LAS VEGAS (KLAS) — Analysts are on guard for signs that casinos are about to fall on hard times. But the leader of Caesars Entertainment says he likes the way the company is positioned “going forward into a period of economic softness.”
And if he’s right, it might explain part of why casinos sometimes seem to be recession-proof.
“We all live in a world where what’s happening in the stock market and on CNBC is the, kind of the echo chamber we live in,” Tom Reeg, Caesars chief executive officer, explained as investors peppered him from different angles about the economy and what’s ahead.
“I think that the bulk of our customers, the bulk of U.S. consumers, are not stock owners,” he said. “You know, what they see right now is gas prices are lower, people on CNBC are frightened, rich people are losing money. That is not a terrible combination for them.”
The balance sheet looked pretty good on Tuesday as Caesars reported first-quarter revenues of $2.79 billion, slightly more than a year ago. The company’s Las Vegas resorts posted just over $1 billion in revenues, down 1.9% compared to Q1 of 2024. Earnings for the entire company were up 4.1%.
“Our customers feel good … I feel better about the way the business is going right now than I did at any point in ’24, and I felt pretty good in ’24. Now, I’m not foolish. I know that can change given what’s happening on a macro basis. But we are not directly impacted by tariffs hardly at all,” Reeg said.
“Obviously we have managed cogs through a pretty brutal inflation environment over the past 3½ years,” he told investors.
“We can’t see it in our business yet,” Reeg said.
Pressed on the point of what Caesars would do if the economy soured, officials pointed to lessons learned during the COVID-19 pandemic. Las Vegas resorts emerged from COVID with a laser focus on profit margins, with most closing buffets, trimming staff and looking to maximize every aspect of their business.
Reeg was among the first to say that buffets wouldn’t be back, although Caesars Palace did reopen the Bacchanal Buffet, a tourist attraction in itself.
What’s different now? Millions invested in iGaming and sports betting has created revenue streams that are growing fast now. The first quarter brought in $335 million in net revenue, up 19% over the first quarter of 2024, according to Eric Hession, president of Caesars Digital.
“We’ve operated now through COVID this portfolio. And so we know that in a particularly dire economic condition … you can be aggressive with hours of operation, days open of non-gaming pieces that help you to manage that,” Reeg said. “But keep in mind in Vegas, these are giant buildings. So they operate their best, and at their best margins when they’re full or close to full. And so that’s the key piece for us. How do we manage that if and when demand softens, which again, we have not seen today.”
Reeg acknowledged the potential impacts on international travel.
“We’re primarily a domestic business. We have some international high-end play that has continued. No change in that cohort for us,” he said.
“Canada for us is something like 3 or 4% of Las Vegas. We have certainly seen reduction in Canadian visitation but have been able to — again, we’re a 97-98% occupancy business, so at that level you are turning away others. We have been able to replace that business. But that’s the only one that I’d call out that’s been visible to us. You know, we see the rhetoric elsewhere, but it has been Canadians who have been visible,” Reeg said.
Caesars continues to improve performance in sports betting, with a goal of reaching a 10% hold on sports action. Even though March Madness took its toll, with bettors cashing in on parlay bets involving teams that were favored.
Hession said the company can reach the 10% goal by the end of 2026.
