The Caesars sports betting offering is now competitive enough for the company’s real star to shine: its loyalty program.
That is what President of Caesars Sports & Online Eric Hession said at investor meetings during Stifel‘s Cross Sector Insights Conference. Also on hand was Brian Agnew, senior VP of corporate finance, treasure and investor relations.
The platform is at the point where customers who value the loyalty program, called best in class by Stifel’s Steven Wieczynski, are no longer switching to different apps to place bets. That helps keep promotional spending low, which Caesars prefers, while boosting margins.
Same-game parlays have seen “dramatic improvement” and a new player account management system is deploying in new states throughout the year, Wieczynski said.
Path to $500M sports betting, iGaming EBITDA
Wieczynski said he thinks the $500 million forecasted for digital EBITDA is “within reach.”
Caesars anticipates an additional $700 million in digital revenue this year, which will flow to EBITDA at around 50%. Another about $100 million in partnership expenses are set to fall off, Wieczynski added.
The company should hit a $500 million run rate in 2025, though timing is not specific on when that run rate will kick in. Caesars is targeting a 10% market share of online sports betting and iGaming to hit it.
MGM: ‘meaningful’ sports betting losses
MGM management told Wieczynski there will be “meaningful losses” for BetMGM in 2024 before an inflection next year.
The joint venture between MGM and Entain was profitable in the fourth quarter of 2023, but both stated earlier this year that more investment is needed to have a competitive platform.
Senior VP of Corporate Finance Sarah Rogers noted its parlay product has improved, so hold rates should start to grow.
BetMGM expects $500 million in EBITDA by 2026, with MGM management noting that requires another 6 to 7 percentage points in market share. Any costs will begin to be covered by BetMGM’s cash flow in 2025.
DraftKings issues Jackpocket shares
DraftKings issued more than $324 million in shares to Jackpocket as part of the payment for the $750 million acquisition.
Jackpocket received more than 7.5 million shares.
The closure was announced May 23, though the Form D is dated for May 22. DraftKings originally said it would pay around $337.5 million in shares.
Penn holders push back on pay
A sizable share of Penn Entertainment investors pushed back against executive pay packages and the re-election of three directors at its annual meeting last Tuesday.
The dissent is notable, as Donerail Group recently wrote an open letter to Chairman David Handler that called into question why CEO Jay Snowden has received nearly $100 million in compensation between 2020 and 2023.
More than a third of the votes, 34.3%, voted against the executive compensation packages for fiscal 2023. Of 129.2 million votes, only 48.8% of the votes approved the packages while 21.4 million shares were broker non-votes.
Handler received 56.9% yes votes, with 26.5% withholding votes and another 17% broker non-votes. Vimla Black-Gupta received 57.9% yes votes and Anuj Dhanda received 67.2%.
