Group revenue at Caesars in Q3 amounted to $2.99bn, up 3.7% from the previous year. The group reported growth across all core segments including digital, helped by the launch of Caesars Palace Online in Q3.
Total spending on digital was up 38.0% on last year, reflecting the impact of the new online casino launch. This was despite the offering not going live until halfway through Q3 in mid-August.
As such, CEO Tom Reeg expects the full impact of Caesars Palace Online will not be felt until Q4. He notes that the Caesars Digital business has started Q4 strongly and anticipates more digital growth in the coming quarters.
“We feel very good about how the business is performing, how it’s coming together,” Reeg said on an investor call. “Looking forward, we feel very good about what we see in front of us. We’re excited about the momentum we’ve got in online casino now that we’ve launched Caesars Palace Online.”
Reeg also spoke about plans to further improve the business and support long-term goals of the segment posting $500.0m in EBITDA by 2025. These include adding another skin to the portfolio, which could happen late next year.
“We feel that there’s a lot of opportunity to improve the integration of the various game vendors that will give us more insight into the actual workings of the game and see what customers are playing and where the spins are,” Reeg said.
“We are also exploring the possibilities of adding another skin to the portfolio. There are a number of states where we have additional licences that we’ve reserved. We would plan to potentially roll that out later in 2024.
“The [$500.0m] target has not changed. We continue to see a visible path to that end. And each quarter, we grow more confident.”
Record quarter for Regionals at Caesars
Analysing group performance in the three months to 30 September, casino activities drew the most revenue at $1.62bn, up 0.9%. Food and beverage revenue climbed 7.8% to $443m, hotel revenue 1.7% to $553m and other revenue 15.6% to $378m.
The Caesars Regional business remains its primary source of revenue, generating $1.57bn in Q3, up 2.3%. Caesars also noted this segment – which covers properties outside Las Vegas – achieved record adjusted EBITDA of $575m in the quarter.
Turning to Las Vegas, revenue here was 4.0% higher at $1.12bn, with adjusted EBITDA rising 0.4% to $482m.
As for Caesars Digital, revenue edged up 1.4% to $215m and adjusted EBITDA amounted to $2.0m. The latter was not only an improvement on the $38m loss posted last year but also only the second quarter in which the division was EBITDA positive.
A further $98m in revenue came from the Managed and Branded business, up 40.0%. In addition, Caesars noted a $4m loss from the Corporate and Other segment.
Revenue rise pushes Q3 net profit to $74m
Operating costs in Q3 totalled $2.23bn, a rise of 1.9%. Casino remained the main area of spending for Caesars at $831m. An additional $585m in non-operating costs were also noted during the quarter.
Pre-tax profit reached $139m, up 127.9% from last year. Caesars paid $47m in tax and also took off $18m in profit from non-controlling assets. As such, net profit in Q3 amounted to $74m, a rise of 36.5% from $52m last year.
Caesars Digital growth clear to see in year-to-date figures
As to how Q3 impacted year-to-date performance, revenue during the nine months to 30 September was 8.9% higher at $8.70bn. Revenue comprises $4.79bn from casino, $1.31bn food and beverage, $1.58bn hotel and $1.03bn from other sources.
Segment-wise, Regional revenue was 1.7% higher at $4.42bn and Las Vegas revenue climbed 7.9% to $3.38bn. However, it is the Caesars Digital business that led the way in growth, with the $669m revenue total being 115.1% higher than $311m last year.
A further $239m in revenue came from the Managed and Branded arm and $1m Corporate and Other.
Looking at costs, total operating spend increased 0.3% to $6.77bn and non-operating costs hit $2.00bn. This left a pre-tax loss of $20m, an improvement on the $409m loss in Q3 of 2022.
However, Caesars received $904m worth of tax benefits. Even after taking off $26m worth of profit from non-controlling assets, net profit was $858m, in contrast to the $751m loss last year.
In addition, adjusted EBITDA for the group was 31.6% higher at $3.01bn, This included $9m from Caesars Digital, which last year posted a $661m loss.
Caesars president and chief operating officer, Anthony Carano, concludes: “We are looking forward to a strong finish to 2023. Consumer demand remains strong and our capital projects are winding down. We will continue to remain focused on operating cost efficiencies, harvesting returns on project capital and driving long-term EBITDA growth.”