Washington, D.C. officials are looking to replace Intralot’s GambetDC sports betting platform in the face of disappointing results.

A top official at Washington, D.C.’s Office of Lottery and Gaming (OLG) has confirmed it is looking to replace the current Intralot-powered GambetDC sports betting platform with a “bigger brand”.

The news was announced by agency head Frank Suarez (pictured), who fielded questions from DC council members in the city’s Committee of Economic & Business Development.

“Having a strong nationally recognised platform will help to quickly reverse the current trend and drive renewed revenue growth,” he said.

Council member Kenyan R. McDuffie, who led the oversight hearing, slammed GambetDC for its “woeful performance”, highlighting issues around usability, customer service and declining revenue.

“We know the current model simply is not working,” she said.

Council members blasted GambetDC for the $4.3m earned over its lifetime, a far cry from the approximately $21m per year projections prior the rollout of the programme.

Future prospects also look bleak, with GambetDC also witnessing a decline in last year’s revenue compared to the previous fiscal year.   

GambetDC plagued by issues

The platform has been plagued with technical problems and other issues since 2019 when Intralot was awarded the $215m contract to develop the city’s sole sports betting system.

Issues included a 2019 subcontract to a local DC business, as required by law, Veterans Services Corp (VSC), with zero employees.

VSC’s head Emmanuel Bailey received a six-figure salary in 2019, multiple times higher than that of the DC mayor.

Currently, FanDuel, DraftKings, Ceasars Sportsbook and BetMGM are all present in DC through partnerships with professional sports teams, albeit limited to in-stadia retail offerings and a two-block radius from the stadium for mobile betting.

Reportedly, frustrated bettors often cross the border into Maryland and Virginia to bet with more traditional online sports betting platforms.

Intralot’s contract is due for renewal in July this year, sparking questions from council members about whether the Greek lottery operator is fit for purpose.

Suarez said the OLG planned to hand over the operation to a more conventional sports betting operator still via an Intralot subcontract, with the Greek supplier retaining a role as provider.

The OLG head said the subcontract extension was the “fastest” way to solve the issue, with a possible February relaunch date.

This compares to putting the entire contract back out to tender, which Suarez said could take up to a year to see through.

As such, the department has already submitted a plan to the US capital’s Department of Small and Local Business to modify Intralot’s contract with a subcontractor to operate sports betting.

While a subcontractor has already been found, presumably in the form of a US sports betting operator, Suarez did not reveal the name of the entity to the committee.

Caesars Entertainment has revealed strategic insights into its digital division and has pledged to intensify competition for market share.

Topline numbers

In Q2 2023, Caesars Entertainment reported total revenue of $2.9bn, surpassing the $2.8bn recorded in the same period last year.

The group posted net income of $920m in Q2 2023, compared to a loss of $123m in the same quarter of the previous year.

Adjusted EBITDA reached just above $1bn, up from $978m for the comparable prior-year period.

A full Q2 business segment breakdown can be found here.

News nugget

The big news this quarter was the positive financial contribution coming from Caesars’ digital division.

Caesars Digital reported revenue of $216m and $11m in adjusted EBITDA. This represents a stark contrast to the $69m EBITDA loss reported during the same period last year.

Those results also marked a significant milestone for the division, as it achieved its first full quarter of EBITDA profitability since rebranding to Caesars Sportsbook in Q3 2021.

During the quarter, Caesars Sportsbook saw a substantial 180 basis points improvement in sports betting hold compared to the previous year. Furthermore, the firm saw a notable year-on-year increase of 27% in iCasino volume.

Caesars attributed this success to its targeted promotional investments and a lower level of marketing, both for existing customers and those in the new states.

Technology enhancements

In addition to the strong financial results, Caesars Sportsbook unveiled four technology enhancements that are expected to drive further growth going forward.

The first is its new iCasino product, Caesars Palace online, which has already gone live in multiple states and is pending regulatory approval in others.

It boasts a significantly improved product with enhanced marketing capabilities, all integrated with the enticing benefits of Caesars rewards, the operator said.

Moreover, the company transitioned its Caesars app in Nevada to its flagship Liberty platform, delivering a “vastly improved” experience for customers.

“Pending regulatory approval, we anticipate converting our William Hill product and our retail sportsbooks to the Liberty platform at some point later this year,” said Eric Hession, Caesars’ president for sports and online gaming.

Caesars Sportsbook has also begun rolling out its new native iOS Sportsbook app, aiming to achieve 100% adoption by August, while the company is also on track to introduce its in-house player account management system, with a state-by-state rollout planned for later in the year.

This system will eventually lead to a shared wallet, expected to be launched in 2024.

These four products required “significant amounts of technical resources over the past year and we’re very excited to introduce them to our customers,” Hession said.

Product development

Presently, Caesars Sportsbook operates sports betting in 30 North American jurisdictions, 22 of which offer mobile wagering. Additionally, Caesars offers iCasino products in six jurisdictions.

