Caesars Interactive the Bright Spot for Parent Caesars Entertainment

Posted on: March 13, 2014, 05:30h. 

Last updated on: March 12, 2014, 08:36h.

It was a good year for Caesars Interactive in 2013, as parent company Caesars Entertainment still struggles with massive debt.

Everyone knows that online and mobile gambling are the biggest growth areas in the gaming industry. But now, companies are starting to see the fruits of their marketing efforts as these segments show up on their balance sheets. Caesars Interactive Entertainment (CIE) posted a 52 percent increase in revenues in 2013, becoming one of the bright spots for a Caesars Entertainment group in a company that, overall, has been saddled with significant losses and almost crippling debt in recent years.

Interactive Growth Strategy

Last year was a major one in general for CIE, which was spun off to become part of Caesars Growth Partners (CGP), a subsidiary company that is 58 percent-owned by Caesars Entertainment, along with the publicly traded Caesars Acquisition Company. CGP has become the arm of choice for assets that Caesars feels have a better chance to grow if they’re not burdened by the debt issues facing the primary Caesars Entertainment entity.

But beyond the corporate reshuffle, CIE has been busy, both in terms of growth and acquisitions. The company saw increased profits in Nevada and the first revenues pour in from New Jersey for, as well as growth from Playtika, its social gaming department. Alongside that, CIE also acquired Buffalo Studios.

“We [have] demonstrated solid economic results in the current year while simultaneously investing and positioning our business for future growth in social, mobile and real-money online gaming,” said Craig Abrahams, CFO for Caesars Acquisition Company.

Talking to investors during an earnings call, Abrahams also spoke to the company’s efforts to be a major player in the important – and recently opened – New Jersey online gaming marketplace.

“On the real-money front, in January [2014], we increased our visibility through advertising and other marketing in New Jersey,” he said. “We are pleased with the resulting total CIE revenue growth of 49 percent and increased market share to 32 percent from December to January.”

Social Skills Are Key

While the real-money gambling sphere gets the bulk of the attention from gamblers, social gaming is also a major growth area for CIE. Over the last four years, the company has made four acquisitions in this area, the most recent of which is Pacific Interactive, which was purchased in February. Pacific is known for House of Fun Slots, which Abrahams said will enhance Caesars’ offerings in the social and mobile arenas.

Overall, CIE posted $316.6 million in revenue, up from $207.7 million just one year ago.

Those excellent numbers contrast with the reported earnings from Caesars Entertainment as a whole. While net revenues were down just 0.2 percent, the company reported a total loss from operations of over $2.2 billion, with a total net loss of nearly $3 billion – a 95 percent loss increase over last year. That was largely due to a decrease in casino revenue, write-offs for investments in the scuttled East Boston Suffolk Downs casino plan, and charges related to the Buffalo Studios acquisition. However, the company has increased its cash on hand significantly, thanks in part to selling some assets to the Caesars Acquisition Company.

“During 2013 we invested significantly in our properties and executed a number of initiatives to enhance the company’s capital structure and better position the company for sustainable growth,” said Caesars Entertainment CEO and president Gary Loveman. “I am proud of the milestones we have reached to date and look forward to making much more progress.”