Caesars Acquisition Company (CACQ) saw its interactive operations revenue double in Q3 thanks to continued strong showings by its social casino and mobile game operations. Caesars Interactive Entertainment (CIE) generated revenue of $161.6m in the three months ending Sept. 30, up 104.8% over the same period last year. Adjusted earnings from social gaming and real-money online gambling in New Jersey and Nevada rose 74.5%.
CACQ was created last year by the heavily indebted Caesars Entertainment to hold an interest in Caesars Growth Partners (CGP), yet another offshoot that controls CIE along with three brick-and-mortar casinos in Las Vegas (Bally’s, Cromwell and the Linq) plus Harrah’s New Orleans and the newly opened Horseshoe Baltimore. The cleaving off of these assets is the subject of multiple legal claims by annoyed debt holders, who accuse Caesars of trying to insulate its more profitable assets as it teeters on the brink of bankruptcy.
CACQ’s overall revenue was up 49% to $485.8m and adjusted earnings rose 34% to $105.4m. CIE’s revenue was half the sum generated by its brick-and-mortar CGP soulmates, but CIE’s share of overall revenue rose to one-third, up from one-quarter in the same period last year. CIE benefited from February’s acquisition of social gaming studio Pacific Interactive while fresh B&M revenue came via the openings of the Cromwell in May and Horseshoe Baltimore in August.
Real-money gambling and the World Series of Poker operations generated just $10.3m of CIE’s revenue. Increased marketing and operating costs in real-money online gambling markets was credited for helping drag down CIE’s operating income 11.5% to $20.1m. CACQ CEO Mitch Garber told analysts the real money online gambling activity in New Jersey continued to be “relatively low compared to our expectations.” The quarter saw the launch of new mobile slot content in New Jersey and a new WSOP.com Android app in Nevada (an iOS counterpart is due in coming months).
CIE’s social and mobile active user numbers posted good gains across the board, but average monthly unique payers – those all-important people who willingly swap real money for the pretend stuff – doubled year-on-year to 595k, representing 3.6% of average monthly unique users. Average revenue per user rose three cents to 29¢.
Garber has high hopes for CACQ’s efforts to link its online operations to the Total Rewards program, allowing users to earn points that can be redeemed for non-gaming amenities at brick-and-mortar properties across the Caesars anagram rainbow. Garber claims this tie-up will be “a key differentiator for us in the US real money online gaming market.” (A similar plan for social games is working wonders for the myVegas tandem of Playstudios and MGM Resorts.)
Garber says CACQ will continue to be “very opportunistic” on the acquisition front and a new purchase won’t necessarily involve another casino-themed developer. Garber says he’s been thinking of “branching out” for a long time because CIE is “the best monetization company for social and mobile games in the world.”
Garber noted that CIE “don’t think we are particularly smart” at creating new games from scratch so the company was looking to acquire an existing title “that we think is being under-monetized” and “leverage maybe the evergreen nature of that particular game and our monetization talent.”