Caesars to “dramatically curtail” US marketing spend on sports betting

Caesars Entertainment CEO Tom Reeg has said the US sportsbook operator will “dramatically curtail” its marketing spend on sports betting after suggesting it had achieved its objectives following the launch of the Caesars Sportsbook last year.

In the firm’s Q4 2021 earnings call, Reeg highlighted the increasing struggles of US sportsbooks in generating ongoing profitability, struggles which have led to a decline in confidence from investors.

Alluding to previous earnings discussions, Reeg said: “What we told you was we saw a significant opportunity to acquire customers and grow this business. We think this – we told you at the time – is the most exciting growth opportunity this space has seen in three decades.”

Caesars relaunched its sportsbook in August 2021, shuttering the William Hill US brand. At the time, the firm committed to a $1bn sportsbook acquisition drive aimed at capitalizing on this relaunch which has seen a wholesale increase in marketing activity over the following quarters.

Reeg continued: “We thought we had a significant advantage with our Caesars Rewards database of 65 million people.

“We were behind. We were an afterthought in this business. We were buying William Hill last year,” he added.

The Caesars CEO qualified his remarks suggesting that the operator had gone from an afterthought to a key player in the sportsbook market, with a 21% market share in reporting states in January.

Caesars is now live in 22 US states, 16 of which now offer mobile betting.

Addressing this, Reeg contended it had exceeded Caesars’ expectations, with the operator now keen to transition its strategy from the prior launch-based outlook to one of consolidation of its existing gains.

“We’ve gone from kind of ever-increasing bullishness to unlimited bearishness at this point,” Reeg explained.

“You are going to see us dramatically curtail our traditional media spend effective immediately.

“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. I think most of you know me as someone who’s not one to spend any money needlessly,” Reeg quipped.

Caesars’ bullish attitude to marketing during the prior quarters has seen them recruit comedian JB Smoove, Hollywood actors Halle Berry and Patton Oswalt, as well as NFL dynasty the Manning Family to its brand ambassador ranks, with all appearing in commercials for the sportsbook. It also leveraged its sportsbook extensively during Super Bowl LVI, as one of only two operators to pursue TV advertising during the showpiece game.

However, Reeg suggested the marketing party was over for Caesars.

“You’re going to see our commercials largely disappear from your screens,” Reeg said.

“There’s some media spend that we couldn’t get out of coming into March Madness in a couple of states. But we will largely be off of traditional media, other than in new launch states from here and launch dates in both igaming and sports,” he added.

Caesars has also launched in New York and Louisiana, with the former proving to be particularly successful for the firm during the initial stages following the market going live on January 8.

Caesars enjoyed an early lead in the Empire State during January, however this lead has largely eroded in February as traditional US heavyweights FanDuel and DraftKings push their way to the top of the handle rankings.

In the Q4 2021 financial results, Caesars Digital reported year-on-year growth of 213% to $116m, buoyed by the relaunched sportsbook. Its land-based operations also reported significant year-on-year growth, largely due to the influence of relaxed Covid-19 restrictions.

Las Vegas operational revenue rose 132% year on year to just over $1bn, while its regional land-based casinos reported revenue growth of 32% year on year to $1.3bn. Caesars’ total revenue amounted to $2.6bn, up $1bn from the same period in 2020.

Caesars stock rose 6% from an opening price of $77 per share to $78.17 in early trading following the results, but later slumped to a low of $74.21 per share on January 22.