CEO Tom Reeg also pointed to Caesars’ focus on iCasino, especially since its acquisition of William Hill.

“When we took over William Hill, William Hill had one employee working on iGaming and we were on old technology,” he said.

He emphasised the capabilities of the Caesars Palace online casino product, including bonusing, segmentation, proprietary games, and live dealer features.

“We are fully aware that we have seen significant competition in the iCasino space. We don’t expect that we’re just going to come in and run everybody over.

“But we feel like we’ve got the product to start to build market share,” Reeg concluded.

Best quote

In Q1 2023, Caesars Entertainment CEO Tom Reeg set a Digital segment EBITDA target of $500m within the next two years. During the Q2 earnings call, he said:

“I laid up specific targets in terms of where we can be in Digital looking out to 2025 on our last call. Then I went to some conferences where a lot of you told me there’s no way we’ll get there. Every number that I laid out, I’m 100% confident that we’re going to hit it.”

Best question

Several questions arose during the earnings call about Caesars’ digital business. Joe Greff from JPMorgan highlighted an interesting trend, noting that Caesars’ iGaming revenue increased sequentially from $75m in Q1 to $80m in Q2.

He then enquired about Caesars’ expectations for the future.

Hession replied: “From a volume perspective, particularly on the iCasino side, and from a general business standpoint, we are feeling very optimistic.”

He further explained that the company is now equipped with a competitive product to work with their existing customer database.

This would enable them to move loyal customers of the Caesars rewards programme smoothly over to the online casino side, which was previously challenging as customers had to navigate through the sports betting app first.

Additionally, Hession emphasised that they hadn’t been able to conduct segmented marketing effectively with their existing technology.

However, with the new system in place, Caesars can now implement segmentation and reinvest directly in the casino side, he concluded.

Current trading & outlook

Following the presentation of the results, Caesars’ shares experienced a decline of approximately 2%.

However, CEO Reeg remained positive about the company’s current trading and outlook.

Commenting on his expectations for the company’s 2023 performance, Reeg said: “We’re on a run rate of about a little over $4bn of trailing EBITDA.”

Looking to the future, Reeg envisions the potential for over $500m of EBITDA in the digital business and a similar opportunity in the brick and mortar segment, driven by returns from recently completed and upcoming projects.

This growth trajectory is expected to drive Caesars towards becoming a $5bn company.

Caesars Entertainment has officially started taking bets on its mobile sports betting app, Caesars Sportsbook, in Puerto Rico.

The mobile offering complements the opening of the land-based Caesars Sportsbook at Casino Metro in December 2022.

Casino Metro is the largest casino in Puerto Rico, and launched its land-based sportsbook in partnership with Caesars ahead of the introduction of online sports betting to the Caribbean island.

The Caesars Sportsbook at Casino Metro, known as “MetroBets with Caesars Sportsbook”, features three betting windows, 14 self-services betting kiosks, more than 25 TV screens and odds boards, “to provide guests with the ultimate sports viewing experience in San Juan,” according to Caesars.

Due to the nature of Puerto Rico’s betting regulations, customers are required to finalise their registrations on the Caesars Sportsbook app in-person at the land-based casino.

The MetroBets retail sportsbook will also work together with the online offering by facilitating cash deposits and withdrawals for mobile app customers.

Caesars said its app “provides customers with a premier sports betting experience from anywhere in Puerto Rico, with numerous deposit options, fast payouts, user-friendly features, and daily boosts and promotions.”

New users will be entitled to a $50 bonus bet when they make their first bet of $50 or more on the app.

Customers will also gain access to the Caesars Rewards loyalty programme for the first time.

At present, any new customers must be legal residents of Puerto Rico. The app is expected to be made available to visitors later this summer, Caesars said.

“The user-friendly app allows customers to bet responsibly from any corner of the island, elevating the experience we offer with MetroBets. Since the grand opening of MetroBets with Caesars Sportsbook at Casino Metro, we’ve experienced an exciting uptick in customers.”

– Ismael Vaga, president of Casino Metro

“The launch of our mobile sports wagering platform is an excellent complement to the elevated experience we’ve provided customers at MetroBets with Caesars Sportsbook at Casino Metro,” said Eric Hession, president of Caesars Digital. 

“We’d like to thank our partners and the Puerto Rico Gaming Commission for making our sportsbook available throughout all of Puerto Rico and we’re confident customers will enjoy an experience they can’t find anywhere else.”

Ismael Vaga, president of Casino Metro, added: “The launch of this app brings our customers MetroBets with Caesars Sportsbook in the palm of their hands.

“The user-friendly app allows customers to bet responsibly from any corner of the island, elevating the experience we offer with MetroBets. Since the grand opening of MetroBets with Caesars Sportsbook at Casino Metro, we’ve experienced an exciting uptick in customers.”

