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US – Caesars reports strong Las Vegas results with hotels at record levels

By - 6 August 2019

Having announced its merger with Eldorado Resorts to create the largest owner and operator of US gaming assets, Caesar’s Entertainment recorded its best ever performance in Las Vegas hotels in the second quarter.

Overall, net revenues increased $103m driven primarily by an $82m increase due to the post-acquisition results of Centaur. Excluding Centaur, Other US net revenues were $935mfor the second quarter of 2019, a decrease of $47m from 2018 primarily due to increased competition in Atlantic City and Southern Indiana, and to a lesser extent in Iowa and Pennsylvania. Las Vegas net revenues increased $10m primarily due to higher hotel and food and beverage revenues. This was partially offset by unfavorable hold predominately at Caesars Palace and weak table game volumes, excluding baccarat.

Income from operations decreased $13m primarily due to a $50m impairment charge related to gaming rights at Caesars Entertainment UK properties.

Tony Rodio, CEO of Caesars Entertainment, said: “Caesars delivered solid financial results in the second quarter driven by the contribution from Centaur and strength from our Las Vegas hotel and food and beverage businesses. Our Las Vegas performance was the result of strong group and leisure demand, which produced an all-time quarterly record for hotel cash revenue and occupancy for the second consecutive quarter. These results were partially offset by competitive pressures in Atlantic City and other parts of our regional portfolio as well as unfavorable hold predominately at Caesars Palace.

“As we work toward successful completion of the proposed merger with Eldorado Resorts, the management team and I remain focused on improving the company’s operations and financial profile through incremental revenue opportunities and operating efficiencies. I’m confident that the proposed transaction will create an industry leading platform poised to succeed in our dynamic industry.”

Chief Financial Officer Eric Hession added: “In the second quarter, our Las Vegas business established record performance for both cash hotel revenue and occupancy breaking the records previously established in the first quarter of this year. Las Vegas gaming revenues decreased 6.1 per cent year-over-year due to $18m in unfavorable year-over-year hold. However, we’re pleased that total gaming volume increased three per cent year-over-year with table games volumes up one per cent and slot volume up slightly more than three per cent.”

Favourable legislative decisions allowed Caesars to further expand its sports betting presence across its portfolio in the second quarter. In the Midwest, the company is currently designing seven sports books across its Indiana properties, and will look to add new sports books in both Illinois and Iowa. Caesars opened two sports books for the Oneida Indian Nation in New York. The company also opened a sports book in Pennsylvania.

Mr. Rodio explained: “Our footprint now totals 20 source books across four states and we expect to be operational in seven states by year-end. During the quarter, several states passed gaming legislation that directly impacts our operations. In Indiana, we are very excited that our Centaur properties will be allowed to offer table games starting in 2020.”
He added that Caesar’s was currently designing and constructing nine sports books across Indiana and Iowa which all are expected to be operational in September of 2019.

“We intend to develop additional sports books in Illinois, which we hope to have operational once the regulations are in place,” he said. Additionally, the United Indian Nation in partnership with us recently opened sports books at Turning Stone Resort Casino in Verona, New York and Point Place Casino in Bridgeport, New York. We are also pleased that North Carolina has legalized sports betting and we are working with our Cherokee Nation partners to roll out our product as quickly as possible.”

During the second quarter of 2019, Caesars was impacted by legislative changes in Indiana, Louisiana, and Illinois. In May, the State of Indiana approved gaming legislation that enables the Company to offer table games at its Centaur properties beginning January 1, 2020. Additionally, the legislation allows Caesars to operate sports betting at its casinos and off-track-betting facilities in Indiana. On June 7, 2019, the governor of the State of Louisiana signed into effect legislation that would enable a 30-year extension — to 2054 — of the Harrah’s New Orleans operating contract upon certain conditions being met by Caesars, including an investment of $325m in the property by 2024 to improve the facility, add new restaurants, and construct a new hotel. In June, the State of Illinois enacted legislation significantly expanding gaming operations throughout the state, which is expected to adversely affect the company’s existing Illinois and Northern Indiana properties.

Mr. Rodio added: “I’m confident that combining Eldorado is attractive platform of regional gaming properties with our best-in-class Caesars reward program, iconic Las Vegas assets and attractive regional portfolio will result in the creation of a leading domestic gaming platform poised for a long-term success. We are working together with Eldorado to complete this transaction, which is expected to close in the first half of 2020 subject to receipt of shareholder and applicable gaming and regulatory approvals along with other customary closing conditions.”

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