Q3 2023 Caesars Entertainment Inc Earnings Call

Okay.

Yeah.

Good day and thank you for standing by welcome to the Caesars Entertainment, Inc. 2023 third quarter earnings Conference call. At this time, all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session. Please press star one one on your telephone.

And wait for your name to be announced to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Brian Agnew Senior Vice President of corporate Finance Treasury and Investor Relations.

Thank you, Josh and good afternoon to everyone on the call and welcome to our conference call to discuss our third quarter 2023 earnings. This afternoon, we issued a press release announcing our financial results for the period ended September 32023, a copy of the press release is available on the Investor Relations section of our website at Investor <unk>.

<unk> Dot com.

As usual joining me on the call today are Tom Murray, our CEO, Anthony Carano, our President and Chief operating Officer, Bret Yunker, our CFO and Eric Caches, President Caesars sports and online gaming.

Before I turn the call over to Anthony I would like to remind you that during today's conference call. We may make certain forward looking statements about the company's performance such forward looking statements are not guarantees of future performance and therefore, one should not place undue reliance on them.

Forward looking statements are also subject to the inherent risks and uncertainties that could cause actual results to differ materially from those expressed for additional information concerning factors that could cause actual results to differ from those discussed in our comments today you should refer to the cautionary statements contained in our press release.

And also the risk factors contained in our company's filings with the Securities and Exchange Commission.

Caesars Entertainment undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances that occur. After today's call also during today's call. The company may discuss certain non-GAAP measures as defined by SEC regulation G. The GAAP financial measures most directly comparable.

For each non-GAAP financial measure discussed and the reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found on the company's website at investors start to users dot com by selecting the press release regarding the company's 2023 third quarter financial results with a disclaimer out of the way.

I will now turn the call already.

Thank you, Brian and good afternoon to everyone on the call.

We delivered the strongest consolidated adjusted EBITDA quarter in the history of the company led by a new all time quarterly adjusted EBITDA record and our regional markets profitability in our digital segment and continued strengthen our Las Vegas segment.

All three segments grew adjusted EBITDA year over year.

Starting with our Las Vegas segment demand trends remained healthy during the third quarter with occupancy increasing to 96, 6% versus 93, 6% in the prior year.

Total Las Vegas segment revenues were up 4% driven by higher occupancy and higher ADR, which drove record cash hotel revenues.

Record gaming revenues and record food and beverage revenues.

Excluding real.

Our Las Vegas segment generated $494 million of adjusted EBITDA with a margin of 44%.

During the quarter. Our group segment also delivered an all time Q3 record for adjusted EBITDA.

As we look to the remainder of the year Las Vegas continues to benefit from strong leisure and casino guest demand.

Robust events calendar and the continued strength of the group and convention segment.

We're looking forward to the inaugural F. One race in November the culmination of significant planning and infrastructure improvements executed by the city in order to deliver a great event.

Heading into 'twenty four we are also excited for Las Vegas to host the Super Bowl in February in addition to many other new and exciting events planned throughout the year.

Las Vegas continues to benefit from one of the strongest event calendars and the United States.

And our regional segment revenues were up 2% versus last year, and adjusted EBITDA grew to $575 million the best regional quarter on record.

Stable guest demand combined with excellent performance from our completed capital projects and newly opened facilities helped to offset competitive pressures in a few of our markets.

Our regional segment is benefiting from a diversified portfolio across the United States.

Turning to our capital projects, we are anticipating a Q4 opening for our Harrah's Hoosier Park property expansion and when.

We expect to have the new Versailles tower rooms in Vegas.

Mine by the end of the year.

'twenty 'twenty four is a busy year and we expect to complete the permanent facilities in Danville, Virginia, and Columbus, Nebraska, as well as the new hotel tower and completely remodeled Caesars New Orleans project.

We're looking forward to a strong finish to 2023 <unk>.

Consumer demand remains strong and our capital projects are winding down we will continue to remain focused on operating cost efficiencies harvesting returns on project capital and driving long term EBITDA growth.

