Caesars Hits Profitability Amid New PA Online Casino App Launch

Caesars Hits Profitability Amid New PA Online Casino App Launch

During a Q2 2023 earnings call, Caesars Entertainment announced it achieved profitability for the first time in years, and launched a standalone PA online casino app in the process. The new platform, Caesars Palace online casino, is targeting the predominant casino player, without dramatically increasing marketing spend.

Caesars outperformed its own targets and the market in Q2, as analysts see the potential for growth in the coming quarters.

Caesars Palace launches as new online casino app in Pennsylvania

Players on Caesars Casino PA no longer have to access online casino games through the sportsbook. To emphasize more of a casino experience, users can download Caesars’ standalone online app called Caesars Palace Casino.

President of Caesars Sports and Online Gaming, Eric Hession, said during the call:

“We’re finally going to have a competitive product out in the market that we can use to work with our existing database. … It was difficult to have that discussion with the customers when they had to go through the sports betting app each time to get to the [online] casino. And so they won’t have that.”

Caesars announced 27% year-over-year growth in online casino revenue. Those numbers would seem to corroborate Caesars’ growing performance in Pennsylvania. Caesars, under the Harrah’s Philadelphia license, recorded $6.8 million in June revenue, the highest ever for the brand in the Keystone State.

Caesars has seen an uptick in revenue since adding Tropicana PA Casino to the license in late April. The company recorded revenue north of $6 million in May, too.

For perspective, here are Caesars’ monthly revenue totals from 2022:

April 2022: $3.5 million
May 2022: $3.2 million
June 2022: $3.7 million

After finishing ahead of licensees such as Parx, Mount Airy and Live! Philadelphia, Caesars is here to stay.

Live dealer games to be ‘major part’ of Caesars Casino business

Caesars has a strong table games presence in Pennsylvania. It’s one of three licensees in the state to generate more than 20% of its online casino revenue through table games in 2023.

In May, Caesars proved that PA live dealer games would be part of its arsenal, after partnering with Evolution Gaming. Though Heisson said the new app is designed to improve slot revenue, he confirmed live dealer games have value:

“I’d say it’s definitely going to be a major part of the business going forward. The standalone app is going to have a higher percentage of slot business than table, but it’s still going to have live dealer and the overall table games. We do expect that live dealer product to be a sizable percentage.”

Heisson noted Caesars will, at some point, have branded, customized games soon. It’ll likely come from a third party. He said:

“I don’t see us bringing it in house at this point anywhere in the near future.”

Marketing plans for Caesars Palace online casino PA

Caesars launching the app is specifically targeting the predominant online casino player. It also wants to improve the slot business, too.

Because of the previous online casino setup, Caesars CEO, Tom Reeg, described online casino marketing efforts as “invisible.” Though Caesars is starting a new initiative, don’t expect the company to break the bank for marketing.

“You should expect us to be visible in terms of promoting the app but nothing anywhere close to what you saw when we launched the sports app,” Reeg said.

The new platform is built with marketing capabilities, which makes it easier to reach players.

“We haven’t been able to really do segmented marketing to any degree so far with the existing tech that we had,” Heisson said. “The new system that we have will allow us to create segmentation and it’ll allow us to reinvest, like we do on the [retail] casino side and to use a lot of those experiences.”

Caesars Entertainment Q2 2023 earnings performance

Caesars outperformed earnings and revenue estimates in Q2 2023. Here are some key highlights from the quarter:

Net revenues of $2.9 billion versus $2.8 billion for the comparable prior-year period.
Net income of $920 million compared to net loss of $123 million for the comparable prior-year period, with the increase primarily driven by a release of $940 million of valuation allowance against deferred tax assets associated with our REIT leases.
Adjusted EBITDA of $1.0 billion versus $978 million for the comparable prior-year period.

Caesars’ digital sector also reported adjusted EBITDA of $11 million, compared to a $69 million year-over-year loss.

Caesars’ stock price sits at $54.77, which is down about 5% since closing on Aug. 1, likely because of its Las Vegas revenues reporting a 1% loss.

Even though Caesars’ Las Vegas sector was slightly down, analysts see potential growth for the company. Caesars produced quarterly earnings of $0.82 per share, beating the Zacks Consensus Estimate of $0.33 per share.

According to CNN Business, 16 investment analysts were polled and voted on buying Caesars stock. Analysts see the stock increasing over time:

“The 14 analysts offering 12-month price forecasts for Caesars Entertainment Inc have a median target of 70.50, with a high estimate of 111.00 and a low estimate of 39.00. The median estimate represents a +26.89% increase from the last price of 55.56.”

Caesars has put itself in a great position for future growth.

Author: George Coleman