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LAS VEGAS, Nev. - Casino operator Caesars Entertainment Corp. posted a smaller loss for its fiscal second quarter on Monday, but results still missed expectations, as slots and tables drew fewer gamblers.
Caesars runs more than 50 casinos, most of them in the U.S. and Britain.
The company saw casino revenue decline by $116.8 million, or 7.5 per cent. CEO Gary Loveman said food and beverage sales may ultimately replace those dollars.
"Food and beverage revenues were up very meaningfully in a year when gaming revenues were weak, and we do think that trend is with us for a long time to come," he said during a conference call with analysts and investors. "We have visitors that are coming to Las Vegas principally for nongaming activities, though they may gamble a little while they're here."
Food and beverage revenue was essentially flat overall for the quarter, but rose 8.9 per cent in Las Vegas, where gambling revenue was down 15.5 per cent.
Caesars attributed the drop in gambling income to fewer patrons. The company also pointed to increased competition in regional markets, as states open the door to commercial gambling, and the elimination of some less profitable marketing strategies.
Loveman, a former Harvard professor, has made a name for himself with innovative loyalty programs that encourage customers to keep coming back. But casino patrons, especially younger ones, are increasingly turning away from gambling, and Las Vegas moguls are attempting to make up the difference with lavish nightclubs, decadent restaurants and boutique hotels.
Caesars opened the upscale Nobu Hotel within the sprawling Caesars Palace casino this year, and is in the process of transforming Bill's Gamblin' Hall
"I'm trying to pull them out of my competitor's casinos," Loveman said.
Caesars said that its net loss for the three months ended June 30 shrank 12 per cent, to $212.2 million, or $1.69 per share, from $241.7 million, or $1.93 a share, last year. Revenue edged down to $2.16 billion, from $2.16 billion in the 2012 second quarter.
Analysts had expected a smaller loss of $1.40 per share on higher revenue of $2.18 billion, according to FactSet.
Caesars is the largest operator of casinos in the U.S. In addition to its Las Vegas and Atlantic City properties, the company runs casinos in Indiana, Louisiana, Mississippi and several other states.
But U.S. casinos have struggled since the recession, and Caesars is the only major U.S. casino company without a presence in the Chinese gambling enclave of Macau. Rival gambling companies Wynn Resorts Ltd. and Las Vegas Sands both reported gains for the first three months of the year, helped by their lucrative Macau properties.
Caesars is in the process of setting up an online gambling site for players in Nevada, and is taking steps to spin off its online gambling venture into a separate company.
The casino operator said in a July 10 Securities and Exchange Commission filing that it plans to raise $1.2 billion by selling stock in the company.
Shares of Caesars Entertainment ended regular trading up 10 cents, at $15.58. The stock was down 23 cents to $15.35 in aftermarket trading. Shares have more than doubled since the beginning of this year.
Hannah Dreier can be reached at http://twitter.com/hannahdreier .
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