A trio of US casino firms released third quarter financial report cards on Wednesday, with Caesars Entertainment’s $500.5m loss producing the biggest headlines. While Caesars net revenues rose 0.4% to $2.198b and earnings rose 3% to $512.2m, the company was hit with $419m in mandatory write downs and a 14.5% boost in interest charges on the company’s massive debt load. The company’s actual loss from operations was a comparatively mild $220.6m.
Visits to Caesars casinos in Q3 fell everywhere except Las Vegas, where visits were up marginally, but spend per trip rose 7.8% thanks to “strength in the international high-end segment” aka Chinese baccarat whales. Net revenues in Vegas were up 0.3% to $735.1m and Caesars’ four properties in the Illinois/Indiana region were up 1.3% to $263.5m. Everywhere else was down, including the bad news vortex that is Atlantic City, where revenues fell 4.1% to $477.3m. Caesars’ seven operations in the Louisiana/Mississippi region saw revenues fall 8.7% to $266.2m, the three operations in the Iowa/Missouri region were down 2.4% to $117m and the four Nevada operations outside Vegas fell 4.8% to $134.1m.
Continuing a recent trend, Caesars Interactive was cited as the only real bright spot on the balance sheet, but Caesars continues to bundle its online revenues into the catch-all ‘Other’ category, which also includes income from certain non-consolidated affiliates. ‘Other’ saw revenues rise 186.7% to $62.5m yet produced a net loss of $145.3m due to the fact that ‘Other’ also includes administrative, marketing and development costs. All of which makes it nigh on impossible to determine exactly how much profit is being generated by social game division Playtika and Caesars’ World Series of Poker-branded online operations in the UK, Italy and France.
Caesars CEO Gary Loveman was asked about this lack of specifics on a conference call with analysts, yet his answer did little to clarify the situation. Essentially, Loveman invited people to check Playtika’s daily user stats then draw their own conclusions. “We have not seen it to be in our interest at this point to break out this with any high degree of specificity yet. There may come a time when we will, but we don’t believe we’ve crossed that point yet.”
MGM Resorts International didn’t fare much better in Q3, posting a $181.2m loss, a significant downgrade from the $123.8m loss in Q3 2011. Net revenue rose a modest 1% to $2.25b, ensuring MGM’s fourth consecutive quarter of revenue growth. MGM’s domestic properties contributed $1.49b of that total, a 2% drop from 2011. Domestic gaming revenue rose 2% thanks to a 1% improvement in hold percentage – except at the Bellagio, which recorded an “abnormally low” 13% hold – but hotel revenue fell 3% due to less people checking into MGM’s Vegas properties. Expenses were up $17m over the previous year, due in large part to the ongoing ad campaign designed to convince Maryland voters to approve casino expansion.
MGM China revenue rose 7% to $665m, with turnover from mass market table games and slots up 10% and 37% respectively. Mass market table win rose 27% while slots win rose 44%. VIP table turnover was down 5% and VIP hold was 3% compared to 2.9% in Q3 2011. Earnings were $152m, up 5% year-on-year before branding fees, but reflecting a margin of 23.6%, less than analysts had expected. MGM China currently has $936m in cash vs. $539m in debt. MGM’s overall long-term debt of $14.1b means the company is paying quarterly interest expenses of $276m.
On a smaller scale, Ameristar Casinos reported a modest 2.1% slip in Q3 revenues to $298m at its eight casino-hotel properties across the midwest and southern United States. Net income fell 15% to $16.13m, hurt by a rise in interest charges and by $1.1m in expenses related to the development of Ameristar’s ninth casino in Lake Charles, Louisiana, which is scheduled to open in Q3 2014, and a proposed venue in Springfield, Massachusetts.
