• Caesars says an ill wind blew through Vegas in Q1.

• In +More: BetMGM’s Dutch launch, AGA’s CEO survey.

• Melco Resorts punts on a capital-light Sri Lanka IR.

• Lottomatica cements its no. 1 position in Italy.

Don't blame me, love made me crazy.

Caesars’ Q1 dip

This is not who we are: “We’re not in the habit of delivering quarters that look like this,” said Caesars Entertainment CEO Tom Reeg, after the company reported revenues that fell 3.1% to $2.74bn while adj. EBITDA dropped by 11% to $853m. “This was kind of a kitchen sink-type quarter for us, everything that could go wrong did for us,” he added.

• Blame culture: Reeg pinned the blame for the poor numbers on hold in Las Vegas, bad weather-afflicted regionals and losses from the North Carolina OSB launch.

Go on, kick my butt: Reeg said the hold issue would reverse over time but added it was “not an instance of a few players beating us.” Instead, he said it was “kind of repeated butt kicking, broadly based, throughout the quarter.” “Volumes were great, people are still here,” he added. “We just didn’t hold.”

• Las Vegas “remains very, very strong,” Reeg said but, while he expected positive quarters for the rest of 2024, he wasn’t sure it could make up for the $70m “hole” from Q1.

• Noting the issues with the weather in January on the regional estate and looking at the strength in visitor numbers to Las Vegas, the consumer “on balance” remains healthy and spending is “robust.”

By the numbers: Las Vegas contributed revenues of $1.03bn, down 9%, and adj. EBITDA of $440m, which represented a 17% decline. Regional revenues were off by 1.7% at $1.37bn and adj. EBITDA was down by 3.3% at $433m.

Don’t @ me: Online revenues rose 18.5% to $282m, producing an adj. EBITDA profit of $5m vs. a loss of $4m in the prior-year period. Reeg insisted Caesars was on track to deliver $500m of adj. EBITDA by 2025. He added, however, that whether that would be the total for 2025 or the run-rate by the end of that year was a question where, if the analysts “want to quibble”, he was “willing to have that discussion.”

• “But the idea that we’re not going to do $500m to me looks highly unlikely.”

• He noted that some of the expensive partnerships that are due to start rolling off this year and next were, in terms of costs removed, “significant and material.”

Palace coup: Digital head Eric Hession noted the Caesars Palace iCasino app was now contributing over 50% of revenues from that vertical. He added that iCasino was a “critical component” of the company’s online strategy.

• Reeg said the Caesars Palace business was “doing exactly” what the company anticipated in terms of creating an iGaming customer base that “looks like our database, looks like our physical floors, skews females, skews to slots.”

• He said a second new brand launch would happen before the end of this year. Recall, Caesars recently bought WynnBet’s operation in Michigan in order to gain another iCasino skin.

Out of the blocks: On the launch in North Carolina, Hession said Caesars had enjoyed its fastest rate of new state sign-ups, resulting in a market share of 9%. Reeg said overall the OSB operation had seen “tremendous momentum” despite poor sporting outcomes.

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+More

BetMGM will launch sportsbook operations in the Netherlands, the second European adventure for the brand following its debut in the UK in August last year.

Steady, Eddie: The AGA’s survey of CEO expectations across the gaming sector suggested there is moderator optimism in the boardrooms of the biggest firms, with slower but more sustainable growth evident in the first quarter of 2024 vs. prior years.

The Oakland A’s organization has hired Galatioto Sports Partners to help attract investors to fund its portion of the $1.5bn development costs for the ballpark on the Las Vegas Strip, according to the Las Vegas Sun. The team is hoping to raise $500m.

By the numbers 

Macau: April GGR came in at $2.29bn, up 26% YoY but down nearly 5% sequentially. The total was also 25% down on the April 2019 total. The market wasn’t helped by only one day of the Easter holidays falling within the month.

What we’re reading

“There is no escaping Ozempic and Wegovy.” Denmark’s Novo Nordisk, the developer of the key ingredient in the new generation of weight-loss drugs, is now Europe’s most valuable company. In Bloomberg.

Melco Resorts earnings recap

The new Macau: The latest international adventure for Melco comes via what CEO Lawerence Ho said was a “capital light” JV with the Colombo-listed John Keells Group, which will see the redevelopment and rebranding of a $1bn IR to be called the City of Dreams Sri Lanka. 

• As part of the deal Melco will operate a new casino floor under a 20-year license, which will open in 2025.

• Ho said Sri Lanka was “by far and away” the closest gaming jurisdiction to India.

Kicking in chairs and knocking down tables; Ho said a refurb at Studio City, the restructuring of the company’s outstanding debt, new management at the City of Dreams Macau and a leadership position in premium mass in Macau were among the quarter’s highlights.

• By the numbers: Revenue rose 55% to $1.11bn while adj. EBITDA rose 57% to $299m.

Venture capital firm Yolo Investments manages in excess of €500m in capital across 100 exciting fintech, gaming and blockchain companies. The Yolo Investments' Gaming fund, regulated by the Guernsey Financial Services Commission, has taken positions in fast-growth suppliers and operators, including Dabble and Enteractive. Yolo Investments (yolo.io) wants to hear from readers of this newsletter. Get in touch with your pitch, or for a chat about innovative products which can plug into our investment ecosystem.

Lottomatica earnings recap

Undisputed champion: With the acquisition of SKS now completed, Lottomatica can lay claim to be the market leader in Italy across all online and B&M sports betting and iCasino, with a combined 29% online market share and 41% in retail betting.

• Online, this puts it ahead of Flutter with 21% and Playtech’s Snai with 9%, while in retail it is now over 22% ahead of Snai on 19% and Entain on 16%.

• Revenues ahead of the incorporation of SKS rose 4% to €440m while adj. EBITDA was down 4% to €149.5m.

• Guidance for 2024, helped by the addition of SKS, is now forecast at between €2.02bn and €2.07bn while adj. EBITDA is set to come in at €680m-€700m.

• “The asset is very strong and there’s a very good team and we can work on this asset to also improve the competitive position,” said CEO Guglielmo Angelozzi.

Earnings in brief

NorthStar Gaming: The Canadian online operator partly owned by Playtech issued Q4 and FY24 numbers showing revenue rose over 100% to C$6.5m ($4.7m) in the three months to December, while for the full year revenue was up over threefold to C$19.4m. 

• Recall, NorthStar recently completed a C$3m short-term financing with Playtech to fund its player acquisition attempts in Ontario.

Analyst takes

Street spirit (fade out): After 12 straight quarters of GGR growth since the pandemic in the second quarter of 2021, the team at Deutsche Bank said “cracks have emerged” and noted specifically a bifurcation of the Strip market.

• The high end has performed “very well”, augmented by events including Formula 1 and the Super Bowl, which have “taken control of the narrative.”

• But the lower- to mid-tier properties have “largely peaked and begun to decline.”

Yes Sir, I can boogie: The high-end strength has come from baccarat, which the team said has “essentially carried GGR to positive comps,” but even here DB believed a plateau has been reached. Despite heavy competition, they suggested this is likely to fade “exposing more clearly, the underlying stagnation that is present in the market today.”

• “In general, we think the competition for the high-end gaming patron is intensifying, which is usually a signal that the market, in this case the baccarat segment, is reaching an apex,” the team added.

Calendar

• May 1: MGM Resorts, Bally’s, Rush Street

• May 2: Penn Entertainment, VICI, DraftKings (earnings)

• May 3: DraftKings (call)

• May 6: E+M Capital Markets Forum, NYSE

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