Caesars Entertainment Announces Horseshoe Casino Launch and Digital Growth in Q2 2024

Caesars Entertainment, a prominent player in the casino and gaming industry, recently concluded its earnings call for the second quarter of 2024. The call, led by Eric Hession, President of Caesars Sports and Online, and Tom Reeg, CEO of Caesars Entertainment, unveiled pivotal developments and provided insights into the company’s performance and strategic direction. This quarter’s discussions revealed significant updates, including the introduction of an iCasino Horseshoe, and an in-depth analysis of the company’s financial standing and growth prospects.

The Launch of Horseshoe Casino

The most notable announcement from the call was the confirmation of the new online branch of the established Horseshoe Casino. This brand, which will officially debut in Michigan in September, represents a strategic move for Caesars Entertainment. Earlier in the year, Caesars had revealed its intention to acquire Wynn’s licenses in Michigan and launch a new online casino. However, the specifics of the new brand had remained under wraps until now. Hession disclosed that the new casino would be branded as Horseshoe Casino, a name with a legacy in the gaming industry.

Hession provided clarity on the approach to launching Horseshoe Casino. Unlike the rapid rollout strategy used for Caesars Online Casino, which launched as a casino-centric app last August, the Horseshoe Casino will be introduced more gradually. The plan involves rolling out the brand state-by-state, beginning with Michigan, and expanding to additional states over the course of the year. By the first quarter of 2025, Horseshoe Casino will reach Ontario. Hession tempered expectations, acknowledging that while the Horseshoe brand is strong, it is unlikely to achieve the same level of success or market share as Caesars Online Casino, which benefits from a head start of nearly a year.

Turning to the financials, Caesars reported a challenging second quarter. The company recorded a net loss of $122 million, a stark contrast to the $920 million net income reported for the same period in the previous year. This decline was largely attributed to a $940 million valuation allowance against deferred tax assets related to REIT leases. Despite these financial hurdles, Caesars’ digital segment showed promising performance.

The digital segment, which includes online casino operations, demonstrated substantial growth. For Q2 2024, Caesars’ digital division achieved an adjusted EBITDA of $40 million, a significant increase from $11 million in the same quarter of 2023. Net revenues for the digital segment also rose to $276 million, up from $216 million the previous year. Notably, the digital division generated $4 million in net income, which has helped reduce the year-to-date losses for the segment to $30 million.

Sports Betting and Strategic Insights

While the online casino segment is thriving, Caesars’ sports betting operations are expected to grow at a more measured pace. Hession indicated that sports betting growth would likely stabilize around 20%, reflecting a more gradual expansion compared to previous rapid growth. The company remains optimistic about the long-term prospects of its sports betting operations, but it is clear that the online casino segment is driving more immediate revenue growth.

In addition to these insights, Hession discussed the impact of several high-value team sponsorship deals made in 2021, which are set to expire in 2026. These deals, while costly, are anticipated to improve the digital segment’s balance sheet significantly once they are no longer a financial burden.

The earnings call also touched on the World Series of Poker (WSOP), a cornerstone of Caesars’ gaming operations. Hession noted that while the WSOP.com online poker platform contributes to the company’s revenue, it does not generate substantial profits. The primary revenue streams for WSOP include media rights, live events, and licensing deals, with online poker representing a smaller portion of the financial picture.

Addressing rumors regarding potential mergers and acquisitions, CEO Tom Reeg firmly dismissed any interest in acquiring Penn Entertainment. Reeg clarified that Caesars is not involved in any discussions related to Penn and emphasized that while the company remains open to selling certain aspects of its business, specific brands such as WSOP were not identified as potential divestitures.

Source:

”Caesars to roll out Horseshoe online casino brand in Michigan this fall”, sbcamericas.com, July 31, 2024.

”Caesars Entertainment, Inc. Reports Second Quarter 2024 Results”, investor.caesars.com, July 30, 2024.