Hurricane Sandy drives quarterly losses for Caesars
Lost revenue attributed to Atlantic City casino closures during Hurricane Sandy resulted in fourth-quarter losses for Caesars Entertainment, the Las Vegas-based company reported today.
The nation’s largest casino company, which has nine Las Vegas properties and has the No. 2 market share behind MGM Resorts International in Southern Nevada, reported an improving Las Vegas market despite the closure of its Bill’s Gamblin’ Hall and ongoing construction work associated with Project Linq on the Strip. The company also announced a delay in the opening of its High Roller attraction.
The company reported a loss of $469.7 million, $3.75 a share, on revenue of $2.02 billion. Losses more than doubled from a year ago in the same quarter when the company reported a loss of $220.6 million, $1.76 a share, on revenue of $2.11 billion.
Caesars CEO Gary Loveman said the company’s casinos along the East Coast, including five in Atlantic City, were affected by Hurricane Sandy and the company also took a write-off on an Atlantic City property. Loveman said there also was lower visitation in some regional markets.
In a conference call with investors Monday afternoon, Loveman said Caesars is working to reinvigorate its core business and will continue efforts to refurbish rooms in Las Vegas properties. The Bill’s property, which is being converted to a boutique hotel concept, closed earlier this month. The company expects to have roughly 100 rooms off line at a time for refurbishment at Bally’s and The Quad, formerly Imperial Palace.
“The recovery has been protracted, slow and difficult,” Loveman said in assessing the national landscape. “I think we’ll see several meaningful economic improvements through 2014, especially in the housing market. It’s good to finally see some robust recovery.”
The company has estimated that Project Linq construction activities reduced fourth quarter 2012 net revenues in Las Vegas by $10 million to $15 million.
Loveman said the company is making strides in Las Vegas, opening the first Nobu hotel concept within Caesars Palace last month.
Project Linq, a $550 million retail concept on the east side of the Strip near the Quad and Harrah’s, is expected to open by the end of the year. A 550-foot observation wheel, to be called the High Roller, is behind schedule due to some unexpected construction difficulties, and Loveman said the attraction is now expected to open in the second quarter of 2014.
Loveman said the company is anticipating an expanded market through new online gaming legislation in Nevada and New Jersey and that the company is looking to expand in Cincinnati, Baltimore, Korea and possibly the Boston area. The company, which doesn’t have a license in Macau, is looking to sell its Macau land holdings, a golf course that is the largest plot of open land left in the city.
The Cincinnati Horseshoe opens in a week, a groundbreaking is scheduled in Baltimore in the next six to eight weeks after a legal challenge delayed progress and the company submitted a pre-approval application to build an integrated resort in the Incheon region of South Korea in a partnership with the Lippo Group.
Loveman said he expects Caesars to benefit from new interactive gaming legislation because of the brands it owns.
“I think with our World Series of Poker brand, I like our chances for market share,” he said.
He expects it to take 18 months to two years before online poker play begins because of the need for new regulations associated with the new legislation.
Nevada approved new online poker legislation last week that enables the governor to negotiate compacts with other states to expand its market. Signed by Gov. Brian Sandoval, the legislation also directs regulators to proceed with online gaming despite past opposition from the federal government. New Jersey Gov. Chris Christie also is expected to sign new legislation for New Jersey this week.
“If Govs. Sandoval and Christie could work on this together,” Loveman said, “that would be a great step in the right direction.”