Caesars Entertainment, Inc. Price & Performance (CZR)

Also during today's call, the company may discuss certain non GAAP financial measures as defined by SEC Reg G, Please visit our press release located in our Investor Relations section for a website. Of our website a reconciliation of the differences between each non GAAP financial measure and the comparable GAAP financial measure. I will now turn the call over to Anthony. Thank you, Brian, and good evening to everyone on the call. During our fourth quarter, regional performance improved sequentially as we opened our Caesars New Orleans expansion in October and Caesars Virginia in December. In Las Vegas, we posted roughly flat year over year results despite a tough comparison versus last year's inaugural Las Vegas Grand Prix F1 race. Excluding customer friendly outcomes in our digital segment, October and December, consolidated EBITDAR in Q4 For the full year of 2024, we company delivered consolidated same store results of $11,200,000,000 in net revenues, and $3,700,000,000 in EBITDAR, delivering an EBITDAR margin of 33.2%. Moving to our segments and starting with Las Vegas, same store net revenues during Q4 were $1,100,000,000 and adjusted EBITDAR was $478,000,000 down 1% versus last year. We were pleased with results in Las Vegas, especially when compared against the inaugural one race held in 2023.

Margins in Las Vegas were 44.4% in line with expectations Occupancy for the full quarter was 96% down slightly to last year against F1 comp Our group business delivered another great performance representing 16% of occupied room nights, recent investments in our Las Vegas room product and gaming offerings, have delivered some of the strongest returns in our Las Vegas portfolio's history driven by strong cash ADRs and increased gross gaming revenues. Turning to our regional segment in Q4. Net revenues declined 1% and adjusted EBITDA declined 5% an improvement sequentially in the rate of EBITDA decline versus the second and third quarters in twenty twenty four. During the quarter, we finished a complete remodel of Caesars New Orleans October 22, opened a permanent facility in Danville, Virginia on December 17. Results in our regional segment were driven by continued competitive pressures in certain markets offset partially by contributions of the two new facilities we opened later in the quarter. With both new properties exhibiting strong early results, We are excited to capture a full year of results from both New Orleans and Danville in 2025. 2024 was the conclusion of an intensive capital investment cycle that began at the close of merger in July of twenty twenty.

We completed several large CapEx projects and beyond and we are cycling through competitive pressures in our regional segment that are becoming less negative. Our investments in our property portfolio are evident and our properties have never looked better. We expect that the returns on our investments and continued strength in both brick and mortar properties and Caesars Digital, will produce a dramatic increase in free cash flow Finally, I want to thank our team members for continuing to execute at the highest level and delivering on our commitment to exceptional family style service. With that, I'll now turn the call over to Eric, who for some detail on our Caesars Digital segment.

Thanks, Anthony. 2024 delivered all time records in net revenue EBITDA and cash flow within our Digital segment. Total net revenue was $1,200,000,000 up 20% year over year and adjusted EBITDA was $117,000,000 versus $38,000,000 a year ago. For the quarter, we generated net revenue of $3.00 $3,000,000 and $20,000,000 of adjusted EBITDA. Absent low hold in Q4, our digital segment would have generated approximately $370,000,000 of net revenues and approximately $60,000,000 worth of EBITDA. Turning to segment results. IGaming delivered exceptionally strong performance all year, culminating with 65% net revenue growth during Q4. Our iGaming franchise continues to deliver industry leading net revenue growth driven by our improved product offerings within the Caesars Palace Caesars app and our new Horseshoe app which is now available in all the jurisdictions in which we operate. In January, we announced the launch of our first branded online Caesars Casino live dealer studio in Pennsylvania, and we plan to roll out similar branded studios in New Jersey and Michigan later in the first half. Also announced the partnership with Brag Gaming to develop Caesars Caesars slot and table content that will help differentiate our offering versus peers. Turning to sports betting. During Q4, net revenue declined during the quarter as result of customer friendly outcomes in October and December.

In addition, our overall volume declined slightly as we limited activity in reinvestment in unprofitable customer segments. Our parlay, SGP and cash out percentages achieved all time records during the quarter and absent the sport friendly outcomes to customers would have resulted in record hold percentage. The increases in these types of wagers along with our improved customer user experience support our belief that we will achieve in excess of 10% hold over time. We look to 2025, we're excited to complete the rollout of our proprietary player account management system, which will lead to a single wallet across all of our sports tier Continued improvements in technology, structure, hold and customer experience will drive another strong year of revenue and EBITDA growth in 2025 and keep us on track for our $500,000,000 EBITDA goal. Now pass the call to Brett for some comments on the balance sheet. Thanks, Eric. We had a productive fourth quarter utilizing non core asset sale proceeds from WSOP and Link Promenade to repay $500,000,000 in debt and repurchase additional stock. During calendar year 2024, we acquired 5,100,000.0 shares for $190,000,000 at an average price of $37 per share. 2024 debt refinancings have positioned the company to take advantage of a lower cost of debt driving significant interest expense savings in 2025.