The news follows on from last month’s announcement that BetMGM had launched the first mobile sports betting app in Puerto Rico, in partnership with Casino del Mar at La Concha resort.

DraftKings went straight to the top of the leaderboard of sports betting operators in its home state of Massachusetts during the market’s first month post-launch.

Massachusetts OSB leaderboard

Since the market opened on 10 March, the Boston-headquartered operator has secured some 46.9% of sports betting handle, putting it in pole position among Massachusetts licensees.

Across all operators, bettors in Massachusetts wagered around $563.9m in March, generating $46.7m in revenue for operators in the process, according to data released by the Massachusetts Gaming Commission and compiled by Eilers & Krejcik Gaming (EKG).

Of the overall total, DraftKings took $257.6m in bets and generated $16.1m in GGR. That equates to the operator securing 34.5% of statewide online sports betting GGR for the month.

National US market leader FanDuel, meanwhile, was able to secure marginally higher GGR of $16.3m, due to its better hold rate of 9% (DraftKings secured around 6.3%), despite taking a smaller proportion of handle in the state at $186.7m, or 33.1% of the total.

In third place, but a long way behind the top two, was BetMGM, which generated $7.4m in GGR from $46.9m in bets.

Those figures left the top three operators replicating a scenario commonly seen across US online sports betting markets, as they together secured more than 85% of the market.

Bringing up the rear were Massachusetts’ other three licensees, Barstool Sportsbook ($3m GGR from $30.2m handle), WynnBet ($2.1m GGR from $18.8m handle) and Caesars Sportsbook ($1.9m GGR from $16.8m handle).

Those relatively meagre results came in spite of Barstool being founded in Massachusetts, and WynnBet’s parent company operating a major land-based casino in the state, potentially offering both brands a certain ‘home’ advantage in Massachusetts.

How did they do it?

Massachusetts’ impressive start was the result of comparatively high level of bets per adult in the state, with EKG calculating the average day-adjusted OSB handle per adult at around $165 (generating $14 per adult in GGR).

The state is home to an impressive roster of professional sports teams including the NHL’s Boston Bruins, NBA’s Boston Celtics, NFL’s New England Patriots, MLB’s Boston Red Sox and MLS’ New England Revolution, all of which boast avid fan bases across the state.

3 things from 1st MA OSB print:

1) No way $DKNG was playing 2nd fiddle to FD on its home turf

2) Very, very impressive per-adult productivity on a day-adjusted basis (more below)

3) Boston = most targeted media market in Mar-23 among major U.S. OSBers, per Pathmatics pic.twitter.com/IWxqEilFXo

— Chris Krafcik (@ckrafcik) April 18, 2023

Massachusetts’ sport-loving population helped put the state ahead of other recently launched markets in the first month post-launch, such as Maryland, where the average handle per adult totalled $153, Ohio, where that figure was $123, and Kansas, where average handle per adult hit $84.

While bonusing spend is not reported by the Massachusetts Gaming Commission, EKG estimates that DraftKings accounted for the majority of bonus spending, “as part of a win-at-all-costs home-field launch.”

According to Legal Sports Report, DraftKings is offering bonuses worth up to $1,200, while Caesars has bonuses worth up to $1,250 available and BetMGM up to $1,000.

Meanwhile, FanDuel is offering customers that bet $5 the chance to receive $150 in bonus bets.

In addition to bonusing efforts, EKG suggested that Boston was the most targeted media market among leading sports betting brands in March. For DraftKings, 27% of its Twitter, Facebook and Instagram ad impressions for the month came from the city.

Harrah’s New Orleans, located a few blocks from Bourbon Street, Jackson Square and many of the city’s iconic entertainment destinations, is undergoing a $325m upgrade and conversion into Caesars New Orleans. Set to become just the third property under the Caesars flagship brand name, the updated property is part of a new era for brick-and-mortar casinos- one that includes natural light.

General Manager and Senior Vice President Samir Mowad spoke with iGaming NEXT’s Ryan Butler at the property’s new sportsbook, talking about the progress of the renovations and how the upgraded Caesars will cater to a new generation of casino patrons.


Ryan Butler: The first phase of the casino renovations features a new poker room and, maybe even more impressively, the adjacent sportsbook, including a massive video screen, odds boards, kiosks, tellers and a bar. What has the reception been to the new sportsbook since it formally opened last year?

Samir Mowad: “We believe that our product rivals anything you’ve seen anywhere in the country. The biggest feedback that we’ve gotten since opening this space is that it resembles the best sportsbooks in Las Vegas. Certainly, Vegas is always going to do its thing. But if you go outside of Vegas, I think we have probably the premier product in the country.”

“The video wall is the centerpiece of it. And we can feature three large games or if you wanted to get really small you can do around 120 images. And then, of course, the odds boards that wrap around. Our seating area has been super popular, and in fact, so popular that we yield it on the weekends; throughout football season, we rent these spaces so people can reserve them.”

