Et Tu Coronavirus? More is Less for Caesars in Q3
Caesars Entertainment, the biggest casino and entertainment company in the United States, is weathering some big hits as it attempts to bounce back from Covid-19 and re-invent itself as an iGaming online superpower.
The negative effects of Covid-19 continue, especially, to impact earnings in its showcase destination hubs; led, of course by Vegas, where a look at airport flight stats alone, showing a drop of 60 per cent, tells you all you need to know about the state of financial play in the world’s top gaming resort.
Caesars (CE) has just posted a net loss of $926m (£704m/€780m) for Q3 2020.
Revenue, for the three months to 30 September, was US$1.84bn (£1.4bn/€1.55bn), a decline of over 34 per cent compared to Q3 2019.
Vegas was down 55 per cent, only garnering a relatively modest US$391m (£297m/€329m).
Regional casinos across the US also reported declining revenues, less than Vegas, but still averaging a 20 per cent decrease in footfall: with total regional earnings—excluding “destination” venues such as Reno, New Jersey and New Orleans–falling to US$1.35bn (£1.02bn/€1.14bn).
“In our Las Vegas segment, revenues declined 60 per cent during the third quarter and adjusted EBITDA declined 83 per cent,” the company said in a statement. [Only] five of our nine [Las Vegas] properties were open during the entire third quarter.”
Caesars’ pending £2.9bn (US$3.8bn/€3.2bn) acquisition of William Hill, set to be agreed by shareholders this November 17, shows that–amid the Covid-19 pandemic–the company has upped its wager on online sports and iGaming to deliver earnings.
It follows CE’s effective merger of its own legacy brand, Caesars, with Eldorado Resorts, to form the new Caesars Entertainment entity this July 20.
The natural cost of merger, exacerbated by Covid-19 financial drag, has meant that CE’s Q3 EBITA, year-on-year, fell almost 43 per cent to US$463m (£352m/€390m), leaving an operating loss of US$152m (£116m/€128m). And with other expenses, including pay-down of debt, Caesars’ pre-tax loss widened to $US789m (£600m/€664m).
“[You could say] our third quarter was a busy period for the company,” said CE’s Chief Executive Tom Reeg.
“We officially closed our merger [with Eldorado], announced [an] offer to acquire William Hill and successfully raised US$1.9bn (£1.45bn/€1.6bn) of new equity.
“Additionally, 55 out of our 56 properties have now reopened and operating results continue to improve sequentially. We remain optimistic regarding an eventual recovery of travel and tourism in the US and especially in Las Vegas,” said Reeg.
A casino rebound, when the coronavirus score has been settled, will go some way to paying down a good chunk of Caesars’ debt, recorded as of September 30, 2020 at USS$16.2bn (£12.32bn/€13.64bn).