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Caesars Entertainment watched how well fellow luxury retail casino and hotel brand MGM Resorts International‘s brand, BetMGM, performed financially in Michigan during the past three months. Now that BetMGM is the state’s No. 1 revenue-generating operator, Caesars CEO Thomas R. Reeg said he’s encouraged about his brand’s prospects.
Caesars will deploy a similarly data-driven online gambling strategy throughout the US.
The strategy Reeg detailed during Caesars’ quarterly earnings call on Tuesday was one of rebranding William Hill’s US operations. Caesars acquired the venerable British bookmaker for $4 billion this spring.
William Hill’s retail sportsbooks in the US will simply take on the Caesars name. Its mobile app will be renamed Caesars Sports. Caesars expects to complete the transition in time for the beginning of the 2021 NFL season.
The next move for Caesars will be tie all of that business into its Caesars Rewards (formerly Caesars Total Rewards) database. This customer rewards program spans its retail properties, its own online products, and related brands like WSOP. That omnichannel strategy for its loyalty program resembles BetMGM‘s own M Life Rewards.
“If you look at what our friends at MGM Michigan, in the quarter where they came from a position similar to where William Hill was to a leadership position in a market where they had a large database, that gives us a lot of confidence as we move forward.”
William Hill is a major player in the Nevada retail sportsbook market, but a smaller presence elsewhere. Its US activities in other verticals are almost nonexistent. As of March, it was operating in 15 states, but 98% of its revenue came from sports betting. The split between online and retail was close to even, whereas most other sports brands generate 80% or more of their revenue online.
Michigan online gambling launched in January. Most major brands found partners in the state well in advance of launch, yet Caesars was conspicuously not among them.
Meanwhile, the Caesars Casino and Sportsbook app was active in New Jersey and Pennsylvania, and William Hill also had a casino in New Jersey. So before adding another Caesars app in a full-service state, it made sense for Caesars to take over William Hill’s slot.
That’s especially true because William Hill had already received approval from the Michigan Gaming Control Board (MGCB). Plus in February, William Hill partnered with a licensee, the Grand Traverse Band of Ottawa and Chippewa Indians.
Caesars had announced its intentions for the acquisition in September. It may have been working on the idea well before that. Entering Michigan by way of this takeover-and-rebrand may have been the plan all along.
Either way, Caesars will now join a list in Michigan that includes BetMGM, DraftKings, FanDuel, Golden Nugget and more than a half-dozen others.
There’s another purpose to the rebranding beyond just consolidation. Caesars enjoys a level brand recognition in the US that William Hill doesn’t. If BetMGM’s success in relying on the MGM name and existing customers’ data to acquire online bettors is any indication, Caesars will do well in Michigan and perhaps in other states, too.
Before the acquisition, William Hill had online sportsbooks in Colorado, Illinois, Indiana, Iowa, Michigan, Nevada, New Jersey, Tennessee, Virginia, West Virginia and Washington, D.C.
Caesars, on the other hand, only accepts online sports bets in New Jersey and Pennsylvania at the moment. This lack of reach is a serious shortcoming, given that the company jumped into online sports betting just months after the 2018 Supreme Court decision that made it possible.
The unusually slow expansion of Caesars may come down to business philosophy. Reeg alluded to Caesars only doing what it can do well when discussing plans to sell off the non-US portions of William Hill within the next 12 months:
“One of my pet themes was when I was an investor is companies that didn’t know what they were good at. And I can’t tell you we’re good at running a non-U.S. digital business.”
Even so, Reeg does believe Caesars can do far better with online gambling in the US now:
“I like [the] hand that guys like us and MGM have to play. … We have the largest loyalty database in the business, bar none. We’ve got a fully immersive experience. You’ve got, in our case, a fully vertically integrated tech stack. So we should be effectively the low-cost producer. We should be able to acquire [customers] at certainly a competitive cost, if not one of the lowest in the business. And we are throwing off over $100 million a month of free cash flow to invest in this business as aggressively as we need to, going forward.”
In an indication of Caesars’ plans to move forward, it announced today that it will offer online betting Arizona once that market opens. The state legalized sports betting last month, and is now going through the regulatory process. Caesars has already signed a deal with the Arizona Diamondbacks MLB team to offer retail and online sports betting, as well as daily fantasy sports.