Eldorado and Caesars cost cutting is boosting profits at regional casinos as merger close nears

📆 17/06/2020 00:08:00
📰 CNBC

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Eldorado and Caesars have released documents estimating the financial performance of their regional casino properties since reopening. Because of aggressive cost-management, they have been able to improve margins by 1000-1200 basis points, year over year- improving EBITDA in spite of flat or lagging revenues, compared to the same period year over year. It's an ongoing theme for the casino industry - taking out big costs, and keeping unprofitable parts of the business closed.

inch closer to merging with one another, tight controls on costs are helping to make the companies' regional casinos more profitable.

Eldorado shares were recently trading nearly 5%. The stock, which has a $3.1 billion, market cap, is down more than 31% since January. Caesars Entertainment, which has a market value of $8.3 billion, has seen its shares tumble 11% year to date. Caesars shares were up more than 2% in trading Tuesday. Marketing is limited now, targeted mostly to loyal customers who are high spenders. With capacity limits in place, casinos need to make sure their best customers have a place at the table.

Caesars has reopened three Las Vegas strip resorts, Caesars Palace, Harrah's and Flamingo, as well as its properties in Lake Tahoe and Laughlin. But its Nevada numbers don't at all mirror the success of its regional casinos. Revenue is down as much as 58% year over year and EBITDA has declined with it, down 70% to 80%.

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