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Caesars Reports First Positive Numbers From Online Gambling Products

Written By Derek Helling on August 2, 2023 - Last Updated on February 16, 2024
hand drawing upward arrow on glass with caesars logo and the word profit

The ultimate goal of a business, turning a profit, is simple. However, it often proves just as elusive. For Caesars Entertainment, that has been the case in terms of its real-money online casino and online sports betting division.

That is no longer completely elusive for Caesars, though, as displayed in the company’s most recent quarterly earnings. While realizing a positive net income from Caesars Digital might not have been completely unexpected, questions remain about how sustainable the result is and whether Caesars can build on it.

Caesars shares Q2 2023 results with investors

On Tuesday, Caesars reported its earnings for the second quarter of 2023. CEO Tom Reeg summed up the report in a news release:

“The second quarter of 2023 reflected continued strength in our business,” Reeg said. “Demand remains strong in both Las Vegas and our regional markets. Caesars Digital posted its first quarter of positive adjusted EBITDA since our rebranding to Caesars Sportsbook in the third quarter of 2021. Our capital investments are generating stronger than expected returns based on recent new property openings.”

Among the openings that Reeg referenced was the opening of Caesars Danville in Virginia. Although that facility is a temporary venue while construction on the permanent facility continues, the casino brought in over $12 million in revenue in its first two weeks.

As Reeg said, revenue at Caesars’ other properties held steady. As a result, Caesars saw a marginal improvement compared to the second quarter of 2022 on its bottom line. The revenue total from all divisions for Q2 2023 came to $2.8 billion.

Most of the reason for the increase of about $50 million came from improvement in Caesars Digital’s performance. The arrow had already been pointing up there prior to the second quarter.

Caesars Digital shows 42% revenue increase

Caesars’ Q1 2023 earnings demonstrated significant movement toward actually showing a profit. During that quarter, the division’s adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) shrank to -$4 million, an improvement of 99.3% to the comparable quarter in 2022.

Brands like Caesars Casino, Caesars Sportsbook, Tropicana Casino and WSOP.com combined to produce adjusted EBITDA of $7 million in Q2. Thus, Caesars Digital has shown its first inkling of contributing to the overall company’s bottom line in a positive way. It’s certainly something for Caesars to celebrate as it represents monumental improvement from past quarters.

With all that in mind, there are other numbers to consider.

As the release states, EBITDA is not a generally accepted accounting principles measurement. Its intent is to tell investors how Caesars looks at the division internally. Other measurements, like net income and net revenues, are more objective.

For the quarter, Caesars Digital reported $216 million in net revenues, a 42.1% uptick. That resulted in a net loss of $22 million for the division. That’s about $10 million or around 31.3% better than Q1 of this year. At the same time, it means Caesars still can’t honestly call its online gambling division breakeven, much less profitable.

Caesars has continued to reap the benefits of optimal positioning for Caesars Digital. At the same time, the first quarter of positive net revenues might not be imminent.

Questions for Caesars Digital going forward

Caesars has put itself in the right places at the right time. Online casino numbers from Caesars’ three markets have been strong during the past quarter. For example, June saw the fifth-highest online casino revenue total in Michigan’s history.

If online casino win in that state plus New Jersey and Pennsylvania can continue to climb, Caesars would benefit merely from being in those markets. Anything it can do to improve its share might make its revenue capture more significant, obviously.

However, that is cause for hesitation as well. Revenue is only one side of the profit coin. Expenses are just as prevalent. Part of the reason that Caesars Digital has enjoyed growth in its net income is because it has scaled back its promotional spending for its online gambling products.

That could change in the current quarter. Online sports betting will be in its busiest season with the return of high-profile American football games in the United States. Additionally, Caesars will have a new market in Kentucky.

Caesars is not afraid to spend money to make money in its digital department. Its online casino revenue is the result of prior spending. Also, Caesars was able to launch two new markets in Q1 without harming its progress toward profitability in its digital division.

The forthcoming spending demands are a reason why Caesars Digital may not yet show positive net income in the coming quarter despite momentum moving in that direction. However, future quarters may indeed show a legitimate profit if Caesars spends wisely.

Photo by PlayUSA
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Derek Helling

Derek Helling is the assistant managing editor of PlayUSA. Helling focuses on breaking news, including finance, regulation, and technology in the gaming industry. Helling completed his journalism degree at the University of Iowa and resides in Chicago

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