Caesars To Spend $1B To Boost Rebranded Online Sportsbook
Caesars Entertainment made it clear during its second-quarter earnings call Tuesday that it intends to be the new gunslinger to be reckoned with in what Caesars CEO Tom Reeg called the “wild west” of the online sports gambling world.
And Reeg expects to bring the full weight of Caesars’ vast casino empire to bear in competing for online sports bettors and their money. His favorite word was “lean” during the earnings call with financial analysts as in “this is a true lean-in by this organization that has never happened before” and “what you’re going to see is us leaning the entire organization into this vertical.”
In the second quarter, Caesars Entertainment enjoyed substantially improved financial numbers as Las Vegas reopened from the COVID-19 pandemic.
Caesars’ net revenues were $2.5 billion and net income was $71 million compared to a net loss of $100 million for the pandemic-devastated comparable period the year before. In the 2021 second quarter, the company posted all-time records in quarterly-adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) and adjusted EBITDA margin.
Regarding the new effort in online sports wagering, either owning or operating scores of casinos in 16 states, Caesars Entertainment has sheer numbers on its size as it begins to muscle-up in the battle for online customers.
Reeg announced Tuesday a plan to spend $1 billion over 2½ years to develop the digital side of the company. That followed an announcement on Monday of a sports betting app that Caesars Sports branding would essentially replace the former William Hill brand.
Caesars bought William Hill earlier this year. A national TV commercial to help jump-start the Caesars campaign is set to air during the U.S. men’s Olympic basketball game Thursday night.
Caesars Rewards, the company’s loyalty program, has 60 million customers in its hefty database and Reeg wants to mobilize Caesars’ 54,000 employees as sales people in acquiring online customers. They’ll be armed with QR codes and incentivized to sign up new gamblers for digital.
Ground to Make Up
While not naming the obvious competition — such as DraftKings Sportsbook and FanDuel Sportsbook — Reeg acknowledged that Caesars has to make up ground but he’s confident that his company is equipped to be a major player.
“You got a bit of a wild west situation where things opened up quickly and everyone is looking for where the customers are,” Reeg said. “If you look at the companies that have very large databases coming into this or even look at the ones who have been successful converting smaller databases, it’s because they know where the customers are.
“We have over 60 million people in our database. We have the wherewithal to serve the highest-level customer down to the lowest-level customer. We have a well-developed rewards program in place that treats customers to increasingly higher levels of service as their value to us increases. That mousetrap has already been built. It’s never really been used in the sports business anywhere. You have companies that don’t have that kind of database and that kind of system, and (then) you’ve got other (companies) like us who are just getting our ducks in a row.”
Expects Investment to Pay Off
In the end, the payoff on the $1 billion investment in Caesars sports betting can be big, Reeg said.
“I think we can generate cash-on-cash business at maturity well in excess of 50% of what we’ll invest,” Reeg said. “But we understand that we operate in a world that is competitive and we’ve got to compete … to build our customer base.” He even ventured that the return could be close to 100%.
“If I could find a brick-and-mortar investment like that,” Reeg added, “we would do it every day of the week.”
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