GBGC: US igaming reality bites

Churchill Downs will be closing its online sports betting and casino division.

Press release.- Churchill Downs has said that it will be closing its online sports betting and casino division, as the company struggled to gain share in increasingly competitive markets.

The company’s Twin Spires segment reported a YoY 54% fall in adjusted EBITDA in Q4 2021, which the company explained was caused by a “US$ 9.5m increase in the loss from Sports and Casino due to increased marketing and promotional activities and a US$ 4.4m decrease from Horse Racing due to the decrease in net revenue”.

CEO Bill Carstanjen commented: “the online betting and casino space is highly competitive with an ever-increasing number of participants. Many are pursuing maximum market share in every state with little regard for short-term or potentially even long-term profitability.”

His comments echo Wynn Resorts views from Q3 2021, when former CEO Matt Maddox argued:

“Competitors are spending too much to get customers. The economics are just not something that we’re going to participate in in the short term. We’re going to be focused on building a long-term business that’s sustainable, that is not losing lots and lots of money.”

In February 2022, Caesars Entertainment also stated that it will be curtailing is sports betting advertising in traditional media. CEO Tom Reeg explained “You are going to see us dramatically curtail our traditional media spend effective immediately.”

When Caesars entered the New York market it was apparently initially offering 100% matched first deposit up to US$ 3,000 and US$ 300 in free bets.

In 2021, prior to the company’s launch in New York, its Caesars Digital division reported a loss of US$ 613 million for the year.

See also: GBGC: UK gambling, change is coming