Caesars Sportsbook has announced plans to cut back on its vast promotional spending as it seeks to pivot towards profitability in the months ahead. Parent company Caesars Entertainment has invested heavily in sign-up bonuses, additional promos and high-profile TV commercials since it purchased William Hill for $4 billion last year. It rebranded William Hill as Caesars Sportsbook and spent lavish sums in a bid to build up market share in the competitive online sports wagering industry. That has helped cement Caesars as one of the top four sportsbooks in the country, but it is now time for the brand to shift gears.
Eric Hession, co-president of Caesars Digital, discussed the team’s strategy during a Caesars Entertainment Q2 earnings call this week. “Our strong gains and unaided brand awareness have allowed us to scale back our brand-related marketing spend,” he said. “That reduction, in combination with a reduced promotional investment environment, translated into steadily improving results throughout the quarter.”
Caesars Sportsbook has typically offered larger bonuses than any of its rivals. It currently offers a risk-free bet of up to $1,500 for new customers. Previous bonuses include a risk-free bet up to $5,000 and a matched first bet up to $1,001. When it launched in New York back in January, it gave new customers a $300 no deposit bonus, along with a 100% match deposit bonus up to $3,000. That led to a heavy financial loss, but it did help Caesars become the early market leader in the Empire State, although it has since been overtaken by FanDuel and DraftKings. These lavish promos could now be a thing of the past, as Caesars seeks to build a more sustainable business.
Confident in Achieving Profitability by Q4 2023
Nevada-based Caesars Entertainment reported a second quarter loss of $123 million earlier this week. That amounted to a loss of $0.57 per share. It had earned a profit in the same period in 2021, so the results fell short of analysts’ expectations. The average Wall Street estimate was earnings of $0.25 per share. However, revenue of $2.82 billion for the quarter beat analysts’ estimates, which averaged out at $2.77 billion. The company’s share price has climbed by more than 9% this week. It just needs to turn that revenue into greater profits. Caesars offloaded the non-US assets of William Hill to 888 Holdings in July, which reduced its debt.
Caesars Digital will continue to cut back on advertising spend. “Our unaided awareness got to a point where we were comfortable pulling back on advertising spend,” said chief executive Tom Reeg on the earnings call. “So you’ll see some commercials largely on ESPN, and you’ll see some local ads that run locally as well. I mean, compared to last fall, it’s going to seem like we’ve left the air entirely, but you will run into a commercial or two depending on where you are and what you’re watching. We have pulled a planned hundreds of millions of dollars that we were planning to spend. We don’t think our competitors have followed us. They’re still spending and our share has been stable.”
When asked about when the digital business can achieve profitability, Reeg added: “Given that we damn near turned profitable in July, I’m extremely confident that we will be a profitable business at least by the fourth quarter of 2023. We’ve proved we could carve out a significant piece of the business. Now we want to prove we can make a profit and then we’ll talk about fighting for additional share on the other side of that. But we are extraordinarily pleased with where digital is in a short period of time and really excited about this football season, where we come in with our legs under us rather than running as fast as we can to keep up.”
Caesars Sportsbook Launches in Wyoming
Caesars became the fourth sportsbook to launch in Wyoming this week, following in the footsteps of DraftKings, BetMGM and FanDuel. It rolled out its new iOS and Android app in the state, while bettors can also place wagers at the website. New users will receive a risk-free bet of up to $1,500 as a welcome bonus. If your first bet loses, you are refunded with site credit, which has a 1x rollover requirement. Bettors can also join the Caesars Rewards loyalty program.
Caesars Sportsbook is now live in 24 states and jurisdictions – 18 of which are mobile – and it operates the largest estate of retail sportsbooks in the country. Wyoming is the smallest state by population, but it is excited about expanding into this market. “We’re ready to give sports fans in Wyoming the first-class sports betting experience they deserve,” said Hession. “Our upgraded mobile sports wagering app together with unforgettable experiences through Caesars Rewards is a special combination we’re excited to bring to this market.”
The team recently added a same game parlay builder to the Caesars Sportsbook app. They are now gearing up to launch more parlay options, plus a wider variety of alternative lines, and they also aim to improve payout speeds to see off competition from ambitious rivals. “We will continue to remain focused on growth through new state launches, investing from a tech perspective on product enhancements and remaining acutely focused on our expenses,” Hession added.
Caesars Remains Neutral in California Battle
Rival sports betting companies such as FanDuel and DraftKings have teamed up to lobby for online sports betting in California, which would become the country’s largest market. That puts them in direct opposition to a group of tribes, who want sports wagering to be limited to retail venues at their casinos, plus racetracks.
Caesars has relationships with several tribes, so it has remained neutral on the issue. “We have a decade-long relationship with a number of tribes across the country where we’ve been managing their assets through multiple contract renewals,” Reeg said. “And we don’t want to be in opposition to tribal interests when we’re their partners. So we’ve remained neutral in California throughout. You should expect that to be the case in any state where tribes are at odds with the commercial interest.”