Amid busiest month ever for sportsbooks, Caesars makes big market-share gains

By Bill King
College and pro football drove high September betting numbers.getty images

The start of football made September the busiest month ever for U.S. sportsbooks and brought substantive market-share gains for Caesars Sportsbook, which built momentum behind a national ad campaign and heavy promotional offers that have left competitors questioning their sustainability.

Caesars saw immediate bumps in business from its now familiar ad campaign and a steady flow of risk-free bet promotions, doubling its share of online betting handle over a two-month span to reach a combined 12% in the eight states in which it now operates the betting platform it acquired from William Hill.

The company reported increasing from 6% to 10% in Virginia, 2% to 8% in Tennessee and 3% to 6% in Michigan.

The cumulative increase did not include Arizona, which already is the company’s third busiest state, behind Nevada and Iowa. Arizona regulators had not reported results of their first month taking bets as of last Thursday.

With that state, Illinois and Tennessee still to report, online U.S. handle for September already was at $4.3 billion, just shy of an easily reachable $4.6 billion record set in March.

The NFL’s welcoming of sportsbook advertising brought national ad spends by Caesars, BetMGM, FanDuel and DraftKings, as well as heavy regional ad spending and rich promotional offers by most sportsbooks.

One of the criticisms of those aggressive promotions — such as Caesars’ willingness to rebate any lost first bet up to $5,000 — is that they acquire customers who then quickly move on to the next offer. Caesars CEO Tom Reeg acknowledged that likelihood on a third-quarter earnings call this week, but pointed to the migration of Caesars loyalty program customers to the sportsbook as a means of balancing that.

“When you’re spending like we’re spending in advertising and promotion, you’re going to get lots and lots of customers that show up at your door,” Reeg said. “A lot of them are not going to be worth a lot of value.”

Caesars Rewards customers, who represent about one third of new sportsbooks signups since its app launch in August, accounted for about half of the handle.

“We think Caesars built a system over two decades that identified the valuable customers that everyone is out there searching for,” Reeg said. “We’re seeing that in our experience, and that’s extremely encouraging as we look to the future.”

The heavy promotional spending came up on investor calls with most gaming companies that reported earnings last week.

“We have been aggressive throughout this period and will continue to do so, but in a relatively disciplined manner,” said Peter Jackson, CEO of FanDuel parent Flutter Entertainment. “We think that some of the people who tried to grab some of the market early in the football season are starting to run out of steam.

“None of these are poorly funded. But there’s only so much funding any of these businesses can access to provide free money to people before they eventually run out of it.”

Early success will allow Caesars to maintain its current marketing pace at least through the year, Reeg said.

“You should expect through this football season we’re going to continue to be aggressive,” Reeg said. “We just finished filming another round of what we’re calling Season 2 of ads that will start rolling out this month. So we’re going to be all over the place in terms of media.”

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