The CEO of Caesars Entertainment told Wall Street analysts and journalists Tuesday that the customers coming to Las Vegas for Formula 1 race in November and the Super Bowl in February are higher-end players and will help the bottom line compared to those who’ve visited in previous years.
Tom Reeg built on his first-quarter comments in which he said Las Vegas sporting events and entertainment are displacing lower-tier players, a trendline that will boost the financial performance of casino operators in the future.
Since the Super Bowl is a perennial destination for visitors to Las Vegas, some have suggested that hosting the game might not have as big a financial impact as it could.
“Super Bowl 2024 is exceedingly strong from a demand standpoint,” Reeg said. “In terms of booked capacity versus a typical Super Bowl, we’re dramatically ahead and at higher rates than typically at this time. And if you look anecdotally at who’ll be getting our tickets, the average customer who comes to the games with us is substantially more valuable than prior Super Bowls.”
Caesars reported that in Las Vegas during the second quarter, revenue fell 1.2%, net income was down 16%, and adjusted EBITDA dropped 6.4%. However, Reeg noted no “discernable impact” from consumers of recessionary concerns.
Reeg blamed the declines on tough comparisons to the second quarter of 2022, a lower hold on baccarat in June, and a 2022 convention that comes to their properties every three years.
Reeg said, “We had a very strong July. We feel pretty good about the remainder of the third quarter and the fourth quarter we have Formula One and the Super Bowl in the first quarter (of 2024). I said in the past that I think Formula One is a 5% lift, not including what happens at the tables. It’s just from increased hotel and food-and-beverage revenue.
“Demand for F1, particularly at the high end, has been very strong. We feel good about our positioning ahead of the event and we’re anxious like everybody else to see how this event plays out as we look to future years.”
President and CEO Anthony Carano highlighted the same-store adjusted EBITDA of $1 billion versus $978 million for the prior-year period companywide. Caesars was buoyed by its digital segment, the $216 million in revenue up 42.1%.
“Operating trends within our properties will hopefully remain strong despite a tough year-over-year comparison driven by a single large convention event. Our Las Vegas segment delivered its second-best second-quarter adjusted EBITDA of $512 million,” Carano said. “Our regional portfolio delivered $508 million adjusted EBITDA, down slightly from last year. Our digital segment reported $11 million in adjusted EBITDA, the segment’s first quarter of profitability since we rebranded to Caesars Sportsbook in the third quarter of 2021.”
Demand in Las Vegas remained robust during the second quarter, with occupancy growth to 97.6%. Las Vegas revenues fell 1% due to “exceptional performance” in 2022 in the group segment, Carano said.
“Las Vegas continues to benefit from strong leisure and casino demand, the return of international guests, and an exciting events calendar and continued strength of the group and convention business in 2023,” Carano said. “While our group and convention segment EBITDA in Las Vegas was down year over year in 2023, pace for the remainder of the year points to another record EBITDA year for the segment.”
Reeg said the second quarter is a “testament to diversification” with a number of regional properties under competitive pressure due to openings.
“Tunica is facing a property that opened about an hour closer to Memphis,” Reeg said. “Council Bluffs has been pressured by casino capacity added in Nebraska. We have Chicago properties both in Illinois and Indiana impacted by the expanded casino offerings in Illinois.”
Reeg said the third quarter is off to a strong start and based on July results, Caesars will beat the third quarter of 2022. The company is benefiting from capital improvements at properties across the country, he said.