We also extended our nearest maturity out to 2027.

Over to Tom.

Thanks, Brad. Thanks everybody for joining. I'll fill in some detail on fourth quarter talk about full year 2025 and since we're almost two months into first quarter, I'll give you some color on what we've been seeing during this quarter as well. As Anthony spoke to fourth quarter in Vegas, we were proud of our performance versus last year's inaugural F1 you can see we were roughly flat. Our volume indicators also flat, so room revenue, cash room revenue for us was down less than 1% for the quarter despite the lack of the F1 business F and B revenue similarly down a little less than 1%. And our volume indicators in gaming were up. Slot win slot coin in was an all time record for us. In Las Vegas, table win was up year over year, helped slightly by a little bit better hold If you look at regional recall that regional was has $500,000,000 or so of trailing EBITDA out of our $1,900,000,000 that's in the middle of facing new competitive threats in those markets. With about 200,000,000 of properties that have tailwinds behind them. We in the fourth quarter, you can see that even with just New Orleans and two weeks of Virginia are year over year performance in regional is down about 5% As we talked about on the last quarterly call, we talked about the headwinds versus the tailwinds What I tell you is since that call in October, we've been pleasantly surprised that the competitive impacts that we were anticipating have not been as severe as we anticipated and the performance of our newly opened properties has been stronger than expected So I'd expect regional instead of being a down slightly to flat year in EBITDA should be flat on the left side of the range and up slightly on the right.

So pleased with that. Eric talked about digital the momentum, we're up 64% in iCasino in the quarter and that's on top of a full quarter of Caesars Palace Online last year where I think we were up 50 something percent. So we're stacking quarters on top of each other now. Feel very good about that. Everybody knows about the sports outcomes that are out that were unfavorable in the fourth quarter We can see our structural hold efforts continuing to bear fruit We're off to a good start in the first quarter, though I'll get into a little more detail as we go. In terms of 25, I spoke to you about regional expect flat to slightly up in EBITDA across that vertical In terms of first quarter, we're kind of right on top of last year. Recall that we lose a a day with the LEAP year last year between now and the end of the quarter. Frankly, that could be the difference between we're flat or we're down a couple of million bucks, but it our regional business continues to improve We are now attacking properties that have opened our typical operating philosophy is for the first quarter or two, we don't try to spend into trial But once our customers have had the trial period, we're in fighting and we're increasing investment in battleground markets.

And I'd encourage you to look at properties earnings state monthly revenue reports out of Iowa out of Indianapolis that show what's happening with share and revenue as we fight for those markets following competitive openings, If you think about regionals going forward, Virginia has been beyond our wildest expectations in terms of performance, Typically, when you double capacity, gaming capacity, your revenues don't keep up with that pace. There's some dilution because you're adding so much product Virginia has kept pace. We've effectively doubled revenue. After doubling capacity. Margins are obviously not quite as strong as They are in the tent where they were over 60%, but we're well into the mid-40s in terms of EBITDA margin. So that's driving strong results. New Orleans had a spectacular Super Bowl at a very good fourth quarter. January was difficult. Recall that the terrorist event in New Orleans four blocks from our site was December 31, We had a citywide convention that canceled shortly after that and then you had the first snow measurable snow in the city of New Orleans since 1895. So we've had about three point five months now of performance, almost four months in New Orleans, but it's been a roller coaster given what's happened.

We're super proud of the property that we built been able to show it to our best customers during the Taylor Swift show shortly after opening. And then the Super Bowl, it's been very well received. The numbers are very strong, excluding the noise around the terror and weather So we feel very good about where those two properties in particular are heading into 25 and through the first couple of months. In Vegas, if you think about 25 I'm sorry, to finish on regional, by the end of twenty twenty five, the sole remaining competitive opening of any substance that Will have not faced is the second Penn Chicago area move from their current site to the new land based site. The bulk of what impacted us in 2024 will be well over twelve months behind us and there's very little coming behind that.

So as I've said, we're more sanguine on '25 and regional twenty six should be even better. As competitive threats abate and New Orleans and Virginia continue to grow following those investments. In Las Vegas, We obviously we had the Super Bowl last year and our peers have commented on headwinds relative to not having Super Bowl This year, if you recall, last year, we were outside on the negative side, our normal range of hold. So we held the poorly at the tables. In this quarter, we're back into our normal range, although not heroic. We're still at the left side of that range through the first two months, but recovery back to normal hold should just about offset the loss of the Super Bowl room revenue So depending on how March comes in, we should be about flat in the first quarter, which I think is different from what you're hearing elsewhere in town. And group business will increase this year over last year. Group increases significantly again in 2026. With CONAG, CitiVIDE and the State Farm Conference that's specific to Caesars Caesars, early in 2026. Recall that that State Farm group is big enough It comes every three years.

