Caesars commits to product upgrades amid marketing spend reduction

Caesars Digital co-president Eric Hession has admitted the firm is struggling to make up ground on its rivals in online casino and sports betting but has committed to upping its product development.

Speaking as part of the wider Caesars Entertainment group Q2 2022 earnings call, Hession was challenged by analysts to divulge the firm’s plans for online casino and sportsbook advancement.

Discussing online casino, Hession suggested Caesars Digital was struggling.

“We really haven’t gained the traction that we want and given our knowledge of how to use those customers and to market to them and to segment to them and what they’re looking for in terms of game type based on the retail business,” he explained.

“We should absolutely be a market leader in the icasino space.

“We’ve been challenged from a tech perspective as well as from a marketing perspective and unfortunately, that is also lagging on the sports betting side,” Hession added.

Hession continued: “In the fourth quarter, we’re going to be making some enhancements on the tech side, so that we’ll be able to do segmented marketing and other things, all basic things that you’d expect would be in place but unfortunately, they were just difficult from a tech perspective.

“That is an area of opportunity. I think if you were to look starting in the fourth quarter and going into next year, you’re going to see us start to make some real progress there,” he added.

Caesars Digital generated revenue of $152m during Q2 but reported net income losses and adjusted EBITDA losses of $116m and $69m respectively in the same period.

A number of US operators have revealed EBITDA losses during Q2, but with the new football season looming, focus is switching to acquiring customers and increasing revenue.

Caesars, for its part, has said it will continue its marketing spend pullback first instituted following the high level of spending seen in New York during the early part of 2022.

“In terms of what our competitors are doing, we really haven’t seen much of a change at this point. We don’t know exactly what their plans are for football, but we’ve heard no indications that they’re changing the original strategy,” Hession explained.

“We believe that the performance that we had in the second quarter and as we head into July and the next few months, support our notion we can pull back and that customers are stickier than we had originally thought.

“That’s allowing us to be able to have the large reduction to still maintain kind of the revenue levels we were at,” he added.

Echoing his colleague’s comments, Caesars Entertainment CEO Tom Reeg expanded on how the reduction might affect customer acquisition and market share levels during Q3.

“The key factor to think about in the third quarter is you have no significant new states coming online and so your business became dominated by existing customers rather than new acquisition customers,” Reeg explained.

“I can’t stress enough that the cost of the acquisition cost versus the retention cost is a dramatic difference.

“I would expect this football season to be important for everybody, you’re going to have New York and Louisiana who were very late last year so you’re going to have a fair amount of acquisition activity there.

Reeg continued: “You’re going to have some natural acquisition activity, but you don’t have a new state of scale coming online until Ohio in January so we feel pretty good certainly for ourselves.

“I can’t speak for what others are doing but we’ve got almost $0.5bn of what we were anticipating spending in marketing in the last three quarters of 2022,” he concluded.