Execs talk about impact of F1, Versailles Tower, Culinary contract

LAS VEGAS (KLAS) — After nearly a billion dollars in net revenue came from online betting in 2023, Caesars Entertainment Inc. has even higher expectations for digital casinos in 2024.

Caesars Entertainment reported its digital gaming segment pulled in $973 million for the year — a 77.5% improvement over 2022 — and the Caesars Palace iCasino app is going to get some company. Caesars is partnering with the Sault Ste. Marie Tribe of Chippewa Indians as it takes over WynnBET’s operations in Michigan. The venture will add a different offering for Caesars’ online customers, pending regulatory approval.

Anthony Carano, president and chief operating officer, called it a breakout year for digital gaming.

“We’re particularly excited about what’s going on in iCasino,” according to CEO Tom Reeg.

The announcement came just ahead of Caesars Entertainment’s fourth quarter/full-year earnings call with analysts on Tuesday.

Caesars produced $11.5 billion in net revenues for the year, compared to $10.8 billion in 2022. The fourth quarter brought $2.83 billion, just ahead of 2022’s $2.82 billion.

It was the latest in glowing reports from casino giants MGM Resorts International, Wynn Resorts, Red Rock Resorts and Boyd Gaming as casinos cashed in during a record year. MGM and Wynn reported big boosts from the F1 Las Vegas Grand Prix, but Reeg was a little more reserved.

“Everybody is aware that if only a few buildings in the market benefit from this, it’s not going to be a super long-term event,” he said. Caesars Palace and Paris Las Vegas — the two Caesars properties right on the track on the Las Vegas Strip — shared in the high-end success of the event, but adjustments at other resorts are sure to come in this year’s race. The company was predicting a 5% boost in profits, but it came in around 4%.

“The lowest event ticket was pricey by any definition,” Reeg said. This time around, he expects “more approachable participation.”

And it could have been better for Caesars Entertainment. Reeg went through some of the factors that kept the company from posting even higher numbers.

• When Caesars began socking money away to pay for employee raises that were part of the Culinary Union contracts approved beginning in November, they had estimated lower amounts. A “catch-up” payment was taken out of revenues.
• “The Versailles Tower that we were transforming at Horseshoe into the Versailles Tower at Paris. Those rooms were entirely offline in the quarter, so we had 65,000 fewer room nights at $200 ADR (average daily rate),” Reeg said. The project isn’t quite finished. “We’re building a bridge that connects that tower to the old Horseshoe — to Paris,” he said.
• A $20 million hit in November came from casinos being on the wrong side of bets as gamblers exacted some revenge.
• Construction disrupted business at the company’s regional properties in New Orleans and Indiana.

With much of the construction behind them, executives are expecting a solid performance in 2024.

Analysts seemed skeptical about Caesars improving on 2023’s record numbers, but Reeg said it would produce higher profits in Las Vegas and its regional properties.

If revenues are going to be so good — again — does that put Caesars in the position of buying or selling a Las Vegas Strip property?

More likely, Caesars would reduce its debt levels and buy back stock, Reeg said. But he left the door open.

“Everything’s for sale every day in a public company, but we’re not anticipating doing anything on our end,” Reeg said.