It's big enough that final event three years ago or two years ago now was the was a sold out Darth Brooks concert at Allegiant Stadium. So that's an awfully big group that's Cesar specific. So '25 and twenty six set up very well for us. In Las Vegas. In digital, digital has had a an exceedingly strong first quarter for us. If you look at iGaming for us, January was up 64% in net revenue keeping in mind that first quarter last year was up 54% February is tracking to the same number, but again, we'll have one less day. So I'd expect February to end up somewhere in the 50s in terms of growth rate. Cash flow continues to increase. I'd expect you're going to start seeing the best quarters that we've ever posted to date [indiscernible] And all of our targets remain the same. Recall that we laid out our targets before we even launched Caesars Sports, that we could reach $500,000,000 of EBITDA We're well on that path. The remaining piece at the end of twenty twenty five will be the roll off of some big partnership contracts in the beginning of twenty twenty six. And that I'd expect that we'd be at our targets and recall those targets have not moved since those were just numbers on a spreadsheet almost four years ago at this point.

So the combination of that Anthony talked about how our capital expense has come down Significantly, we should have in the neighborhood of between among interest expense, lease expense, total capital expenditures and Cash taxes in 2025, our outflows will be around $3,000,000,000 So you can take whatever your EBITDA estimate and subtract that and that's our free cash flow number. We did start to buy back stock in '20 you should expect that our paying down debt. We want to continue to reduce leverage as we have since we closed the transaction in July of twenty twenty, but now we have share buybacks as a [indiscernible] And with that, I'll throw it back to the operator for And our first question will be coming from Carlo Santarelli of Analyst, Hey, guys. Thank you for taking my question. Tom, Anthony, Bret, you guys Tom, you just laid out kind of rough guidance for 25% for both Vegas and the regional And obviously, if you look at Las Vegas, in 2024 and you look at the regionals in 2024, I think regional labor expenses were down almost 1% year over year. Same store Las Vegas looks like it was up, but certainly not as much as some of the contract hit and stuff from the labor union negotiations within the context of how you're thinking about 2025.

How do you kind of foresee the expense side for both loss Vegas and the regionals?

Yes. Carlo, it's Anthony. Team did a fantastic job that $50,000,000 increase this year It's a smaller increase in the contract for 2025 in Las Vegas. There's also a smaller increase in Atlantic City union contract in 2025 as well. That coupled with our operators who do an amazing job on the efficiency side I think we'll be in a very good position on expenses in 2025. And keep in mind that $50,000,000 of labor, Carlo, in Vegas we had wish I knew the number off the top of my head. Call it a dozen or more F and B outlets and bars that were open in 'twenty four that were not open in 'twenty three So that is obviously increased expense So Anthony and Sean and the team did a fantastic job of managing costs while increasing our offerings to our customers.

Great. Thank you for that. And then if I could, one follow-up. Obviously, it's hard to look at peer valuations and kind of identify your hybrid owned leased mix and where the respective pieces of that mix are trading. But I don't think it's overly hard to look at kind of a a comparable valuation and identify that The credit for the digital segment is hard to kind of distinguish. I know clearly that the space could foresee some there could be some activity in 2025, 2026. How are you guys thinking about ways to to monetize and or unlock some of the value that's presumably within the Digital segment and maybe not reflected in the stock Yes, Carlo, we see the same thing that you see To me, the hardest part is building the business that has the value that we can talk about in this way and we laid out that plan in the middle of twenty twenty one in terms of where we anticipated getting and we now it's right on the horizon. And we recognize that a digital business trading at our There's dollars left on the table Operationally, it makes the most sense to keep everything together as one But when the dichotomy is such that it's been and is Today, [indiscernible] known us for a long time.

We look to drive as much shareholder value as we can. This is why it's important for us to own everything in the business, the entire tech stack, not have [indiscernible] have our own PAM, which we're in the middle of rolling out, but it's in it's a natural time to start to think about should you be doing something else strategically that allows investors a path to investing in that business on a pure play basis. And if the if the market dynamics remain the same and the business continues to grow, as it has, you should expect that we would look at any and all avenues in terms of how we can drive the most value to our shareholders. That's helpful. Thank you, Tom. Everyone. And that message came from Carlos Santarelli of Deutsche Bank. Moment for our next question. Which will come from David Katz.

Of Jefferies. David, your line is open.

