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Caesars Online Casino Strategy Drives Higher Digital Earnings in Q3

Caesars held its Q3 earnings call this week, with positive results in its digital business thanks to its online casino strategy, including the launch of Horseshoe Casino.

Caesars Entertainment logo over digital chip
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Caesars Entertainment’s brand-first online casino strategy appears to be paying off, as the company posted record-high quarterly net income for its digital division. The company announced its Q3 results in an earnings call on Oct. 29.

Caesars Digital’s revenue thrived in the third quarter, setting a company quarterly record for Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), with net income up 40.9% year-over-year.

Caesars online casino has been expanding its range of brands in the US to coordinate with its retail portfolio. Last year, it introduced a flagship standalone online casino brand, Caesars Palace, to cater to users turned off by the sports-first focus of Caesars Sportsbook & Casino. 

This month, it launched a secondary brand, Horseshoe Online Casino, in Michigan and then Pennsylvania. Its other brands include Tropicana, Harrah’s, and WSOP.com online poker—although it has sold the World Series of Poker to GGPoker owner NSUS, it continues to operate the US-facing network of WSOP sites.

Overall EBITDA fell 4% year-over-year

The strong digital showing wasn’t enough to help Caesars top its Q3 2023 earnings report.

Overall, Caesars Entertainment’s Q3 adjusted EBITDA dropped 4% year-over-year. CEO Tom Reeg said Caesars regional properties were “negatively impacted by new competition, construction disruption and difficult comparisons versus the prior year.”

Falling short of Wall Street consensus estimates for Q3, Caesars Entertainment stock fell around 3% in post-market trading following the earnings announcement.

Caesars focus driving casino’s digital growth 

Caesars’ renewed focus this year on its iGaming products appears to be paying off. The Q3 boost built upon strong Q2 numbers for Caesars digital segment, which saw a 27.8% year-over-year increase.

In Q3 this year, Caesars Digital saw $303 million in net revenue, compared to $215 million in the same period last year. The digital sector’s adjusted EBITDA for Q3 jumped to a record ​​$52 million, up from just $2 million in Q3 2023.

Caesars Digital’s net income after expenses last quarter was $11 million. By comparison, Caesars posted a $29 million net income loss in 2023’s Q3.

During the earnings call, Eric Hession, President of Caesars Sports & Online Gaming, said the company’s online casino products have been driving the digital surge.

“In our iGaming segment, our net revenue growth rate accelerated in the quarter to 83%, driven by a 55% increase in volume and a 40 basis point increase in year-over-year hold.”

Horseshoe brand helps keep online momentum rolling

Reeg said he was “tremendously pleased” with Caesars’ digital progress and was optimistic that the rollout of the Horseshoe online casino will help continue the momentum into next quarter.

After debuting in Michigan in early October, Caesars launched Horseshoe Casino in Pennsylvania earlier this week. Horseshoe is expected to be rolled out in West Virginia soon, then in New Jersey and Ontario by the end of the year.

Early data from Michigan, where Horseshoe took over WynnBET‘s online casino license, showed that it not only retained Wynn’s customers, but also added to the customer base, Reeg said. He added:

“We’ve recently launched (Horseshoe) in Pennsylvania and West Virginia and expect that to be a further building block in iCasino … (I) feel very, very good about what’s happening there.”

Through the first three quarters of this year, total revenue from the Caesars Palace and Tropicana online casinos in Pennsylvania has already topped Caesars’ 2023 total revenue. Horseshoe’s addition to the market should nudge Caesars’ numbers up even more in Q4 and, potentially, beyond.

 

Photo by PlayUSA
Graphic from Caesars Entertainment

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