“Then the bar has been a big hit as well, driving a lot of business besides just the sports betting and sports viewing aspect of it. The sportsbook bar is actually the first new bar we’ve opened at Harrah’s New Orleans in a while. It’s become popular on the weekends even after the live sporting events end for the day. It’s been a hangout spot.”

“So as this is literally the first phase that we opened up our transition from Harrah’s New Orleans to Caesars New Orleans, it’s just been a home run all around.”

 

RB: Much of the industry’s attention in recent years has been about digital casino gaming options, especially around the proliferation of sports betting mobile apps. These make the vast major of sports betting handle (for example, Maryland’s first month with legal online sports betting saw its digital offerings make up more than 95% of all bets), but it can’t replicate the retail experience. What does the Caesars retail sportsbook mean to the casino?

SM: “The Caesars app is great, but the app takes time in terms of signing up for getting your money and getting your money out. Now, it’s easier than it’s ever been, but there’s still a level of commitment there. I also think that when you’re in this sportsbook, and you get that Vegas feel, there’s something to coming in making your bet, then getting your ticket, and if the bet wins, you get your cash in hand immediately thereafter.”

“So I think that’s where our company and even the folks that are the minds behind Caesars, sportsbook, they really saw what this space needed to be versus at maybe a lot of our other destinations outside of Vegas and other “no- destination” markets. So it has been a home run from that perspective, even since we transition from the temporary sportsbook we opened in January 2022 to this space now. We’ve seen the average bet increase and all the other positive things that you would hope.”

 

$CZR is on pace to complete the renovation and rebranding of Harrah's New Orleans under the Caesars name by summer 2024, General Manager and SVP Samir Mowad reaffirmed to @iGamingNEXT today; property's new sportsbook and poker room opened last year pic.twitter.com/pOYXIXvVR7

— Ryan Butler (@ButlerBets) January 13, 2023

 

RB: The sportsbook and poker room are the beginning of the massive renovations, which will eventually include a new food hall with natural lighting, something once unthinkable in a casino. What other details are underway to help the future Caesars New Orleans?

SM: “Some of the great things that we love to point out are the new column wraps. The old column wraps are pretty bulky and obtrusive. And we’ve now not only “Romanized” them, but modernized them by slimming them down to where it really allows for great viewing lines. You’ll also see the Caesars carpet, with images of Caesar’s head on that carpet underneath there.”

“The poker rooms have also been updated. That’s been a homerun as we’ve had football season and the holidays and all the folks coming into town for bowl games and New Orleans Saints games and events like that.”

 

RB: This casino has always had a special role in New Orleans, the first land-based casino in the state. Part of the future renovations come as part of a 30-year gaming license extension and a renewed commitment to the city. Leading up to this, how has that relationship grown and evolved in the previous 30 years?

SM: “I think it’s all part of the natural positive evolution of what our company has done here in New Orleans. Because when we opened up our temporary facility over 25 years ago, I don’t think people really knew what to expect with a land-based casino coming to New Orleans. I think that we were also trying to, at the time, blend in and be a part of the city. The casino had a New Orleans theme, with fake balconies that went down the casino “streets”, like you’re on Bourbon Street or something.”

“Now I think we’re a part of New Orleans. And we know people come to get New Orleans and Bourbon Street and the restaurants and the people and the amenities. They’re all right outside our door. But this is kind of how our next level of differentiating our experience from what’s going on in the city, while also being a great compliment and an entertainment asset for the city.”

 

RB: When Caesars New Orleans formally “opens” in summer 2024, it will be an example of the change in casino gaming from maze-like slot boxes to a full entertainment experience, even for “non-destination” properties outside Las Vegas or Atlantic City. What are your bottom line thoughts on where the industry stands now and its position in the overall hospitality and service industries?

“As an industry, we’re not so niche anymore. We’re a complete entertainment experience. It’s no secret now that in your “destination” markets like Vegas, you know, non-gaming revenue outstrips gaming. Our property will have not just casino gaming but local chefs on the property and full-service restaurants, among other entertainment options. All of this is part of our own value proposition as we look to stand out, because the competition for entertainment dollars has never been more intense.”

Caesars’ online sports betting and casino division was adjusted EBITDA positive during October 2022, CEO Tom Reeg said during Tuesday’s Q3 earnings call.

The positive contribution in the full month of October – following more than $1bn in losses from the digital division in recent years – is a massive development for the company, Reeg claimed. He said depending on sports results in November and October, the company could even see positive Q4 contributions from Caesars’ digital arm – 12 months ahead of schedule.

The October gain comes after the company saw improved losses through Q3. Adjusted EBITDA losses for Q3 2022 were $38m, nearly half the $69m loss from Q2 2022. Net revenues (not taking into account expenses) increased to $212m from $152m during that same time.

