Caesars set to report significant improvement in Q4 digital division losses

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Caesars is set to report dramatic improvements in losses from its digital gaming division during Q4 2022 compared to the same time frame from a year earlier.

Caesars Entertainment is set to announce between ($4m) and ($6m) in Q4 adjusted EBITDA 2022 losses from its Caesars Digital division, according to an 8-K form filed Monday. This compares to ($38m) in AEBITDA losses from Q3 2022 and ($305m) in Q4 2021.

In Q4 2022, Caesars online sports betting and casino entities grossed between $236m and $238m, more than double the $116m in income from Q4 2021. Caesars Digital’s net income improved to losses of between ($36m) and ($34m) during the quarter, compared to ($360m) in losses during that same time in 2021.

These figures come as part of a disclosure announcing announced that the company intends to raise $1.25bn in new debt through senior secured notes due in 2030. The company’s formal earnings announcement is expected sometime in February.

Caesars continues loss turnaround

Monday’s announcement continues Caesars’ improving bottom line for its digital division after more than $1bn in losses.

Like its other major competitors, Caesars spent hundreds of millions on advertising, free bets and other promos in the past couple years. Upon completing its acquisition and subsequent rebranding of William Hill in 2021, Caesars began a massive marketing blitz in an attempt to acquire new players.

Caesars offered as much as $3,000 in “risk-free” bets to first-time New York players in January 2022, one of the highest such offers of any operator in the country. The company’s advertisements were also seemingly ubiquitous in New York – and many states that didn’t even offer legal sports betting.

Facing difficult macro-level stock market conditions, and under increasing pressure from shareholders, most US sportsbooks began announcing plans to curtail spending and pivot toward profitability beginning in 2022. Caesars CEO Tom Reeg said in his company’s most recent earnings call that Caesars digital division was AEBITDA positive for the month of October, the first full month it reported earnings in the black.

Though it appears Caesars Digital will fall short of profitability in Q4 2022, Monday’s filing indicates it is closer than ever to its full first profitable quarter, which seems on pace to occur sometime in 2023.

Major operators chase profitably

FanDuel, the US market share leader by gross gaming revenue, was the first major operator to announce a profitable quarter. FanDuel, a subsidiary of European gaming giant Flutter Entertainment and not traded publicly in the US, has not revealed specific financial data, but company officials have said they expect a profitable full-year 2023.

BetMGM, a 50/50 joint venture between MGM Resorts International and European gaming operator Entain, is also nearing a profitable quarter, company officials have said. BetMGM is the third-leading US sportsbook by handle but has found greater success from its online casino gaming division.

DraftKings, the No. 2 sports betting operator by handle, is aiming for a profitable quarter in Q4 2023. The publicly traded digital gaming operator is projecting several hundred million dollars in losses for calendar year 2023 in addition to the more than $3bn in losses it has accrued since 2018.

Penn Entertainment officials said during their company’s Q3 2022 earnings call its Barstool Sportsbook had a profitable October. Barstool, which centers its marketing around its media brand and personalities instead of the massive marketing and promotional spend of its competitors, is projecting to be full-year profitable for calendar year 2023.

About the author

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Ryan Butler

Ryan is a veteran sports betting and iGaming regulation and breaking news journalist based in the US. A two-time Associated Press Sports Editors award winner, he has reported on sports and politics since 2012. He has covered the gaming industry since 2018. Ryan graduated from the University of Florida with a major in Journalism and a minor in Sport Management.

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