I want to thank all of our team members for their hard work. Our success is a direct result of the dedication of our team members and their commitment to delivering exceptional guest experiences every day.

With that I'll now turn the call over to Eric for some insights on the second quarter in our digital segment.

Yeah.

Thanks, Anthony during the third quarter, we delivered another positive adjusted EBITDA as a result, and a significant improvement versus the same quarter last year Caesars digital generated $2 million of adjusted EBITDA versus a $38 million EBITDA loss last year, demonstrating significant and continued year over year flow through improvements.

Q2 represented a second consecutive quarter of EBIT profitability in our digital segment. It makes us positive now on a trailing 12 month basis as well during.

During the quarter online sports betting handle increased 14% and casino handle improved 38% revenues were negatively impacted by lower year over year hold in both our online sports betting and <unk> segments, which we believe to be temporary.

We continue to remain balanced with our promotional spend during the quarter with a focus on investing in our best customers, resulting in an overall promotional spend being among the lowest in the industry.

During the quarter, we delivered our new Standalone Casino App Caesars Palace online the product features enhanced game content and functionality. In addition to facilitating segmented marketing the results of which drove monthly GTR in NCR in its first full month of operation to a record.

We anticipate realizing increasingly positive results in the months ahead.

Turning to online sports betting we launched several new product features for football, including SGP is for NCWA, a live streaming product for nationally broadcast NFL games.

Reward credits features and improved payment options as we head into 2024, we believe that our product in both sports betting and casino are significantly improved from prior periods and quite competitive we have an exciting and robust technology plan, which will have a focus on retention enhancements our preview with you over there.

Coming calls, but initially we plan to continue to roll out our proprietary Pam, which will enable a shared wallet.

And to improve the customer experience through enhanced application stability ease of use and App speed. We now offer sports betting in 30 in North American jurisdictions, 24 of which offer mobile wagering. We also operate casino in six jurisdictions I'll now pass the call back to Bret for additional comments.

Thanks, Eric year to date, we've applied over $700 million of cash flow to debt reduction and the acquisition of the remaining equity interest in our Baltimore asset our leverage continues to reduce as we repay debt and grow EBITDA with our total net leverage under our bank credit facility declining to $3 Nymex as of September 30.

Resulting in a 25 bps reduction in our term loan and revolver spreads to 150 bps over silver.

Cash Capex, excluding Atlantic City at our joint venture project spend is expected to land at just over $800 million for 2023, we're looking forward to posting a strong fourth quarter heading into 2024 over to Tom.

Thanks, Brad.

The group has detailed.

It was an extremely strong quarter for us all time record for the company those of you who've been on.

Paul's going back for quite some time, there should be a familiar story for you Vegas remains quite strong.

In terms of headwinds in Vegas in the quarter.

No that we are accruing for the anticipated.

Touch on a little.

More momentarily.

We had REO left the system.

On October 2nd.

Alright.

Limped out the door in terms of how it was performing in the third quarter, we had more significant disruption in the Versailles tower.

We anticipated we thought we were going to keep.

A fair amount of it active but as you open the walls.

The building that is.

David is that particular building if I had all sorts of surprise as we took the whole tower out.

Service, so fewer rounds.

Labor cost headwinds.

Rio is a drag we still feel year over year.

Margin.

Rio comes offline October 2nd you should expect us to recover that margin percentage, if not more going forward.

I know there will be questions on the Union contract. We are in active dialogue with the unions I'm in line with the Union I'm involved personally in the discussions.

Optimistic we will reach a solution you've heard me say before.

We we have done quite well as a company post merger post pandemic, our employees should and will participate in that so you should expect that when we reach agreement on a contract its going to be the largest.

That's well deserved it's anticipated in our business model and as I said, everybody should be participating in the.

The results that we've been delivering in terms of regional.

I know that a lot of you are expecting.

Fairly dramatic moves in terms of what's happening with the customer have been for many many months if not quarters by this point that's not what we're seeing we're seeing stability in the customer.

Seeing weakness in properties that.

It has competitive openings that we've named before.

Tunica, Chicago market being chief among them.

If you want to hang your hat on something that feels soft Atlantic city, it feels soft, but thats not particularly news at.

