Business Combination

12 Months Ended

Dec. 31, 2020

On October 23, 2020, the Company acquired a controlling interest in Wynn Interactive, which was formed in stages through the merger of Wynn Resorts' digital gaming businesses and BetBull (the “BetBull Acquisition”). BetBull is licensed to operate online sports and casino wagering in the United Kingdom and develops mobile applications for that purpose. This acquisition provides the Company with access to the online market in the United Kingdom, synergies in mobile application development, and digital gaming operations expertise.

Prior to the BetBull Acquisition, the Company held a 22.5% interest in BetBull, which was accounted for as a cost method investment. Immediately prior to the BetBull Acquisition, the book and fair values of this cost method investment were $21.5 million and $37.2 million, respectively. The Company recorded a gain of $15.7 million to reflect the fair value of its interest at the date of acquisition, which was recorded in Other non-operating income (expense) on the Consolidated Statement of Operations for the year ended December 31, 2020.

As consideration for a controlling interest in Wynn Interactive, the Company contributed its interests in WSI US, LLC (“WSI”) and Wynn Social Gaming, LLC (“Wynn Social”) both of which make up the Company’s existing digital operations. The fair value of the combined interests contributed totaled $49.5 million. Consideration also included the settlement of transactions from the Company’s pre-existing relationship with BetBull and the fair value of vested replacement stock options, all of which totaled $6.0 million. The fair value of non-controlling interest at the consummation of the BetBull Acquisition was approximately $72.0 million.

The fair values of WSI, Wynn Social and BetBull were all determined using the market approach given the early stages of each of the businesses. The income approach was also used as a cross-check to determine the reasonableness of the market approach as well as to determine the fair value of BetBull immediately prior to the BetBull Acquisition. The settlement of pre-existing transactions was valued based on the contractual amounts owed to either party.

The BetBull Acquisition was accounted for as a business combination. The assets acquired and liabilities assumed were recognized at their fair values at the acquisition date, which was estimated using both level 2 (observable) and level 3 (unobservable) inputs.

The following table sets forth the preliminary purchase price allocation (in thousands):



Consideration
Total consideration	$	164,671
Less: Cash acquired	4,604
Total consideration, net of cash acquired	160,067
Identifiable assets acquired and liabilities assumed
Other current assets	1,735
Property and equipment	32,092
Intangible assets other than goodwill	16,393
Goodwill	121,039
Deferred tax liabilities	(1,249)
Liabilities assumed	(9,943)
Total identifiable assets acquired and liabilities assumed	$	160,067

Acquired intangible assets included in the above table are being amortized on a straight-line basis over their estimated useful life of ten years for trademarks and three years for customer lists. In addition, the Company acquired software totaling $31.5 million, which is included in Property and equipment in the table above and is being amortized over an estimated useful life of three years. The estimated useful lives approximate the pattern in which the economic benefits of the intangible assets and software are expected to be realized. The purchase price allocation is preliminary as the Company is determining its final deferred tax assets and working capital adjustments.

Immediately after the BetBull Acquisition, the Company contributed $78.0 million to Wynn Interactive and purchased approximately $33.6 million of Wynn Interactive shares from non-controlling shareholders (the "Secondary Transaction"). After the BetBull Acquisition and the Secondary Transaction, the Company holds an approximately 72% interest in Wynn Interactive, which owns 100% of BetBull, WSI, and Wynn Social.

The Secondary Transaction was recorded as an adjustment to Stockholders’ equity (deficit) on the Consolidated Balance Sheet as the Company had a controlling interest in BetBull at the time of the transaction.

Pro forma results of operations for this acquisition have not been presented because they are not material to the consolidated statements of operations.