EPISODE 169 | LSR Podcast

Caesars is Making Money

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24 min

Caesars is Making Money | LSR 169

Welcome back to the Legal Sports Report Podcast, Ep. #169! Caesars tells everyone they had a profitable month, a year ahead of schedule, for sports betting and online casino (1:43). We also talk about last call for California sports betting on the ballot (9:47), NBA, FanDuel, and player data (15:56), and Pete Rose + gambling in Ohio (19:22).

Full transcript

Matt Brown (00:12):

Hello and welcome to episode number 169 of the LSR Podcast. My name is Matt Brown, joined each and every week by the brightest minds in all of the gaming industry. With me I have but one of those minds, but damn it, he is the brightest. It is Dustin Gouker. You can find him on the Twitter machine @dustingouker. Smash the button, it’s absolutely free. If you hate yourself, you can follow me @mattbrownm2. We will talk FanDuel and their NBA data deal. We’ll talk about some Pete Rose stuff that is kind of LOL funny and we’ll see what’s going on. Of course, we know Election Day is next week, so is there any hope left over there in California?

(00:49):

But we had some earning calls, Dustin, so let’s kick things off with what Caesars had to say from a sports betting perspective of the casino side of things. The big news around here was they were going to sell off a property and they had made it very well known that they were going to sell off a property on the Las Vegas Strip. And yesterday they said, “Yeah, we’re not going to do that anymore.” So that made some news around here. What did they say about sports betting?

Dustin Gouker (01:13):

Wait, first off, I thought we were just talking about the Phillies for half an hour. We’re not talking about the Phillies?

Matt Brown (01:18):

Let me tell you this. So, I have futures tickets on both teams in the World Series, so I can’t lose.

Dustin Gouker (01:23):

Nice.

Matt Brown (01:23):

And I would win more money on the Astros, but I have more people who are rooting for the Phillies. And so I almost weirdly am rooting against my own financial boon here. I’m like I almost want the Phillies to win just for you guys.

Dustin Gouker (01:37):

I appreciate it. We will not be talking Philadelphia Phillies odds. It’s going to come up here in a second though …

Matt Brown (01:43):

Yes.

Sports betting, online casino turns profitable for Caesars a year early

Dustin Gouker (01:43):

… because it does intersect with the stuff we do. But yeah, top level Caesar’s earnings call, this is Q3 earnings call season, so you’re going to hear a lot of this from us and read a lot of content about this. Caesars though, yeah, came out and talked a lot about its digital business. Now, I’ve been doing this long enough, sports betting, online sports betting, online casino used to be just, I mean, even just a few years ago was kind of like this thing on the side. People don’t talk about it. Caesars goes into this and it’s not dominated, but a lot of the call was talking about digital business and where that’s going. Again, both sports betting and online casino. They turned a profit on their sports betting and online casino business for the first time in October. Again, that’s not Q3, but that’s the first part of Q4. But they again, ahead of schedule on profitability. The question is whether that sticks there or not. But this is definitely interesting.

(02:41):

I mean, Caesars is a large, as we all both know, large gaming company with a footprint all over the place. They’re really still pumping that this is their path forward. They’re not talking about that they even want to ever spin it off. They think there’s this synergy between sports betting and online casino. Which again, I think is very good for our prospects of more legalization in the future because when you see a large traditionally land-based casino operator talk about this is a part of their business now. We’re past this stage where casinos should be worried about cannibalization. They should be looking at how does online casino help our bottom-line business, and that’s where Caesars is. And again, increasingly a part of what they see as their future and driving a lot of that. And not just top line revenue, but also engaging with the brand and all of those sorts of things. So really interesting earning call and more to come from the companies in the space that we cover.

Matt Brown (03:37):

And one of the things I think that really stood out, as you mentioned, with that October being profitable, Dustin, was not only ahead of schedule, but a full year ahead of schedule. I think whenever they had talked about, when they were looking and forecasting, they were looking towards the end of 2023 for all of that to happen, and so we’re kind of a year ahead of schedule with that.

Dustin Gouker (03:57):

Yeah. I mean, they’ve told people, “Yeah, we hope to be 2023.” And this is what everybody’s going to be talking about and over the next several quarters and into next year is that path to profitability because you can’t just sit around running sports betting and online casino at a loss in perpetuity, so that they’re already there … Again, it’s not clear that they’re going to be able to maintain that every quarter, but certainly a good start and that they’re doing that now.

