When the Supreme Court opened the door to nationwide sports wagering with its decision striking down the Professional and Amateur Sports Protection Act, there was healthy skepticism over whether sports betting would be as big a deal as proponents suggested.
After listening to several third-quarter earnings calls, it’s clear that casino companies in Las Vegas and across the country are angling to find their best strategy to capitalize on the newfound bonanza.
Though the game is still in the early innings and experts point out that sports betting remains a low-margin business, CEOs are convinced sports betting is important. And at least one CEO for a small Las Vegas company thinks it’s really important.
From the big players to the smaller regional operators, executives agree that sports betting is capable of getting people through their doors. Once they’re there, the opportunity for more spending is magnified.
Place a sports bet, then play a few hands of blackjack. Eat a meal. Throw a few dollars into a slot machine. Best of all, get a sports bettor to sign up for a loyalty card, giving the company a means to communicate directly to the player.
Most companies acknowledge it’s a strategy for a bigger-picture market.
Sometimes, it’s a geographic play, which appears to be the case for Wynn Resorts Ltd.
“We have a sports betting strategy that’s very focused on high-quality product in very selected markets,” Craig Billings, chief financial officer of Wynn Resorts, said during its earnings conference call last week. “We’re likely to launch a sports betting product early in 2020 in New Jersey and then move out to selected states and hopefully deploy that product in Massachusetts, where we think that will be a game-changer for Encore Boston Harbor.”
The strategy for MGM Resorts International involves drawing millions of eyeballs to MGM products.
MGM, which no doubt hopes to someday bring an NBA team to T-Mobile Arena, has scored big on partnerships with several sports teams and affiliated sports marketers.
Last month, it announced a partnership with Yahoo Sports to help expand sports betting nationwide. The company already has a deal in place with Buffalo Wild Wings.
In its latest move, MGM pressed to move in on Wynn territory with a new partnership via the Boston Red Sox with a new music hall at Fenway Park.
Reno-based Eldorado Resorts, which would become the world’s largest casino operator once it acquires Caesars Entertainment Corp. next year, is still sorting out its regional casino strategy. Caesars has an exclusive relationship with the NFL that should pay dividends for Eldorado.
It’s understandable why Eldorado wants to get the $17.3 billion deal done by the end of the first quarter, with the NFL draft in Las Vegas in April and a Caesars property the likely centerpiece for draft activities.
“Caesars has a lot of its own sports betting partnerships,” Eldorado CEO Thomas Reeg said last week in his company’s earnings call. “As we come together, it’s an obvious time to figure out how are we going to tackle sports going forward. That’s clearly a much higher-growth business than the core casino operating business.”
Eldorado’s biggest rival, Penn National Gaming, is contemplating whether the proliferation of sports betting nationwide puts it in a position of not needing a new Las Vegas Strip asset.
Penn rode the opening of sportsbooks in Iowa, Indiana and Pennsylvania and the launch of a mobile sports app in West Virginia to a 71.6 percent leap in third-quarter revenue and a 21.1 percent increase in net income.
But perhaps the best earnings story of the quarter came from longtime Las Vegas executive Dan Lee, who now runs Full House Resorts, a small operation with five properties in Nevada, Colorado, Mississippi and Indiana.
“By far, the most important thing in the quarter were the sports wagering agreements we signed,” the CEO said on his call. “To some extent, we got lucky on this. The Supreme Court a little over a year ago approved sports wagering in states other than Nevada, and now two of the states that opted to pass enabling legislation were Indiana and Colorado, and we happen to have casinos in those two places.”
But Lee lamented how few investors are paying attention to how the new sports contracts will add millions of dollars to his company. He was excited about the prospect of Colorado voters approving sports betting in the state. They did so by a close margin last week.
“Now, we’ve signed all these contracts that frankly double the value of the stock,” he said. “I hate to keep elaborating on it because I’m kind of surprised our stock hasn’t reacted, and I think it’s just because we’re so small that nobody’s really paying attention, but this is really … important.”