At this point.

Returns from our projects that have come online Lake Charles <unk>.

Virginia, Horseshoe Indianapolis have been quite strong and have offset.

The weakness in the properties that are competitively impacted and as you saw we set an all time.

Clearly record for EBITDA and margin was stable. So we feel very good about regional I would point to moving forward.

Oral lens is in the midst of.

Significant construction project that we've got going on there, it's particularly disrupted now and for the next quarter or two basically a third of the floor. The casino floor is torn up.

Any given day as we run.

As we do the heavy work.

At that level, we topped off the hotel tower, we're on target to.

Open that expansion completely well in advance.

Super Bowl of 25.

Yes.

Yes.

And we also have.

Obviously, that's where I'm coming to Vegas.

Feel very very good.

No change in what were <unk>.

We're expecting in terms of.

Last in the quarter in the neighborhood of 5%, which is what I told you a year ago wed expect to deliver that at the high end and the amount of credit play that we have in the market that we will exceed new year's Eve. So I'd say, it's an extraordinary events.

The high end perspective Super Bowl in Vegas is filling in the same way extremely strong.

High end as well so we feel very good.

Those events.

Digital Eric touched on.

Just on the way we've been operating that's not promotional driven that's actual handle growth we got being done.

In the quarter, but still delivered a positive EBITDA quarter, we're particularly pleased with the way the fourth quarter has begun in digital excited about the momentum.

We've got an online casino now that we've launched Caesars Palace.

And what we'll be able to deliver in the coming quarters.

As we have discussed we are nearing the end of a significant.

Capital cycle, So as New Orleans winds down you should expect our project cash capex.

Capex budget to come down our EBITDA is growing in both brick and mortar and digital so our free cash flow is growing we continue to use our free cash flow to pay down debt and reduce leverage and that's what you should expect until we see leverage in the four times or below.

Suggested area so.

We feel very very good about how the business is performing.

It's coming together looking forward, we feel very good about what we see in front of US we see of course, the volatility that you see in share.

Share prices in the space not just us.

It's not reflective of what's going on in the business.

We're just going to keep delivering numbers until that volatility subsides, and we expect the market to recognize the value in.

In our equity and with that I'll open it up for questions.

Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for questions.

Okay.

Our first question comes from Carlo Santarelli with.

Deutsche Bank you May proceed.

Hey, guys. Thank you.

I believe you were talking about some of the event calendar for 2024 as it pertained to Las Vegas I was wondering if you could perhaps provide kind of an update on where you guys are in terms of group pace and how youre thinking about kind of the in the year for the year experienced this year relative to.

You know what you could perhaps the next year.

Yeah. Thanks Carlo group pace, as we said set a record.

And this quarter, we see extremely positive calendar.

Going into 'twenty for getting better by the day.

I think mix is around 15% to 16% this year should pace up to about <unk>.

High teens next year.

Perfect. Thank you and then obviously you guys.

Benefited from from some of the favorable baccarat results in the market in the <unk> I was just wondering I mean, we've seen a pretty healthy stretch here of a materially higher baccarat holds.

Is there anything that your folks are noticing just in terms of the changing dynamics that we seem to be seeing.

Coming out of at least at the Nevada published data as it pertains to Blackrock.

No we had a really good quarter in baccarat last quarter Q2.

Q3 normalized for US we're seeing a really strong return of the international customer diversified return of the international customer and we think that will continue to grow.

This quarter with F. One.

A lot of interest in international for both F. One and the Super Bowl and then anticipating a great new year's and Chinese new year's for for next year for International.

Great. Thank you very parallel.

On a consolidated basis for the quarter whole didn't have a material impact one way or another for us yes.

Yes, no no no no I was just referring to the background specifically in more of the market data.

Yep.

Thank you.

Thank you one moment for questions.

Our next question comes from Joe Greff with JP Morgan you May proceed.

Yeah.

Good afternoon guys.

Ill lead off with a question for Eric here obviously.

Significant increase in gaming handle up 38% year over year and Thats, great can you talk about the path for growth from here.

