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Caesars Revenue Loss in Q3 but Big Growth in Online Gaming

Caesars Entertainment reported a net loss in Q3 2024, with overall revenue falling 4% to $2.87 billion. Despite challenges in traditional operations, the company saw significant growth in its digital segment, with online revenue rising 40.9%. Caesars also announced the sale of the World Series of Poker brand and LINQ Promenade to strengthen its financial position.

CasinoLandia > News > Caesars Revenue Loss in Q3 but Big Growth in Online Gaming

Branimir Ivanov | Senior News Contributor

Updated: Nov 1, 2024

Strip Sees Slower Revenue

Caesars Entertainment faced a challenging third quarter in 2024, reporting a net loss as growth in its digital business was not enough to offset declines in other areas. The company announced on October 29 that it recorded a revenue of $2.87 billion, down 4% from the previous year, with only its digital segment showing significant improvement.

Despite these overall declines, Caesars Digital shone brightly during the quarter, achieving a remarkable 40.9% increase in revenue. The segment generated $303 million, compared to $215 million in the same period last year. This surge was driven by record online casino revenue, which soared 83% year-on-year. Caesars highlighted the success of its Caesars Palace app, which has been gaining traction as a major contributor to its iGaming revenue.

“Results in Las Vegas reflect record Q3 hotel, F&B and banquet revenues driven by strong occupancy and cash ADRs,” said CEO Tom Reeg during an investor call. The company reported strong performance in non-gaming revenues in Las Vegas, which helped mitigate some losses. However, regional operations faced challenges from new competition, construction disruptions, and difficult comparisons to the previous year.

The digital segment’s performance was further underscored by a record quarterly adjusted EBITDA of $52 million, driven by an increased hold rate of 8.6% for online sports betting—up from 6.5% last year. Reeg noted that app enhancements and targeted market campaigns contributed to improved player retention across Caesars’ platforms.

Key Points

Financial Performance: Caesars Entertainment reported a net loss of $9 million in Q3 2024, with total revenue decreasing 4% to $2.87 billion, primarily due to declines in its regional and Las Vegas operations.
Digital Growth: The company's digital segment experienced significant growth, with revenue rising 40.9% to $303 million and setting a record for adjusted EBITDA at $52 million, driven by strong online casino and sports betting performance.
Asset Sales: Caesars completed the sale of the World Series of Poker brand for $250 million and agreed to sell LINQ Promenade for $275 million, aiming to reduce debt and focus on core business areas.

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.