outset of Wynn’s first-quarter earnings call Monday, CEO Matt Maddox compared the potential revenues from sports betting and igaming to a commercial casino opportunity – “$40 billion over the next five years.” Maddox added, “That’s typically how long it takes to build one of our brick-and-mortar properties. We knew that this is an opportunity that we had to capitalize on.” Wynn is also entering a game that could be nearing halftime. Sports betting is legal and active in 21 states and Washington, D.C. Another six states, where it’s been legalized, are expected to launch this year. Meanwhile, another dozen states are grappling with sports betting legislative initiatives or ballot referendums. Wynn Resorts acquired United Kingdom sports betting and online gaming operator BetBull in 2019 and created Wynn Interactive. The company currently provides sports betting through WynnBET in six states. Wynn said it has market-access opportunities in 15 current and potential sports betting states covering approximately 51% of the U.S. population. But in the states where it is currently operating – New Jersey, Colorado, Michigan, Virginia, Indiana, and Tennessee – WynnBet’s market share is in single digits. For now, the sports betting market is dominated by other casino operators – Caesars (which acquired William Hill US for $4 billion), Penn National Gaming (through its ownership of Barstool Sports), MGM Resorts International (through a 50-50 partnership with Entain in BetMGM) – and two daily fantasy sports providers, DraftKings and FanDuel. “Wynn is a relatively later entrant into the market and will be competing directly with Caesars as they both attempt to wrestle share from the three current incumbents, who already have customers and are continuing to invest heavily,” Morgan Stanley gaming analyst Thomas Allen said in a research note. Additional casino operators (Bally’s Corp., Golden Nugget, Rush Street Gaming) and sports betting players (Betfred and PointsBet) also have skin in the game. In its investor presentation, Wynn Resorts suggested it could reach an 8% market share in the states it expects to be operating in by 2023. In Massachusetts, which has yet to legalize sports betting, Wynn suggested it could achieve a 20% to 30% market share since it operates Encore Boston Harbor, the only casino in the metropolitan Boston region. Allen told investors the SPAC merger for Wynn Interactive “increases our confidence in the business.” Foley, whose net worth was estimated by Forbes to be $1.9 billion, is also optimistic. He will retain a 3% ownership stake and will serve as a director on the company’s board. Cannae will “fully backstop” any share redemptions, which assures Wynn Interactive will have cash available when the deal closes later this year. Foley expressed confidence that the Wynn team will “exceed their financial projections against what will be a massive addressable market.” Foley doesn’t like to lose. Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at firstname.lastname@example.org. Follow @howardstutz on Twitter.