Particularly when you think about other brands or Reskins apps, and how that could drive cloud growth there Eric.

Yes, sure thanks, and thanks, Joe.

We feel like from a volume perspective, we had a very solid quarter on both sports and.

Casino up 38% and keep in mind, we had during the quarter, we didn't have our apps.

The exception of basically for one month.

As we were putting it in.

For the first two months of the quarter.

So again most of the upside from the new App is going to accrue in the fourth quarter and into next year.

We feel.

There's a lot of opportunity to improve the integration of the various game vendors that will give us more insight into the actual working into the game and see what customers are playing and where the spins or we also have an opportunity to improve our CRM.

As we mentioned during.

Prior calls up to about a couple of months ago, we werent able to do segmented marketing and so now with our new App and with some of the new technology, we feel like Thats going to really benefit us heading into next year and then to your point, we are exploring the possibilities of adding another skin to the portfolio.

And there are a number of states, where we have additional licenses that we've reserved and would plan to potentially roll that out.

Later in 2024, so all of those things contributing to.

The overall improvement, but what I would say is that the thesis of the new casino App is following exactly to script, we're seeing a much higher percentage of slot players, which if you recall on our prior apps. It was heavily table focused and then as a result, we are seeing improved hold in that particular app.

Which we think over time will ultimately create a whole lot more value for us.

Great and then a question for you going back to Las Vegas, and the third quarter.

Casino revenue flat year over year, food and beverage hotel, another all up to varying degrees nicely.

Year over year.

Table game drop was down 6%.

Is there anything specific there Anthony or time that you would call out in the queue.

You referenced.

That the Las Vegas segment.

It faced some challenges related to construction disruption and roadwork.

On the strip, obviously, it didn't impact food and beverage and hotel.

To what extent was that a driver.

I mean, you could name.

A lot of things that impact that but a big.

A big impact on it.

Casino revenue as shift in mix out of.

Your database or tour and travel into group business those customers spending more money outside of the casino floor than those that are replacing so you're going to see some of that you wouldn't really.

And obviously table games drop, particularly.

Caesars Palace, where we are today is dependent on when your big customers come and visit.

So there is.

I don't want to say seasonality, but there is volatility in that number based on when those customers shop.

Great and then just related to the Las Vegas talk Tom do you think you benefited at all from a competitor or cyber security issue, which may have hurt them.

Definitely hurt them.

On their disclosures that did you have an outsized benefit that you would call out.

No I wouldn't call out a benefit I would tell you one thing I know for certain after this quarter is nobody benefits from the cyber security incident.

Sure.

Thank you you guys have a good day.

Thank you one moment for questions.

Our next question comes from Dan <unk> with Wells Fargo. You May proceed.

Hey, good afternoon, everyone.

First.

Have you heard Tom or Anthony as you think about next year and we're kind of rounding up this year here. How do you think about the growth in the segment between segments as it relates to Las Vegas and regional.

Tom You mentioned in Las Vegas, Youre seeing of our side power, maybe shifted a little bit later than anticipated and then in the regional segment New property is ramping but also some new competition. So any high level thoughts preliminarily as we think about the growth path for your next year. Thanks.

Yes, so I'd say on the <unk> side tower timing really Hasnt changed what's changed is we had to take far more rooms out of service than we anticipated before we started opening up walls will still.

As Anthony said, beginning rooms back before the end of the year.

We think thats a driver in <unk>.

Las Vegas, I would be we're in the middle of budget.

Budgeting right now and I would say.

If youre budgeting.

Modest growth in both Vegas and regional.

And significant growth in digital here you are consistent with what we're thinking.

Got it and then.

Just pivoting to digital a bit.

This is a business where I think it seems like from an operating expense perspective. It looks like you really reach scale. There as you think about the path forward here are there any rules of thumb or high level way to think about the flow through just as it looks like you've turned the corner in terms of the cost structure.

Yeah happy to give you a few thoughts one of the things that I think we're particularly proud of over the last few quarters is that what we've been able to hold our promotional spending.

Constant and even down this quarter it was down 25 basis points versus prior year.