Afternoon, everyone. Thanks for I do want to just double click on the discussion about stock buybacks.

For the moment and how we think about that rolling forward and frankly balancing it with leverage reduction along the way.

Sure. We have talked since the merger that we want to get our lease adjusted leverage toward four times. [indiscernible] that remains our number one priority where you have seen us start to buy back stock has been in asset sale transactions where we were trading assets out at significant premiums to our current trading multiple and current leverage multiple. You shouldn't expect to do see us do any share buybacks that are leveraging and really nothing that's close to that. You should expect that if you're looking at something in the neighborhood of $1,000,000,000 of free cash flow in '25 the vast majority of that would go toward that pay now.

Got it. And is there along the way I know it's been a discussion in past quarters [indiscernible] do you have any updated thoughts in terms of the asset base of the company where there may be things [indiscernible] could be worth looking at selling.

David, you'd heard me say many times, we're a public company Yes.

No M and A is an easy lift but the easiest list non core assets were printed in 2024. We still own some assets that we would consider non core, non operating Caesars. But have for some in some form or fashion are harder to monetize quickly, but we're in active dialogue kind of around this stuff all the time. I would say since fourth quarter, we've seen an increase in incoming calls in terms of somebody saying, hey, what about this asset, what about that asset, transitioned into any particular trades that I think are imminent or even highly likely, but that's after a couple of years where nobody was making calls at all. So that's a step in the right direction. We are not married to any of our assets, any of our markets. If we can drive value through sale transactions, we'll look at those as well.

And one moment for our next question. Our next question will be coming from Brent Montour of Barclays. Brent, your line is open.

Thanks for taking my question. So Tom, on Las Vegas, you guys gave some some helpful stats on convention calendar and strength you're seeing in those bookings. I'm wondering if you could look at the bigger picture for Las Vegas. I know you guys talked about 1Q, but for the full year, what are the puts and takes in terms of the 2Q to 4Q seeing growth in that market and EBITDA? It's really going to be driven by increased yield out of our room product that's part of the building of group business or the increase in group business will replace lower value business. We've got a number of projects that are coming online or have recently come online we opened Gordon Ramsay's Burger and Pinkies at Flamingo activating the Strip Frontage at Flamingo for the first time since we've owned Caesars, we opened Carmela's at Planet Hollywood, there's a number of food and beverage product that's come online We've still got returns from our hotel projects. We have an anniversary of the opening of the balcony rooms at Versailles. So we feel very good about what 25 looks like. And then as I said, '26 is a major group year on top of 25.

Okay.

Thanks for that. Yes. We also But We also just opened a beautiful new high limit slot area at Caesars Palace The previous high limit space hadn't been touched in about twenty five years. The response has been tremendous out of that room and in addition to that, we opened a new high limit pit area that's adjacent to the high limit slot Again, that came out beautiful and has had great response from our customers in there as well. Great.

Thanks for that. And then just a follow-up maybe for Eric.

The iGaming results continue to be very impressive. I'm sure you're looking for another big year in terms of iGaming top line. When you look at your KPIs and your drivers of that top line growth, are you thinking more about direct casino activation from your database or cross sell from OSB, hold, structural hold, continues to creep up. I know that's a function of your mix. But maybe you could flesh out some of the things that are driving that that growth and and help us think about how it will evolve in 2025?

Sure. I believe we said previously and perhaps if not about 30% to 35% of our IT casino business comes from the sports book side of the [indiscernible] and the balance is being made up of the Caesars Palace Caesars standalone apps and then the newly introduced Torshue app.

If you think back a year and a half, neither of those apps existed. And so largely the majority of the growth is coming from Caesars Palace online app and then now the Horseshoe. So the customers that we're acquiring from there, some of them are Caesars rewards Caesars. But the majority of the customers that we acquire are coming from other avenues such as the affiliates or Facebook and Google advertising so far.

The difference is that the customers that we get that do participate in brick and mortar are worth many times more than customers that only participate with us either in brick and mortar or online. And so we think about a lot of the potential growth that we have, it's having customers experience both products and then being more loyal and sticking with us for a longer period of time and consolidating their spend both on the property level and on the online level with us. And so specific KPIs that we look at are the number of customers that we've acquired, the cost to acquire those, then we look at, of course, our daily actives and then the volume that we have. And as you've noted, the hold has started to improve, which we think will continue. And so if we're able to drive the volume up in all the different businesses that we have as well as the whole, then that will translate into great gaming revenue. And then as you've also seen, we've been very disciplined with our reinvestment levels. Both on sports book and on the casino side. And so that flows through to net revenue then the other costs as well, we maintain those or reduce them.

That will allow us to get the flow through that we've guided to before.

