Caesars Sportsbook is partnering with the NBA‘s Cleveland Cavaliers as part of its Ohio sports betting strategy despite another available entry point.
The deal made sense for Fubo because it lacked mobile market access in Ohio. Caesars Sportsbook has an entry point, though, through its Scioto Downs racino in Columbus.
So the deal seems to be more about targeting specific customers. Caesars did not respond to additional questions about the deal.
Will Ohio sports betting bring out promo wars?
The launch of mobile sports betting in New York might have made US sports betting operators a bit wary of new state launches.
Despite New York’s 51% tax on gross sports betting revenue, operators like Caesars, DraftKings and FanDuel did not pull punches when it came to promotions and advertising to get new customers. Caesars led the way with a promo three times as generous as the other two at launch but quickly scaled that back.
Ohio might not be New York with its 20.2 million residents but it is still the seventh-most populated state with 11.8 million residents. Fewer companies seem willing to fight for customers than this time last year, though, including Caesars.
“You are going to see us dramatically curtail our traditional media spend, effective immediately,” Caesars CEO Tom Reeg said.
“We have accomplished what we set out to do. We set out to become a significant player and it’s happened significantly quicker than we thought. And I think most of you know me as someone who’s not one to spend any money needlessly.”
Caesars’ digital segment posted an adjusted EBITDA loss of $305 million for the fourth quarter of 2021 alone. It brought in just $116 million in revenue.
What would Caesars gain from Cavaliers deal?
Without knowing the economics of the deal between Caesars and the Cavaliers, it is hard to say if the agreement makes financial sense or is cheaper than traditional media marketing.
Look at it this way, though: traditional marketing is for acquiring customers and exposure. Caesars will certainly get both through multiple aspects of the deal.
First, Caesars is opening a 10,000-square-foot retail sportsbook at Rocket Mortgage FieldHouse by the end of the year. That’s more than three times the size of Fubo’s lounge, which does not include retail betting. Caesars will also get in-arena branding visible during TV broadcasts.
It is not immediately clear if Caesars gets access to any database of Cavaliers fans, which would be highly valuable to any sportsbook operator. It would not be unprecedented in this kind of deal, though.
“As we prepare to launch sports betting in Ohio later this year, this wide-ranging partnership enables us to connect with the Cavs’ passionate and highly engaged fanbase,” Caesars Digital Co-President Chris Holdren said.