So its staying in that range that we've kind of given you for guidance of the 1% to 1.25% of volume and so I think thats one thing to help help build the models.

If you look at our tax rate along with the payments processing fees and a few other variable costs that we have.

Using 50% or thereabouts in terms of incremental flow through is a good.

Yes.

A good number to use.

I think youre, probably right about thinking where we're kind of essentially at that point, where we've covered all of our fixed costs now and the marketing spend is still coming down we were down about $50 million year over year this quarter versus same quarter last year.

And that will start to kind of stabilize as we've pulled a lot of it out.

With the exception of some of the league and other.

Longer term commitments coming out over the next year, but from a variable perspective, I would think you could take every incremental dollar flow 50% through at this point.

Got it thanks, so much for the detail.

Okay.

Thank you one moment for questions.

Our next question comes from Stephen <unk> with Stifel. You May proceed.

Yeah, Hey, guys good afternoon.

So Tom as we think about 2024 in Vegas, maybe from a cost perspective, you're obviously going to have some labor pressure heading into next year depending.

Depending on how old that labor negotiations and up but as we think about flow through.

For 2024 and that market anything we should be thinking about that.

On the positive side that could potentially offset some of that wage inflation.

Yes, I mean <unk> got continued shift.

Into group business, which is higher margin for us. So if you look at.

Caesars was historically running at.

14% or so were up a couple of points above that we should be up a couple of more points next year that brings more banquet revenue that brings higher room rate, which has very high flow through we've got Versailles tower comes online as we have discussed.

We would expect that thats.

15%, 20% ROI at a minimum on a 100 million dollar project. So we have.

We have wind at our sales in addition to offset more than offsetting what youre, noting on the cost side.

You've seen that even in.

Third quarter, which had a number of headwinds and we still posted growth in a quarter that is not particularly strong from a pool perspective.

Okay got it thanks for that and then and then Tom in the past.

Earlier last quarter, you've laid out a path to.

$5 billion in EBITDA by 2025, and I'm just wondering.

As you sit here today is there anything out there that youre seeing that would impede.

<unk> you guys from getting somewhere around that target and I'm guessing you're going to give me a one word answer no, but just wanted to check back in.

Kind of see how youre feeling about that target today.

Yes, Steve and I told you that I think there is half a billion dollars of opportunity in brick and mortar half a billion dollars of opportunity in digital.

We still see that in front of us.

Okay, great. Thanks, Tom I appreciate it.

Thank you one moment for questions.

Our next question comes from Shaun Kelley with Bank of America, You May proceed.

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

Tom I feel like one of the themes from the kind of quarter has rolled out so far is just broader operating expense inflation.

You, obviously I mean based on just what we saw out of the regional margins alone.

You were able to find offsets to be able to kind of counteract that but could you just outline a little bit more broadly maybe kind of what what extent pressures you're seeing in the business and do you think you've got the ability kind of going forward to be able to offset that and hold or get close to at least holding margins across the regional.

<unk>.

Yes, sure I mean, I think you've seen it for quite some time you saw this quarter.

We've been good at this for a very long time. This is.

Kind of how we built the business was.

Being as good as we could be at blocking and tackling and recall that we're still.

It seems like it's been forever, but it's been three years since we closed the merger we're constantly continuing to sign new opportunity to squeeze cash flow out of the business.

The cost pressures that.

Youre hearing from us and others in terms of labor.

Inflation related costs, those arent, new we've been dealing with those kind of since we got out of the pandemic and.

We have said all along that we think our margins are.

Right.

You Shouldnt expect significant degradation in margin and you haven't seen that to date. So that's what I would expect going forward.

Thanks for that and then maybe pivoting to Las Vegas and I appreciate.

The comments that you make it, especially given the sensitivity around the union side.

Just kind of anything further you can provide us around timing as we kind of do you get ever closer to Formula One and then.

<unk> already accruals at I believe youre already taking in the quarter are those in line with your comment about the kind of step function in.

<unk>.

You expect that contract to ultimately yield.

Yes, you should expect that we're okay.

