Caesars Entertainment plans to launch a standalone icasino app during the third quarter as part of its latest offerings on the digital front.
The company made the announcement last week during its first-quarter earnings call, citing its net digital revenues continuing to increase significantly, with Caesars launching in new states and retaining its existing customer base.
Eric Hession, president of Caesars Sports and Online Gaming, called the new icasino app an exciting addition to its product offering that “will allow us to drive better customer engagement through a dedicated application with a focus on increased game content, which will include new proprietary offerings and improved marketing capabilities.”
Caesars also announced it plans to begin testing on its in-house player-account management system later this year, which will ultimately lead to a shared wallet that the casino operator plans to roll out in 2024.
Third, Caesars plans to bring its Liberty tech stack app it uses in other states to Nevada ahead of the 2023 football season.
Caesars offers sports betting in 30 North American jurisdictions, in 22 of which it offers mobile wagering. In addition, it offers online casino games in five jurisdictions.
Caesars CEO Tom Reeg said the launch of the igaming app will improve its slot business, as its existing portal is through a sports-betting app. Caesars’s existing icasino business leans toward tables more than its peers and the igaming app will make a big change for the operator, he added.
“If we get our igaming share to equal our sports-betting share, it’ll be that third boost in EBITDA,” Reeg said.
During the first quarter on the digital side, Caesars delivered a dramatic improvement in the performance versus the prior year, Hession said. Its digital business nearly broke even during the quarter, on $238 million of net revenues versus a $554 million EBITDA loss last year, which was impacted by significant brand-related spending and state launches in New York and Louisiana.
“Our performance this quarter clearly demonstrates the effectiveness of our targeted promotional investment within our existing customer base, as well as customers located in the new states that we launched this quarter, Ohio and Massachusetts,” Hession said.
Caesars has partnership and talent agreements that come up in 12 to 24 months worth $500 million in EBITDA, Reeg said. The company curtained advertising campaigns a year ago after its New York launch.
The company also cited a $3.5 million loss with the launches in Massachusetts and Ohio and a disappointing Super Bowl earnings wise. Otherwise, the quarter would have been positive.
“In digital, I told you last quarter we anticipate that we’ll generate positive EBITDA for the year 2023,” Reeg said. “I can tell you today, we’re already there on a year-to-day basis and the amount of EBITDA I was expecting. When we announced that we’d be positive for the year about 90 days ago versus where we are today, we think we’ll do considerably better than where we thought we were even 90 days ago.”
More than 80% of Caesars’ digital business is non-Nevada, Reeg said. The company remains on track to generate the 50% return on the $1.1 billion of cumulative losses that it generated while launching the business.
“I still expect that to be a 2025 event, with the hope that we’re run-rating that level by the fourth quarter of ’24,” Reeg said.
The chief driver of the change has been what they’ve done on the promotions and branding side, Reeg said. Promotions as a percent of handle for the quarter accounted for around 1.25%, dramatically lower than its peers, he said.
“Our cost of acquisition has come down considerably. Ohio as a new launch state for us was EBITDA positive in March, so month three post-launch,” Reeg said. “We’re really feeling good about the way we’re running the business and how we’re positioned. We think the opportunity there starts in earnest at the beginning of the third quarter when we launch the new icasino app.”
