Digital success tempered by Q4 stagnation in Caesars’ 2023

The 12 months to 31 December 2023 proved to be a solid year for Caesars. Revenue was higher across all divisions, with group revenue hitting $11.53bn (£9.12bn/€10.66bn). This growth also helped the group return to a net profit.

Despite the group’s optimism, though, Caesars only managed 0.1% revenue growth in Q4, with that stagnation to end the year perhaps marking an indicator of what is to come.

While down from the $0.66 loss per share in Q4 2022, Caesars still recorded a GAAP loss of $0.34 per share in the final quarter of 2023. Gross margin was also down 2.8% from Q4 FY2022.

The momentum of the company has taken a hit, with Caesars’ FY2022 and FY2023 failing to keep up with the impressive growth seen in the two years prior.

At market close on Tuesday, Caesars Entertainment was trading at $41.65 per share in response to the company’s Q4 and full FY2023 results, down 2.02% on the previous day’s close.

Caesars reported solid year-on-year growth across its Las Vegas and Regional operations. However, Caesars says the stand-out highlight for 2023 is the record performance of its digital division. Here, revenue was up 77.6% as the operator grew the business significantly across both online casino and sports betting.

The group also kept spending relatively level, allowing a net loss in 2022 to turn into a net profit and adjusted EBITDA to increase. Eric Hession, president of Caesars Sports and online gaming, focused on digital growth, highlighting record revenue and adjusted EBITDA for the division.

“The core icasino slot customer has responded positively to our significantly improved offering,” Hession said. “We’re pleased that the new product and brand resonate much better with our Caesars Rewards database than our casino associated with the sportsbook. 

“Igaming remains a critical component of our digital growth strategy for 2024 and beyond.”

Widespread growth for Caesars in 2023

Taking a look at the 2023 results, and beginning with group performance, casino revenue was up 6.2% to $6.36bn. Rooms revenue climbed by 6.8% to $2.09bn, food and beverage revenue 8.3% to $1.73bn and other revenue 5.7% to $1.34bn.

Turning to segmental performance, growth is clear to see. Caesar’s Regional division remains its core source of revenue, with this edging up 1.3% to $5.78bn for the year.

There was also growth in Las Vegas, with revenue rising 4.3% to $4.47bn. Caesars says this was helped by certain key developments during the year including the Nevada city hosting its first Formula 1 race weekend in November.

However, it was the Caesars Digital business that caught the eye in 2023, with revenue up from $548m to $973m. An additional $307m in revenue was reported from corporate and other activities, up 8.9% year-on-year.

Back in the black as net profit reaches $786m

While revenue increased, Caesars was able to keep costs down. In fact, operating expenses for the year were 0.3% lower at $9.06bn, while an additional $2.53bn of other costs were also reported.

This left a pre-tax loss of $60m, an improvement on the $565m loss in 2022, while Caesars also benefitted from an $888m tax benefit. After taking away $42m in net income from non-controlling assets, group net profit for 2023 was $786m, compared to the previous year’s $899m loss.

In addition, Caesars says its adjusted EBITDA for the year increased 21.7% to $2.92bn. 

Digital growth boosts Caesars in Q4

Alongside the full-year figures, Caesars also posted results for Q4, with the success of its digital business again the main headline for the operator.

Group revenue in Q4 was 0.1% higher at $2.83bn. This includes $1.58bn in casino revenue, rooms revenue of $509m, food and beverage revenue of $423m and $315m in other revenue.

Regional revenue edged up 0.5% to $1.36bn but Las Vegas revenue dipped 5.5% to $1.09bn. However, digital revenue jumped 28.3% to $304m, with managed and branded revenue down 5.6% to $68m.

Costs-wise, operating expenses were 1.9% lower at $2.29bn and other costs fell by 10.6% to $576m. This resulted in a pre-tax loss of $40m, compared to 2022’s loss of $156m.

Caesars paid $16m in tax and also discounted $16m in income from non-controlling assets. As such, it ended Q4 with a $72m net loss, an improvement on $148m in the previous year. 

However, adjusted EBITDA for the quarter was 2.8% lower at $930m.

“Our fourth quarter operating results demonstrated consolidated net revenue growth, reduced net loss and stable consolidated adjusted EBITDA year over year,” CEO Tom Reeg said.

Caesars acquires WynnBet igaming business in Michigan

Along with announcing these results, Caesars also confirmed the acquisition of WynnBet’s Michigan igaming business. It has also signed a long-term extension for igaming market access rights in the state with the Sault Ste. Marie tribe of Chippewa Indians

Caesars now gains access to the Sault tribe’s igaming skins, allowing it to operate additional digital brands in Michigan. Existing WynnBet customers will transition to Caesars’ Michigan igaming platform later this year, pending regulatory approvals. 

“As we continue to grow our igaming franchise, the assumption of WynnBet’s igaming operations in Michigan allows us to tap into a significant market and customer base,” Caesars’ senior vice-president and chief igaming officer, Matt Sunderland, said. “It provides a crucial step forward in growing our digital products and offering players more ways to play.

“We are honoured to work with the Sault Ste. Marie tribe of Chippewa Indians and look forward to growing with them in Michigan.”

WynnBet has been operating under the Wynn Interactive umbrella. However, Wynn Resorts, which owns Wynn Interactive, last summer announced a major reduction in its online brand WynnBet’s US footprint.

Initially, Wynn said it would cease operations in Arizona, Colorado, Indiana, Louisiana, New Jersey, Tennessee, Virginia and West Virginia. Last week, it also exited Massachusetts and operations in New York remain under review, but it remains active in Nevada.

As for Caesars, tribal partnerships are not a new concept for the group. Last month, Caesars announced it will launch mobile sports betting in North Carolina after expanding its relationship with the Eastern Band of Cherokee Indians.

The operator is set to go live when North Carolina launches its online sports betting market on 11 March. Ahead of the launch, the Caesars Sportsbook app will start accepting sign-ups and deposits from 1 March.