Despite concerns in the U.S. business community that the Trump administration’s trade agenda could hinder a growing U.S. economy, the top executive at Caesars Entertainment Corp. believes the current robust job market will help spur continued profitability at the casino chain in 2018.
Las Vegas suffered greatly during the economic recession in the aftermath of the global financial crisis. Unemployment in the city topped 13 percent and home foreclosures spiked. An improving economy, however, is spurring renewed optimism, particularly among casinos that also see the potential for profits nationwide following a Supreme Court decision to lift a ban on sports betting.
Revenue at Caesars, which emerged from bankruptcy last year, grew by 110 percent, to $2.1 billion for the quarter that ended on June 30, while net income rose 89.3 percent to $282 million. Same-store revenue at the company’s Las Vegas locations also increased 7.5 percent, while staying largely flat in other states.
Tossing aside any fears over the economic impact of the Trump administration’s new tariffs on steel and aluminum imports, Chief Executive Officer Mark Frissora said he expects low unemployment will help spur growth at the casino chain for the remainder of the year.
“Small business confidence is high,” he told investors. “Part-time workers as a percentage of total employment has returned to pre-recession levels, particularly with millennials, a key growth driver for our business.”
[Also read: Businesses grow impatient with Trump’s trade war]
The U.S. economy added 213,000 new jobs in June and grew at a rate of 4.1 percent in the second quarter. Businesses like General Motors and Ford Motor Co., however, are warning that Trump’s 25 percent tariff on steel imports and the 10 percent tariff on aluminum imports will weigh on profits. Caterpillar also previously announced it would raise costs to offset the financial burden of the new duties.
Frissora also told investors the company would move aggressively to grow its sports gambling business in the existing 14 states where it currently operates, and would expand to additional locations when the practice is legalized.
Since a Supreme Court decision earlier overruled a law that had prevented states from legalizing sports gambling, states are rapidly trying to pass laws to allow it and casinos are rushing to launch the infrastructure to support the expected gambling volume that some estimates say could grow well over $100 billion a year.
Caesars is already seeing early success from its mobile sports application in Nevada, where sports gambling has long been legal. The online platform now accounts for 13 percent of the company’s total sports betting volume in the state, Frissora said.
