The data from sports betting in Arizona in September and October gave a good picture of what a new state looks like when all the major operators are there from the start.
Out of the gate, we can see that both DraftKings and FanDuel no longer appear to need the head start of an existing DFS player base to establish themselves as market leaders. With respectively 32.5% and 22.7% of handle and 30.8% and 24% of October GGR, the two U.S. market share leaders will be pleased with the numbers to date.
BetMGM, meanwhile, continues to impress as a well-established leadership contender with a solid 19.7% of handle and 21.,3% of GGR in October.
But it is the management at Caesars Sportsbook who will likely be most pleased with what they have seen so far in the state.
A 14.5% share of handle and 13.1% of GGR is notable as this is the first state where Caesars has gone toe-to-toe with its competitors on a same go-live date in a new state since it relaunched the sportsbook ahead of the start of the NFL season.
Hail Caesars
Eilers & Krejcik Gaming analysts noted what they suggested was a “punchy start” from Caesars in Arizona, suggesting it is the brand’s best online market share performance outside Nevada.
Indeed, according to data presented by Deutsche Bank at the time of the third-quarter results, this is the first time Caesars has managed a double-digit market share in any state aside from Nevada. Its best performance up to that point was Indiana, where it reached 9.6% in September.
The market share performance in Arizona came at a cost, however. EKG also noted that Caesars trended towards a 25% market share of Arizona TV ad impressions among the selection of sports-betting brands tracked by iSpotTV.
“Out of the gate in Arizona, Caesars is showing that it can and will use aggressive promotional spending and televised advertising to generate monthly handle totals that are in line—or line-ish—with those of industry leaders FanDuel, DraftKings, and BetMGM,” said Chris Krafcik, managing director for sports and emerging verticals at EKG.
Just the start
The share of handle over the two months will no doubt be seized upon by Caesars as providing proof that its strategy of heavy advertising spend backed up by equally aggressive promotional offers is paying off.
Management promised a spend of $1bn over three years when relaunched the sportsbook last year.
At the time of the third-quarter results, the company said that in October alone it had generated $1.3bn of handle compared to $1.7bn in Q3 which suggests a step-change in its online fortunes.
Across the states where Caesars is now active for sports-betting, its share of handle in Q3 reached 17%, though it should be added here that a large part of this comes from Nevada where, according to EKG, it controls over 60% of handle.
Caesars also hinted at more to come, pointing out that where it has transferred to the Liberty platform for its sportsbooks, its share of handle rose from 6% to 12%. Important states yet to migrate include Nevada, Pennsylvania and Illinois, which are among the nation’s largest markets by handle.
Success is its own reward
It isn’t just the ad campaign that is driving Caesars’ success. The company said at the time of the third-quarter earnings in Nov. 2021 that the company’s Caesars Rewards customers accounted for around a third of all new sports-betting sign-ups since the relaunch and accounted for over half the handle.
As Deutsche Bank analysts said at the time: “We view this very favorably on a go-forward basis, as all customer acquisition funnels are not created equal in our view.”
Of course, it remains early days in the evolution of the market in Arizona. Notably in September and October, industry-wide promotional spend from Caesars and its competitors hit 100% and 70% of total GGR, proving that competition is indeed fierce.
How the market shares of the leading operators fare as the heat is gradually taken out of the market will be instructive.
“Going forward, though, Arizona should serve as a useful lens through which to appreciate the strength of Caesars’ online sports betting retention game vs. these leaders—all of which have a fairly sizable head-start on Caesars in this all-important area,” Krafcik said.
