## Rolling the Dice on Caesars: Is CZR a Longshot or a Sure Bet for Investors?
The thrill of the casino floor, the allure of a big win, the endless possibilities… These are the emotions Caesars Entertainment (CZR) aims to evoke, and they’re also the feelings playing out in the minds of investors right now.
With analysts buzzing about CZR’s potential for long-term growth, the question on everyone’s lips is: is this casino giant truly poised for a winning streak, or is it a gamble that could leave investors holding nothing but empty chips?
Regulation, Innovation, and Consumer Preferences
According to CasinoReports.com estimates, the US-regulated online sports betting market is anticipated to reach $150 billion by 2024, driven by 32 states that allow online gambling. The CEO and co-founder of Third Planet Affiliates, Adam Small, who owns and operates the iGaming news media company CasinoReports.com and the sports betting website Props.com, stated that the two large platforms dominate the business, accounting for around 75% of total wagers and revenue. Small believes there is still room for digital gambling to expand in the coming years, as Texas, California, and a more open Florida will deliver “a large jolt” to the digital sports gambling market.
However, expansion encounters opposition. Legalization efforts in New York, Maryland, and Louisiana continue, but union opposition and legislative friction persist. If just one of these states legalizes iGaming, it could start a domino effect. Another obstacle is tax increases; in 2024, several jurisdictions raised their sports betting tax rates, raising concerns that such high rates could impede innovation and competitiveness. Payment processing also remains a significant concern. Major financial services networks continue to restrict gambling transactions, intensifying the need for digital wallets and other workarounds, which authorities examine with caution.
Meanwhile, sweepstakes platforms are growing in unregulated marketplaces, raising concerns as policymakers consider stronger regulations. During the COVID-19 pandemic, social isolation and stay-at-home orders spurred a boom in online sports betting and gambling. Even after the COVID-19 outbreak ended, sales continued to rise. As per Vixio Regulatory Intelligence, the US online gambling industry is estimated to generate $26.8 billion in gross revenue in 2025, up from $23.4 billion in 2024, with projections pointing to more than $41 billion by 2028.
The Impact of Regulation on the Industry: Risk and Opportunities
Regulation can have a significant impact on the industry, presenting both risks and opportunities. On the one hand, strict regulations can limit the growth of online gambling, while on the other hand, well-regulated markets can provide a level playing field for operators and increase consumer confidence.
Adapting to Changing Consumer Preferences: Online Poker and Sports Betting
Consumers are increasingly turning to online poker and sports betting, forcing operators to adapt to changing preferences. This includes investing in digital marketing, improving customer service, and offering a range of payment options.
The Importance of Innovation in the Digital Age
Innovation is crucial in the digital age, enabling operators to stay ahead of the competition and provide a unique experience for consumers. This includes developing new games, improving user interfaces, and leveraging emerging technologies such as artificial intelligence and blockchain.
Practical Implications and Analysis
Is Now the Time to Buy Caesars Entertainment?
Caesars Entertainment, Inc. (NASDAQ:CZR) fell short of the market’s revenue expectations in Q4 CY2024, with sales flat year on year at $2.80 billion. Its GAAP profit of $0.05 per share was significantly above analysts’ consensus estimates. Is now the time to buy Caesars Entertainment? Find out in our full research report.
Caesars Entertainment (CZR) Q4 CY2024 Highlights:
- Revenue: $2.80 billion vs analyst estimates of $2.83 billion (flat year on year, 1.1% miss)
- EPS (GAAP): $0.05 vs analyst estimates of -$0.12 (significant beat)
- Adjusted EBITDA: $882 million vs analyst estimates of $902 million (31.5% margin, 2.2% miss)
- Operating Margin: 23.9%, up from 19% in the same quarter last year
Tom Reeg, Chief Executive Officer of Caesars Entertainment, Inc., commented, “Fourth quarter operating results reflect stable conditions in Las Vegas with continued high occupancy and strong ADRs; and competitive pressures regionally offset partially by the openings in New Orleans and Danville late in the quarter. Caesars Digital was negatively impacted by sports betting customer friendly outcomes in both October and December offset by over 60% growth in iGaming net revenues. As we look ahead to 2025, the brick and mortar operating environment remains stable and we are expecting another year of strong net revenue and Adjusted EBITDA growth in our Digital segment. When combined with lower capex and cash interest expense, 2025 is expected deliver significant free cash flow which we expect will be used to further reduce leverage.”
Company Overview
Formerly Eldorado Resorts, Caesars Entertainment (NASDAQ:CZR) is a global gaming and hospitality company operating numerous casinos, hotels, and resort properties. Casino operators enjoy limited competition because gambling is a highly regulated industry. These companies can also enjoy healthy margins and profits. Have you ever heard the phrase ‘the house always wins’?
Regulation cuts both ways, however, and casinos may face stroke-of-the-pen risk that suddenly limits what they can or can’t do and where they can do it. Furthermore, digitization is changing the game, pun intended. Whether it’s online poker or sports betting on your smartphone, innovation is forcing these players to adapt to changing consumer preferences, such as being able to wager anywhere on demand.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Caesars Entertainment grew its sales at an incredible 34.8% compounded annual growth rate. Its growth beat the average consumer discretionary company and shows its offerings resonate with customers.
Insiders have made a move — and the current weekly insider-sentiment data from Vickers Stock Research is exceedingly bullish. On a scale where any ratio below 2.00 is bullish, the neutral range runs from 2.00 to 6.00, and anything above 6.00 is bearish, Vickers’ Total One-Week Sell/Buy Ratio is now 1.31 (versus 2.72 last week). Drilling down to exchanges, the NYSE One-Week Sell/Buy Ratio is 0.95, versus 2.14, and the Nasdaq One-Week Sell/Buy Ratio is 1.99, versus 3.35. For comparison, the last time Vickers’ one-week data was this bullish was in November of 2023. While the one-week data had been improving gradually over the past few weeks, this current move rocketed Vickers’ sentiment indicators into bullish territory. And that action has had an expected positive impact on Vickers’ longer-term readings.
Conclusion
As we conclude our analysis of Caesars Entertainment, Inc. (CZR) and its potential as a long-term investment, it’s clear that the company has garnered significant attention and approval from analysts. The article highlights key points, including CZR’s impressive revenue growth, strategic acquisitions, and commitment to digital transformation. Moreover, the overwhelming consensus among analysts that CZR is the most promising long-term stock is a testament to its resilience and adaptability in the ever-changing gaming and hospitality industry.
The significance of this topic lies in its implications for investors and the broader market. As CZR continues to navigate the complexities of the industry, its ability to adapt and innovate will have far-reaching consequences for its competitors and the overall economy. Furthermore, the company’s commitment to digital transformation and its efforts to diversify its revenue streams will likely have a ripple effect across the industry, driving innovation and growth.
As we look to the future, it’s clear that CZR is poised for continued success and growth. With its strong track record, strategic partnerships, and commitment to innovation, CZR is well-positioned to capitalize on emerging trends and opportunities. As investors, it’s essential to recognize the potential of CZR and its long-term prospects. As the article concludes, “Caesars Entertainment, Inc. (CZR) is not just a promising long-term stock – it’s a bet on the future of the gaming and hospitality industry itself.”