Caesars Reports Underwhelming Fourth-Quarter Earnings

Caesars Entertainment has released its fourth quarter earnings report, showing a somewhat disappointing three-month period for the U.S. gambling giant known for having one of the top sportsbooks.

The company was optimistic as it prepared to release its most recent quarter figures, with Caesars Entertainment having met or exceeded consensus estimates for five consecutive quarters.

The company, along with other sports betting sites, reported disappointing Q4 figures. Despite a highly anticipated partnership with ESPN BET, PENN Entertainment also reported lackluster performance.

Getting into the numbers

Caesars Entertainment was looking forward to continued growth across all sectors based on its Q4 earnings report. This positive outlook followed a strong Q3 performance where growth was observed in the hotel, casino, and online gaming divisions.

Caesars’ Q4 revenues remained steady at $2.83 billion, slightly higher than the previous year’s $2.82 billion, but fell short of analysts’ projected revenues of $2.85 billion by 0.2%.

In Q4, Caesars Entertainment posted a net loss of $72 million, falling short of consensus estimates. While this loss is an improvement from the $148 million loss reported in Q4 of 2022, it still did not meet industry expectations.

The company experienced a loss of 34 cents per share in the quarter, significantly higher than the expected loss of three cents per share.

Good news from the report: Caesars Digital

Although largely disappointing, the Caesars Entertainment Q4 report did highlight a few positive aspects, such as the success of Caesars Digital, including its top-notch sports betting app, which stood out as a strong point for the company in that quarter.

In the current quarter, net revenues from Caesars’ sportsbook and online gaming sector increased to $304 million from $237 million in the previous year. The adjusted EBITDA for the period saw a significant improvement, rising to plus-$29 million from a negative $5 million in Q4 of 2022.

During our Q4 call last year, I discussed how increasing net revenues in our digital segment would result in enhanced profitability due to the high flow-through nature of this business,” stated Eric Hession, the president of Caesars Sports and Online Gaming. “As predicted, we experienced substantial revenue growth in Q4 and throughout the entire year of 2023, setting numerous records within our digital business.”

The growth of iGaming gained momentum during the quarter, with a volume increase of over 50%, primarily driven by Caesars Palace Online. This contributed to our first quarter reaching $100 million in Gross Gaming Revenue (GGR) for the segment, as stated by him.

Looking forward

Despite a lackluster Q4, Caesars is expected to be well-positioned for success in the future.

The company has completed significant renovations at several of its properties, such as the Versailles Tower of Paris in Las Vegas. These renovations had a significant impact on the company’s financial performance in Q4, as construction costs were incurred and approximately 650 rooms remained vacant for the entire quarter.

In addition, Caesars acquired WynnBET’s Michigan sports betting license through a partnership with the Sault Ste. Marie Tribe of Chippewa Indians. This agreement enhances Caesars’ sports betting operations in Michigan and broadens its online casino options in the state.