Wynn Resorts, Limited (WYNN - Free Report) has entered into an agreement with BetBull Limited (“BetBull”) — a sports betting operator based in Europe. Wynn Resorts and BetBull’s digital sports betting platform will leverage the developing sports betting market in the United States.
Apart from this deal, Wynn Resorts will take a minority stake in BetBull. Notably, it will take a 22.5% ownership of BetBull on a fully-diluted basis. However, the value of the deal has been kept under wraps.
This latest deal will significantly enhance each company's market access and customer base throughout the United States. In an effort to strengthen its foothold in the gaming industry, Wynn Resorts seems to be banking on sports betting, following the legalization outside Nevada. In May 2018, the Supreme Court overturned the Professional and Amateur Sports Protection Act (PASPA) that banned sports betting outside Nevada. The court supported the legality of a 2014 New Jersey law, which allows sports betting at casinos as well as racetracks in the state. The decision also broke the Nevada's monopoly on the betting market.
The Court ruling also opened door for other states to enter sports betting business. Per Eilers & Krejcik Gaming 2017 reports, legal sports betting market is likely to garner $6.03 billion revenues annually by 2023. In fact, nearly 20 states introduced bills and many other states have started taking initiatives to pave the way for legalized sports betting.
We believe that the scope for the casino operators has intensified following the legalization of sports betting outside Nevada. This is because illegal betting in the United States is valued at billions of dollars annually.
In the past six months, shares of Wynn Resorts have lost 36.2% compared with the industry’s 21.3% decline. Dismal Macau performance has also been weighing on the company’s performance lately. Further, Wynn Resorts’ heavy reliance on debt financing is an added concern.
Stocks such as Boyd Gaming Corporation (BYD - Free Report) , Red Rock Resorts, Inc. (RRR - Free Report) and Century Casinos, Inc. (CNTY - Free Report) , which belong to the same industry, has also declined 2.9%, 17.1% and 15.1%, respectively, over the past six months.
Wynn Resorts carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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