Caesars Entertainment Faces A Difficult Q3

Caesars Entertainment’s third-quarter report offered little relief for investors or analysts, as the casino operator posted flat revenue and declining profits across nearly all business segments. The company’s stock fell sharply following the release, reflecting concerns over both Las Vegas softness and regional underperformance.

 

Weak results across core operations

The company reported group net revenue of $2.9 billion for the quarter ended September 30, unchanged from the prior year. However, segment-level performance painted a more troubling picture. Las Vegas, traditionally Caesars’ most lucrative market, saw revenue drop 10% year-over-year to $952 million, while net profit plunged 40% to $132 million. CEO Tom Reeg attributed part of the shortfall to “abnormally poor” table-game hold, which cost roughly $30 million in revenue.

Regional operations provided only limited relief. Although revenue in those markets rose 6% to $1.5 billion, profit collapsed 55% to $56 million, with management citing uneven investment cycles and cost pressures. Caesars Digital, once a bright spot due to its rapid expansion in online gaming, recorded a modest 2.5% increase in revenue to $311 million but swung to a $21 million loss, reversing an $11 million profit from the prior-year quarter.

Overall, adjusted EBITDA for Las Vegas fell 19% to $379 million, while regional EBITDA was mostly stable, rising 1.5% to $506 million. The digital arm’s adjusted EBITDA rose 55% year-to-date to $151 million, though Q3 results indicated a slowdown. Caesars ended the quarter with $836 million in cash and $11.9 billion in total debt, after redeeming $546 million in debt and repurchasing $100 million in stock.

Reeg, who earlier this year dismissed concerns about Las Vegas demand, struck a more measured tone in Tuesday’s call. “We’re now four months into this step-down in leisure demand for Vegas,” he said, adding that while conditions have improved since midyear, they remain weaker than in 2024.

Las Vegas tourism has been under pressure from inflation, tariffs, and uncertainty tied to a federal government shutdown. The city’s major events, including the upcoming Formula One Grand Prix (Nov. 20–22), could offer short-term relief. Reeg said early booking trends look “considerably better” than last year but still below the event’s inaugural 2023 performance, when it generated an estimated $1.5 billion in economic impact.

Despite speculation about potential asset sales, Reeg said Caesars is not “actively exploring” any divestitures at this time.

Regional strategy and capital discipline

Reeg defended the company’s cost-control strategy, which has been a hallmark since the pandemic. He acknowledged, however, that spending “might’ve gotten too wide” relative to competitors.

“If you look at regional capital investment across us and our peers, we’ve outpaced everybody in the last five years,” he said. “Let’s harvest those investments, give people a reason to come and see [regional properties].” The CEO said he remains “encouraged” by recent trends suggesting regional initiatives are starting to drive cash flow, though he cautioned that such shifts do not align neatly with quarterly reporting cycles.

Caesars Digital received limited attention this quarter, reflecting slower growth and regulatory challenges. The company continues to target $500 million in annual EBITDA by 2026, but higher state gaming taxes and the sale of the World Series of Poker franchise have constrained short-term results. Another drag came from “player-friendly” sports outcomes, particularly during football season, which cut into hold rates. “We’re four of 13 weekends into the fourth quarter,” Reeg said, noting that game results “have not gotten substantially better.”

The growing influence of prediction markets—financially regulated exchanges offering contracts on sports outcomes—was also a focus. Platforms such as Robinhood and Kalshi are drawing investor and bettor attention, prompting strategic questions for legacy bookmakers. Nevada regulators recently warned licensees that involvement in prediction markets could jeopardize their suitability, limiting Caesars’ ability to participate. “We will not put any licences at risk,” Reeg said, though he added the company would be “prepared to move” if regulators define a legal framework.

 

This stuff happens over a longer period of time, but we are particularly encouraged by the trends that we’re seeing

Stock reaction and outlook

Investors reacted swiftly to the weak report. Caesars’ shares fell about 2% Tuesday to $22.09, then slid further to $19 on Wednesday, extending a year-to-date decline of more than 40%.

Analysts remain cautious about the company’s near-term prospects. While Caesars continues to deleverage and maintain liquidity, persistent Las Vegas softness, regulatory friction, and digital volatility suggest limited upside through the end of 2025. For now, the company appears focused on stabilizing its core operations rather than pursuing major expansion or restructuring—a pragmatic stance in a market where consumer and investor confidence remains fragile.