Caesars CEO Bearish On Commercial Opportunities In Texas, Florida, California

April 23, 2024
Despite sports betting's rapid rollout to 38 states and counting, the CEO of Caesars Entertainment believes the big prizes of Texas, Florida and California will remain a difficult, if not impossible, option for commercial gaming expansion.

Despite sports betting's rapid rollout to 38 states and counting, the CEO of Caesars Entertainment believes the big prizes of Texas, Florida and California will remain a difficult, if not impossible, option for commercial gaming expansion.

In Florida, the Seminole Tribe gained the exclusive rights to operate casino-resorts, mobile and retail sports betting through a tribal-state compact signed in 2021 with Republican Governor Ron DeSantis that was upheld in a federal appeals court last year.

Legal challenges before the U.S. Supreme Court and at state level remain ongoing, but the boss of the largest commercial casino operator in the U.S. is not expecting the Seminole Tribe's exclusivity over mobile sports betting or other forms of gaming to be brought to an end.

“It’s unlikely you are going to see any penetration from commercial [companies] into Florida anytime soon,” Tom Reeg, CEO of Caesars Entertainment, said Thursday (April 18) during a presentation at East Coast Gaming Congress at the Hard Rock Casino in Atlantic City.

Reeg said it is a similar situation in California and Texas. 

“I’m not really expecting any movement in California for quite some time,” Reeg said. “That’s controlled by the tribal casinos … which have generated a ton of employment, economic activity in the state.”

California voters resoundingly rejected two ballot measures in 2022 to legalize sports betting.

Proposition 26, funded by about a dozen tribes, would have allowed retail sports wagering at tribal casinos and four racetracks. But only about 30 percent supported the measure, while about 70 percent opposed it.

Proposition 27, which would have allowed mobile sports betting, lost with only 17 percent of voters approving the measure, while 83 percent opposed the plan that was supported by several large gaming companies, including FanDuel, DraftKings, and BetMGM. Caesars did not participate in trying to pass Proposition 27.

Another effort to legalize sports betting in California died quietly in January after an investment group ended its campaign to place another measure to legalize mobile and retail wagering on the November 2024 ballot.

Currently, Caesars has its Harrah’s brand attached to tribal casinos in five states, including California, Arizona, and North Carolina.

Reeg reminded attendees that California tribes have a “powerful position and should.” 

“And really, in my opinion, mobile operators as an external threat to their business depending on where you are in the state, certainly, it’s understandable,” Reeg said. “I think it is going to be a very difficult state to crack.”

Reeg’s pessimism extended to efforts to legalize sports betting and commercial casinos in Texas.

“I lived in Texas for 17 years,” he said. “Given the political environment there, where the legislature meets every other year, I’m not optimistic about Texas anytime soon.”

Reeg’s comments to conference attendees came as Las Vegas Sands renews its efforts in Texas to legalize casinos and bring resorts to Dallas and San Antonio. In the last couple of weeks, the Sands-backed Texas Destination Resort Alliance has begun asking voters to sign a petition urging lawmakers to legalize gaming.

In terms of further sports-betting expansion, Reeg said the focus for now will be on smaller states, but the business as a whole will continue to grow.  Legislation to authorize sports betting is currently pending in Alabama, Minnesota Missouri and Oklahoma, but only Missouri seems like a viable contender to approve legislation this year, via a possible referendum in November.

From Caesars' standpoint, Reeg said that internet gaming remains particularly attractive because of the millions of customers in the company's Caesars Rewards database from when the company was purchased by Eldorado Resorts.

He said the Caesars Rewards program is the “most well-developed system in terms of generating cross-marketing.”

Still, Reeg acknowledged that iGaming does not have the same grass-roots level of backing among state policymakers as sports betting because it is more controversial to support, due to concerns over cannibalization of brick-and-mortar casinos and the potential for resulting job losses and declines in tax revenues.

“What happens inevitably, if you look back 30 years as states run into a bunch of issues, gaming becomes a popular way to fill budget gaps,” Reeg said.

“I don’t expect too much in the next couple of years in terms of legalization but as you get into 2026 and that [COVID-19 federal stimulus] money is gone and states are on their own, from a budget perspective, I think you are going to see momentum again with iCasino.”  

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