Mattress Mack’s $3 Mil bet

(04:22):

I’ll do my own segue here because now we’re back into the Phillies. But the old Mattress Mack, the furniture magnate-turned-sports bettor who hedges furniture promotions against betting on sporting events, they could be driven back into the negative realm if the Astros win this World Series because Mattress Mack has a $3 million bet at Caesars that they win World Series at 10 to 1, that’s a $30 million hit. So we are now talking about Mattress Mack actually from cute little side show sometimes to he has bets at lots of sportsbooks and most of those sportsbooks would very much like the Astros not to win. Of course, the Astros behind two to one as we record this, playing again tonight against the Phillies. But this is wild to me that sportsbooks, their bottom line is basically, for a month or a quarter, could be hedging on how Mattress Mack does and how the Astros do.

Matt Brown (05:17):

Yeah. Seriously, because we talk about what a slim margin business sports betting is anyway, right? And so when someone were to get a $30 million hit. I mean, if we were talking about the casino side of things, we’d be like, “Oh, that sucks,” but it’s certainly not going to be the end all be or something. But from a sports betting perspective, I mean, that shifts and moves the meter.

Dustin Gouker (05:43):

Yeah. I mean, again, he has bets with MGM, several other even smaller ones where it’s probably he has smaller bets with smaller books, but these are all needle-movers for all of them. You take the bet, you got the PR out of it, so this is some earned media and branding out of this that they get alongside of this. And again, I guess, he’s actually into the … He’s not betting, so he has an upside if the Astros win, but he’s not gambling. He’s hedging this against a furniture promotion, so he doesn’t really lose money. But he’s sitting on a potential $75 million windfall. I hate giving Mack, as you know, lots of air play. He is a good guy in Houston. He does good things for the neighborhood, for the community down there, but he’s also just a master of PR. But because this was mentioned in the Caesars earnings call, I felt like we had to bring it up because this is crazy that …

Matt Brown (05:43):

No, you do.

Dustin Gouker (06:36):

… this one result can change some of these companies’ fortunes for a quarter.

Matt Brown (06:41):

Yeah. I mean, as we often talk about at our sister sites and stuff with TheLines and all that, big bets don’t necessarily mean shark bets or that these guys are good betters. And then specifically in his case, these are all, as you mentioned, these are just hedges against promotions where he’s going to come out ahead no matter what. So as you mentioned, this is the greatest PR thing ever because everybody picks it up and everybody talks about it and the guy just wins no matter what.

Dustin Gouker (07:11):

Yeah. I mean, again, I hate the content about it and that we’ve created this monster, but he’s a genius from a PR marketing standpoint.

Matt Brown (07:21):

It is. It is.

Dustin Gouker (07:21):

There’s no doubt about that.

How will DraftKings stock respond to Friday earnings call?

Matt Brown (07:22):

So obviously, one more earnings call that we want to touch on here coming Friday on the DraftKings side of things.

Dustin Gouker (07:29):

I mean, this is the big one that we always look for because this is one of the top two operators in the US. They report third quarter earnings on Friday. We have seen tons of trading and volume on earnings call days for DraftKings whenever people are basically betting on whether this is going to be a good or a bad earnings report for DraftKings. Right as this comes on and we’re expecting, again, some high volume. Especially, again, coming out of Q3 and, you know, September numbers will be reported, this is the high water mark. That month really should be the biggest month for sports betting operators across the US. So DraftKings has actually been ticking up lately. Trading about $16 USD right now as we sit here. It’s been as low as under 11, so shareholders, I’m sure, hopeful this is the start of an upward climb.

(08:17):

But what remains to be seen, is DraftKings going to be … What is their path? Again, this profitability will be the key to whether investors are saying, “Are you going to be profitable in the near future?” And if not, you might see some more selling of DraftKings stock. But yeah, we’ll just be looking for a story on Friday I’m sure at LSR. But it’s the largest pure place, online gambling operator in the US. Even FanDuel is part of a larger company. So we look at DraftKings as kind of the bellwether for what’s going on in the public sector for the sports betting industry.

