Caesars chairman bullish on online poker
11 Nov 2011
By Howard Stutz
By Howard Stutz
Welcome to the party.
During the company's third-quarter earnings conference call with analysts, Loveman said Caesars was first in support of Internet poker legalization.
The company, which operates 10 resorts on and near the Strip and more than 50 properties worldwide, owns the lucrative World Series of Poker brand.
Through a partnership with British-based 888 Holdings, Caesars operates Internet gaming sites in the United Kingdom, Italy and France.
Loveman said Caesars would be ready if Congress passes a bill that legalizes Internet poker and sets up a regulatory process.
Loveman also said the potential for revenues from a U.S. Internet poker market was much more lucrative than the $5 billion a year analysts have predicted.
"I consider $5 billion to be a conservative figure," Loveman said.
He added the World Series of Poker, which was expected to conclude its 2011 run Tuesday night at the Rio, paid out roughly $209 million in prize money to players.
"That's about $10 million more than the payroll of the New York Yankees," Loveman said. "And a much better bang for the buck."
Loveman estimated the company would need "12 to 14 months" to get a U.S.-based Internet poker website up and operating, based on licensing procedures.
"Because of the relationships we have in place already, I don't think we would have to sign any more deals that would dilute our earnings from Internet poker," Loveman said.
Loveman and Caesars executives also discussed the company's land-based casino expansion opportunities in the United States.
Caesars is building two casinos in Ohio and is the lone bidder for a casino development in Baltimore. The company will also bid on a casino project in Boston once Massachusetts's lawmakers pass a casino expansion bill and is looking at potential gaming opportunities in the Miami area.
"Florida is a very desirable location for us," Loveman said.
The company would likely take on a partner because of the expected cost to enter the market.
Weather-related closures in Atlantic City during August played a role in reducing third-quarter revenues for Caesars Entertainment by 1.5 percent, to $2.25 billion.
Hurricane Irene caused the temporary closures of the company's four Atlantic City casinos during the final peak summer weekend. Caesars estimated the closures reduced revenues by about $22 million, to $27 million, and reduced cash flow by $15 million to $20 million.
In a statement, Caesars Entertainment said new competition in the Illinois and Indiana region reduced results at the company's casinos in the Midwest.
Caesars reported income of $198.2 million, a 12.8 percent increase, the result in part of cost cuts, efficiency initiatives and organizational realignments.
"While weather-related property closures in the Atlantic City Region impacted our overall third-quarter results, we saw strengthening fundamentals in our Nevada and international operations," Loveman said.
Results from Caesars casinos along the Strip and in Reno helped offset the Atlantic City declines.
The company said rated play visitations tracked by its players rewards program declined 5.1 percent companywide because of the weather issues. However, the amount of money spent by customers per trip increased 3 percent.
In Las Vegas, revenues grew 2.9 percent, to $733.1 million. Customer spending per trip grew 3.1 percent as rated play visitations increased 3 percent.
"Our trends in the fourth quarter are generally the same," Caesars Entertainment Chief Financial Officer Jonathan Halkyard said. "We're experiencing a nice volume of business."
Caesars Entertainment is privately owned but has publicly owned debt. Among the company's Strip casinos are Caesars Palace, Harrah's Las Vegas, Bally's Las Vegas, Paris Las Vegas and the off-Strip Rio.
Caesars Entertainment didn't break out results property-by-property, but Loveman said the company was pleased with results from Planet Hollywood Resort, which it acquired 21 months ago.
"Planet Hollywood is doing exceptionally well," Loveman said. "That was one of the best deals we have done."
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