Fact check: Is the new Reno-based Caesars Entertainment really the largest casino company?
It is a claim that’s often been made over the past few weeks: that the newly merged Caesars Entertainment — formed July 20 when Eldorado Resorts acquired Caesars (and dropped the Eldorado moniker) — is the largest casino company.
Most recently the claim was made by Caesars in the corporation’s second-quarter earnings report, released last Thursday:
Eldorado Resorts and Caesars Entertainment Corporation completed their merger on July 20, 2020 creating the largest casino and entertainment company in the U.S.
But it’s also been written by news organizations. That includes the Associated Press in its report on the July merger, in which it took the claim a step further by calling it not just top dog nationally, but globally:
A Nevada company that started in 1973 with a single hotel-casino in Reno announced Monday it has completed a $17.3 billion buyout of Caesars Entertainment Corp. and will take the iconic company’s name going forward as the largest casino owner in the world.
But is this claim true? The Reno Tahoe Business Report asked University of Nevada, Las Vegas gambling historian Dave Schwartz:
Well, that depends on what you mean by the largest. I’ll just run down some of the measures you could use to legitimately say you were the largest.
So, first, you could say number of ‘gaming positions,’ which is the number of slot machines plus the number of tables (from games such as poker and blackjack), times six.
You could do it by number of employees. You could do it by number of hotel rooms. You could also do it by market capitalization.
And — surprise, surprise — if you use different metrics, different companies could say they’re the biggest. So, yeah. It’s kind of hard to say.
RTBR couldn’t locate some of those metrics — particularly industry statistics like “gaming positions” — nor could Schwartz. Here’s how Caesars stacks up based on various metrics that we could find.
Market capitalization
Market capitalization, sometimes referred to as “market cap,” is simply a corporation’s number of stock shares multiplied by the value of one share. It’s basically how much a company is worth, at least in the eyes of shareholders.
With a market cap of $6.16 billion, Caesars trails well behind industry-leading Las Vegas Sands’ $36.3 billion. At least another four U.S.-based casino companies have larger market caps than Caesars: MGM Resorts International ($10.68 billion); Wynn Resorts, Limited($8.79 billion); Churchill Downs Incorporated ($6.37 billion); and Penn National Gaming, Inc. ($6.25 billion). (These figures are as of the end of trading day on Aug. 10, as reported by Bloomberg.)
Net income
If market cap is about perception (in the eyes of shareholders), then net income, also known as “the bottom line,” is about performance. It’s revenue minus operating costs and all other expenses. Net income is also known as profit, but that assumes the company made a positive net income. If it’s negative, then it’s a loss.
RTBR looked at net income from the full calendar year of 2019, as according to Bloomberg. However, the Caesars as it exists now — a merger of Eldorado and Caesars — is fundamentally different from the entity that existed in 2019, which was then known as Eldorado. (Remember: Eldorado changed its name to Caesars upon the acquisition.)
The best we can do is combine Eldorado’s 2019 net income ($81 million) with Caesars’ 2019 net income (-$1.2 billion) in order to give us a proxy of the current Caesars. Of course, the July merger may have made the corporation less expensive to operate, and therefore more profitable. But we won’t know until net income from the full calendar year of 2020 is reported, which won’t be until early 2021.
So, by adding the two 2019 figures, this proxy was not profitable: net income was -$1.12 billion. By comparison, the market cap leaders from the previous section all posted positive net incomes. Even if you give the current Caesars the benefit of the doubt in how it merged, it faces stiff competition from net income leaders Sands and MGM, each of which posted profits in the billions: $2.7 billion for Sands and $2 billion for MGM.
Properties
This is where Caesars appears to be number one. The corporation says it owns and operates more than 55 gaming properties worldwide. Market cap leader Sands, meanwhile, has only eight. Caesars also has a sizable lead over MGM (30), Wynn (four), Penn (41), and Churchill Downs (10).
These numbers come from the corporations themselves. It should also be noted that not all properties are wholly owned by a single corporation.
Employees
This may be the least reliable metric, for a number of reasons: most of the largest gaming corporations don’t keep up-to-date figures on how many people they employ, nor do they make the distinction between full-time and part-time employees.
On top of that, the current recession brought on by the COVID-19 pandemic has led to layoffs across industries, and gaming is no exception. With the rapidly evolving nature of the pandemic and its financial fallout, workforce reductions aren’t fully accounted for in real time.
With these caveats in place, RTBR estimates that Caesars employs the most people, at an estimated 84,000. We arrived at that figure by adding the number of employees from the now-defunct Caesars with Eldorado, as according to business intelligence firm Owler. Of course, some positions may have been consolidated through the merger, which would reduce that number.
MGM is the only gaming corporation that comes close to that number, and indeed it is close: the company says it employs 83,000 people.
Adding it all up
Is Caesars the biggest casino corporation? As Schwartz said, and as our analysis shows, different metrics lead to different conclusions. No one corporation leads every category. While Caesars is the largest in terms of number of properties — and perhaps the number of employees — it isn’t a runaway leader across the board, owing to its rank in market cap and net income.
A more accurate way to describe Caesars: it is one of the biggest casino corporations.
