Caesars Eyes Growth in iGaming and Sports Betting in 2024
Category
🥇
SportsTranscript
00:00Caesars, another company that's kind of in that mix with BetMGM and some of the others after FanDuel and DraftKings, a new
00:06structural hold target that certainly will definitely be intriguing to see what they say their earnings are.
00:12They changed things around a little bit, Matt.
00:14So tell us what happened there.
00:16Let's circle back and then why this report will be interesting.
00:19Yeah, it's interesting.
00:21They did raise how much was expected from their structural hold.
00:25They're now looking at 8.5%.
00:27They didn't hit that in the second quarter.
00:29We did see growth coming from Caesars in the second quarter, and not necessarily from the revenue line.
00:35In fact, revenue was flat when it came to sports betting.
00:38But they held 7.2% across the board, and that's up from 6.4% last year, and that was mostly attributed to an
00:48increase in how many bets are turning into parlay bets and same-game parlays and all of that that we've spoken
00:56about, Craig, that we know that these companies are pushing users toward those higher margin bets.
01:02And that's helping them survive in these slow periods and the periods where they really get walloped by some
01:10bad results.
01:12And so Caesars is feeling confident in what it's doing there, too.
01:16And they are also doing very well in iGaming as well, Craig.
01:20They saw their iGaming revenue jump.
01:22I believe it was 33%.
01:24They're bringing in more customers.
01:26They're launching a new brand.
01:28They are branding their new iGaming app after the Horseshoe brand of casinos.
01:34That'll be live alongside their Caesars Palace brand online gaming app.
01:40So there's a lot going on for Caesars right now.
01:43They did say that they are not interested at all in any of the Penn Entertainment talks.
01:48Remember, Penn is potentially up for sale with a couple of companies maybe interested.
01:54We haven't heard anything, you know, too concrete on that.
01:58But Caesars is confident that they're going to hit this $500 million adjusted EBITDA rate for the digital
02:06segment, and they're going to start seeing that next year.
02:10It's going to hit that run rate, which means it'll eventually hit a rate where it would be making $500
02:16million annualized.
02:18And CEO Tom Riege understands that the analysts aren't exactly calling for that right now.
02:24The consensus numbers don't show that that's what's expected from the market.
02:29But he said, you know, you'll eventually believe.
02:32You will eventually believe our iGaming is growing well, our sports betting is growing well, and you
02:37will eventually believe when you see that we hit that target.
02:41One thing that's helping with them hitting that target, Craig, is they have sponsorship costs that are
02:48falling off.
02:49Remember, all of these companies went nuts signing sponsorships with sports teams and stadiums and
02:56leagues and everything.
02:58And they were not moving the needle as much as the companies expected that they would.
03:03And so Caesars has been really happy to see these costs falling off.
03:08There was $605 million left to be spent at the end of last year.
03:14That's down to $570 million now.
03:18So it's looking pretty good.
03:21They're falling that off.
03:23They say that's going to fall to the bottom line and help them.
03:27So a lot going on for Caesars right now.
03:30But frankly, Craig, we're starting to see that in a bet MGM and a Caesars that the product on the sports
03:38betting side is improving.
03:40And we're going to get to the point where those products are going to be close enough to FanDuel and
03:46DraftKings that customers may start moving to one of these guys if they have a loyalty account or what
03:52have you or just simply have a strong preference.
03:55So it's going to be interesting.
03:56This football season is going to be a lot of fun.