Caesars Faces Lower Q4 Projections Amid Impact of F1 Las Vegas GP

Joseph Greff, an analyst at J.P. Morgan, revised Caesars’ expected Q4 cash flows downward, from $499 million to $485 million, falling below the $489 million achieved in Q4 2023.

Formula 1’s Impact on Caesars

The Formula 1 Las Vegas Grand Prix was anticipated to drive significant revenues for Caesars and the broader hospitality sector in the city. However, attendance during the 2024 event fell short of expectations, resulting in lower gaming revenues and narrower profit margins for Caesars’ Las Vegas properties.

Analysts point to several reasons behind the weaker turnout:

• High ticket prices for the inaugural 2023 race may have deterred return attendees.
• Lack of competitive drama during the 2024 event reduced its appeal.
• Unfavorable weather conditions further dampened enthusiasm.

The ripple effects of lower attendance were felt across the Las Vegas hospitality industry, with hotels, restaurants, and entertainment venues experiencing weaker-than-anticipated demand. Caesars, which focuses on mid-tier and lower-tier properties, appears to have been particularly affected, as “higher-end” establishments reportedly benefited more from the F1 event.

Other Contributing Factors

In addition to the Formula 1 shortfall, Caesars faced challenges in other areas:

• Online sports betting performance lagged due to player-favorable outcomes in December.
• Gaming volumes showed moderate declines, with table game hold percentages averaging 22%, a middling result.

Despite these obstacles, Caesars had positive developments, including the opening of its new casino in Danville, Virginia, and the rebranding of Caesars New Orleans, which are expected to bolster regional cash flow stability.

Analyst Outlook

While the lackluster Q4 projections raise concerns, Greff maintains a positive medium-term outlook for Caesars, citing a “solid risk-to-reward ratio” for the stock. The company’s ability to navigate the short-term challenges in Las Vegas while continuing to drive growth in its regional markets is seen as a key factor in its overall resilience.

Caesars is scheduled to release its Q4 and full-year 2024 earnings on February 25, 2025. Investors and analysts will be watching closely for updates on how the company plans to address the challenges posed by fluctuating demand in Las Vegas and broader shifts in the gaming industry.