Caesars Spent Far Less Than Competitors On MA Promotion, Execs Say

Caesars Sportsbook deems its entry into Massachusetts as highly cost-effective, boasting the lowest customer acquisition expenses compared to its competitors in the state.

During a first quarter earnings call on Tuesday, Caesars Entertainment CEO Tom Reeg expressed his contentment with the performance of the sports betting operator in 2023. He particularly highlighted the successful entry into two new markets. Caesars made its debut in Ohio’s new market on January 1, and subsequently launched its mobile sportsbook in Massachusetts on March 10.

Reeg stated that Caesars kept their promotional expenses for the Massachusetts online sports betting launch at a manageable level, significantly lower than other operators.

“Our focus on promotional and branding efforts has been the primary catalyst for the change,” stated Reeg during the conference call. “In terms of percentage of total bets, our promotional expenses were approximately 1.25%, significantly lower than our competitors. Our cost of acquiring new customers has also significantly decreased.”

Where Caesars didn’t spend money in Massachusetts

When a sports betting operator ventures into a newly opened market, it generally utilizes a substantial marketing budget to entice potential customers. These funds are typically assigned towards promotional campaigns that involve bonus bets.

At the time of its launch, Caesars Sportsbook Massachusetts provided new customers with the opportunity to receive up to $1,500 in bonus bets. However, the offer has been reduced to $1,250 in bonus bets since then.

Despite the high promotional offer, Caesars was noticeably absent from the airwaves in Massachusetts during the launch. On the contrary, advertisements for DraftKings Sportsbook and FanDuel Massachusetts were ubiquitous.

Caesars allocated significantly less funds towards advertising.

Caesars published an earnings report covering the period from January 1 to the conclusion of March, which encompassed approximately three weeks of online sports betting operations in Massachusetts. Despite experiencing a loss in the sports betting segment, Reeg expressed optimism and encouragement regarding the outcomes.

According to Reeg, “In the Digital sector, we experienced a loss of approximately $3.5 million, primarily due to the launches of Massachusetts and Ohio. Additionally, the Super Bowl did not perform as anticipated, considering the high number of scores. However, if any of these three factors were absent, our quarter would have been profitable.”

Where Caesars stands in Massachusetts market

In March, the Massachusetts Gaming Commission released data indicating that Caesars ranked last among the six operators in the state. During the 21 days the market was active, the company’s total handle amounted to $16.4, with taxable gaming revenue reaching $1.8 million.

As more states legalize sports betting, the expenses associated with running a sportsbook have become a matter of concern. Massachusetts imposes a 20% tax on online revenue, while certain states like New York enforce significantly higher rates. In New York, sportsbooks are subject to a hefty 50% tax rate, leading companies such as Caesars and a few others to reduce their advertising efforts in the state.

Figures for promotional spending in Massachusetts by sportsbooks are not publicly disclosed. However, the March report from the MGC revealed that DraftKings, based in Boston, claimed the top spot in terms of wagers accepted, amounting to $257.6 million, while FanDuel secured second place with $181.0 million.

BetMGM recently disclosed that its expenditure on the Massachusetts launch was lower than initially anticipated.