Caesars Entertainment (CZR) CEO Tom Reeg announced that the company would cut ad spending after accomplishing its online Caesars sports betting objectives.
One primary objective was securing a sizable chunk of the market space, which, according to Reeg, is now roughly 21%.
Did Caesars’ ad spending pay off?
During the company’s Q4 earnings call, Reeg said that it’s time to dial back spending after launching in New York and Louisiana.
“You are going to see us dramatically curtail our traditional media spend effective immediately. 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.”
After purchasing William Hill in April 2021, the company announced a $1 billion advertising campaign focusing on customer acquisition and retention. The media blitz began with several commercials featuring actors JB Smoove and other famous faces.
Reeg noted the company’s commercials would “largely disappear” from TV screens.
“There’s some media spend that we couldn’t get out of coming into March Madness in a couple of states. But we will largely be off of traditional media other than in new launch states from here, and launch dates in both iGaming and sports.”
Path to profitability
According to the company, during Q4 of 2021, Caesar generated $2.6 billion in net revenue, a 62% increase year-over-year.
As of writing, $CZR stock was trading at $80.95 per share. Like other sportsbook operators, Caesars is working towards profitability by late 2023.
During its Q4 earnings call, DraftKings CEO Jason Robins noted the company spent $278 million on sales and marketing in the fourth quarter alone. Overall, DraftKings spent $981.5 million on marketing.
Robins said the cost of launching in new markets like New York has been significantly higher. However, DraftKings did signup 100,000 first-time paid bettors in New York in less than 24-hours.
DraftKings expects to generate positive adjusted EBITDA by Q4 2023.