Caesars pledged to invest $1 billion in its digital business over the next two and a half years, as it seeks to climb into the top-tier of US sports betting.
The company relaunched its Caesars Sportsbook on Monday on new technology following the William Hill acquisition.
On Tuesday, CEO Tom Reeg said the entire organization was ready to “lean into the vertical.”
Caesars going big on sports betting
That effort includes major investment, a nationwide marketing campaign, and a frontline worker effort.
“We are activating the entire enterprise,” Reeg said at the company’s Q2 earnings.
“We are activating our player development teams across the organization to sign up new accounts. We’ve got 54,000 salespeople in our company that work with customers every day that can open accounts.”
Invest big to win big?
Reeg said the digital business at maturity could generate $500 million to $1 billion EBITDA a year.
However, he warned that US sports betting was intensely competitive.
“You should expect us to spend over $1 billion in the next (two and a half) years to build our customer base,” Reeg said. “I can’t give you a more precise number because a lot of the acquisition spend is success-based.”
How does Caesars investment compare to US sportsbook leaders?
While chunky, the CZR investment works out around $400 million annually for the next couple of years.
That is still some way behind the leading brands, per Bloomberg estimates, compiled by Roundhill Investments.
Both FanDuel Group and DraftKings project to spend more than $750 million on sales and marketing in 2021, per those figures.
New focus for Caesars Sportsbook
The CZR digital business was reported as a separate line item in results for the first time Tuesday.
The new segment includes the old William Hill business (including retail books,) and the Caesars betting and iGaming revenues.
For the quarter, the segment posted same-store net revenues of $117 million and same-store adjusted EBITDA of $2 million.
Expect teething troubles
Reeg sounded keenly aware of the realities of the US market.
“We know this is not going to be a straight line up,” added Reeg. “We expect that we will make mistakes. We’ll have to continue to evolve both from a marketing strategy and a technology strategy. But we have the tools to execute on this opportunity and I’m really excited to play this hand.”
Analysts asked Reeg whether that planned investment could increase to $2 billion, and whether any M&A might be needed.
The exec did not rule anything out, but said Caesars had everything in place to “launch with strength.”
What to expect from new Caesars Sportsbook
As for the product itself, CFO Bret Yunker said it was “best-in-class.”
“We encourage you to download and experience it yourself,” Yunker told analysts. “It has very deep betting markets. It’s very fast, the UX is great. And then you layer on top J.B. Smoove and a great marketing campaign, and we like our digital mousetrap.”
The switch to William Hill technology should indeed improve the app. In Eilers & Krejcik testing, the William Hill app finished 15th out of 31, with Caesars 25th.
As for a limits, the company told partners this week it was potentially open to bigger players than William Hill was.
Caesars stock climbed around 2% following the earnings report.