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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.