Does Caesars Entertainment Corporation’s Future Hinge on Online Gambling?

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By Jacob Maslow

online pokerOne of the biggest controversies broiling Las Vegas currently is the battle over online gambling. Caesars Entertainment Corporation (NASDAQ:CZR) leads the group of Vegas casino operators that are backing the legalization of online gambling in the United States. They believe that once online gambling becomes legal, Las Vegas-based casinos stand to benefit tremendously. Standing almost alone on the other side of the debate is the Las Vegas Sands owned by Sheldon Adelson. The Sands believe that online gambling is going to work against Las Vegas, and brick and mortar casinos in general.

This is the battle royale that is being played out in the halls of congress through the millions of dollars of lobbying funds being supplied by both groups. It remains to be seen which side will prevail. However, what is indisputable is that Caesars Entertainment Corporation would stand to benefit tremendously from an online gambling victory. This company has been struggling since 2008 when it went through a leverage buyout by TPG and Apollo Global Management. The leverage buyout put a lot of debt on Caesars’ books right around the time the global financial crash of 2008 hit.

As you are already aware of, Vegas got flattened by the financial crash, and this brought about the Chapter 11 bankruptcy of Caesars. Caesars is still trying to recover from this bankruptcy. While its revenues have been growing both on the food and beverage as well as the casino side, it is still operating at a loss. It remains to be seen how long it will continue to do this before it generates a profit. The company definitely has its work cut out for it. The good news is that the US economy is improving, and this should bolster Caesars’ short-term to midterm fortunes quite a bit. Still, the biggest shot in the arm the company can have is if online gambling is legalized.

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