Caesars Entertainment’s latest earnings report reflected the positive impact its approach of segmenting its digital division is having on the bottom.
Overall as a company, Caesars reported $3 billion in earnings, $1 billion in consolidated EBITDA, and $74 million in net income for the quarter.
“During the third quarter of 2023, the company achieved an all-time consolidated adjusted EBITDA record. We experienced adjusted EBITDA growth year over year in all three of our primary operating segments including Las Vegas, Regional, and Caesars Digital. Our Regional segment achieved an all-time quarterly adjusted EBITDA record as we harvest the recent portfolio investments within this segment,” Caesars Entertainment CEO Tom Reeg said in the release.
Caesars Digital cuts income losses 89% from 2022
On the digital front, the company posted $2 million in adjusted EBITDA for the quarter, which was a substantial jump from the $38 million in losses posted in the same period from 2022.
Caesars Digital did post net income losses of $83 million, but again, the number was down precipitously from 2022, when spending on New York and other promotional costs ballooned that number to $755 million.
During the conference call discussing company earnings Reeg and Caesars Sports and Online Gaming Eric Hession offered some insights into what boosted those numbers and observed they had significantly curbed promotional spending compared to previous years.
We launched several new product features for football, including SGPs for NCAA, a livestreaming product for nationally broadcast NFL games, a bet with reward credits feature, and improved payment options,” Hession said. Along with the rollout of new proprietary TAM that will allow shared wallet functionality, these improvements have the company feeling much better about the product.
Handle on the rise but hold still trails DraftKings, FanDuel
On the handle front, Reeg noted a 38% boost to overall betting handle. While that number can often be inflated by operator promotional spending, he said for this quarter that is not the case.
“That’s not promotional-driven. That’s actual handle growth. We got dinged on hold in the quarter but still delivered a positive EBITDA quarter.”
While FanDuel is consistently posting double-digit hold in states, Caesars continues to lag behind but Hession did say the situation was improving.
“We continue to see an end point where we’re going to have hold in the 7.5% to 8% range. If you look at this quarter in particular, we did continue to have sequential hold improvement for the last 4 quarters,” he said.
Caesars Palace online drawing older, female customers
Meanwhile, the pivot to a secondary casino-specific online app, Caesars Palace Online, is helping improve digital performance as well. So much so that the company could consider unrolling even more skins in the future.
“We are exploring the possibilities of adding another skin to the portfolio as there are a number of states where we have additional licenses that we’ve reserved and would plan to potentially roll that out later in 2024,” Hession said.
The benefit of the segmented app is a shift in the types of online casino customers Caesars is acquiring.
The customer that showed up in our iGaming business before through our sports betting tab tended to be a sports better, which skews younger and male and table games player,” Reeg explained. “If you look at the businesses we want to emulate in the iGaming arena, they look like our brick-and-mortar business in terms of skewing to slots and older and female.”
