Wynn shakes up Q1 earnings, spins off interactive division through $640M SPAC deal Howard Stutz, CDC Gaming Reports · May 11, 2021 at 7:40 am Las Vegas-based casino operator Wynn Resorts is spinning off its Wynn Interactive division into a separate public company, saying Monday the sports betting and online gaming operation could have an enterprise value of more than $3.2 billion following its merger with a blank check acquisition company. Wynn unveiled the deal in conjunction with the company’s first-quarter earnings announcement. Through a merger with Austerlitz Acquisition Corp. I, Wynn Interactive will have access to approximately $640 million in cash to fund the combined company’s operations and support new and existing growth initiatives. Bill Foley/Photo via LVSportsBiz.com Blank check companies are another name for special purposes acquisition companies, or SPACs. Wynn Interactive is currently providing sports betting through WynnBET in six states – New Jersey, Colorado, Michigan, Virginia, Indiana, and Tennessee. In a statement, the company said it has market access opportunities in 15 states covering approximately 51% of the U.S. population. In the ultra-competitive U.S. sports betting market, where only a handful of operators have routinely risen to the top in market share, analysts said the investment through a blank check merger could fuel Wynn’s growth. The company hopes to repeat the success found by sports betting operator DraftKings, whose growth was fueled through a merger with a bank check company that led to an initial public offers that saw the shares jump more than 10% on the Nasdaq on the opening day. “We are confident that this transaction will unlock the tremendous potential of Wynn Interactive to further accelerate growth and enable the business to capture the massive opportunity in North America,” Wynn Resorts CEO Matt Maddox said in a statement. Following the merger with Austerlitz, Maddox will continue to serve as WynnBet chairman. Austerlitz was founded by Bill Foley, who has sponsored six blank check companies through his Cannae Holdings and has created more than $140 billion in value. Foley, whose net worth was estimated by Forbes to be $1.9 billion, has holdings that include Fidelity National Financial, software and data provider Black Knight, and the NHL’s Vegas Golden Knights. “Our investment in Wynn Interactive fits the criteria for the type of company and management team with which we like to co-invest,” Foley said in a statement. “I’m optimistic about the future of U.S. online casino gaming and sports betting and am confident in the ability of Matt and the Wynn Interactive team to execute the business plan and exceed their financial projections against what will be a massive addressable market.” Foley intends to join the Wynn Interactive board. “Bill Foley is the ideal partner to ensure continued success, “Maddox said. “His track record with business combinations, extensive experience growing marquee consumer brands, and partnering to maximize value in businesses like ours will be invaluable as we continue scaling.” Wynn Interactive will retain its name and be listed on the Nasdaq under the symbol WBET. Wynn Interactive’s current shareholders will retain 79% ownership in the combined company, which includes a 58% equity stake controlled by Wynn Resorts. Austerlitz I’s stockholders will hold approximately 18%, and Cannae will hold approximately 3%. Wynn Resorts acquired United Kingdom sports betting and online gaming operator BetBull in 2019 and created Wynn Interactive. Maddox said the business now has 300 employees. Wynn Interactive includes sports betting operator WynnBET, U.K. operator BetBull, and online casino brand WynnSLOTS. Wynn Interactive President Craig Billings said the merger will help the company establish “a leadership position in what will ultimately be a $45 billion North American online sports betting and igaming market.” First-quarter results The announcement overshadowed Wynn’s results for the quarter that ended March 31. Maddox told analysts the company’s three markets – Las Vegas, Boston, and Macau – showed improved results throughout the quarter as COVID-19 restrictions were being lifted. The company’s two Strip resorts – Wynn Las Vegas and Encore – went to 100% capacity on May 3. He said the Las Vegas resorts “showed continued strength in the casino segment.” He added that forward bookings throughout the year improved in the quarter. Wynn’s the Macau casinos – Wynn Macau, Encore, and Wynn Palace – experienced continued gradual improvement in visitation trends “driving particular strength in premium mass casino and luxury retail.” Still, Wynn’s overall net revenues for the quarter declined 23.9% to $725.8 million. The Las Vegas properties saw revenue decline 44.8%. Wynn had a net loss of $281, which was a significant improvement over a net loss of $402 million a year ago. Wynn’s cash flow of $58.9 million improved from a cash flow of $5.3 million a year ago, which included the impact of $75.7 million of expense accrued during the quarter related to the company’s commitment to pay salary, tips, and benefits continuation for all U.S. employees during the pandemic closures a year ago. Shares of Wynn Resorts, traded on the Nasdaq, closed at $125.73 on Monday, down 56 cents or 0.44%. The shares were up almost 2% in after-hours trading. Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at firstname.lastname@example.org. Follow @howardstutz on Twitter.