Caesars Leads with Innovative App Updates & Stock Growth
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SportsTranscript
00:00Caesars in particular, let's start there as far as their success goes, I know they had a stock update recently and they're trying something brand new in terms of to really make their stock and make their app work in a way that others don't.
00:19So tell me a little bit about how that works and why it's successful for them.
00:24Sure. Well, first of all, for having me, Stifel held a cross sector insights conference where they talked to a bunch of these companies and management from these companies got a little more in depth than they do typically on their investor calls.
00:40They just get into a little bit more granular detail.
00:43And what we heard about Caesars is that they really do feel like the platform now is at a point where it can compete with the DraftKings or a FanDuel.
00:55They have the Parlay updates, they have more in-game betting available.
01:00And so they're saying, you know, as in the past where they had Caesars reward members who would use their app, but then they would go price shop elsewhere or they would say, well, I know I can't make this bet on Caesars.
01:13Let me head over to one of the big guys with their bigger portfolio bets.
01:17They're saying now they really feel like with their platform, there's no need to leave the platform at this point that they have everything that a customer wants.
01:25And that should really help them in the long run because of what they say tends to be loyalty because of the Caesars rewards program.
01:35It is touted as one of the best in the country in terms of rewards programs by a lot of people, including Stifel in their note.
01:44And they have upwards of 60 million people in the database.
01:49So that's really significant when you're thinking about what that could mean for Caesars moving forward.
01:56It has always been a topic of discussion for us, Craig, and throughout the industry.
02:01What can these casino operators, their first line of business being these retail casinos, what can they do to outpace a DraftKings or a FanDuel?
02:12And now if they're saying that their product is on par with them, then you would expect to see an increase in share because so many people do belong to Caesars rewards.
02:22And it isn't hard to sell someone on staying loyal to a rewards program, Craig.
02:27I personally, I traveled for business three years ago, and I stayed at a pretty nice hotel that has a chain across the country.
02:36And now I find myself still looking for that chain because I already accrued some points.
02:40And why not get more? Why not get something for the money that I'm spending anyway?
02:45So I think Caesars really has something going there that they're able to say, OK, we did it.
02:52The platform is there. Now let's show everybody why they should be betting with Caesars and why they should have been all along.
03:00You know, look at what they could have been doing with total rewards.
03:04As for the stock, Craig, the outlook for Caesars is they want to hit $500 million in EBITDA from digital.
03:15And Stiefel says it looks like that is within reach for 2026.
03:21They expect to add like $700 million in additional digital revenue.
03:2750% of that should all flow to the bottom line.
03:30And, you know, we had so many of these partnerships, Craig, with, you know, this sports book is the official sports betting operator of this team or this league or this restaurant, what have you.
03:43So many of those were signed in the early days of legal sports betting in the U.S.
03:48And honestly, Craig, what we're learning is that not a lot of them really paid off tangibly for these companies.
03:55And Caesars is one of them that went in big.
03:57And right about now they have about $100 million in those partnership fees that are about to fall off from contracts that just won't be renewed.
04:06And that goes to the bottom line, too.
04:08So right now, from a digital perspective, you know, Caesars Palace, their online casino app is doing very well.
04:15Caesars Palace is a strong brand that anybody even remotely familiar with gambling, they know what Caesars Palace is.
04:24So Caesars right now seems to be taking the right approaches and steps with their digital product.
04:30And I'm really interested to see what kind of gains they can make in the future.