Caesars Entertainment announced Tuesday it is buying the WynnBet online casino business in Michigan, adding to its designs for iGaming dominance.
Caesars gains the ability to offer an additional iGaming brand where it already operates Caesars Palace and World Series of Poker. Existing WynnBet Michigan customers will be absorbed into the platform, as Caesars and the Sault Ste. Marie Tribe of Chippewa Indians announced a long-term extension of the former company’s market access deal.
“As we continue to grow our iGaming franchise, the assumption of WynnBET’s iGaming operations in Michigan allows us to tap into a significant market and customer base, providing a crucial step forward in growing our digital products and offering players more ways to play,” Matt Sunderland, SVP & Chief iGaming Officer for Caesars Entertainment said in a statement.
Stock up, record year for Caesars Digital
Caesars announced Tuesday that 2023 was Caesars Digital’s most profitable year, in line with what it pre-reported in January.
It finished 2023 with $38 million of Adjusted EBITDA, versus 2022, when it accounted for a $666 million loss. Most of that came in Q4, which saw $29 million in EBITDA, versus a $5 million loss in Q4 2022. Net revenue was $304 million, up 28% year-over-year and a new quarterly record.
Caesars stock was up 3.8% to $42.57 a share midday Wednesday.
iGaming a ‘critical component’
The company attributed its growth to Caesars Palace, the rebranded iGaming app it launched in August. It has shifted many table game customers to slot players, which typically produce 1 to 1.5 percentage points higher hold, CEO Tom Reeg said.
Its iGaming handle and gross revenue were both up over 50% in Q4, capping a year where they grew every quarter. The company finished 2023 with $10.62 billion in iGaming handle, up 32% from 2022.
“The core iCasino slot customer has responded positively to our significantly improved offering, and we’re pleased that the new product and brand resonate much better with our Caesars Rewards database than our casino associated with the Sportsbook,” Hession said. “iGaming remains a critical component of our digital growth strategy for 2024 and beyond.”
Can Caesars carry iGaming momentum into 2024?
Reeg expects more dramatic growth for digital in 2024 compared to any other business the company runs.
“The size of the market has consistently exceeded our expectations. Growth in mature markets that have had OSB for a while or iGaming continue to grow at steady clips,” Reeg said. “I would say legalization, there has been no real surprises there in terms of jurisdictions that did or didn’t legalize our performance in iCasino since we launched Caesars Palace Online. We had pretty aggressive expectations and they’ve exceeded those and it continues to accelerate.”
Caesars also will address that through an agreement with live table game operator Evolution to establish live casino studios across the US, including at the Tropicana AC in New Jersey.
It was announced Wednesday, a day after the New Jersey Division of Gaming Enforcement closed an investigation into allegations of misconduct by Evolution. The investigation found no evidence of Evolution promoting its business in any market New Jersey considers prohibited.
Sports betting takes a back seat
Sports betting handle in Q4 was up over 12% year-over-year. Hold hit 6.4%, despite historically bad win in November from unfavorable sports outcomes.
Meanwhile, sports betting handle for the year was $12.09 billion, down 5.6% from 2022, as the company focused on iGaming.
“On the sports betting side, during 2023, we continued to focus our product and technology improvements on the overall experience for our customers. They responded favorably to improved same-game parlays product enhancements, in-game wagering improvements and streaming technology,” Hession said. “The percentage of customers making parlay wagers continues to improve and the average legs per wager also continues to steadily increase, giving us confidence in our ability to improve hold throughout 2024.”
CFO Bret Yunker added that “there are a few features” that still need attention with the sports betting app and functionality is the company’s focus going forward.
