In mid-July, Caesars Entertainment officially merged with Eldorado Resorts in a staggering $17.3 billion deal, making it the largest casino and entertainment company in the United States. Could this contract be a sign of things to come for the iGaming industry?
It was expected that after the merger, other retail and mobile sports betting competitors would suffer nationwide. This is considering the combined companies own or operate casinos in sixteen states, including Nevada, New Jersey, Pennsylvania, and Louisiana.
The merger’s terms included hiring William Hill U.S. to manage sportsbook operations within Caesars’ several properties.
U.S.’ Next Sports Betting Spinoff
Since the merger, the company has been discussing spinning off its sports betting and iGaming business.
Last week, Tom Reeg, the new Caesars CEO, spoke about the company’s second-quarter earnings call.
Reeg claims that they should have a comprehensive plan for entry in the sports betting and iGaming industry within the calendar year. He also reminded stakeholders they should not expect a “permanent solution” anytime soon.
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As Caesars’ new CEO, Reeg is being realistic in his expectations but is admittedly excited to see the growth of U.S. sports betting and iGaming, especially in recent months.
He said it is the most significant growth and opportunity in the industry in the past 25 years. Reeg is confident in the prospect that Caesars will be at the forefront of the competition.
Already Dominating the Long-Standing Competition
In its first-quarter earnings, the now-dominating sportsbook DraftKings reported a net loss of $74 million. Meanwhile, Caesars is already making money in its iGaming and sports betting business, according to Reeg.
Reeg expects a reported $600 million to $700 million in revenue just next year with the new business initiative. After years of working the market, DraftKings is expected to bring in $700 million in 2021.
This year in New Jersey alone, Caesars is on track for $125 million in iGaming revenue. Caesars owns 100% of that business.
The Numbers Don’t Lie
Professional analyst, Chad Beynon, believes Caesars has the potential of capturing over 10% of market shares in both U.S. sports betting and iGaming. On July 22, Beynon estimated the business was worth around $19 per share.
He expects Caesars to maintain 50% of profits from sports betting revenue through the William Hill partnership.
Sports betting in the U.S. has skyrocketed in the past few years, especially after the nation went fully-online during the pandemic. Sportsbooks, technology suppliers, and iGaming operators have increased in popularity and demand because of this.
After going live with U.S. listings, major sportsbooks like DraftKings have grown at unprecedented levels with shares closing at a 52-week high of $43.70 on June 1.
Penn National has also experienced a significant increase in value after acquiring 36% of Barstool Sports as a betting brand. Before the acquisition, Penn National stood at around the $25 a share mark and closed at over $45 on Monday.
Although valuations for Caesars are more than promising, they are not rushing to be the top dog just yet. Reeg highlighted the company’s priority to think about long-term success and take their time with the process.