Despite posting an overall $9 million third-quarter loss, Caesars’ digital gaming arm was up significantly from last year, and projections are optimistic for future growth in the mobile gaming industry.
Bright Future for Mobile Gaming
Caesars’ third-quarter revenues of $2.87 billion fell short of the $2.91 billion analysts had anticipated, and overall year-over-year profits declined 3.33%. However, the company’s digital sector made dramatic gains, revealing a 40.9% increase in net revenues with $303 million generated during the most recent quarter.
“I think the future is very bright for our digital business,” Caesars CEO Tom Reeg said. “I think that business is going to end up generating a hell of a lot more than the $500 million target everyone has been wringing their hands about for the last three years. We feel very good about that.”
Caesars digital gaming is a combination of its mobile sports betting app available in 32 North American markets, in addition to its online casino (iGaming) presence in Pennsylvania, West Virginia, New Jersey, Michigan, and Ontario. And it was the company’s iGaming revenues that stole the show, up 83% from Q3 2023, which was attributed to a 40-basis point increase and volume that showed a 55% increase.
“With this performance, we have now generated trailing 12 months EBITDA of $126 million,” said Caesars president of sports and online iGaming, Eric Hession. “Our net revenue flow through to EBITDA in the quarter was slightly above our planned 50% range.”
The company’s second online casino brand, Horseshoe iGaming, has already launched in Michigan, Pennsylvania, and West Virginia, with rollouts in New Jersey and Ontario expected by the end of the year. This parallel iGaming brand is expected to bolster its online casino profits even further.
“Tremendously pleased with the way digital has been coming together,” Reeg said. “We had been outpacing our peers in growth by about two times coming into the quarter. I’d guess three times in the third quarter.”
Sports Betting Rises & WSOP Sold
Although much of the emphasis was on the company’s iGaming success, Caesars also had a better-than-expected quarter in the mobile sports betting realm. Revenues increased 36% from Q3 2023, which was due to a higher hold (win rate) of 8.6%, nearly two points above last year at this time.
“Given our roadmap and our customers’ receptivity to the enhanced parlay options, we now believe that achieving a structural hold above a 10% threshold is achievable in the next few years,” Hession said.
An ambitious marketing campaign planted in April reaped lofty results in the summer and early fall, which the company believes will continue now that the NFL and college football seasons are in full swing.
Caesars also announced the closing of the sale of its WSOP brand to the NSUS Group for $500 million. The deal provided an infusion of $250 million upfront, with the remaining $250 million in a promissory note to be paid out over five years.
However, Caesars is not divorcing itself from the brand as it continues to hold the rights to the WSOP main event as well as other high-profile brand tournaments. A license from NSUS will also be sought to launch WSOP online poker sites in Nevada, New Jersey, Michigan, and Pennsylvania.
