Caesars Digital retains upward trajectory with Q3 revenue rise of 146%

Caesars Entertainment has reported an 89% year on year rise in overall group revenue for Q3 2021 to $2.7bn.

The uptick marks the second consecutive quarter of growth for the US casino operator, after the effects of Covid-19 restrictions being removed lifted 2021 revenue, which reached just $1.3bn in 2020.

The largest rise was reported in Caesars’ flagship Las Vegas operations, where revenue grew 234% annually to just over $1bn from a 2020 low of $304m.

Caesars Digital Q3 revenue soared by 146% to $96m, while the firm’s managed and branded operations enjoyed a 73% upsurge to $71m. Its regional operations reported a revenue increase of 46% year on year to $1.5bn.

Company net losses narrowed to $278m from a previous Q3 2020 high of $926m, while adjusted EBITDA rose to $882m from a prior 2020 figure of $375m.

Caesars CEO Tom Reeg said: “Our third quarter operating results reflect an all-time quarterly EBITDA record in our Las Vegas segment and a new third quarter EBITDA record for our regional segment.

“We are encouraged by the early results from our rebranded Caesars Sportsbook launch and we are looking forward to launching additional states by year end and into 2022,” the Caesars CEO added.

Caesars has committed to spending $1bn in marketing on its fledgling sportsbook operations over the next two years, although Reeg conceded this target would be based on “success-based” customer acquisition.

In the firm’s Q3 conference call, Reeg said: “If we do worse than we’re expecting from a share perspective, I’d expect that the ultimate investment will be less.

“If we do better than we expected from a share perspective, I’d expect the ultimate investment to be more, but, obviously, the return will fall in both directions,” the Caesars CEO added.

As of September 2021, Caesars had $15.2bn in aggregate debt outstanding, with the firm targeting the sale of a Las Vegas strip property during 2022 as part of a program to balance its books.

Discussing this, Reeg cited 2022 as a year of “massive cashflow generation and deployment” for the company.

“We’ve got the William Hill non-US asset sale settling, the NeoGames sale, and we’ve got about $1.5bn of proceeds to deploy, the bulk of which will be coming in 2022,” Reeg explained.

“We’re generating in the bricks-and-mortar business something in the neighborhood of $2bn a year of free cashflow right now.

“We also think this is an opportune time to execute on our strategy of a strip asset sale, so you should expect us to put that in motion in the early part of 2022.

Addressing questions from analysts, Reeg continued: “You should expect the firm to be aggressive on the refinancing front in 2022 as well, which should dramatically lower our cost of debt and so if you add all of those up, we should have well in excess of $5bn of cash to deploy in 2022.

“Some of that will be spent in the digital business, some of that will be spent on capital projects that drive ROI in the portfolio, but the bulk will be used to pay down our debts,” he concluded.