Caesars Entertainment declared during its third-quarter financial update that it will be backtracking on its planned divestment of a Las Vegas asset.
Within its Q3 release, the operator also announced a year-over-year increase in revenue, with a significant improvement in digital operations.
Initially, Caesars stated that it would be selling a Las Vegas asset as part of its plan to reduce its debt load.
However, during the operator’s Q3 earnings call, CEO Tom Reeg declared that those plans had been brought to a halt due to a change in the market.
Reeg commented: “I’d also like to touch on the strip asset sale and say that we intend to keep all of our trip assets as we move forward. We ran into a market where the cash flow of the asset continued to increase the ability of buyers to raise financing, making it a very easy decision for us to keep.
“I know that despite us talking about how this is and was a discretionary process for us, it created an unnecessary overhang in the stock. And I apologize to all of our shareholders for that. That was a self-inflicted error and that was me. So, we will be keeping our Vegas Strip assets as we move forward.”
Caesars Entertainment’s Digital operations shine
As previously mentioned, Caesars’ Q3 group revenue grew YoY, rising by 6.4% to $2.88bn (2021: $2.68bn) thanks to increases across all three of its core segments.
The Regional sector earned the most at $1.53bn but only grew by 0.1% YoY (2021: $1.49bn).
Las Vegas operations came in second, up by 5.9% YoY to $1.07bn (2021: $1.01bn), but it was Caesars’ digital operations that saw the strongest revenue growth during the quarter, rising by 120.8% YoY to $212m (2021: $96m) as a result of “improved operating efficiencies”.
Caesars reported a group net income of $52m in Q3 (2021: -$233m) – Las Vegas: 9.9% decline YoY to $245m (2021: $272m), Regional: 5.8% fall YoY to $211m (2021: $239m), and Digital: 66.8% gain YoY to -$63m (2021: -$190m).
Group adjusted EBITDA increased by 15% YoY to $1.01bn (2021: $870m) – Las Vegas: down 4% YoY to $480m (2021: $500m), Regional: up 0.9% YoY to $570m (2021: $544m), Digital: 76.8% YoY improvement to -$38m (2021: -$164m).
“As we look to the remainder of ’22, we remain optimistic about our business as consumer trends remain healthy, especially versus ’19,” noted Anthony Carano, President and COO of Caesars Entertainment.
“As we mentioned last quarter, we remain encouraged regarding improving group and convention trends in Las Vegas, the return to the international consumer as well as the potential for the full recovery of our older demographic consumer, who has been the most impacted by COVID-19.”
Times Square casino bid
Furthermore, following the end of the quarter, Caesars announced a partnership with SL Green in a joint bid for the redevelopment of 1515 Broadway in Times Square, New York.
The operator plans to turn the site into an entertainment and gaming venue, but it is expected to be a very competitive bidding process.
“Given the inherent sensitivities around the bid process, we aren’t in a position to go into details around project costs at this stage,” stated Bret Yunker, Chief Financial Officer at Caesars Entertainment.
“However, we can tell you now that the project starts with an existing building and will be financed within a new joint venture that is not on our balance sheet. Caesars will brand and manage the asset under a long-term management agreement and any equity investment into the joint venture will be very manageable relative to our free cash flow.”
Alongside a planned sportsbook launch at Ontario’s Casino Windsor, Maryland, Ohio, Massachusetts, Maine, and Puerto Rico were named as possible new digital sports betting markets for the operator.