The NFL Draft brought hundreds of thousands of visitors to Las Vegas last week and filled hotel rooms, but the CEO of Caesars Entertainment told Wall Street analysts Tuesday that it didn’t do much to add to the Strip’s already strong gaming revenues.
Chief Executive Tom Reeg made the comments about the three-day Draft weekend during a first-quarter earnings call question about the impact to the second-quarter’s bottom line and how that will compare to the same period in 2023.
“The Draft, in terms of a visitation standpoint for the market, very very strong,” Reeg said. “It was not a particularly great gambling crowd. It was good for visitation, but the casino numbers were kind of average.”
In April, however, Reeg said their Las Vegas properties recorded an all-time room-revenue record.
Las Vegas also reaped the benefit of two April weekends in which the Korean pop band BTS played to sold out crowds at Allegiant Stadium and of hosting the National Association of Broadcasters convention.
Reeg touched on a variety of issues, such as the forthcoming sale of one of Caesars’ Strip properties, and gave an optimistic outlook on the California sports-betting market. The Wall Street Journal reported Tuesday that a coalition of sports betting operators – FanDuel, DraftKings, and BetMGM – submitted more than 1.6 million signatures for a November ballot measure that would allow mobile sports betting in partnership with California tribes. The tribes, who oppose that measure, have already qualified a separate one referendum that allows retail only at tribal casinos and horse tracks.
“Obviously, between our Indian partnerships and our Vegas assets, we have an enormous California database,” Reeg said. “We would expect to be an aggressive competitor for business, if and when that state launches. There are things that we learned in New York in terms of how we would tailor an offer and what we would shoot for. We would expect to be among the leaders in California, like we are in most of the states where we operate.”
As previously reported, Caesars Entertainment has already started the process of selling one of its Las Vegas Strip properties. There was some expectation there would be a sale to announce this spring.
Reeg admitted he previously spoke unartfully three months ago about the timing of the Las Vegas asset sale. “I want to be clear,” he said. “We started the process to sell a Las Vegas-Strip asset early in 2022. Documents show you how long the process to reach a definitive agreement lasts, which would put us somewhere in the middle of summer for a confirmation of a transaction. You shouldn’t expect us to give you a play-by-play in the interim. We will be back to you when that’s resolved. Know that it’s in motion.”
Caesars reported first quarter net revenues of $2.3 billion compared to $1.8 billion in the first quarter of 2021. The company said its first-quarter operating results reflect sequential improvement each month of the quarter for revenues and adjusted earnings, with Las Vegas posting an all-time first-quarter adjusted-earnings record, and the regional segment delivering “solid” adjusted earnings and margin growth. Consumer and convention trends remain healthy and Reeg said they’re optimistic about the rest of the year.
Investors are always waiting for “the next shoe to drop,” from the effects of inflation and the economy. The industry has been living with significant inflation for about a year and has seen “no real impact” on gaming spending, Reeg said.
“We just had a quarter where GDP was down 1 ½ points and the business of casinos held up quite well,” Reeg said. “I can’t tell you what’s going to happen in September or December or March, but the resilience of this business and casino customers, especially, has been extraordinary. None of us would have imagined that we would shut our doors for months at a time. Nobody knew what would happen when we reopened. I look at other sectors in travel and entertainment, but the level of demand that has come back here has just been great to see. As I walk through our properties now, this feels like what we were buying when we announced this deal back in June 2019. We’re super-excited to see where it goes from here.”
In July 2020, Eldorado Resorts closed on its deal to acquire Caesars for $17.3 billion.
“I know there’s a lot of concern about what’s going on with the consumer and what’s going to happen around the corner, but I can’t stress enough that this business, particularly in Vegas right now, is operating and generating as much cash as it ever has,” Reeg said. “We feel very good about the balance of the year.”