“Caesars Digital reported strong revenue growth in the quarter and a smaller than expected EBITDA loss driven by improved operating efficiencies,” Reeg said in a statement before the call.

Caesars has come under increased scrutiny for its massive losses in its gaming division in recent quarters. Reeg and other company officials have said they believe in the viability of the digital vision long term, and that they would begin cutting some of the advertising and other player acquisition expenses that have driven up the massive losses but were designed.

Despite the improved results for the digital division in Q3 from Q2, online sports betting and iCasino gaming has contributed to $661m in adjusted EBITDA losses through the first nine months of 2022. Caesars Digital was down $554m in adjusted EBITDA in Q1, largely from a massive promotional, free bet and marketing campaign in New York, which started accepting legal mobile bets in January.

Caesars’ digital gaming losses echo similar massive losses for many of its major competitors. BetMGM, the digital gaming arm of Caesars’ Nevada-based casino rival-turned mobile sportsbook provider MGM, has posted similar losses, even as, like Caesars, its brick-and-mortar division continues to recover from the depths of the COVID-19 pandemic.

DraftKings, which challenges BetMGM and Caesars among the US market share leaders by handle, is expecting to lose more than $500m this year from its flagship digital gaming product on top of the more than $3b its lost in the three years prior. FanDuel, the US market share leader by gross gaming revenue, is the only major US sportsbook operator to turn a quarterly profit; European parent company Flutter Entertainment still expects significant losses for the calendar year.

Tuesday’s earnings call indicated, that at least for Caesars, that profitability could come sooner than expected.

Caesars CEO Tom Reeg: “Caesars Digital reported strong revenue growth in the quarter and a smaller than expected EBITDA loss driven by improved operating efficiencies.”

By slicing losses in half last quarter, and posting a profitable October, Caesars has shown it can cut expenses while still gaining overall revenue. The first of the aforementioned companies to report Q3 earnings, it will put an additional spotlight on both MGM and DraftKings when they report later this week (FanDuel is not a US publicly traded standalone company).

Overall, Caesars’ third-quarter results set a new quarterly record for consolidated adjusted EBITDA. Caesars also set a quarterly record for brick-and-mortar properties, led by a new all-time high third-quarter EBITDA results in the company’s regional segment and “continued strength in Las Vegas,” Reeg said in a statement.

GAAP net revenues were $2.9bn for Q3 2022, compared to $2.7b for the comparable prior-year period. GAAP net income was $52m compared to a net loss of $233m for the comparable prior-year period.

Meanwhile, same-store adjusted EBITDA was $1b, compared to $880m for the comparable prior-year period. Same-store Adjusted EBITDA, excluding Caesars Digital, was a company-record $1.05b compared to $1.04b for the comparable prior-year period.

The company also announced it would not pursue selling a major Las Vegas Strip asset do to improved cash flow from these properties and deteriorating market conditions. Officials has announced last year it was looking to undertake such a move.

Caesars stock spiked more than 8% shortly after hours following Reeg’s comments about October sports betting and iCasino results. Caesars stock ended regular trading up a little over 1.5%.

Residents in seven states can now download the Caesars Racebook app for android devices as well as desktop computers, Caesars announced today, furthering the company’s horse racing expansion efforts.

The new options for the Caesars Racebook are available for download in all seven states where the racebook operates: Kentucky, Florida, Ohio, Indiana, Oregon, Montana, and North Dakota. The new launch comes just ahead of this year’s Breeders’ Cup, which along with the Tripple Crown races is among the four biggest events in US horse racing.

“Expanding Caesars Racebook’s access to Android users and desktop is key for the platform’s continued growth,” said Caesar Digital vice president Dan Shapiro in a statement. “We’re excited to offer even more customers a horse racing wagering experience that treats them like royalty, no matter what type of device they prefer, thanks to the integration with our industry-leading Caesars Rewards loyalty program.”

Caesars Racebook earlier this year partnered with the New York Racing Association (NYRA) to utilize its NYRA Bets platform for online, advance deposit pari-mutuel wagering. NYRA Bets, which features race replays, handicapping insights and more information for bettors, is the fastest-growing national advance deposit wagering platform for watching and wagering on horse racing, Caesars officials said in a statement.

Bettors using Caesars Racebook can wager on races at more than 250 tracks across the country, according to the Caesars release. That includes Keeneland, home to the upcoming Breeders’ Cup Race, as well as Aqueduct, Belmont Park, Saratoga Race Course, Gulfstream Park, Del Mar and Santa Anita.

Caesars Racebook also plans to continue to launch in additional states across the US, according to the release, pending regulatory approvals.

The steady expansion of Caesars Racebook states in recent months gives the company a compliment to its other digital gaming platforms. Though none of the seven states currently allow online casino gaming, Indiana already has statewide mobile sports wagering and Ohio is set to launch Jan. 1, 2023; Caesars has already started accepting downloads there for its standalone digital sportsbook.

