Nevada gaming regulators on March 2 recommended media mogul and IAC Chairman Barry Diller and CEO Joey Levin be licensed in the state as part of the company’s 14 percent ownership stake in MGM Resorts International.
Later in the Nevada Gaming Control Board hearing, a Wynn Resorts executive told the board about their pulling back on digital spending in a competitive sports betting marketplace, according to CDC Gaming Reports.
In 2020, IAC, a publicly traded company, spent more than $1 billion to purchase 59 million shares of MGM, a 12 percent ownership stake. The two assumed positions on MGM’s 14-member board of directors. MGM authorized a $2 billion share-repurchase program that will increase value for the company’s shareholders.
Diller’s resume includes chairman of Expedia, founder of Fox Broadcasting Company and USA Network, and former chairman and CEO of Paramount Pictures. He liked the potential for online business at MGM.
“We were in March 2020 and looking at what’s happening in the world and how IAC was in a stable place. We were looking at what opportunities were out there,” Levin said. “As we looked through many businesses in this period, we were trying to work to find opportunities and MGM kept hitting all of our filters.”
MGM is committed to the digital space Wynn is shutting down.
Vincent Zahn, senior vice president and treasurer of Wynn Resorts Limited, said Wynn believes the digital space was way too competitive, especially in sports betting,
“In the fourth quarter of last year, we decided to retrench and build a business that creates long-term shareholder value and a long-term sustainable and profitable business,” Zahn told the board. “We cut back on media spending. We cut back on performance marketing. And we shifted the business model to more of an affiliate-based customer-acquisition model.”
Board member Philip Katsaros said his previous prediction that companies’ spending to acquire sports betting customers was unsustainable has proven to be true.
“I was on the record that this was insane,” Katsaros said without naming any companies. “The user-acquisition costs are going through the roof, and I don’t see how this is sustainable.”