Crewing at a level that we think is consistent with where the contract will shake out.

Consistent with our view that.

Our employees deserve what theyre going to get here and we intend to provide it.

In terms of timing, we're in active dialogue I don't want to be delivering a play by play. This is a five year <unk>.

Contract.

So while it seems like Gee why why don't you just get it done next week. These are complex contracts that.

I.

Cover a long period of time, and we're going to do to work with the union to make sure that we do it right for all parties.

I can't tell you is that means it's going to happen.

Next week, a couple of weeks from now or a month from now.

We are in.

In dialogue.

Constantly with the Union.

Have further meetings this week.

Great. Thank you very much.

Thank you.

One moment for questions.

Our next question comes from Brad <unk> with Barclays. You May proceed.

Hi, good.

Good evening, everybody and thanks for taking my question.

And congratulations on the strong results.

Your comment on the regional consumer loud.

Loud and clear that.

Stable, obviously people are a little bit.

Nervous on this particular segment I was wondering if you could just go cut deeper on what Youre seeing and maybe talk about sort of maybe the month to month throughout the quarter or spend per visit trends.

Realization of loyalty rewards.

Across your system and anything that can kind of put a finer point on that thank you.

Yeah, So Brad I'd say.

I don't have anything intelligent to say about month to month.

Not a particular months that stood out for us what we are seeing is.

The end markets that are not impacted by new competition.

Save for Atlantic City, you are seeing.

Demand tenant equal to last year to let's call it.

Plus or minus 2%, if you're looking across the whole portfolio something that averages two.

A little bit of growth across those assets from a revenue standpoint, then you have assets that are <unk>.

Imperatively impacted.

Like tunica like the.

Chicago market that are.

Very different from a revenue and EBITDA perspective, they're under pressure and then you've got properties, where we where the new supply whether either through a new project like Lake Charles or Virginia or expansion.

Indiana, and our revenue and EBITDA is going up and the net result of that is what you saw in the business for the quarter.

EBITDA grew and EBITDA margin was flat.

That's really been the case.

Sure.

About a year now for us every quarter, we run into.

Well now it's got to be right around the corner and we.

We're just not seeing that.

We saw.

The well documented surge in unrated play with stimulus checks a couple of years ago.

Unrated play is where you see the volatility.

But our database is strong enough that it's you're able to withstand that decline in unrated play back from.

The pandemic because of the stimulus days, so we feel.

Very good about where we sit in our regional business and remember this is.

The logic.

Behind.

In pursuing Caesars as a target in M&A was.

Diversification is going to be a strength of the company.

That's what we've seen from a broad perspective, you saw as the pandemic ended people didn't want to get on a plane.

And regionals carrier Vegas, then regionals had the tough comp versus stimulus and Vegas carried regionals now you have both of them.

Bumping along as modest.

A modest growers and we have digital kicking in and within regional we've got diversification.

Across our portfolio and we hear what.

Whats set by other staffing we heard one of our competitors in Reno.

Arena, because theres international competitor.

Don't know who that is because we had our best quarter ever in arena.

<unk>.

I would just tell you that the diversification that we thought was going to be a huge asset for the company continues to prove itself to us and we hope to you.

That's super helpful. Thanks for that and then and then over in digital several weeks now into the NFL season, I'm wondering if you're seeing anything.

From the competitive landscape, that's surprising at all from promotional advertising perspective, and then it's.

If you could separate but related if you could just update us on your overall confidence levels of hitting that.

EBITDA targeting 25 that would be great and Thats all for me. Thanks.

Yes.

The target has not changed.

We.

Continue to see a visible path to that end.

Each quarter, we grow more confident we're not seeing anything.

Promotional <unk> thats, requiring us to respond.

I'll, let others talk about.

Their own promo strategies.

Although each other once in a while and say look at this look at that but.

We've kind of got our heads down executing on our business model and driving that $500 million of EBITDA, which again would be.

Yeah about a 50% return on the cumulative EBITDA losses are shareholders allowed us to invest in the business to date, so we feel.

Very very confident about where we are in this business.

Great. Thanks Al.

Thank you one moment for questions.

