Caesars Digital To Report Q4 Improvements Despite Low Hold

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Caesars expects to report its strongest digital quarter yet, even with customer-friendly results in November.

The pre-reported earnings came out of an 8-K filed by Caesars as the company offered a cash tender for any and all of its outstanding $3.4 billion 6.25% senior secured notes due 2025.

Despite the drop in hold and higher promotions, digital had a record quarter of adjusted EBITDA as sports betting and iGaming handle both grew compared to the fourth quarter of last year.

Adjusted EBITDA up, more upside possible

Caesars expects to report between $28 million and $30 million in fourth quarter adjusted EBITDA when it reports its earnings at 5 pm. Feb. 20.

That is a significant improvement from the rest of the year. Caesars reported $9 million in adjusted EBITDA for the first nine months of 2023.

Adjusted EBITDA could have been about double that $29 million Q4 midpoint, Caesars said, had it not been for hold falling below its typical range in November. That impacted about $44 million in net revenue.

Caesars dishes more promos

Caesars pulled back significantly on promotions after spending ostensibly to rent market share when New York launched.

It saw those promotions tick up in the fourth quarter of 2023 compared to the prior year, though. Sports betting, online casino and poker promos hit $69 million in the fourth quarter compared to $55 million from Q4 2022.

That jump in promotions can be attributed to both new market launches, and the fact that both ESPN Bet and Fanatics are now fighting for customers, too.

Is Caesars Palace carrying profit?

The strength of the standalone Caesars Palace iGaming product seems clear in the numbers.

iGaming handle is expected to be $10.7 billion in 2023 compared to the $8.1 billion from 2022. That is a 24.3% increase from the prior year.

Sports betting handle, meanwhile, is expected to be down about 5.6% to $12.1 billion from $12.8 billion in 2022.

Sportsbook is more efficient

While iGaming hold is expected to be steady, around 3.25% compared to 3.2% last year, sports betting hold is a different story.

Caesars has worked to improve its parlay products to create a platform more competitive with DraftKings and FanDuel.

Those higher-margin products allowed Caesars to squeeze about 1 percentage point of hold more in the fourth quarter than the prior year. Hold should be between 6.3% and 6.4% compared to 5.4% in Q4 2022.