Caesars Entertainment’s neutral stance in California’s heated battle to legalize sports betting means the casino company could be the ultimate winner if the votes are tallied.
CEO Tom Reeg told analysts last week that Caesars was sitting on the sidelines as supporters of two November referendums battled for voter approval.
Debate has already raged on Proposition 26, which approves retail sportsbooks and is backed by a coalition of tribal casinos, and Proposition 27, a mobile sports betting-only referendum funded by seven sports betting operators. I’m here.
Gaming industry adviser Brendan Bassman said the debate was a reminder of California’s failed attempts to legalize online gaming over the past decade.
“No matter what is passed, Caesars may be the only winner of the election,” he said. “With the hotly contested political campaigns surrounding sports betting on both initiatives, there must be some definite sentiment when the dust has settled.”
Lee said the reason Caesars is out of the fray, despite the projected sports betting market potentially generating more than $3 billion in gaming revenue per year, is because of two California Indian casinos. mentioned the company’s partnership.
Asked about the company’s position in California by Macquarie Securities gaming analyst Chad Beynon, Reeg said in response to a question about California, “If it opens in the US, we won’t go. I’m having a hard time thinking about jurisdictions,” he said.
“We’d love to go anywhere, but when it comes to California, we’re not on either initiative,” says Reeg.
This doesn’t mean the company can’t find its way to the Golden State even if it issues a pass.
For nearly 20 years, Caesars has operated Harrah’s Southern California in San Diego County for the Rincon Band of the Luiseño Indians. In 2019, Caesars opened his Northern California Harrah’s near Sacramento for the Buena Vista Rancheria band of Me-Wuk Indians.
Depending on the outcome of the vote, Caesars may undertake to operate the Caesars Sportsbook in connection with any of the assets. The company has a history of operating sports betting in partnership with Indian casinos through tribes in North Carolina and Arizona.
“When we’re partners with the tribe, we don’t want to go against tribal interests,” League said. You should expect that to be the case in states where interests are at odds.”
Caesars, one of the nation’s top four sports betting companies based on revenue, is one of seven domestic sports betting providers (DraftKings, FanDuel, BetMGM, WynnBet, Bally’s Interactive, Barstool Sports, and Fanatics) supporting Proposition 27. Union is especially lacking. If approved, it will partner with Tribal Casino for mobile sports betting in California.
Caesars’ neutrality also saves the company money. A total of $365 million was donated by tribes, sports betting operators and other groups supporting or opposing his two referendums, according to PlayCA.com.
Bussmann, managing director of Las Vegas-based B2 Global, said Caesars took a smart approach, saying, “We didn’t throw millions of dollars into a dangerous political race. Based on the ads I’ve seen on, (it) looks like an unlimited battleship game.”
longtime tribal partner
In Arizona, Caesars has a sportsbook retailer at Harrah’s Ak-Chin near Phoenix, a casino that has operated in partnership with the Ak-Chin Indian community since 1994. Arizona Diamondbacks. The company recently opened a sports tavern with a sports betting facility in Chase Field in downtown Phoenix.
In North Carolina, Caesars operates retail sportsbooks at Harrah’s Cherokee and Harrah’s Cherokee Valley River for the Eastern Band of Cherokee Indians started in 1997. The casino, the only two of his sports betting operations in the state, does not allow mobile sports. Bet.
Reno-based Eldorado Resorts, which the league was CEO of when it acquired Caesars in 2020 following its $17.3 billion acquisition, inherited its Indian gaming deal.
He was surprised by the longevity of the contract. Usually, the validity period of casino management contracts in India is he 7 years.
“I’ve never seen it before. [It] It was a unique position when we acquired Caesars,” says Reeg.
A Proposition 26 spokesperson said the Rincón and Buena Vista tribes are not part of the coalition that started working on the initiative in 2019. However, both tribes are members of the California Nations Indian Gaming Association, which supports the proposal.
Rincon was part of a coalition between the San Manuel Band of Mission Indians in Southern California and Wilton Rancheria in Northern California to promote tribal-only mobile sports betting opportunities. A potential referendum has been postponed until the 2024 elections.
Reduce sales promotion costs
Caesars executive vice president Eric Hesshon said the company offers sports betting in 24 provinces and Ontario, Canada. In 18 jurisdictions, Caesars operates mobile sports betting.
In the second quarter, Caesars’ digital platforms (sports betting and iGaming) posted revenue of $152 million, an increase of almost 30% year-on-year. However, total cash flow was a loss of $69 million. Rieg said he cut promotional budgets in his July, part of the third quarter, and cut costs related to customer acquisition efforts to reduce losses.
“Given that we were almost profitable in July, I am confident that we will be profitable by at least the fourth quarter of 2023,” he said.
Most of the major sports betting operators have suffered losses related to high advertising costs, and Caesars has caught up as it launched an improved technology platform last year.
“Caesars has been able to maintain market share by significantly reducing marketing and promotional efforts. Future product enhancements should further strengthen customer acquisition and retention,” said CBRE Gaming analyst. List’s John Decree wrote in a research note following the company’s earnings release. “This business is still undervalued and shows great benefits.”
Whether it’s retail sports betting, mobile sports betting, or both, California’s potential market can increase customer acquisition costs. And with his 12% of the total U.S. population, California is a place too profitable and non-negotiable.
That number is what drives DraftKings CEO Jason Robins and his company to support Proposition 27. He said the message was the language of an initiative that included funding programs for homelessness and mental health efforts with his 85% of the proceeds.
On the company’s second-quarter earnings call last week, Robbins said, “California has significant benefits, and we’re committed to making that clear to voters.” I continue to believe that we can surpass it and achieve it.”