Our next question comes from Barry Jonas with true Securities You May proceed.

Hey, guys I was wondering if you could talk about next steps maybe any updated expectations for the New York land based casino process I believe one bidder is exiting of that process and while we're at it maybe any general thoughts on the potential for I gaming and New York as well. Thank you.

Yes, so tongue in cheek I would say I don't have grandkids, yet, but im hoping its awarded before.

First Grandkid has 25 years old.

Okay.

Going slowly Dave just past the second round of quest.

Questions.

Headline for that so then I'll answer all the questions.

Then you get into.

The.

Community Board process, where you've got to put out the RFP.

<unk> got to be approved by your community Board those that are.

Approved by their community boards will have an opportunity to submit our final application for the license.

As I sit here today, I think the quickest that they could issue a license.

Based on what needs to be accomplished between now and then is the end of 2024.

I would say.

Yes.

Personal expectation is it's 2025 before a license.

Got it.

Then just a follow up on digital I appreciate the comments on low hold in the quarter.

Reversing I guess you've talked in the past.

Maybe expectations for holds for bridging the gap with competitors. So just curious any updated thoughts there and sort of the timing to narrow that gap. Thank you.

Yes, sure I'll jump in on this one we continue to see.

Hey.

And then point, where we're going to hold in the seven 5% to 8% range.

If you look at this quarter in particular, we.

We did continue to have sequential hold improvement for the last four quarters actually it's really just we had an anomaly in Q3 of last year, where we held almost 200 basis points on the sports betting side higher than any other quarter in the two years. So it's really just a reversal of that period and that was.

Primarily driven by the September last year football results.

Which then reverse this year, but we are steadily improving on that path.

It is important to note that if you look at last year's our blended hold was around five 5%. So if you increase it by 200 basis points.

On the volumes that we're producing.

Talking a couple hundred million more of incremental <unk> at those flow through rates that we talked about.

It should be a big contributor towards the EBITDA.

As I mentioned, we're heading steadily in that in that direction. So that's one of those areas that its in the model to get to the $500 million, we have to execute on it but it's not particularly dependent on either the consumer changing behavior or our competitors doing something differently, we just need to.

Execute on that.

Great. Thank you so much.

Thank you.

One moment for questions.

Yes.

Our next question comes from Stephen Grambling with.

Morgan Stanley you May proceed.

Hey, Thanks, I know in the past you talked about hitting the four turns of leverage and then keeping M&A in the tool kit with loved to hear as you look at the broader environment, obviously theres been a lot of market volatility is that increase the likelihood of any Q&A you.

Popping up or do you say look at this point buying back your own stock makes the most sense.

Yes so.

And thanks for the question. So the uses of free cash flow that are available to us.

Deleveraging.

Something internally from a growth capital perspective.

Something external from an M&A perspective or buying back stock.

When we had the conversation.

Last quarter.

Stock was right around $60 isn't going up as we sit here today.

Close around 40 Bucks today at that free cash flow yield, it's going to be very difficult for me to find an external opportunity.

I have.

At the same level of conviction I would have in terms of driving returns.

And buying back stock.

Yes.

<unk> plus percent free cash flow yield so when we get to our.

Yes.

Towards the end of the New Orleans projected leverage gets too.

Target.

If I can drive.

It kind of free cash flow returns, we could drive with our stock at 40.

More likely be.

The buyer of our stock then using it an acquisition we're effectively selling it so.

So it's going to depend on where we said those are the tools.

Available in the toolkit, but the stock.

This level is.

Very clearly the best alternative.

That's helpful and perhaps a change in topic, but on I gaming I think you referenced.

Bit of a pivot to more slot play does that effectively a different customer as we think about our gaming on tables versus slots.

There's always this question of is that impacting at all the brick and mortar customer <unk> properties are you still seeing incremental customers coming from digital thank you.

Yes. So the answer is yes, it's the customer that.

<unk> and our I gaming business before through our sports betting tab tended to be a sports better, which skews younger and male and table games player.

