Caesars Entertainment is thriving in its iGaming market but what about the rest of their struggling business?

Caesars Entertainment is thriving in its iGaming market but what about the rest of their struggling business?

On Tuesday, Caesars Entertainment is set to release the Q1 earnings. It will be another disappointing quarter for one of the top sportsbooks in the United States. The only positive from Q1 was Caesar’s strongest digital quarter yet. Market analysts expect Caesars to post quarterly earnings of $0.02 per share—a whopping 78% year-over-year decline. Not ideal for the sportsbook. 

Caesars revenues are expected to be $2.83 billion. That is down less than 1% from year-over-year. However, it would be the second straight quarter of declines by Caesars. Online Sports Betting and iGaming accounted for $29 million adjusted EBITDA for Q1. In Q1 of 2023, they lost $5 million. While the digital sector of their sportsbook is thriving, the company needs to take a new approach to the rest of its business.

Where does Caesars compare to the other major sportsbooks in the United States?

Historically in the casino and online gaming industry, Caesars Entertainment has finished third behind DraftKings and FanDuel. They control a majority of the market share. Data from six states in Q1 suggests that Caesars is tied with BetMGM having 7% of the market share. Additionally, they ranked sixth out of the top six sportsbooks in the US for having the handle derived from promotional play. 

That data is courtesy of Citizens JPM Securities. In the fall, Caesars Entertainment switched its focus to iGaming. Legal Sports Reports suggests that Caesars could have impacted their business by taking sources to help support their iGaming mission. Caesars Entertainment CEO Tom Regg said Formula 1 races last November helped their Q4 earnings be boosted by about 4%. Analyst Chad Beynon thinks the Las Vegas Strip revenue will be up 2% year-over-year in Q1. That’s highly beneficial for Caesars who owns nine properties in Las Vegas. The potential for revenue in Las Vegas for Caesars Entertainment is substantial.

Why are Caesars casinos struggling to grow?

While Caesar’s digital market is doing well, the same cannot be said for their physical casino locations. Their current stock price is $36.66. Signifying a 21% drop year-to-date. That’s also a 34% drop since last December. Out of the top six sportsbooks in the US, Caesars is behind DraftKings, FanDuel, BetMGM, Las Vegas Sands, and Wynn Resorts. All six casinos have seen a decline over the last year. However, none have dropped as quickly as Caesars has. 

The company has been tied down by $12.2 billion in outstanding debt. Their strategy is to start reducing their debt by selling some of the company’s assets. Also known as deleveraging. If they have to start selling their assets, the rest of the company is going to be affected. What can Caesrars do to try and clean this all up and start making positive profits again?

 

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