In Kentucky, home to the upcoming Breeders’ Cup and the state best-known for horse racing, Caesars Racebook could also give the company a leg up on the market if lawmakers there approve online or retail sports betting. In Florida, another major horse racing state, the Racebook could foreshadow interest in the market, though it would likely take a constitutional amendment approved by voters for online, single-game sports wagering to be permitted in the state.

Caesars’ continued horse racing expansion comes as the company is set to open, build and operate a Harrah’s racetrack and casino in Columbus, Nebraska. Nebraska law will also permit an on-property sportsbook, though mobile wagering statewide will not be allowed.

The company already operates a host of racetracks across the country, including Harrah’s Hoosier Park, Horseshoe Indianapolis, Harrah’s Philadelphia, and Eldorado Gaming Scioto Downs. All these properties are also eligible for wagers via Caesars Racebook.

Meanwhile, the National Thoroughbred Racing Association’s National Handicapping Championship will be held at Horseshoe Las Vegas through 2026. Caesars is undertaking a massive renovation of the former Bally’s on the Las Vegas Strip, rebranding it under the Horsehoe name.

Going overboard on the underdog

ESPN published a story this week on a wager which recently sent the sports betting Twittersphere into a virtual meltdown.

The story begins with a New Jersey restaurant owner and a former Goldman Sachs trader talking bets at a Russian-style bathhouse.

According to the article, hungover restaurateur Robert Doran was waxing lyrical to bathhouse owner and former financial trader Pete Kizenko about a bet tip he’d received the night before.

Doran told Kizenko that a number of former Michigan athletes had been at the wedding he attended the previous night, and were talking up a team from the Mountain West as a sleeper for the next college football season.

Kizenko, a betting enthusiast and no stranger to taking the longshot, didn’t hesitate. After checking the odds on a tournament victory for the Utah State Aggies (who ranked 24th in the final Associated Press top 25 rankings in 2021), he said: “F— it! Let’s hammer the national championship. They’re 1,000/1.”

While placing bets on wide outsiders is nothing new in the betting world, Kizenko’s $1,000 stake – worth a million-dollar payout if the bet comes in – left the Caesars Sportsbook team scratching their heads.

According to the article, several veteran bookmakers struggled to recall ever taking a four-figure bet on a team with 1,000/1 odds or longer. 

Adam Pullen, who has been taking bets in Las Vegas for 30 years told ESPN that wagers on 1,000/1 long shots are typically in the $5-$20 range or “the $100 variety at most,” nowhere close to the $1,000 Kizenko dropped on Utah State.

After tweets showing the bet went somewhat viral on Twitter, other punters wanted to get in on the action and Caesars found itself taking another $1,000 bet on the Utah underdog within a few days, and as of mid-July, the Aggies had attracted more national championship bets of $1,000 or more at Caesars than any other team, except Alabama and Ohio State, the two consensus favorites.

Doran clearly liked the idea that his tip had contributed to messing with the bookies’ heads. “It’s funny, because you had everybody thinking that these smart people are doing crazy research on Utah State and that it’s some like hidden Messiah golden pick,” he said. 

“And really, it just came from me ripping tequila shots with some players at a wedding.”

While the odds remain slim, one thing’s for sure; if Kizenko’s bet comes in, Doran can be sure there’s a lot more tequila where that came from.

All hail the meme stock king

Speaking of outlandish bets, the Financial Times this week shared the story behind Jake Freeman, the 20-year-old student who was able to amass a $110m fortune by investing in beleaguered US retailer Bed Bath and Beyond.

Shares in the bed and bathroom specialist have tanked from a 52-week high of $34.61 to as little as $4.39 this year, making it a prime target to become a so-called ‘meme stock’ – a term used for stocks whose prices are inflated by an online community of aggressive retail investors looking to extract as much value as they can from the market (remember GameStop, anyone?)

The hordes of investors jumping in on these shares cause massive volatility, allowing the savviest investors to make huge returns in short spaces of time.

Jake Freeman recently offloaded a 6% stake in Bed Bath and Beyond at a price of around $27 per share. He bought those shares a few weeks earlier for under $5.50.

This almost 5x return generated an extraordinary $110m fortune from the young investor, who as it turns out had been furnished with $27m of capital to invest – hardly a rags-to-riches story, then.

Speaking to the FT, Freeman declined to disclose the names of his investors, citing confidentiality agreements, but said he had tapped friends, family and other people in his orbit.

As it turns out, Freeman is something of a mathematics whizz, and is no stranger to the world of investment having interned at New Jersey-based Volaris Capital Management under the mentorship of its founder Vivek Kapoor – who, by the way, said he was not involved in the Bed Bath trade.

The now set-for-life young man had been trading alongside his uncle Scott since the age of 13, apparently, and had what he described as “substantial” support from his parents.

