Caesars Interactive Entertainment (CIE), as a part of Caesars Growth Partners (CGP), has been lauded as a bright spot for the Caesars brand. At a time when the company is dealing with tremendous debt and lawsuits with bondholders, CGP is overseeing online operations and other areas of growth as part of a strategy to reorganize Caesars and make the company’s finances sustainable for the long haul. It’s a bit early to say if that’s going to work, but one this is clear: CIE is definitely holding up their part of the bargain.
In the first half of 2014, CIE brought in $268.8 million, an increase of nearly 90 percent over the $142.1 million they brought in last year. The increase was slightly more dramatic in the second quarter alone, with net revenues up more than 95 percent to $144.6 million.
Positive Cash Flow for CIE
At the moment, CIE is still posting losses for the year. The company is down $16 million for 2014, though that’s still an improvement over the $27.1 million they lost in the first half of 2013. But with 20.5 million in profits in the second quarter, it’s quite possible that the company could be in the black by the end of the year.
“With the Interactive Entertainment segment generating positive cash flow, we remain confident that our strategy to develop new projects and maintain investments to expand our casino and interactive businesses will reap benefits to the asset portfolio,” said Caesars Acquisition Company CEO Mitch Garber.
CIE is finding that its social and mobile games are growing rapidly. Products that include the World Series of Poker social games, Slotomania, and Bingo Blitz have all been organized under the Playtika brand. They now attract 5.7 million active users daily, and nearly 17 million unique users every month. That’s enough to generate a lot of revenue, even with the average user only spending about $0.26 a month on these games.
The CIE growth was attributed to the purchase of Pacific Interactive, an Israeli social casino games studio. CIE made the acquisition in February for an estimated $60-90 million. That was the fourth social gaming buyout completed by CIE, and it’s unclear whether further purchases of online and mobile game companies are planned as a part of the company’s growth strategy.
A Small Part of the Caesars Picture
Still, for a company that generated over $8.5 billion in revenue last year, CIE is still a relatively minor part of the picture for Caesars, at least for now. That could change as revenue from online gambling and social games continues to grow, especially if online poker or other Internet casino games become regulated in larger US markets. These numbers will have to continue to grow if Caesars wants to taut CIE as a way to pacify bondholders and stockholders.
For now, though, even the World Series of Poker brand can’t make online poker a major winner for Caesars. In the second quarter of 2014, Caesars took in $10.2 million in online poker revenues. The company certainly won’t be turning that money away, but it’s barely noticeable for a company that holds over $24 billion in debt and paid $650 million in interest costs last quarter as a result.