Matt Brown (08:56):

As anyone knows who has to consume television the way that I do, because you have to watch sports live and you can’t watch sports on delay, so therefore I get every political ad that’s ever happened, Dustin. It’s one of those things where it’s like everybody that just watches sitcoms and stuff and they just watch things on DVR, they don’t even get it. They don’t even understand what is going on right now from a commercial aspect. When you watch as much sports as I do and you have to sit there through the commercial breaks, I get nine political commercials every single commercial break. It is absolutely absurd. I will be so glad when next week is come and gone. But as we sit right now, we know the big thing, we’ve talked about several different times, is California over there. Is there any hope whatsoever, or are we going to be looking further down the line at California?

Gov. Newsom opposes Prop 27 for online CA sports betting

Dustin Gouker (09:47):

I mean, there’s nothing really new here. Adam and I talked about this quite a bit last week. But I felt like the election day is Tuesday, I feel like we should touch … This is the only thing that’s on the ballot around sports betting, and we should talk about it. But yeah, it just still does not look good. There’s nothing to lead anyone to believe that sports betting is going to pass either of the two propositions in California. The polling continues to be absolutely abysmal. And while I’ve cautioned on this podcast and elsewhere that polling on state level stuff is difficult and especially on propositions, but it’s so far behind on basically every poll we’ve seen. The one that people would care about more, the online sports betting proposition, is polling at 26% in the latest poll from last week. It’s hard to see where a poll would be that far off. Now, it’s not impossible and who knows what happens on Election Day. But I mean, it’s off the board at this point. At DG Sportsbook, for educational purposes only, I would not spread this game, spread this vote. It’s that far off the radar.

(10:51):

And again, I think Adam and I got into this again, but I feel like I don’t know what the path forward is. If this doesn’t happen and, again, don’t think it’s going to, I just don’t see when California’s getting sports betting any time in the near future. Yeah, it’s bad news if you’re in California and hoping to get this, but the hope is you come back with a fresh take in two years, try a different tack, get the tribes involved. But barring a huge upset on Election Day next week, we’re looking at no sports betting in California, certainly next year. I would highly doubt a legislative answer gets through in 2023 and then probably another ballot measure tries to take this up again in 2024.

Matt Brown (11:35):

Yeah, I saw our friends over at Eilers were debating in the latest newsletter whether it would happen before 2027, so that was kind of the debate in the newsletter amongst their writers, so if that tells you anything.

Dustin Gouker (11:49):

Yeah. I mean, this is what they thought was their best shot to do it now. And again, they’ve created so much animosity that the tribes, again, they have the physical casinos. That’s all they really care about. They don’t even really want sports betting. The status quo is what they’re … Now can that change in the next couple years? Sure, there’s tribes that are involved in online gambling in other states, but they just don’t see a great reason to let this happen. It kind of has to involve them if you’re going to get this through because they proved this year that they’re willing to spend infinity money, borderline infinity money, to try to stop online sports betting from happening without their blessing and without them being the conduit through which it happened.

(12:34):

So yeah, I mean, 2027, I hate to say it, but that’s kind of the over/under now. I think 2024 is such a long shot now that I’m not even sure it’s worth putting it on the ballot. I think you have to start over from scratch and just try to get everybody on the same page and agree. Which, again, we always say this, but poker in California was such a mess. Ten years of it. We sat there, and you and I watched this and hoped for California to legalize poker and start maybe a wave of legalization, never happened. It’s never going to happen at this point. Don’t even get started on other forms of online gambling outside of sports betting. You might get the online sports betting in the five- to 10-year horizon, but anything else, poker, I think you can basically forget about in California anytime soon.

Does Texas sports betting legislation have a chance in 2023?

Matt Brown (13:21):

The silent fist pump from all of these sportsbooks in Las Vegas as well who are A-OK with nothing passing in California, that’s for sure. I mean, so Dustin, really as we move forward past Tuesday, I think all of our sites, as far as say we just shift to Texas, right? I mean, that’s where we will be looking at LSR and everybody will be looking at Texas. It’s been a while since we’ve talked about Texas just because they don’t meet this year. But what we do know, kind of going on behind the scenes, is the power players within that state all seem to be aligned, and they all carry a massive amount of weight in that state and political influence. And so unlike California and unlike Florida, I am almost to the point of where I think Texas is a favorite to get something done. When you have multiple billionaires who are all on the same page, stuff typically tends to get done.

