BUSINESS

Caesars Entertainment’s social gaming 13x larger than real-money online gambling

TAGs: Caesars Entertainment, caesars growth partners, caesars interactive entertainment, Playtika

caesars-playtikaThe division of struggling casino operator Caesars Entertainment that actually makes money reported making more money in Q2. (Now bear with us, because we’re about to enter Acronym Hell.) Caesars Acquisition Company (CAQ) is the Caesars offshoot that controls Caesars Growth Partners (CGP), the off-offshoot that controls the real-money online gambling and social gaming operations of Caesars Interactive Entertainment (CIE) as well as some of Caesars’ more profitable brick-and-mortar casinos. Since we’re now all up to speed on how the game of Acronymonopoly is played, let’s roll the dice.

Because of the highly controversial asset shell game Caesars has engaged in over the past year or so (and which aggrieved debt-holders are furiously protesting), CAQ/CGP year-on-year comparisons are mostly meaningless, but revenue rose 31.8% to $438.7m while operating income fell 44% to $28.9m and adjusted earnings rose 19.1% to $104.9m.

Focusing on the individual online components, for the three months ending June 30, CIE reported revenue of $144.6m, up 95.4% year-on-year. This was primarily due to CIE’s market-leading social gaming operations, which are now consolidated under the Playtika brand and reported revenue up 90% year-on-year to $134.4m. By comparison, CIE’s real-money online gambling operations in Nevada and New Jersey reported a 20% sequential quarterly gain to $10.2m.

Despite those gains, CIE recorded an operating loss of $20.5m thanks in part to $31.9m in acquisition related costs and $15.5m in impairment charges from the anticipated closure of one of CIE’s development studios as it brings all its social gaming operations under one roof. CIE’s adjusted earnings rose 119% to $44m.

CIE’s social gaming metrics are heavily skewed by its February 2014 acquisition of development studio Pacific Interactive but they’re impressive all the same. Playtika managed to convert 3.2% of its total average monthly unique users into purchasers of virtual goods, which compares quite favorably with the 1.9% former social gaming kings Zynga reported in its own Q2 scorecard. CIE also reported average revenue per daily average user of 28¢ compares to Zynga’s 7¢.

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