Good evening. 

• In this earnings extra, Caesars gives an early sight of its Q4 EBITDA numbers as part of a new debt announcement.

• VICI gets a vote of confidence from analysts at CBRE.

• Michigan data for December shows BetMGM on top.

Caesars pre-announcement

Caesars says Q4 digital losses will be down to less than a tenth of last year’s figure, with Las Vegas ahead of EBITDA consensus.

Driving the news: Digital adj. EBITDA is expected to come in ahead of consensus at losses of $4m-$6m, while Las Vegas operating profits will be ahead at $534m-540m or over 11% at midpoint. The earnings pre-announcement comes as Caesars announced an offer for $1.25bn of new bonds and a new $1.75bn debt facility.

• The digital adj. EBITDA loss tumbles from losses of $360m in Q421. Digital revenues are expected to more than double to between $236m and $238m.

• Total adj. EBITDA is expected to come in at $947m-$967m, or 65% at midpoint.

• Analysts suggested regionals will miss consensus with adj. EBITDA of between $440m and $446m.

• In Las Vegas, Truist noted that Caesars said occupancy in Las Vegas was 95.5% in the three months to December, up on Q419.

If not for the Mack: Analysts pointed out the digital performance could have been even better if it wasn’t for the amount paid out to Mattress Mack over the quarter. Ex-his antics, they estimated Caesars would have been in positive territory.

• The team at B Riley now thinks Caesars FY digital EBITDA could be flat this year compared to a consensus of losses of ~$50m.

Allaying fears: On the new debt, Wells Fargo suggested the new money should “help appease equity investors concerned about the 2024/25 maturity stack”. Together the $3bn of new debt will replace the $3.24bn 2024 term loan. Deutsche Bank said the proactive extension of maturities “should help to eliminate a topical discussion amongst investors”.

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Datalines – Michigan

Sports-betting GGR rose 40.6% to $50.4m, with $48.8m coming from mobile. Net revenue came in at $30.8m, up 181% YoY, after $18m of promotions were taken into account. Promotions accounted for 37% of total GGR. iCasino GGR was up 25.5% YoY to $152.8m.

• Sports-betting leaders by GGR: FanDuel led with 43.3% followed by BetMGM (23.2%), DraftKings (18.2%), Caesars (6.7%) and Barstool (2.8%).

• iCasino leaders: BetMGM led with 35.6%, followed by FanDuel (19.0%), DraftKings (17.1%), Caesars (4.7%), WynnBet (3.3%) and Barstool (2.8%).

Analyst takes – VICI

Mission improbable: The gaming REIT has had a busy start to the year with five new investments totaling $3.66bn and a $1bn equity raise, which the analysts at CBRE noted came “in spite of challenging economic and capital market conditions”.

• Indeed, the analyst said that since inception VICI has raised over $20bn of equity in more than a dozen transactions “each at a better price than the previous”.

• It’s an “impressive (and improbable) task given the global pandemic and current macroeconomic headwinds”.

• Wait for it: The track record highlights, according to CBRE, “one of the most critical components of VICI's flywheel” (there it is).

• This gives the company “access to continuous and permanent capital”.

• King Kong: They noted VICI now has “dominant scale”, apparent since the MGM Growth Properties deal.

• “VICI's growing tenant network offers greater visibility and better information flow that helps build a larger and more sustainable growth pipeline.”

Calendar

• Jan 25: Las Vegas Sands

• Jan 26: Rank, BetMGM

• Feb 1: Entain

• Feb 2: Evolution, Penn Entertainment, Boyd Gaming

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