Dustin Gouker (14:19):

Yeah. I mean, there’s not been a whole lot of chatter real recently, at least publicly. I’d say coin flippish. I’d spread it -110, sure, on the side. I think it’s possible and maybe not 100% likely, but we’re going to go into it. And it’s such a short window. That’s the thing with Texas, three months basically and they’re done. Either it gets done or doesn’t and then they don’t meet for two years. So there will be a lot of eyeballs and a lot of lobbying going into Texas because this is the big needle-mover in sports betting.

(14:47):

There will be other states that probably legalize next year or look at legalizing, but nothing that’s anywhere near the size of Texas from that standpoint. We obviously have watches in Ohio and Massachusetts coming. Maryland potentially even this month with some operators going live. But yeah, Texas will be the one. We’ll be watching a court case in Florida, as well, that would allow for Hard Rock and the Seminoles to offer sports betting. That has a chance of turning things around for online sports betting in the short term as well. But yeah, we’re going to be … Yeah. I mean, I’m sure all we’re going to be doing is hammering Texas, the phones on Texas lawmakers and trying to figure out whether Texas is going to legalize it in the first few months of the year next year.

Matt Brown (15:32):

We already brought up Mattress Mack. Trust me, we’ll be talking about him during all that. He is going to be lobbying very hard, and lots of Mark Cuban, Tillman Fertitta, and Jerry Jones talk, that is for sure. Because all of those guys have already publicly backed this and, in some way, shape or form, most likely are going to have a lot of influence in this one way or another. Let’s talk FanDuel and NBA player data.

Opinion: NBA tracking data deal between FanDuel, Sportradar raises major questions

Dustin Gouker (15:56):

Yeah, interesting deal came out. FanDuel and Sportradar announced a deal in October actually, a deal for player tracking data to be provided to sportsbooks. And again, I suggest you go read the piece from John Holden. We’re not going to get super into the legal repercussions here, but it’s interesting. What do we think this is going to do for sportsbooks and is this … Let’s start it from this point and I’ll turn it back to you, what is the appetite for this as a betting product? We saw Simplebet launch with its partners, with its sportsbooks that it works with, launch pitch speed during the World Series, that you can bet on the pitch speed. Do you think people want to bet on player data and things around players, how fast they’re running and things like that? And what other potential uses are there, I guess, out of this?

Matt Brown (16:51):

Yeah. I mean, for me it is like … Look, there’s still learning curve involved for me just to get people to understand the live betting aspect just in general and all of that. And I am very curious and I’m glad you brought it up because I’m very curious as to what any sort of appetite there would be for something like this. I mean, me personally, I’m as avid a better as there possibly is. And don’t get me wrong, it won’t happen in Nevada for who knows how long, we won’t be getting it. But I’m not really jumping up and down about something like this and I’m always looking for different ways to get action going on things. So yeah, I don’t know.

(17:34):

I mean, look, it doesn’t hurt I suppose. I mean, the more options, the better. And if there’s anything like that that people are always going to probably bet on the long shot, which means you’re going to win way more than you’re going to lose. Nobody wants to bet on a -110 guy who’s going to have the fastest rushing speed or whatever. It’s going to always be the … Tyreek Hill is going to be -200 every single week, and so someone’s going to bet on the +800 guy, and that’s never going to hit. So I guess there’s that for the sportsbooks that looks good. But yeah, I don’t know, man. I mean, I don’t see myself getting involved.

Dustin Gouker (18:10):

Yeah. And that’s only part of this when you unpack player data. A bookmaker can probably find information there that’s useful, that’s not for providing markets, but is a pitcher getting tired? Is somebody slowing down? That might just be the benefit of this, being able to see that data in real time and then can you then take that information and change your live markets and make all of that more optimized so that you’re not taking a loss on a live bet? That perhaps is interesting.

(18:41):

The other part of it is how much is this stuff verifiable? There’s no independent verification. So is this good data? One, to bet on it. Two, to book something on it. You’re not being able to verify this because you’re just going on what the player tracking says that the NBA is providing, again, through a deal with the Player Association and then Sportradar reporting that to you. I don’t know. We’ll see. It’s certainly interesting. It also underlines that the CBA allows for this.

