Caesars Sees iGaming Gains But Still Grappling with Data Breach Affecting NC Customers

Caesars Entertainment executives expressed an optimistic outlook for iGaming during the company’s third-quarter earnings call on Tuesday.

With iGaming among its top-performing market segments, Caesars’ results support pro-online gaming arguments by some North Carolina legislators who want to legalize app-based casino gambling activity in the state.

The company revealed more information about a recent data breach in a required quarterly 10-Q SEC filing on the same day.

A strong quarter for Caesars Entertainment

Overall, Caesars saw record third-quarter earnings with strong performances in regional markets and the iGaming sector.

“It was an extremely strong quarter for us, all-time record for the company,” CEO Tom Reeg told investors.

The leading proponent of North Carolina online casinos is Rep. Jason Saine, senior chair of the NC House Appropriations Committee. In Saine’s arguments for bringing iGaming to the state, which he outlined in a Charlotte Observer opinion piece, the sector could generate nearly $300 million annually for the state. New iGaming casinos can begin operating at a much faster pace than brick-and-mortar facilities. Furthermore, in states where online casinos are legal, the revenue from the sector outpaces that of retail casinos and online sports betting.

During the earnings call, the data revealed by Caesars executives were in line with Saine’s points as the company saw a 38% year-over-year increase in iGaming handle. Reeg also made the point that iGaming is not cannibalizing their land-based casinos.

“In terms of cannibalization, we have seen nothing to date in terms of cannibalizing the brick-and-mortar business,” Reeg said. “It’s been accretive to brick-and-mortar in that — customers that we found through digital or reactivated in digital, showing up in brick-and-mortar continues to increase as the quarters pass.”

North Carolina’s two Cherokee-owned casinos, Harrah’s Cherokee and Harrah’s Cherokee Valley River are both owned by Caesars including the Caesars retail sportsbooks in both casinos.

Saine and his like-minded colleagues can introduce a bill to bring iGaming to the state during the next session of the General Assembly.

In the meantime, the North Carolina Lottery Commission will be ironing out rules for the launch of online sports betting and parimutuel horse race betting for a mid-June launch.

The cybersecurity elephant in the room

Caesars is expected to be among the operators offering online sports betting in North Carolina in 2024.

However, Caesars does have a serious sticky wicket due to the cybersecurity breach it experienced earlier this year which affected both Harrah’s venues  in the state. The casinos participate in the Caesars Rewards program that criminals infiltrated, accessing Social Security numbers and driver’s license details of some members.

Ahead of the earnings call, Ceasars revealed in an SEC filing that it is the target of over a dozen lawsuits from aggrieved customers affected by the hack. The company announced the data incident on Sept. 14, 2023.

“Between September 15 and October 26, 2023, thirteen class actions have been filed against us in U.S. federal and state courts in Nevada, New Jersey, and California, purporting to represent various classes of persons whose personal information was affected by the Data Incident. These class actions assert a variety of common law and statutory claims based on allegations that the Company failed to use reasonable security procedures and practices to safeguard customers’ personal information, and seek monetary and statutory damages, injunctive relief and other related relief. Caesars is seeking consolidation of the cases that have been filed into a single case.”

In addition, the filing stated that Caesars is also the subject of inquiries from state regulators regarding the data breach and that the company is “cooperating fully with regulators.” The list of states making inquiries was not in the filing.

Van Denton, director of corporate communications at the North Carolina Education Lottery, told NCSharp via email that the North Carolina Lottery Commission was not among the state agencies sending inquiries to Caesars Entertainment.

So, while Caesars enjoyed an impressive jump in revenue in the third quarter, it also indicated that the company is still unsure of the “scope and costs and related impacts” of the data breach.

MGM also experienced a more extensive cybersecurity incident this year, shutting down resort reservations systems and gaming machines for nine days and costing the company at least $100 million. When asked if Caesars saw any competitive advantage when MGM was breached, Reeg replied succinctly.

“One thing I know for certain after this quarter is nobody benefits from a cybersecurity incident.”

About the Author

Cheryl Coward

Cheryl Coward started her career as a news reporter in Washington, DC. She's a die-hard women's basketball fan and founded the website as a result of that passion. She loves writing about sports on all levels and has previous experience covering sports betting regulations, operator marketing campaigns and women's sports gambling topics.