Caesars Spent Far Less Than Competitors On MA Promotion, Execs Say
Caesars Sportsbook considers its Massachusetts launch one of the most cost-efficient for the sportsbook, and claims to have the lowest cost of customer acquisition among its competitors in the Commonwealth.
On Tuesday in a first quarter earnings call, Caesars Entertainment CEO Tom Reeg expressed satisfaction at the numbers he sees for the sports betting operator thus far in 2023, especially considering the launch into two new markets. On Jan. 1, Caesars debuted in Ohio’s new market. Mnd on March 10, the mobile sportsbook launched in Massachusetts.
According to Reeg, Caesars held its promotional spending during the Massachusetts online sports betting launch to manageable levels, well below those of other operators.
“The chief driver of the change has been what we’ve done on the promo and branding side,” Reeg said during the conference call. “I think promo as a percent of handle for the quarter was around 1.25%, which is dramatically lower than our peers. Our cost of acquisition has come down considerably.”
Where Caesars didn’t spend money in Massachusetts
Typically, when a sports betting operator enters a market that’s opening for the first time, it wields a hefty marketing budget to attract new customers. The money is usually allocated toward promotional offers in the form of bonus bets.
Caesars Sportsbook Massachusetts, for instance, offered new customers up to $1,500 in bonus bets at launch. It has since shrunk that offer to $1,250 in bonus bets.
Even though that promo offer was high, Caesars was notably absent from Massachusetts airwaves surrounding launch. Ads for DraftKings Sportsbook and FanDuel Massachusetts, on the other hand, were everywhere.
Translation: Caesars didn’t spend nearly as much on advertising.
Caesars released an earnings report for activity from Jan. 1 through the end of March, which included about three weeks of online sports betting activity in Massachusetts. While the company reported a loss in the sports betting category, it was encouraged, Reeg said, by the results.
“In Digital, we were about a $3.5 million loss … that was with the launches of Massachusetts and Ohio. And the Super Bowl, that didn’t hold very well for us, frankly, given the amount of scoring that happened in it,” Reeg said. “Really, if any of those three legs were not a part of the quarter, we were positive.”
Where Caesars stands in Massachusetts market
According to data released by the Massachusetts Gaming Commission last month, Caesars ranked sixth among the six MA operators in the state for the 21 days the market was active in March. The company reported $16.4 in total handle, and $1.8 million in taxable gaming revenue.
The cost of operating a sportsbook has been a topic of interest as more states legalize the activity. Massachusetts taxes online revenue at 20%, but some other states, notably neighboring New York, charge much higher rates. In New York, sportsbooks pay a 50% tax rate, which has led Caesars and a few other companies to curb their advertising in the state.
No figures are publicly available for spending on promotions in Massachusetts by sportsbooks. But for March, the MGC reported that Boston-based DraftKings ranked first among wagers accepted ($257.6 million), with FanDuel second at $181.0 million.
Earlier this month, BetMGM revealed that it spent less on its launch in Massachusetts than it expected.