After researching ailing retailers to identify his next big opportunity earlier this year, Freeman had settled on Bed Bath and Beyond and was surprised to see prices begin to surge once again in August.

“[People] were really hyping it up on [Reddit discussion board] WallStreetBets, which just led to more and more fear of missing out,” he said.

And he got the timing just right. The day after he liquidated his 6% stake, the value of shares plunged from $27 and are now worth less than $11 each.

Once again, the market is reminded: never underestimate the power of a determined online community.

Investors themselves, however, should also be reminded: try to avoid getting caught up in online FOMO. When it comes to meme stocks, what goes up must come down.

Search continues for BitConnect co-founder

From bets on criminally long odds, to actual criminal activity, this week Coingeek reported on an investigation taking place in India against the co-founder of cryptocurrency Ponzi scheme BitConnect.

Police in the Indian city of Pune have launched an investigation against Satish Kumbhani, who is now wanted in the country following a complaint from an investor about a missing BTC investment.

According to a report by local news outlet the Indian Express, the investor said he lost nearly 220 bitcoins (more than $5m) through several investment platforms operated by Kumbhani and six others between 2016 and 2021. This amount includes his initial investment of 54 bitcoins and reinvestment of 166 bitcoins earned as returns.

Authorities have been unable to local Kumbhani since he was indicted by the SEC for charges relating to his BitConnect activities, which ceased in 2018.

According to US authorities, the platform fraudulently raised $2.4bn by misleading investors. In February this year, Kumbhani was indicted by the Department of Justice on charges of wire fraud, conspiracy to commit commodity price manipulation, and international money laundering.

According to Coingeek, he will face up to 70 years of jail time if found guilty of all the charges.

While the old saying goes “if you have nothing to hide, you have nothing to fear,” it seems Kumbhani now has plenty of motives to do both.

Caesars Entertainment posted a net loss of $680m in Q1 2022 as recovery in the land-based sector failed to offset significant digital costs.

Despite the business generating $2.29bn in revenue across all segments, up 27.9% year-on-year, Caesars Digital made a negative revenue contribution of $53m, down from a positive $39m contribution in Q1 2021.

Adjusted EBITDA across the business totalled $296m, down from $535m in the prior-year period. This accounts for an EBITDA loss of $554m attributable to Caesars Digital.

According to CEO Tom Reeg, over $400m of the digital division’s EBITDA loss was the result of launching online services in New York and Louisiana, which brought significant marketing and promotional costs for the business.

In February, Reeg said the business would “dramatically curtail” its US marketing efforts, after suggesting it had already surpassed its online market share targets.

Caesars Entertainment CEO Tom Reeg: “We fully expect to inflect to EBITDA positive in Digital as we move into football season of 2023.”

“And we did cut back all of our mass media spend,” Reeg told Caesars investors on yesterday’s (3 May) earnings call. “So we cut about a little over a quarter of a billion dollars of expected spend from when we started cutting in February, through the end of this year.”

Further, he explained that costs began to reduce after the initial launch periods in New York and Louisiana. “If you look at the quarter, we lost about $44m in March. So as you got out of that heavy launch period, our losses moderated considerably.

“So our losses come down considerably as we move forward, and we fully expect to inflect to EBITDA positive in Digital as we move into football season of ‘23,” he said.

Speaking to the benefits and challenges presented by pushing the Digital business, Reeg added: “To give you some context, we’ve had 1.4 million in Caesars reward sign-ups since we re-launched digital that came in through the digital channel.

“If you think about a typical Caesars property, we get about 50,000 on average per property per year of new sign-ups. If you think about 1.4 million customers coming into the pipeline, in really a span of five months, it’s extraordinary. And now the work in front of us is to identify which are the most valuable customers there. 

“As you look back at the way football season was last year, you are getting the same offer whether you were a $50 player or you were a $1,000 and above player. We didn’t discriminate. That’s kind of what we inherited, as we bought all of these brick-and-mortar assets for various operators in the past, marketing to the masses with little discrimination.

“And what you’ve seen us do repeatedly in the brick-and-mortar business is target that spend to our most valuable players, and not waste money on the unprofitable players. That’s the task in front of us in Digital.

“So you’re going to see us segmenting in terms of our marketing as we move forward. And that’s going to be a dramatic improvement in profitability as we move forward. So we are excited for that.”

Of the total $680m net loss in Q1, Caesars Digital accounted for $576m, compared to just an $8m loss in Q1 2021.

The operator’s ‘managed and branded’ and ‘corporate and other’ business segments also made net losses of $211m and $185m, respectively.

Caesars Entertainment CEO Tom Reeg: “You’re going to see us segmenting in terms of our marketing as we move forward. And that’s going to be a dramatic improvement in profitability as we move forward.”

However, Caesars’ Las Vegas and regional casino properties generated net income of $168m and $124m respectively, indicating a continuing recovery from the effects of the Covid-19 pandemic for Caesars’ land-based portfolio.

