Caesars Sportsbook to Curtail Ad Spending Despite Revenue Growth

Caesars Entertainment Inc has released both its fourth quarter and full-year 2021 financial report. 

CEO Tom Reeg stated: "Our quarterly operating results reflect new fourth quarter records for Adjusted EBITDA and Adjusted EBITDA margin in both our Las Vegas and Regional segments. Caesars Sportsbook continues to exceed our expectations for new customer registrations, deposits and market share, especially in recently launched jurisdictions."

Notable 4Q Results:

GAAP net revenues of $2.6 billion versus $1.6 billion for the comparable prior-year periodGAAP net loss of $434 million compared to a net loss of $555 million for the comparable prior-year periodSame-store Adjusted EBITDA, excluding our Caesars Digital segment, of $886 million versus $313 million for the comparable prior-year period

Notable 2021 Results:

GAAP net revenues of $9.6 billion versus $3.6 billion for the comparable prior-year periodGAAP net loss of $1.0 billion ;compared to a net loss of $1.8 billion for the comparable prior-year periodSame-store Adjusted EBITDA of $3.0 billion versus $1.1 billion for the comparable prior-year period

As it pertains to the Sportsbook, Reeg posited that customer registrations, deposits, and market share continue to exceed expectations. 

Notable Market Information:

Owns 21% of the US. Sports Betting Market Recorded a $70.5 million gross gaming revenue (GGR) after taking in more than $800 million in wagers in New York State throughout the opening month

Due to these developments, the company also announced that it will curtail it its marketing budget in efforts to reach profitability.

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Suppose you live in a state or jurisdiction that allows retail or mobile sports betting. In that case, you're aware that Caesars inundates the masses with promotions after deploying a $1 billion marketing campaign after its merger with William Hill last year.

"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," said Reeg.

Whether the constant inundation of emails from JB Smoove as the pseudo–Roman Dictator of sports betting or the Manning brothers, the company utilized various digital and social channels to create further brand awareness.

Promotion Defense

Caesars' entrance specifically into the New York market reverberated throughout the betting community due to their aggressive offering of $300 in free bets and 100% deposit match up to $3,000 for new customers.

Numerous market pundits were critical of these aggressive offerings, but Reeg remains steadfast that results were driven by smaller customers averaging $450 per deposit upon registration.

"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."

Stock Implications

After announcing plans to cut ad spending, rose nearly 5% in premarket trading Wednesday morning.

As of 12:00pm EST, the stock has rose upwards of 8% despite its earnings report that came in below projections. 

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The stock remains far below its 52-week high, but with the anticipated budget cuts, it is expected to rise again in 2022 as it rebounds from its extensive marketing campaign and entry into robust states like New York.

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