Caesars Entertainment and Century Casinos Maintain Demand Amid Macroeconomic Challenges — Macquarie

Caesars Entertainment and Century Casinos are among the casino operators demonstrating that consumer demand for gaming remains robust in the first quarter, despite macroeconomic challenges. This perspective was shared by Macquarie analyst Chad Beynon in a note titled "Looking for Weak Links in All the Wrong Places," amid widespread concerns regarding high inflation and rising interest rates.
Beynon stated, "With an improved calendar of events and conferences, room rates and overall revenue/EBITDA at the beginning of Q1 appear very strong, and additional catalysts are emerging to fill the city. Despite challenging year-over-year comparisons in the second quarter, we are confident in our 2023 estimates, especially considering new events in the second half of the year."
Caesars is heavily reliant on gaming dynamics in Nevada, as it is the second-largest operator on the Las Vegas Strip and a leader in the Laughlin and Reno-Tahoe markets. However, Beynon believes that Caesars' extensive portfolio of regional gaming destinations could be a boon for investors in the future. He anticipates that the operator's performance will be bolstered by the launches of projects such as a temporary casino in Danville (Q3 2023) and a facility in Columbus, Nebraska (mid-2024), among others.
As for Century Casinos, this small-cap regional operator recently received regulatory approval in Nevada to acquire Nugget Sparks. The company is also expected to commence operations in Maryland. Beynon notes that Century will continue to explore merger and acquisition opportunities in the U.S., but will avoid entering very small markets and Atlantic City.
Beynon's note highlights several key takeaways from the recent Consumer Bright Ideas conference, including current earnings before interest, taxes, depreciation, and amortization (EBITDA), as well as revenue levels on the Las Vegas Strip. Overall, Nevada casinos have reported gross gaming revenue (GGR) of at least $1 billion (approximately 84.44 billion rubles) per month for nearly two years.
Notably, casino visitors in Deadwood, South Dakota, spent 2.3% more in February compared to the previous year.