“Our properties are performing above expectations and we anticipate significant debt reduction in 2022 through a combination of strong operating cash flows and expected asset sale proceeds,” said Bret Yunker, CFO of Caesars Entertainment.

According to Caesars president and COO Anthony Carano, 18 of the operator’s properties set a record for the highest first-quarter EBITDA levels during the period, while 28 set a record for highest Q1 EBITDA margin.

The business ended the reporting period with $814m in cash and cash equivalents, and net debt of $13.49bn.

Caesars will “dramatically curtail” its US marketing efforts effective immediately according to CEO Tom Reeg, who insists the operator has already smashed its online market share targets.

Since launching the Caesars Sportsbook brand, Reeg said the business had gone from an “afterthought in the market” to winning a combined US sports betting handle market share of almost 21%.

In Q4, the operator more than tripled its digital revenue year-on-year to $116m. However, this came at a cost, as Caesars reported a Q4 net loss of $360m for the division during the reporting period, rising to $580m for full-year 2021.

In fact, Caesars made a bigger loss on the digital division in Q4 than its online operation generated in net revenue for the whole of 2021 ($337m).

As with most US sports betting operators, the losses were attributed to high marketing spend and the cost of acquiring new customers, particularly in newly launched states like New York and Louisiana.

Caesars’ share price fell by more than 3% following the publication of the results as investors continue to struggle to see a path to profitability for Caesars Digital – and many of its rivals – in such a competitive and expensive operating environment.

“That leads me into digital, where I know the market is struggling,” said Reeg on the Q4 analyst call. “Investors are struggling with it. Can this be a profitable business? We’ve gone from kind of ever-increasing bullishness to unlimited bearishness at this point,” he added.

To remedy this, Reeg has promised to pull the vast majority of Caesars’ above-the-line digital division marketing spend in the US. This appears to have done the trick, at least in the short term, with Caesars’ pre-market share price up by more than 5%.

“You are going to see us dramatically curtail our traditional media spend effective immediately,” said Reeg. “We have accomplished what we set out to do. We set out to become a significant player, and it’s happened significantly quicker than we thought.

“I think most of you know me as someone who’s not one to spend any money needlessly. We’ve gotten to where we need to be and you’re going to see our commercials largely disappear from your screens,” he added.

Caesars Sportsbook ads will continue into March Madness in some states as it was too late to change the schedule, according to Reeg.

The operator has spent a fortune to date on traditional media marketing, led by Hollywood-style TV ad campaigns fronted by actor and comedian JB Smoove, including a 30-second spot starring Halle Berry during this month’s Super Bowl.

It has also broken the bank to acquire customers in key battlegrounds including New York, where Caesars currently leads the monthly revenue rankings. When the market launched in January, the operator offered a deposit match of $3,000 to new users.

“I know there was a lot of focus on our $3,000 deposit match in New York and the thought that, gee, I could just put in $3,000, make a couple of easy bets and withdraw my money,” said Reeg. “But our average deposit in New York was about $450.

“Our results in New York were not driven by a lot of $3,000 deposits responding to our offer – it was hundreds of thousands of smaller customers that came to our site.

“The reason that you go after those brand-new customers as avidly as all of us do is because the customer that you find in the first quarter post-launch is worth something in the neighbourhood of 2x what you find afterwards, so there is a method to the madness here.”

On the call, Reeg revealed that overall betting volumes in New York, and Caesars’ current market share in the state, were both double what the operator had originally anticipated.

Caesars has recruited around 500,000 customers in New York since going live on 8 January and the state is nearly as large as the rest of its US digital business combined.

Reeg described the consumer demand for mobile sports betting in New York as “absolutely staggering” and said Caesars dealt with 75,000 customer queries within the first 72 hours of launch.

Caesars’ higher-than-expected market share means the cost is also greater than the operator had originally modelled for, with the Super Bowl in particular triggering some sizeable pay-outs.

Considering New York went live after the Q4 reporting period, in January 2022, Reeg warned investors the bottom line will almost certainly get worse before it gets better.

“We were extremely pleased with how we came out of the box,” said Reeg. “But because of the launch of New York and Louisiana in the first quarter, you should anticipate that this current quarter is our peak EBITDA loss and that you’re never going to see a quarter like this again.

“That quarterly loss is going to be larger than it was in the fourth quarter, but you’re going to see us moving toward profitability and making moves both in traditional media and ultimately through offers to customers, because we have reached where we want to reach in terms of customer acquisition,” he added.

Caesars reported a 63.5% year-on-year rise in overall Q4 net revenue to $2.59bn, primarily driven by recovery across the operator’s regional and Las Vegas-based casino properties. The business made an overall Q4 net loss of $434m.

For full-year 2021, the operator reported net revenue of $9.57bn amid an overall net loss in excess of $1bn.