Caesars Entertainment Inc. (formerly Eldorado Resorts, Inc.) was first founded in Reno, Nevada, and the impressive progression of the company can be traced right back to the initial opening of Reno’s Eldorado Hotel on May 24, 1973. Over the years the Eldorado casino business continued to expand its property portfolio, by acquiring and purchasing a number of casino businesses including Circus Circus Reno, Tropicana Entertainment and Isle of Capri Casinos. Eldorado purchased Caesars Entertainment for $18 billion in stock and cash in June 2019. As of 2022, Caesars’ impressively diversified and expanded portfolio means it now operates over 50 casino properties in the US.
Today, Caesars Entertainment Inc offers a range of gaming destinations and has also developed a whole host of iGaming and online sports betting infrastructure, including its expanding mobile wagering app, Caesars Sportsbook. Caesars was one of the first online gambling operators to launch in New Jersey all the way back in 2013 and its online casino in New Jersey offers over 800 casino games – Time2play has reviewed a variety of Caesars online slots, noting that the game library is one of the industry’s biggest, and that the iGaming operator is offering ‘a quality product’.
Caesars’ digital business reported positive EBITDA (otherwise known as earnings before interest, taxes, depreciation and amortization) in October of this year. The company saw a record Q3 performance of over $1 billion for EBIDTA – a marked 15% year over year increase. The CEO of the entertainment company, Thomas (Tom) Reeg, said earlier this month that this positive profitability landmark had arrived 12 months earlier than was expected, and he seemed hopeful that the digital business now boasted a ‘really good shot’ at becoming ‘a contributor’ to full-year EBITDA next year. It’s certainly an interesting time for the growing digital business, and traders will be watching closely, as Caesars’ third quarter results represent a new quarterly record for the casino and digital sportsbook company.
The Chief Financial Officer of Caesars Entertainment Inc., Bret Yunker, spoke of how the company has continued to reduce debt via free cash flow and net asset sale proceeds at a sum of $880 million. He stated that the business has also worked to scale up its pro rata bank facilities to $3 billion, including a brand new $750 million Term Loan A and a $2.25 billion Revolving Credit Facility – both to mature in 2028. The business’ hotel revenue and profit set new records in Q3, while its gaming revenue similarly saw a record high in this quarter. Tom Reeg noted that Caesars’ ‘improved operating efficiencies’ were responsible for the unexpected upturn and improvement in the company’s outlook, describing October 2022 as ‘the strongest month in the history of Las Vegas for Caesars’.
So then – what does all this mean for Caesars stocks? By beating expectations, it’s looking likely that the business could see stocks soar. Following on from the CEO’s optimistic reporting, Caesars stock jumped 6.6% after hours, with many of its competitors following suit. Caesars Entertainment’s positive upward trajectory displayed in Q3 – especially the promising outlook for Caesars’ digital business – means the stock is a good buy at its current price. This potential upturn could have a knock-on effect on the iGaming market at large. Confidence in the iGaming market seems to have been boosted by this vote of confidence in the ever-growing world of online gambling.
Since the COVID-19 pandemic began in early 2020, the world has faced a tumultuous period and on many levels it continues to deal with the social and economic fallout of the global pandemic. Global shortages and pressures on supplies have led to inflation in nations like the US and the UK, so there have been many valid concerns about pressures on consumer spending and potential downturn for growing iGaming businesses like Caesars. However, some might say that Caesars’ positive outlook suggests sports betting remains a strong market in the current economic climate. It seems apparent that consumer habits have not drastically changed, and despite the global slowdown, there remains a huge and growing demand for high quality digital gambling platforms and a continued consumer appetite for iGaming.
Caesars now operates sports betting in 23 states – 5 of these allow online gaming, while 16 of these states also offer mobile sports betting. Even though Caesars stock is down 52% so far this year and its sports betting offering is currently losing money, the potential for growth is considerable and Caesars optimistic outlook is indicative of overall market confidence and consumer interest in iGaming throughout the US. The market at large can see some positive outcomes on the horizon when looking at the trajectory of Caesars Entertainment Inc. and it is certainly worth keeping your eyes on the interesting developments still to come in the next quarter and beyond.