Browse articles by topic

Slow Vegas recovery hurts enlarged Caesars’ Q3 performance


Caesars Entertainment’s third quarter results offer further proof that Las Vegas is enduring a slower recovery than regional gaming markets, with revenue falling on a like-for-like basis and the business posting a quarterly net loss of $926m. 

For the three months to 30 September revenue amounted to $1.38bn (£1.05bn/€1.16bn), more than doubling the legacy Eldorado Resorts’ revenue for Q3 2019. This only included 10 days’ contribution from the legacy Caesars Entertainment Corporation (CEC) business, however, after the operators’ mega-merger was closed on 20 July. 

However, on a ‘same shop basis’ – factoring the properties that will be divested from the merged casino giant’s expanded portfolio, plus CEC’s performance for the first 20 days of July – revenue for the quarter came to $1.84bn, a 34.3% decline from the prior year. 

Looking at revenue breakdown by region, and using the full quarter’s contribution from the legacy CEC business, Las Vegas properties accounted for $391m of the total, down 54.9% year-on-year. 

Regional casinos across the US, however, reported a decline in revenue – but much reduced from the Vegas drop – of 19.7%, to $1.35bn.

Managed services, international properties and the Caesars Interactive Entertainment divisions, meanwhile, brought in a further $92m, down 34.8%, with corporate and other revenue flat at $5m. 

The interactive division is set to be significantly expanded through Caesars’ acquisition of William Hill, having made a £2.9bn (€3.17bn/$3.72bn) offer for the British operator at the end of the quarter. This will go to a vote of William Hill shareholders on November 17.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) came to $463m, down 42.8% year-on-year. 

Operating costs for the quarter- though only including the legacy CEC contribution from 20 July – came to $1.53bn, up from $538m in the prior year. This saw the business swing to an operating loss, of $152m. 

After other expenses – comprising interest and losses on the extinguishment of debt – of $637m, Caesars’ pre-tax loss widened to $789m. This resulted in a net loss of $924m after income taxes, compared to a $37m profit for the legacy Eldorado business in Q3 2019.

“Our third quarter was a busy period for the company. We officially closed our merger with former Caesars on July 20, 2020,” Caesars Entertainment chief executive Tom Reeg said. “We announced a recommended offer to acquire William Hill plc on September 30, 2020 and successfully raised $1.9bn of new equity that closed on October 1, 2020. 

“Additionally, 55 out of our 56 properties have now reopened and operating results continue to improve sequentially. Regional markets continued to outperform destination markets and we remain optimistic regarding an eventual recovery of travel and tourism in the US and especially in Las Vegas.”