Vegas-based Caesars Entertainment has reported losses for the third quarter leading to frenzy among shareholders for a quick sell out. Two of the firm’s largest brands Harrah’s and Horseshoe have not reported profits since 2009 which is a worrying situation for investors. The main factors which have led to loss accumulation of this magnitude in third quarter are large wins by players and unpaid gambling bets by players unable to pay. The management of Caesars Entertainment is trying to get loans to restructure business and improve revenues since 2008. Market watchers state that this decline has been largely lack of foresight by its management and inability to recognize business opportunity of overseas operations.
What went wrong?
While expressing his disappointment at the low returns reported in fourth quarter by Caesars Entertainment Corp, the group’s Chairman cum CEO stated that these losses are due to bad luck and bad debts. According to a recent statement by Bloomberg, the net loss of the group in this quarter is at $ 908.1 million though revenue has slowly increased by a steady rate of 6 percent every year. The company’s lack of presence in world’s biggest gambling market Macau has also affected its profits as markets in the US have not recovered as yet from financial recession. Besides Las Vegas, Caesars Entertainment also has gambling interests in Atlantic City and New Jersey which are generating profits.
Caesars Entertainment has been able to reduce its debt load to only $20 billion since 2008 and investors are challenging the firm’s ability to pay off its debts in the near future. Its CEO has also stated that Caesars will start cost cutting from early next year which will add around $250 to $300 million to its overall earnings before tax and depreciation. To reduce losses it has already closed non- profitable casinos in Mississippi and New Jersey though it continues to run its Baltimore-based Horseshoe Casino in collaboration with local partners. To improve its profits, Caesars has invested in interactive gaming at Nevada and New Jersey which have helped in accumulation of $161.6 million in revenue.