Caesars Entertainment CEO Tom Reeg appears heartened by the third-quarter performance of Caesars Sportsbook.
Overall, Caesars Entertainment reported $2.7 billion in net revenues and $233 million in net losses, compared to $1.4 billion and $926 million in the same period last year. With an EBITDA of $882 million, the company missed analysts’ earnings estimate of $931 million, but focus was elsewhere on the third-quarter earnings call.
In August, Caesars relaunched its sportsbook and rolled in its William Hill US assets under the brand in most markets. That campaign began a potentially $1 billion investment to capture market share. That effort is off to a good start, according to Reeg, but it is just the beginning for Caesars Sportsbook.
“I would say, even though we’re strongly encouraged, the numbers are ahead of internal expectations, but it’s very early and this is a long game,” Reeg said on an earnings call. “We expect it not to be a straight line.”
Caesars Sportsbook market share
Live in 20 total jurisdictions, Caesars reported a 17% national market share of handle, which appears to include retail. In the eight markets Caesars Sportsbook is operating on the Liberty platform, it doubled its market share from approximately 6% to 12%, according to Reeg. That figure accounts for the William Hill acquisition.
Those numbers do not include Illinois and Pennsylvania, two of top four legal US sports betting markets. Reeg expects those markets to go live on the Liberty platform in the first half of 2022.
“We didn’t want to spend money guiding customers to an experience that would not be what we wanted to offer them,” he said of those two states. “Our market share sucks, for lack of a better term.”
In the third quarter, Reeg said Caesars took a little more than $1.7 billion in handle, with each month taking substantially more than the last. In October, Caesars had $1.3 billion in handle alone, according to Reeg.
Arizona off to good start for Caesars Sportsbook
Regulators have yet to release the Arizona sports betting numbers from its first month in September, but Reeg is bullish on Caesars in the state. The Arizona figures will add to the states included in the company’s Liberty platform category.
“We think results will show us in excess of handle numbers earlier,” Reeg said, referencing market share percentages.
He said Arizona is third among states in terms of Caesars Sportsbook market share, behind Nevada and Iowa. In Nevada — a state without DraftKings and FanDuel — he said market share stands at approximately 50%.
New markets coming for Caesars Sportsbook
Reeg used the Arizona success to express his optimism for Louisiana and Maryland. On Sunday, two Caesars retail sportsbooks opened in Louisiana.
Caesars is extremely active in the Bayou State. Louisiana Gaming Control Board Chairman Ronnie Johns said online sportsbooks should launch by January 1, 2022.
A second approval for a sportsbook at a Caesars casino in Maryland could come next week. Caesars signed a partnership deal with the NFL‘s Baltimore Ravens in September.
Quiet on the northern front
Caesars has not made much noise in Canada sports betting. Caesars does have a long-term management relationship with Caesars Windsor Hotel & Casino.
While other operators have worked to establish partnerships, Reeg said Caesars is watching the market. Ontario, which includes Windsor, should be a significant sports betting market for operators.
“We’re watching as you are as they go through the mechanics of how it will roll out,” he said. “We anticipate we’ll be in a better position with our long management history with Caesars Windsor and a large amount of customers known to us and available to us.”
Shotgun approach to customer acquisition
Reeg knows the marketing spend is high and with that comes a lot of customers who will not be worth much to the sportsbook. He was, however, optimistic about the funnel to the Caesars Rewards program.
Since the relaunch in August, Reeg said approximately a third of new deposits are Rewards members. Those members make up approximately a half of the handle.
“[That’s] validating that we think Caesars built a system over two decades that identified the valuable customers that everyone is out there searching for,” he said. “That’s extremely encouraging.”
Spend will flex with Caesars Sportsbook results
As mentioned, Reeg believes the early results are encouraging. He also recognizes the momentum will be a quarterly property.
He expects sports betting to be EBITDA-positive by the 2023 NFL betting season. But if results slow, so too will the announced $1 billion investment in Caesars Digital.
“The bulk of our spending is success-based, it’s tied to customer acquisition,” Reeg said. “If we do worse than expected, the ultimate investment will be less. If we do better from a market share perspective, the ultimate investment will be more, and obviously, the return will follow.”
So far, he believes the marketing spend is worth it and said unaided brand awareness is “dramatically higher than it was August 1.” The all-out advertising blitz from Caesars will continue at the very least through the end of this football season.
