Mattress Mack’s record $75M payout to Astros will cost Caesars, Penn big this quarter

Mattress Mack’s record $75M payout to Astros will cost Caesars, Penn big this quarter

Jim “Mattress Mack” McIngvale, of Houston, holds some of the tickets in Atlantic City, N.J., Tuesday, Nov. 1, 2022, showing the bets he made on the Houston Astros to win the World Series in baseball.

Wayne Parry | AP

Mattress Mack’s record $75 million payout on a bet that the Houston Astros will win the World Series will cost The Caesars and Penn Entertainment big on its digital businesses this quarter.

Jim “Mattress Mack” McIngvale, a Texas furniture salesman who famously hedges its sports bets with furniture promotionshe put $10 million on his beloved Houston Astros to win this year’s World Series, with several bets.

With the Astros’ second World Series win on Saturday, McIngvale earned a $75 million payout. Of that total, Caesars will take the biggest hit, paying out $30 million from McIngvale’s May 13 bet on the Astros for $3 million at 10-1 odds.

“I think most of you are aware that we have a pretty big liability with the Astros. So that’s going to be a game changer in whether the fourth quarter is positive overall,” Caesars CEO Tom Reeg warned the company on Nov. 1 call earnings.

Penn Entertainment CEO Jay Snowden similarly warned on the company’s Nov. 3 earnings call about the company’s profitability in light of McIngvale’s bet through Penn’s sportsbook Barstool — and urged listeners to root for the Philadelphia Phillies instead.

“I think if Mattress Mack doesn’t hit, we’ll be profitable in the fourth quarter,” Snowden said at the time. “If he does, then it will probably be closer to the end.”

The company now has to pay $10 million.

Wynnwho also hosted one of McIngvale’s bets, said he would comment further on the bet on their earnings call on Wednesday.

McIngvale said he pitched other bets on the Astros at locations including BetMGM, Unibet and Betfred. Texas does not allow legalized gambling, so the mattress salesman often travels to states where betting is legal.

Despite the costly hit, Caesars said Saturday after the Astros’ win that the bet was worth it.

“What can we say? We just wrote the largest check in sports betting history to Mattress Mack for $30,000,000. Would we do it all over again? You bet,” said Ken Fuchs, Chief Operating Officer of Caesars Digital.

Fuchs said a casino the size of Caesars is used to taking big risks.

“You know, for us it’s just another day at the office in some respects,” he said.

Caesars and Penn are each on their way to profitability in their growing digital segments — and investors are adding tremendous pressure.

DraftKings Shares fell on Friday after CEO Jason Robins forecast bigger-than-expected losses next year and reiterated that the company does not expect to be profitable until the fourth quarter of 2023.

McIngvale, for his part, now has to refund any customers who took advantage of his promotion: Those who spent $3,000 or more on a mattress got the purchase free with an Astros win.

The owner of Gallery Furniture says it will return its initial $10 million investment and return the rest to customers.

“It’s going to be a pretty neat thing to give the customers their money back, which is what we really want to do because then word of mouth takes 20 or 30 years,” he told CNBC ahead of the World Series.

“My real interest is to make sure that the customers win because the customers will be happy, delighted and smiling,” he said.

Mattress Mack bet $10 million on the World Series

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