Matt Brown (19:12):

I know.

Dustin Gouker (19:13):

If I was the Players Association, I’d be like, “Maybe I should stop collectively bargaining this away and get some money out of it.”

DraftKings, BetMGM among new licensees for Ohio online sports betting

Matt Brown (19:22):

Seriously, seriously. It’ll be interesting. I mean, like I said, I mean, more options, typically the better. I just don’t know what all we’re going to be looking at with all of that. Typically, everything we talk about here on the podcast you can find over at LegalSportsReport.com. We do go to our sister site for this one to take us home over at PlayOhio because this is more of an LOL kind of thing right here where we know that there’s going to be legal sports betting in Ohio. You’ve heard of Bronson Arroyo, maybe Anthony Munoz, Ickey Woods, of course, all of that. But the first legal sports bet, Dustin, is a little bit of irony.

Dustin Gouker (19:59):

And is this a good idea, bad idea? I don’t know, but it’s a thing. But the Hard Rock Casino in Cincinnati is having Pete Rose come on 12:01 on New Year’s Eve and place the first bet. It may or may not be the, quote, unquote, first bet anywhere in Ohio, but it will be the first one placed at this physical sportsbook. Obviously, with the entire history of Rose and baseball and gambling, obviously, we know Pete Rose loves to make money from gambling or at least to gamble and then find what ways for that to happen. But it feels at this point he’s also just kind of … As much as Major League Baseball has taken in sports betting and it’s part of its future and they’ve accepted it, Pete Rose going off and betting, being a ceremonial first bet, feels like a … I don’t know. If he wants to be in the Hall of Fame and he wants to be back in baseball, maybe you should just stay away from the gambling.

(20:55):

But at this point, he’s probably made his bed and he decided, “Oh, I’m just going to keep bleeding into this as much as I can and not worry about the chips.” But the more baseball gets in bed with gambling, I mean, what Rose did was wrong, but it’s also the optics of it are like, “Oh, you’re still keeping Pete Rose out when you’re DraftKings?” Again, I’ve watched that Harper home run in the LCS a million times, got DraftKings Sportsbook in the background when he’s around the bases every time. You get live cut-ins from the old DraftKings too during the late innings of these games, and I don’t know. I don’t know where it’s all going, but Pete Rose, yeah, taking a first bet, I mean, I wouldn’t touch it with a 10-foot pole if I were a sportsbook and I would just stay away from him. But this is his shtick now, and he is obviously the ties to the res and then gambling. And there have been lots of headlines written about it and there will be many more written about it in the next few months.

Matt Brown (22:02):

Yeah, I’m with you. I think you can hold two thoughts in your head at the same time where it’s at this point where we’ve moved, it’s ridiculous that they’re keeping him out of the Hall of Fame, while also saying, “Yeah, but maybe you don’t celebrate the fact that he was gambling when it was illegal and whatever.” So it’s like I think we can hold two thoughts on our head at the same time. Should he be in the Hall of Fame? Now that we’ve moved away from this, absolutely. One of the greatest baseball players of all time. At the same time, we can say maybe we shouldn’t just celebrate this guy as a gambler because what he did definitely was wrong at the time whenever it was happening. So I think we can do this, but I don’t know. As a society, Dustin, we’re not allowed to do that. You have to have a hard take and that’s the only take you can have.

Dustin Gouker (22:42):

Yeah, no doubt. Yeah, it’s somewhere in between. It’s just weird and messy. And I mean, I’m more excited about seeing Ickey Woods do the Ickey shuffle on New Year’s Eve.

Matt Brown (22:50):

Exactly, which you will. Yes, we know he will. He’ll probably make the bet. He’ll do it and then spike the ticket or something like that or whatever. Yeah, that’s really what this is all about. Guys, everything we talk about over on LegalSportsReport.com, so please go over there, take in all of the great words that our writers are doing over there. And follow us on the social medias as well. If you happen to be catching us on the YouTube, go ahead hit that subscribe button down below. Really do appreciate the support as we grow this channel along the way. If you want to follow Dustin on the Twitter machine @dustingouker. It’s absolutely free, go and smash that button. Until next week, for Dustin, I’m Matt.

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