Casino stocks traded down on Tuesday with concerns over how China will regulate casinos in the Macau region.
The relationship between casino traffic during and after the COVID-19 pandemic and international relations are having an impact on share prices of stocks.
This leads to an important topic that could provide value to shareholders: Could spinning off online sports betting and iGaming operations help stocks of casino companies?
Wynn Resorts: The question could be answered soon with the online sports betting and iGaming arm of Wynn Resorts, Limited WYNN getting spun off via a SPAC merger.
Wynn Interactive, which includes WynnBet and Bet Bull, a UK online sports betting and iGaming brand, is going public via Austerlitz Acquisition Corp I AUS.
Second-quarter revenue was $990.1 million for Wynn Resorts. The company reported Macau revenue of $450.4 million from two casinos and revenue of $355.1 million for Las Vegas and $165.12 million for Boston Harbor.
The impact of Macau revenue could have a strong impact on the outlook for Wynn Resorts and its shares.
Wynn will retain 58% ownership of Wynn Interactive and could see growth as the pure-play company is spun off to tackle the growth of online sports betting.
Wynn Interactive will be armed with a database of more than 13 million Wynn Reward members and access to the company’s state licenses.
WynnBet covers 51% of the U.S. population with 15 states secured and another nine states (26% U.S. population) in negotiations.
WynnBet is live in New Jersey and Michigan for online sports betting and iGaming and has online sports betting in Colorado, Virginia, Indiana and Tennessee.
Estimates call for Wynn Interactive to have revenue of $96 million in fiscal 2021 and $422 million in fiscal 2022.
BetMGM: This company gets lots of attention as a potential winner as a pure-play online sports betting and iGaming company.
BetMGM is a 50/50 joint venture between MGM Resorts International MGM and Entain ADR GMVHY.
The company offers online sports betting and iGaming in 12 states and plans to be in 20 states over the next year.
In Michigan, BetMGM holds the number three market share for online sports betting with 21.8% market share and is first in online gaming with a 36.7% market share.
Only Draftkings Inc DKNG and Flutter Entertainment PDYPY owned FanDuel beat BetMGM for online sports betting market share in many of the legalized states.
BetMGM was number one in market share for U.S. iGaming for the start of 2021 and continues to rank high in market share for the segment.
In the second quarter, MGM Resorts posted revenue of $2.3 billion. The total was split as $1.0 billion from Las Vegas, $856 million from regional casinos and $311 million from MGM China.
If MGM Resorts spun off the joint venture, it would create a pure-play online sports betting and iGaming company that could trade at a higher multiple given the growth of the industry.
Right now, MGM Resorts share price moves more in reaction to issues in China and visitor figures to the casinos than the growth of online sports betting, which could be leaving growth on the table for shareholders.
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