Caesars Q2 2022 aided by rebounding US casino sector as digital losses continue

Caesars has once again defended its digital division despite registering its second consecutive quarter of net losses and negative revenue during Q2 2022.

Releasing its financial results for the period, the Las Vegas-headquartered operator reported a $116m net loss which reduced the $152m net revenue positive figure to just $36m.

This figure does not account for Caesars Digital’s adjusted EBITDA losses, which amounted to $69m during Q2.

However, these losses are substantively less than those reported during Q1, when the firm reported a $554m net loss and a $56m negative revenue figure, something alluded to by Caesars CEO Tom Reeg in a statement accompanying the results.

“Our second quarter results reflect a consolidated EBITDA record for our brick-and-mortar properties led by an all-time quarterly EBITDA record in Las Vegas and continued strength in our regional markets when compared to 2019,” Reeg explained.

“Operating results in our digital segment improved dramatically versus the first quarter and we are optimistic regarding trends in this segment for the balance of the year,” he added.

Elaborating on this during the Q2 earnings call, Caesars Entertainment CFO Eric Hession highlighted the “significant” improvement in digital divisional revenue, referencing the reduction in marketing spend made by the business.

“Our strong gains in unaided brand awareness have allowed us to scale back our brand-related marketing spend. That reduction, in combination with the reduced promotional investment environment, translated into steadily improving results throughout the quarter,” he explained.

Caesars’ strong Q1 2022 losses were punctuated by increased promotional activity to support its sportsbook launches in the battleground states of Louisiana and New York, where early market share gains subsided following the reduction in promotional spend.

Addressing the reduction in marketing spend and its resultant effects on revenue, Hession revealed Caesars would unveil a number of significant product enhancements during H2 2022, in areas including cash out speed, customer services, parlay and alternative line markets.

“We also anticipate converting all of our Caesars’ branded apps and sportsbooks to our Liberty tech stack by the end of 2022, really enhancing the customer experience,” Hession said.

“In addition, our marketing teams will have new and enhanced ways to deliver offers and promotions to customers, ensuring that they receive them in the most cost-effective way.

“We continue to believe that scale is important for our digital sports betting and icasino and poker offerings and pending regulatory approvals plan to expand into states and jurisdictions where allowed,” he added.

At a wider group level, Caesars’ Q2 2022 revenue rose by 12% year on year during Q2 to $2.8bn, with the firm reporting a net loss of $123m over the same period.

Adjusted EBITDA at a group level fell to $978m from a prior 2021 high of $1bn.

Divisionally, Caesars’ Las Vegas division was the big winner during Q2, posting a 33.6% year-on-year increase in net revenue to $1.14bn and net income of $313m.

Its regional casino property division posted Q2 2022 net revenue of $1.4bn, down 4.1% YOY from the same period last year, while regional net income fell 38% to $145m over the same period.