In a disastrous start to the year, a US$423 Million Net Loss for Caesars Entertainment Inc is the official figure for the company’s in Q1 2021 despite the firm’s realignment into online gambling business ventures. Although the figures don’t look great, when reading the full story, there is light at the end of the tunnel!
Total revenue reported throughout Q1 of 2021 is $1.7 billion, which in all fairness is not that bad compared to Q1 2020 which reported a slightly higher number of $1.83 billion. Considering people’s fear of visiting public places of entertainment and forced closures or reduced opening hours for many of the brand’s land-based gambling venues, the downturn is not as bad as one might have predicted. The overall drop in revenue is a mere 7%, although no company likes to report losses!
When looking deeper into the figures, Caesars said that its Las Vegas business has been the hardest hit as it only brought in $497 million; a 39.5% drop this quarter compared to the first 3 months of the previous year. However, there is some promise because the company’s regional revenues were met with the good news of a rise of 26.8% ($21.2%) to $1.11 billion.
In other areas of the business, such as Caesars Interactive Entertainment (CIE), only $90 million in revenue came through which is a 29.1% reduction from last year and corporate revenues also took a 20% hit nose-diving to just $4 million. Other income from discontinued operations and non-controlling interests came to around $8 million.
All this totted up, Caesars made an operating profit of $194 million after it forked out a huge $1.51 billion in costs, however, other business and investment expenses for the company came to $696 million ($563 million in interest), leaving a pre-tax loss report of $520 million.
However, the firm received some tax relief to the tune of $79 million to cushion which we can subtract now to give the casino firm an official pre-tax loss of $423 million! meanwhile, there is still no news on whether Ceasars will successfully receive/negotiate a payout for losses covered by its insurance policy in which the firm is currently navigating a civil lawsuit!
Eldorado Is Operating Over 75 Gambling Assets with Many of Them Closed!
The primary cause of the losses is of course land-based casino closures, which a large number of those establishments come via the $18 billion in stock and cash acquisition of Caesars Entertainment by Eldorado Resorts, Inc. This deal completed in June 2020 and since then Eldorado changed its name to Caesars Entertainment Inc. (adding the official publicly floated Inc to the name).
Its 2019 purchase meant the firm picked up 53 additional casinos owned and operated by the original Caesars Entertainment. Had the company not made that purchase, the losses would not be nearly as bad, but at the time no one could have foreseen the up-and-coming Pandemic and you can hardly blame Caesars for its ambition.
The firm also just acquired William Hill, which will also be having an effect on operating costs as Caesars realigns the new venture with its current operations. Plus, we are still yet to see a full reopening of land-based casinos which will begin to happen over the next couple of months. What is likely to happen once the pandemic hermits feel safe, casinos will see an inundated influx of clientele!
There is no doubt that Ceasar Entertainment will get back to profitable ways once the Pandemic draws to a close. Inoculations across regions the firm’s casino establishments operate are well underway while there is a strong focus on its online gambling operations in the US where revenues state-by-state are soaring!