Of around 50% or slightly above that.

Excellent. Thanks everyone.

And our next question will be coming from Dan Politzer of Wells Fargo. Dan, your line is open.

Hey, good afternoon, everyone. Thanks for taking my question.

First, taxes across both digital as well as brick and mortar have been very topical year to date. I was hoping maybe Tom if you could kind of get give us a lay of the land of the landscape a regulatory standpoint and how you're thinking about that risk and maybe kind of I don't know give some context this year versus prior years if you feel like this is an increasing area of focus or just kind of the headline cycle we're in?

I think it's a headline cycle we're in. It's a function of where state budgets are versus where they've been the last couple of years. And I think that your I know that whatever the headline of the day is grabs attention If you look at past History in gaming you're at you're likely to see a mixed bag of activity. You've seen states that have increased sports betting taxes. You've seen Illinois put a casino or slot machine on every street corner, but you've also seen states legalized OSB, states legalized iCasino, and iCasino, this is going to be if you're looking out three to five years, the states is gone The surest way to raise the most revenue is to legalize iCasinos. So I think Opportunities are going to present themselves. And yes, there will be You'll see negatives as well. You'll see Baltimore appears I'm sorry, Maryland appears determined to raise more money out of gaming through additional taxes and we'll adjust to that. But we think that states looking for more tax revenue from our sector is likely over If you're looking beyond next month or the following month, it is likely to lead to more iCasino jurisdictions.

And that's an area where We're growing share or we're growing revenue about twice as fast as our peers. And as you know, we started from very little business in that area when we took over William Hill and very little in the way of employees and product So we're quite keen to see what would a new iGaming jurisdiction, iCasino jurisdiction look like for us. So I know that what gets the attention is all of this is negative. Somebody is saying they want more tax revenue from gaming the way you've seen it evidence itself over time. Is expansion of gaming, which would be good for us.

Got it. That's helpful context. And then just a follow-up on iGaming specifically, the hold really seems like it's picked up. I mean, my math is right. It's probably around 4% and the fourth quarter.

I mean, I guess what's been driving that? And if that level is that sustainable Can that move higher? And is it as a function of customers or slot mix versus tables? Or any additional detail you could share there would be great.

Yes, it has moved up. I'm not sure it's as high as you quoted. I think probably more around 3.5 or 3.6 for the fourth quarter. But certainly, our goal is to get the hold into the 4s. I don't think that's an impossibility at all. We're able to continually improve the product working with the vendors on the slot. Side. As I mentioned, we also have our studio that's going to produce some product that will be of higher hold And then we also have side bets and other activities that we're able to offer people on the table game side, including the live dealer with different game rules that will allow us to creep that hold up. But when you're talking about 11 or 12, billion dollars or $14,000,000,000 worth of volume modest hold increases really translate into significant Got it. Thanks so much.

And one moment for our next question.

And our next question will be coming from Stephen Wiesinski of Stifel. Your line is [indiscernible] I want to go back to your comments about regionals. Now being flat to up slightly versus I think you said slightly down to flat. So just wondering if you can fill us in a little bit more about why you've kind of made that that change? I know you gave a little bit of comments in your prepared remarks, but why you've kind of made that change in your outlook for regionals given we're only two months into the year at this point. It seems like there's always something that pops up in terms of headwinds for regionals, weather or stuff like that. So So just wondering if your new outlook for regionals maybe incorporates any of those potential headwinds to give yourself a little bit of a cushion here Just hope that makes sense.

Yes, Steve, as you know, I'm telling you what I know as I sit here today, and I know more than I did four months ago when we were back here before, in terms of How our properties are going to respond to competition, how our efforts to claw back in Battlegrounds is going to bear fruit and the returns that we're going to get New Orleans and Virginia And line all those up every one of those is better in terms of where my thoughts were October when we released third quarter. So it's really a function of that. We had a poor weather quarter last year first quarter and the hope was that would be a boon for regional this year. And I think as Boyd told you, and we'd agree with whether really hasn't been any any better particularly. This year's first quarter, it's been about the same and yet we're still seeing that business perform better. And if you look at Council Bluffs and you look at Indianapolis, and see us starting to claw back in areas where we're now fighting for that customer after we've gone through the trial period that bodes well for other markets that are in similar situations.

So it's really just four months has elapsed, you learn a lot in four months and a lot of assumptions that I was making October have proven to be too conservative and this is where I sit today.

Okay, got you. Thanks for that time. And then if we kind of stay on the regional side of things, I mean, I guess, you would probably characterize regionals as being stable at this point. I don't want to put words in your mouth. But can you give us any color around and I don't know if you've said this in your prepared remarks, but any color around unrated play and maybe how that is fared recently? And then maybe some have you seen any spend pattern changes across your database tiers? Just trying to figure out that low rated that low tier rated player, if you've seen any softness there or it's been pretty stable.

