Caesars caps off October to forget by reporting $761m Q3 loss

caesars-entertainment-q3-lossStruggling casino operator Caesars Entertainment lost a whopping $761.4m in Q3, despite revenue falling a mere 0.7% to $2.18b. As usual, the fact that Caesars had to ante up $563m in interest charges on its crippling $23.8b debt load erased any potential for black ink.

The less than stellar results are the perfect capper to a month that has seen US federal authorities investigating possible violations of anti-money-laundering laws at Caesars Palace in Las Vegas, the biggest one-day drop in Caesars share value in almost a year and Caesars’ Massachusetts ambitions going up in smoke after investing around $100m in their pursuit. Seriously, if CEO Gary Loveman decides to go as a sad clown for Halloween, he won’t need a costume.

Net casino revenue was down 7.1% to $1.12b, for which the company blames “continued softness” in the overall US casino market outside Nevada, and the Q2 sale of 45% of its casino operation in Uruguay. Table game strength partially offset “weakening in slot volumes in virtually all domestic markets.” Caesars also reported a three-point decrease in room occupancy rates, yet room revenue rose 2.1% thanks to Caesars raising the average room rate from $89 to $101 via its imposition of new ‘resort fees’ in March.

On a regional level, Caesars’ Las Vegas properties saw revenues rise 5.2% to $773.5m. Improved baccarat volume and hold were singled out as the primary engines behind the 2.9% rise in casino revenue. Vegas property earnings were up 35.7% to $222.4m, boosted by a $20.2m reduction in operating and depreciation expenses.

On the Atlantic coast, Caesars four properties in Atlantic City plus Harrah’s Philadelphia reported both decreased visitation and unfavorable hold, resulting in an 11.7% drop in revenue to $421.5m and a 22% drop in property earnings to $77.9m. A $536.2m non-cash tangible and intangible asset impairment charge resulted in an operating loss of $494.7m for the region. Revenue at Caesars’ 18 properties in the rest of the US fell 4.6% to $744.8m, resulting in a net operating loss of $184.2m. Citing a “slightly unfavorable hold” percentage and regional competition, property earnings fell 19.1% to $162.3m.

Caesars ‘managed, international and other’ operations reported revenue up 18.5% to $240.1m, but the lumping of corporate expenses into the ‘other’ category resulted in an operating loss of $105.5m. The ‘other’ category also includes the World Series of Poker and the social gaming and real-money online gambling operations of Caesars interactive Entertainment (CIE). The ‘other’ category reported revenue up 46.3% to $91.4m, “mostly related to” the late 2012 addition of social game developers Buffalo Studios.

In a call with analysts, Loveman declined to offer specifics on how Caesars’ Nevada-facing online poker site has fared since its Sept. 19 launch, saying only that the company had received “positive feedback” from players. Loveman also hyped CIE’s social gaming operations as a “meaningful revenue driver.” While he’s yet to receive approval from New Jersey regulators, Loveman said Caesars fully anticipates going live on Day 1 when the state’s online gambling market officially launches on Nov. 26.