Caesars’ digital betting business hits a milestone, sending sports-gambling stocks higher

By Bill Peters

‘We expect that we have inflated and digital will be a contributor as we move forward,’ CEO says of mobile gambling business, sending DraftKings stock higher along with Caesars shares

Shares of sports-gambling operators ran higher in extended trading Tuesday after Caesars Entertainment Inc. management revealed a measure of profit in its digital betting business turned positive last month, giving the business a chance to contribute to profit in the months ahead.

Casesars (CZR) Chief Executive Tom Reeg said in a conference call Tuesday that the digital business, which includes online sports betting, reported positive Ebitda — or earnings before interest, taxes, depreciation and amortization — in October. The push into that measure of profitability arrived 12 months ahead of schedule, he said.

Whether that leads the business to turn an adjusted profit in the fourth quarter will depend on the Houston Astros’ fortunes in the World Series, and how much Casesars might have to pay out. The casino operator could pay $30 million, potentially the largest payment in the US to a single bettor ever, should the Astros come out on top over the Philadelphia Phillies, according to the Associated Press.

“I think most of you are aware we’ve got a fairly high-profile liability out there with the Astros, so that will be a swing factor in whether the fourth quarter is positive as a whole,” Reeg said on the call. “But we expect that we have influenced and digital will be a contributor as we move forward.”

He said the digital business had a “really good shot” at being “a contributor” to full-year Ebitda next year, ahead of schedule.

Caesars stock jumped 5.9% after hours, and other online-gambling companies joined the fun. DraftKings Inc. (DKNG), the online sports betting platform, picked up 6%, while MGM Resorts International (MGM) increased 1.5%.

The remarks came after Caesars’ third-quarter results beat expectations as the company returned to profit, helped by sales made from online sports betting — a segment the company has promoted aggressively in recent months. Strong results in Las Vegas and its gaming and hotel segments lifted the results overall.

Ceasars reported the results as Wall Street tries to measure consumers’ appetite for travel and gambling as higher prices threaten to cut into expenses. But Reeg said October was “the strongest month in the history of Las Vegas for Caesars.” And he said regular seasonal business trends had returned to the city.

Casears stock is down 52% so far this year. By comparison, the S&P 500 index is down 19% over that time.

-Bill Peters

 

(END) Dow Jones Newswires

11-01-22 1949ET

Copyright (c) 2022 Dow Jones & Company, Inc.

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