I would say pretty stable on rate. It has actually gotten a little better for us [indiscernible] Now that's [indiscernible] a number of quarters of softness post the stimulus checks, but at worst it stabilized. It actually appears to be getting better. I see the same things that you see from our other consumer facing brethren in terms of concern about segments of the consumer or particular areas. What I would tell you is our customer is pretty solid and stable across both regional and Vegas. Now we We don't have a ton of visibility. We've got ninety days into Vegas that looks strong regionally. You really don't have a lot of forward visibility, but the tone seems fairly firm for us and got a little better post election. I think that was really just a function of you stopped seeing advertisements about how horrible everything was at every [indiscernible] I don't think that's a Particular comment on the outcome just getting past that. Seemed to be good for our customer. And we've seen that over the last four months.

Okay, got you.

Thanks, Tom.

Appreciate the color.

And one moment for our next question. Our next question will be coming from Barry Jonas Truist. Your line is open, Barry.

Hey, guys. Wanted to follow-up on the state tax increase question for digital, especially with Jersey just announcing something a few hours ago.

Do you see that as a potential risk in the near term to hitting your $500,000,000 target? Or are there offsets you and the wider industry can quickly pin it to? Thanks. Barry, I'd say give me more than a couple of hours on New Jersey in terms of what we'd anticipate. But it's going to I we are well on the path to our targets does that move the can something move the a month or two, sure. But there's no There's no doubt in the room that we are getting to where we've been telling you for four years and also that that's not the end of it, that we're going to continue to grow I see the estimates for our digital brethren out there and I have no reason to believe that there's anything wrong with those estimates. But I tell you, if if they're going to hit the numbers that you and your peers have out for them. We're going to do a hell of a lot more than $500,000,000 of EBITDA out of digital.

Great. And then just a follow-up for Vegas. Can you talk a little bit about how the Versailles Tower is doing? And maybe talk about any other opportunities for kind of high ROI investment in Vegas beyond that?

Thanks. [indiscernible] continues to improve. Cash ADR up $67 this year, so up 61%. We're seeing similar results in other hotel towers that we've remodeled, Caesars Palace, Coliseum Tower and Octavius Towers, both up 2029%. Out of the capital we're putting into our room product Other projects that we recently deployed Pinkies at Flamingo and Gordon Ramsay's Burgers Tom spoke to Carmelo's of all great all great assets and then we're getting ready to open a brand new pool at Flamingo will be one of the nicest resort pools on the Strip. So the return from that should be exceptional as well. Great.

Thank you. And one moment for our next question. Our next question will be coming from John DeCree of CDRE. Your line is open.

Good afternoon everyone. I wanted to ask in the quarter on the sports betting handle, I think it was down double digits year over year And curious if you could give us some color on that. Is that kind of customer mix that you're seeing or is there related to the big hold swing? Not sure if you had some additional color.

Yes, it's really related to two different things. One is, if you think back to last year, we commented on how we had introduced our marketing tool that allowed us to do segmented marketing in the middle of the year prior to that. We had been unable to have different offers go out to different segments. And so as a result, we were over investing in a lot of the lower end segments, which made them unprofitable. And so we've changed that dynamic and really pulled back on the reinvestment to that segment. Making it flip to a positive contributor. However, as you'd expect, the volume fell fairly significantly in that group. And then the other segment is kind of the very high end customer lot of it's over the counter at the retail books. And those customers, we've also cut the reinvestment level too for those that have been particularly sharp and low hold and we've reduced the limits in some of the cases as well.

And when does that anniversary Yes, it should anniversary beginning in the second quarter.

Got it. Tom, you jumped right to my second question, my follow-up. So maybe I'll throw one into Las Vegas or broadly if you have comments or Anthony on the play, I guess particularly Sol in Las Vegas, some of your peers. Said the same thing. Also noting high limit slot rooms in new areas that have done well. Is there something that's kind of budding with the slot customer that's playing higher? Are they kind of new customers? Or was it a bit more of a 4Q phenomena that we're seeing, but it seems like there's a little bit of a trend of of high limit slot players that are playing more or coming back. So curious if you have any any thoughts on that and that's it for me.

Yes. We've been seeing the slot business grow for a couple of years now at our strip properties. And growing higher at the high end of the database obviously with the investment in the new Caesars Palace slot room. But I'd also say our host and our and Sean and the property teams are doing a phenomenal job curating events around these slot customers and driving them to town. And it's really showing on the results last few quarters.

