Eric Hession, president of Caesars Digital, recently addressed the challenges facing the sports betting industry, including rising tax rates and the emergence of prediction markets. He highlighted growth opportunities in states like Alberta and Maine while exploring ways to navigate these changes.
Eric Hession, the president of Caesars Digital, has voiced concerns regarding the potential risks that operators face in the evolving sports betting landscape. Speaking at an event organized by the Nevada Society of Certified Public Accountants, he pointed out two significant threats: increasing tax rates imposed by states and the rise of prediction markets. Hession emphasized that while the sports betting sector experienced a period of rapid revenue growth, the recent months have brought a shift in dynamics.
"When governments recognize the opportunity for tax revenue, they might be inclined to continuously raise taxes, and I’m uncertain how we can effectively counter that," Hession stated. The competitive nature of the market is fierce, with established players consistently innovating and new entrants emerging with unique products, such as sweepstakes casinos. He remarked on the peculiar notion that prediction markets, which can include bets on something as specific as rebounds in NBA games, could require economic validation.
In recent months, prediction markets have gained traction across various states, attracting attention even in regions where traditional sports betting remains illegal, such as California and Texas. Hession noted that Caesars started its journey at a disadvantage compared to industry leaders like FanDuel and DraftKings. The inability to participate in prediction markets has given those competitors a head start, but he remains optimistic about Caesars' potential in the long run.
Hession acknowledged the challenge but also viewed it as an opportunity, hoping for clarity in regulations that would allow Caesars to compete effectively.
"We will have to face the challenge of catching up, but once there is regulatory clarity, I believe we can perform competitively," he explained, expressing a desire for decisive action from the Supreme Court or relevant authorities to establish clear rules for the industry.
Despite the current stagnation in the expansion of igaming, Hession identified promising avenues for Caesars. He highlighted upcoming launches in Alberta, Canada, scheduled for July, which will include both sports betting and online casinos. Additionally, Maine is set to introduce igaming in July, with Caesars and DraftKings as licensed operators. Washington, D.C., has also included igaming in its budget for 2027.
Hession remarked, "As states begin to witness revenue shifts towards untaxed prediction markets, there will be increasing pressure to legalize and impose taxes on these platforms, especially in areas where sports betting is already permitted." This trend could lead to more opportunities for established operators like Caesars.
Furthermore, Hession mentioned that Caesars frequently receives inquiries about international expansion. However, he believes that focusing resources in the U.S. and Canada is more effective than venturing into foreign markets, which can present their own set of challenges.
Another area of interest for Hession is DFS-Plus, a regulatory category for fantasy sports contests that base payouts on fixed odds rather than player competition. He noted that around 20 states currently have solid regulations in place for this type of contest, with some even offering licenses. Since Caesars already provides parlay betting, integrating DFS-Plus would require time and alignment with existing systems.
"Our timeline is fully booked for the year, and planning for Q1 next year is already underway. Incorporating new initiatives would necessitate either expanding our team or deprioritizing current projects, which complicates our decision-making process," he explained.
Addressing the prevailing criticisms about Las Vegas, particularly regarding its high costs, Hession expressed confidence in the city's ability to innovate. He pointed out that Las Vegas has a history of reinventing itself, notably through the integration of professional sports teams.
Hession believes that Las Vegas will continue to evolve, creating new attractions to maintain its status as a premier entertainment destination.
"Las Vegas has a wealth of creativity, capital, and excitement. The city is uniquely positioned to adapt and thrive. While I can’t predict what the next big thing will be, I’m certain that it will emerge, ensuring that the city remains a vibrant hub for entertainment and tourism," he concluded.
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