Are online casino games a safe bet?
In an interview with Third Bridge Forum, the specialist said while the launch of sports betting in New York earlier this year was “enormous”, they are unsure if similarly large markets such as Florida will fully open. The specialist was more bullish on online casino gaming, which they predict could have a TAM of “USD 50bn-plus”, based on the value of online casino players being 2-4 times more than those betting on sports online.
We were told it would be “a failure” if Caesars does not grab at least 10% of online gaming TAM in the US, and that it should aim for 15% over the next 10-15 years. The specialist said the company’s Liberty platform previously caused problems for users but has now reached a point where it is “competitive” and will likely be an “advantage” when it is rolled out in more states.
Caesars’ launch in New York was described by the specialist as “terrible”, having seen its market share drop by a half after a month. The specialist said this was because of limited customer support when launching in the state and a lack of casinos in the Big Apple compared to rival betting companies. These problems resulted in Caesar dropping from number one to number four in the state, a “super disappointing position” in the specialist’s opinion. However, we were told it is unlikely to drop any lower given its advantages compared to closest rival BetRivers.
On reinvestment in players, the specialist said companies set aside a portion of money for customer relationship management. They told us 10-25% reinvestment happens in players after they have been acquired. But while they expect promotions to increase gross gaming rates, the revenue they produce could dissipate as the promotions are lowered, although not in a consistent manner. For example, the specialist said a USD 100 promotion that decreases by 50% might only cause a drop in revenue of between 10-25%.
The specialist also commented on the Penn-Barstool acquisition, telling us they were “surprised” Penn had not spent more on marketing Barstool. This lack of spending in the specialist’s opinion makes Barstool non-threatening to Caesars, although this could change if Penn invests more in Barstool.
Despite a number of high-profile deals, acquisitions and state launches in recent years, the specialist said betting companies are likely to “tighten the screw” on spending over the next 12-18 months as geopolitical issues and inflation begin to hit.
To access all the human insights in Third Bridge Forum’s Caesars Entertainment – Online Betting Industry Positioning & Marketing Efforts Outlook Interview, click here to view the full transcript.
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