And Anthony and team have made some dramatic changes in slot four layout and design when we [indiscernible] The transaction that Caesars family of properties slot floors were not [indiscernible] well laid out, customer friendly, and we found in a number of properties, we didn't have enough slot machines. So we're adding additional slots and not seeing any degradation in [indiscernible] And we think there's still opportunity there, particularly in Caesars Palace.

Is that Vegas specific or are there some opportunities in regional as well? There's opportunities in regional as well. You should see us We're spending a little bit more on slot capital in $25,000,000 in our capital numbers. That allow us to tackle some floors that we think were more dated, but what we're finding is as you bring new product on the floor, you increase machine count, you increase open table hours, Across the regional business, you're seeing returns on that gaming revenue growing and you should expect us to continue to push that into '25 Got Great.

Thanks Tom. Thanks all.

And one moment for our next question.

Our next question will be coming from Steven Grambling of Morgan Stanley. Steven, your line is open.

Hey, thanks. A couple of follow ups on the digital side. You think about the $500,000,000 goal, do you need sports betting handle for OSB to to hit that breakeven? And then on the monetization, is that $500,000,000 target a fully loaded number comparable to public peers should we how should we think about any incremental product, technology or other kind of cost to think about it apples to apples.

And not following your second question, The first one Steve, we would expect volume, as Eric talked about, once we get through the mix segmentation in the second quarter to start to grow again in the back half of the year for Sports Obviously, you continue to see very strong volumes in the iGaming segment. But if you think about the components towards growth and margin will drive higher parlay mix So it's a lot of variables, but yes, to your specific question, we would expect to volumes on the sports side start to grow again in the back half of this year.

Got it. And then just the second question, just to repeat, I was breaking up or I it seemed like there was some some background there, but is the $500,000,000 just a fully loaded EBITDA, if you were to have that as a standalone business or there are incremental costs that to be allocated? [indiscernible] [indiscernible] if you were to separate the business, There would be some modest dissynergies associated with that. Because it does digital does rely on our centralized functions as they sit here today. But if you're talking about something modest in terms of difference and a significant multiple discrepancy in terms of how the businesses are valued. I don't think that would be a determinative piece of the puzzle, but it would be something you'd consider. And would the data with the customer go along with that or there would be any sort of tie into total rewards? Considering we're just talking about what we would explore, I'd rather stay out of how you would functionally separate the businesses but you're getting along the lines of how would how would you go about doing it? You've got a document the way the businesses interact, The digital business, a key piece of its in terms of advantages is access to Caesars Caesars.

So you shouldn't expect a transaction that we would pursue that would shut it out of that.

Fair enough. That's helpful. Thank you.

Thank you. One moment, Our next question will come from Chad Beynon of Macquarie. Chad, your line is open.

Hi.

This is Sam on for Chad.

Thanks for taking our question.

Based on your New York sports betting numbers in '25, it looks like the hold rate improved quite a bit relative to the rest of the market. Sequentially. So just wondering what were the main drivers And with better KPIs in single wallet, any potential change to your player reinvestment strategy in certain states?

Yes. I do think our hold has closed the gap somewhat over the course of the year particularly in New York. Obviously, with the high tax rate, the reinvestment strategy is different in New York than in other states. And so it It is the fact that we closed the gap a bit more in New York. But it's a combination of all of the factors that we talked about. We're getting more legs per wager. On the parlay side. We're getting a higher percentage of SGPs We're getting a higher percentage of cash out. And so all of those things contribute to the improved hold percentage that you're seeing. I'd also say that the good news is that our competitors have even higher percentages on all of those than we do. And so there's a a good roadmap there to close the gap even further. Or at least if they continue to improve on hold then we will as well and get to that 10%. [indiscernible] And then what was your second question?

If higher hold rates and KPIs could lead to a change in the reinvestment strategy for the broader online segment?

Yes, we target reinvestment as a percentage of the volume. So our reinvestment level is a percentage of TGR has actually declined throughout the year and then compared to last year. I don't anticipate us changing that reinvestment level. From a target perspective. It does vary based on certain tax changes and certain dynamics. But broadly speaking, it's not a competitive dynamic that would change that reinvestment decision. Much more of test and control type decision where we believe that we can make more money by changing it to a certain segment of the business. So, I would anticipate that the reinvestment level as a percentage of the volume would remain constant. And it might change slightly between states or between segments, but not broadly speaking across the business.

And that's really the key. We're getting much have gotten much better, continue to get much better on identifying our most valuable players. And incentivizing them to continue to play with us and spending less money on those that are not valuable to us, but kind of give you empty handle which has been part of the the remarks to date.

