Caesars Revenue Loss in Q3 but Big Growth in Online Gaming

Struggles in Traditional Operations

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Caesars’ operating costs remained marginally lower year-on-year, but the drop in revenue led to an 11.1% decrease in operating profit, which fell to $644 million. After accounting for $592 million in non-operating costs, the company reported a pre-tax profit of $52 million—down 62.6% from the previous year. This culminated in a net loss of $9 million, a stark contrast to the $74 million profit reported in Q3 2023.

Year-to-date figures echoed this trend, with total group revenue dropping 3.0% to $8.45 billion. Once again, digital was the sole segment reporting growth. The company ended the quarter with a cumulative net loss of $289 million, a significant decrease from last year’s $858 million profit, which had been bolstered by $904 million in tax benefits.

In addition to the quarterly results, Caesars announced the completion of two major asset sales: the World Series of Poker (WSOP) brand and the LINQ Promenade in Las Vegas. The WSOP brand was sold to NSUS Group Inc., which operates the online poker site GGPoker, for an initial $250 million in cash and an additional $250 million promissory note due in five years. Importantly, Caesars retains the right to host the flagship WSOP live tournament series at its Las Vegas casinos for the next 20 years.

The LINQ Promenade, a popular shopping and entertainment destination, was sold to a joint venture between TPG Real Estate and Acadia Realty Trust for $275 million, with the deal expected to close by the end of 2024. Reeg emphasized that the sale of these non-core assets would aid in accelerating the company’s debt reduction goals.

Caesars Digital set a new all-time quarterly record for adjusted EBITDA driven by over 40% growth in net revenue.

Future Outlook

Looking ahead, Reeg expressed optimism about expanding operations in the U.S. and the potential for more states to regulate both sports betting and iGaming. He highlighted the importance of a structured path for legalizing and licensing these markets, emphasizing the significant investments and tax contributions made by operators.

While the company is exploring the sale of other non-core assets, Reeg clarified that there are currently no active sales processes for casino properties. However, he noted an increase in inquiries about potential asset sales, indicating a growing interest from investors.

“We’re economic animals,” Reeg stated. “If it ultimately makes sense that the best way to drive value is to transact, that’s a possibility.” For now, Caesars is focused on navigating the complexities of the market while leveraging its digital successes to offset traditional revenue declines.