Caesars Reports Underwhelming Fourth-Quarter Earnings

Caesars Entertainment is out with its fourth quarter earnings report, and it revealed a slightly underwhelming three-month period for the U.S. gambling giant that's typically among the best sportsbooks.

Optimism was a theme for the company ahead of releasing its most recent quarter figures. Caesars Entertainment had been in the midst of five straight quarters of meeting or exceeding consensus estimates.

The company ended up joining other sports betting sites in reporting disappointing Q4 figures. PENN Entertainment also reported an unflattering performance, despite a highly touted recent partnership with ESPN BET.

Getting into the numbers

Caesars Entertainment anticipated seeing growth in all sectors from its Q4 earnings report. It was expected to build upon a very good Q3 reporting period when growth was seen in all three phases of the business - hotel, casino, and online gaming.

That didn't happen. Caesars' Q4 revenues were flat at a reported $2.83 billion for the three-month period. While up ever-so-slightly from the $2.82 billion from Q4 of 2022, that figure did miss analysts' projected revenues of $2.85 billion by 0.2%.

Caesars Entertainment reported a net loss of $72 million during Q4, which also missed consensus estimates for the company. A $72-million loss is far better than the $148 million in losses reported in Q4 of 2022, but well short of what industry insiders expected.

The company endured an adjusted loss per share of 34 cents during the quarter, far from the consensus estimate loss of three cents per share.

Good news from the report: Caesars Digital

While mostly underwhelming, the Caesars Entertainment Q4 report did identify some positives. Caesars Digital, which includes one of the best sports betting apps, was a bright spot for the company during the three-month period.

Net revenues from Caesars sportsbook and its online gaming sector came in at $304 million, up from $237 million in the same quarter the previous year. Adjusted EBITDA figures for the period came in at plus-$29 million, a vast improvement from the negative $5 million from Q4 of 2022. 

“On our Q4 call last year, I talked about how the benefits of scaling net revenues in our digital segment would drive improved profitability given the high flow-through nature of this business," said Eric Hession, the president of Caesars Sports and Online Gaming. "This transpired as strong revenue growth in Q4 and for the full year of 2023 led to several notable records within our digital business.”

“iGaming growth accelerated throughout the quarter and delivered over 50% growth in volume led by Caesars Palace Online, which contributed to our first quarter of $100 million GGR for the segment,” he continued.

Looking forward

Caesars should be poised for success going forward, despite an underwhelming Q4. 

The company has done major renovations at a few of its properties, including the Versailles Tower of Paris in Las Vegas. Those renos functioned as a major drain to the company's bottom line in Q4, as construction costs were factored in and some 650 rooms were empty for the entire quarter. 

Also, there was Caesars' acquisition of WynnBET's Michigan sports betting license in partnership with the Sault Ste. Marie Tribe of Chippewa Indians. The deal not only bolsters its sports betting presence in the Wolverine State, but it also expands Caesars' online casino offerings in the state.