So if you're thinking we would say, okay, now promo instead of being one and change of handle, it's going to be three. That's not going to be what happens. But if you think you're going to invest more in your most valuable players, and get a bigger share of their wallet, that's certainly part of the [indiscernible] Okay, great. Thanks for that. And then just quickly on Vegas, wondering if you guys have seen any changes in international visitation trends in 2025 just given stronger dollar perhaps some political headlines headwinds.

No.

I mean, that political headwinds argument gets a lot of chatter on cable news networks that leaks into the investment community You're You don't really see a lot of political statements being made by our guests. They want to come have a good time. They want to get away from the political environment and we there's nothing to speak of in terms of change there. Okay, great. Thank you.

Our next question will be coming from Jordan Bender of Citizens Jordan, your line is open.

Good afternoon, everyone. One more on the tax changes. I think we have a pretty good good grasp on what happens when the sports betting tax rate increases just given that we've seen it before.

So generally and not related to New Jersey, but are the levers to offset the tax increase the same for an iGaming business compared to a sports betting business or is there anything in that iGaming business model do you think that will differ in terms of promos and marketing if adjusted?

Short answer is it's the same. Tax rate is part of your calculation of return. And so as the tax is different, your from our standpoint, we can only speak for us the reinvestment rates will move.

Easy enough. Okay. And then Eric, maybe just following up on the right side of the online customer base. Does the changing customer mix change the flow through assumptions that you guys have provided around 50% at all?

No, I don't believe it does, because the guidance that we've given on our flow [indiscernible] Was in relation to net revenue down to EBITDA. And so the mix that we're doing and changes that we're making in terms of our reinvestment levels is above the net revenue line on the P and L. But you're basically replacing high volume very low hold customers customers that are more apt to play parlays and more apt play more legs of parlays. So it's a piece of [indiscernible] structural hold is improving as well.

Thank you. And one moment for our last question.

And our last question will be coming from Dan Daniel Guggenheim of Capital One Securities. Your line is open.

Hi, everyone. Thank you for taking my questions.

You mentioned attacking properties in battleground markets, which is great. Can you lay out the different metrics you look at to judge the team's success there?

Yes. I mean, we're looking at what does you're looking at a lot of things in each market. You're looking at what is the relative strength of my property versus the competitive property. So to give you an example in Council Bluffs, we have a highly developed two properties on the Iowa side that are seven minutes further away from Omaha [indiscernible] commercial casinos that the tribes open in Omaha but they had financing constraints. So they didn't open properties that are physically competitive with ours. So we're going to be very aggressive in that market in terms of getting people back because you're not asking them to go very far. And you've got a superior product. You got a property like Indianapolis where had its own had an entire ring to itself Fort Wayne opened and encroached on that a bit. But again, Fort Wayne is a more modest property in terms of what it is in terms of scale versus what we have in Indianapolis. So that's another one where we're going to go back toward them It's not going to be just the middle. We're going to be getting back into markets where we think we can gain traction.

And what you're looking at is county by county, what's my investment in this county, What's that doing to share? Is it bearing fruit? And you can see it happening in Indianapolis and Council Bluffs, there's properties that are tougher where a competitive asset like Porch Creek opened right in the feeder market for Hammond that was already facing the move of Hard Rock into a better location on the interstate. So you've got a locational disadvantage and you have newer properties versus older property, that's a tougher hand to play in terms of How aggressive you get, but the fundamentals are the same. You're going to decide how aggressive do I get in the various counties and what are my returns as I do and you've seen our history, we have a very long history of not just futile flushing money, if it's not driving returns. But that's where we are in the bulk of the assets that were impacted in 2024. And the early results are such that we're more confident about '25.

That's great. I really appreciate all the color. It's helpful to to understand that. As a quick follow-up, you all provided the 2025 CapEx ranges in the K. Can you highlight any chunkier regional projects projects that are implied in the growth or maintenance lines there?

Yes. We've got Tahoe that's under construction as we speak. The first phase of this Tahoe project, if you recall, it's the Harvey Tower, great location close to the lake.

We are under construction on all public areas, basically casino floor valet, lobby, one of the hotel towers, we should have that wrapped up in mid to late June, open for the busy summer season up there. We'll take a break during the summer season and come back and finish the second half casino convention space and a few other areas But we'll really transform that property As I said, beautiful location, great destination market, for all of our Caesars Rewards members to go to. So we'll really reposition our oldest property into a really very nice new property in Tahoe.

And Dan, if you think about pacing of that, that's about $160,000,000 total project. There was a little money spent on that in 2024. The remainder split between '25 and twenty six.

Awesome. Thank you.

And I'm showing no further questions. I would now like to turn the conference back to Tom Reed for closing remarks.

Thanks, everybody. Appreciate your time. We'll speak to you pretty soon after first quarter.

And this concludes today's conference call. Thank you for participating. You may now disconnect.