Caesars Entertainment Inc. saw net revenues fall 4% year-over-year in the first quarter of 2024 as losses mounted and market expectations weren’t met.
The casino, online gaming, and resort company reported revenue of $2.74 billion, down from $2.83 billion year-over-year, for the quarter ending March 31. Caesars citied a low handle on table games in Las Vegas, poor winter weather conditions across the regional sector, and promotion losses from the North Carolina online sports betting launch as setbacks.
The good news for Caesars is that the digital division, which includes online sports betting and iGaming, saw revenue rise nearly 19% year-over-year to $282 million while also generating $5 million of adjusted EBITDA in Q1.
For all sectors combined, EBITDA fell year-over-year from $958 million to $853 million. The biggest change came from Las Vegas, where EBITDA dropped 17% from the same quarter in 2023.
“Moving past the first-quarter headwinds, we remain optimistic toward improved operating results throughout the balance of the year,” Caesars Entertainment CEO Tom Reeg said.
Online momentum
Caesars is now operating sports betting in 31 North American jurisdictions with 26 running mobile wagering, which created “tremendous momentum” in the first quarter, according to Reeg.
Online sports betting generated 23% net revenue growth, and the North Carolina sports betting launch on March 11 went better than expected.
Caesars Sportsbook saw a faster customer sign-up pace in the Tar Heel State than normal. Market share for the first month was 9%, about three times more than Caesars has seen in other state launches without any marketing changes.
Take away losses from promotional costs, and sports betting for Caesars was up 33% year-over-year.
“Excluding the effects from new state launches, our net revenue of flow through EBITDA was over 50%, consistent with our expectations and setting the stage for our continued profitable growth in the years ahead," said Eric Hession, CEO of Caesars Digital.
Moving forward, Caesars is working to enable shared wallets across state lines in all jurisdictions by the middle of 2025. Digital also plans to improve same-game parlays, live wagering, and internal pricing this year.
Up and down
The online sports betting hold grew 80 basis points year-over-year, despite the public cleaning up on the Kansas City Chiefs in the Super Bowl and favorites Connecticut and South Carolina winning the NCAA basketball championships.
“However, despite the increase, it was at the lower end of our expected range due to less favorable results around the Super Bowl and March Madness,” Hession said. “Despite the unfavorable large-event outcomes, parlay rates improved approximately 400 basis points year-over-year during the quarter, driven by our improved user interface and pricing up time.”
However, the gains from online were “offset slightly” by retail losses. Reeg said the brick-and-mortar hold was down compared to Q1 2023.
iGaming flourishes
The company's online casino saw 54% net revenue growth in Q1 and set new quarterly records for active customers, volume, gross gaming revenue, and net gaming revenue behind the Caesars Palace online app, which launched seven months ago.
The new product makes up more than 50% of net revenue for the segment already.
“I feel fantastic about where digital is today,” Reeg said.
Caesars will continue to add new game content to the app, improve the functionality, and is on pace to launch a new iCasino brand in the second half of 2024.
In-person casinos didn’t fare as well in Q1. Las Vegas table games typically generate a hold of 20-23%, but that fell to 15% in the quarter.
It wasn’t just a few heavy hitters. Reed said Caesars took a “repeated butt kicking broadly based throughout the quarter.”
Caesars is confident that table-game figures will rise considerably in the final three quarters of 2024 as the Las Vegas business continues to be strong.
