- Legal States
Julie Moraine August 7, 2020 3 min read
Caesars Posted Q2 Loss, Will Offset with Convention and Sports
Caesars Entertainment Inc. posted its second quarter financial results Thursday, the first report from the combined entity between Caesars and Eldorado Resorts. The $17.3 billion mega-merger deal was completed July 20, to create a regional gaming giant.
The new Caesars posted $100 million in net loss for the second quarter of 2020, compared to a net income of $18.9 million for the same period the year before, showing clearly the material impact from the casino closures across the US.
“Our second quarter operating trends were negatively impacted as the majority of our properties remained closed during April and May 2020. Our properties began to reopen in late May and early June. All of the combined new Caesars Entertainment, Inc. regional properties are now reopened and we are encouraged by operating trends.”Tom Reeg, CEO, Caesars Entertainment, Inc.
After completing the merger, all operating teams are fully engaged in the integration of the two companies and the execution of the synergy plans, Mr Reeg continued further. Stressing that the safety and security of team members and guests remains top priority within these challenging times, Caesars’ CEO hinted on optimism related to an eventual recovery of the travel and tourism sector in the US and in Las Vegas in particular.
Growth in Group Business Bookings
In the earnings call that followed the announcement of the second quarter results, Mr Reeg further elaborated on the information regarding travel and tourism pick up. It turns out Caesars Entertainment Inc. looks to capitalize on conventions and sports, to offset the casino closure impact reflected in the second quarter report.
Despite group business bookings being severely hit by the virus outbreak, dampening midweek occupancy rates in Las Vegas, Tom Reeg said in the conference call with investors that Caesars booked almost $200 million, compared to $120 million in the same period 2019, with only 15% of these being re-bookings, and most of the events taking place between 6 and 24 months out.
Besides the uptick in convention, sports wagering seems to be the other venue for additional revenue for the company, representing an important casino activity with regards to the return to action by the NBA, NHL and MLB, and the approaching return of the NFL.
The partnership with William Hill US and the launch of several race and sports books by the bookmaker nationwide is another reason for optimism. Tom Reeg expects revenue from the vertical of between $600 million and $700 million in the next year, as well as further refinement to sports betting operations.
Caesars’ plans to sell at least one Strip asset are still intact, but due to the current operating environment, the timeline for the sale may go beyond the initially expected 12 to 18 months from the merger completion, Mr Reeg explained.