If you look at the businesses, we want to emulate in the high gaming arena, they look like our brick and mortar business in terms of skewing to slots and older and female and since we've launched Caesars Palace online that's exactly what we've seen in.

And that App, so very encouraging in terms of.

Early days.

As a result.

In terms of cannibalization.

We have seen nothing to date in terms of cannibalizing the brick and mortar business it's been.

Accretive to brick and mortar and that customers that we've found through digital or reactivated digital showing up in brick and mortar continues to increase.

As the quarters pass so very pleased with how that business is developing.

No that it's early stage since we've launched <unk>.

Caesars Palace online, but extremely encouraged by this.

<unk>.

It's helpful. Thanks, So much best of luck.

Thank you.

Thank you.

One moment for questions.

Our next question comes from John Decree with CBRE you May proceed.

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

Maybe one.

Back on on gaming and I know you have most of your peers competitors don't really provide active user information but.

In response to your prior questions. It sounds like with the shift in demographics are you are you seeing a meaningful increase in active users or frequency of play for from customers.

Or are you more seeing since you've launched the Standalone app.

Higher paying customers come in or are a mix of both any kind of.

Color you could provide around those trends would be helpful.

Yes, youre seeing all the months Youre seeing.

More active play Youre seeing increase in customers and youre seeing better customers coming into our network. So it's Ben.

As I've said, an encouraging start.

Thanks, Tom and maybe to pivot back to the M&A potential question, I guess bigger picture and I imagine the answers.

But potential targets specific but given the margin improvement that the industry realized.

<unk> pandemic when you look at possible targets do you still see an opportunity for.

Meaningful synergies or efficiencies.

That you and your team could could find it might make.

M&A target, particularly accretive when valuing that against the free cash yield.

Of your stock today, there is still some some opportunities that you think you could harvest.

Some additional EBITDA growth from.

Okay.

Yes, I would say the risk of running out of.

Opportunities, where we think we can squeeze more EBITDA.

Assets than a target is very very low on my list of <unk>.

Reason, why M&A might not happen.

Fair enough I appreciate that thanks, everyone.

Thank you.

One moment for questions.

Our next question comes from David Katz with Jefferies. You May proceed.

Hi, everyone. Thanks for.

Thanks for work.

I wanted to just go back to Vegas Vegas margins in particular, because Tom you.

Laid out some items.

In your earlier remarks about <unk>.

<unk> is about real leaving about disrupting.

Disrupting a little more than expected.

Are you able to quantify that for us and the nature of the question is always just trying to find what the normal Vegas margin is going to be with a lot of the noise going on.

Yes, so I would say what I can quantify is Rio was a little over $40 million of revenue with zero EBITDA.

Maybe even.

The way it runs it was less than zero since you had to run that lease payments through it. So we had.

With that coming out that's a significant move in.

Reduction in revenue increase in EBITDA with it out of the system by dental again don't want to touch on any details of.

Union contract, we're in dialogue and in terms of various Si.

Really youre seeing rooms that were out of service that will come back online by the end of the year. So you can presume that versus third quarter last year that was a margin headwind.

Coming back online at a higher average rate should be accretive to margins going forward.

Got it.

And if I can just follow up with Eric on the digital side one of the observations.

Today as that product is winning.

Things such as Parlays in game and other kinds of features and functionality.

Yes.

Okay.

Or would you characterize your archon sort of being caught up with the leaders.

And in terms of doing that.

Presuming that you do have to do that in order to accomplish your goals or.

Am I misreading that.

Yes, I think it's a great question I think youre right.

Product is quite important.

I think it manifests itself, mostly in retention because.

Trial, you can get that right away and then it's a question of how much people are going to continue to play and then how much they play once they do.

Okay.

From our perspective, I think we've made a lot of steps in the last two years and I feel like our product.

Is comparable to the top products that are out there not quite to the level. There is still some pieces of functionality that we just haven't developed yet are focused on but.

Having the same game parlays for the NCWA, having live same game parlays, having alternative line.

Sgp's out there were big steps rolling those out for the NBA coming up and then getting that same action into hockey and so forth are some of the things that we still need to close the gap on.

But broadly speaking I feel like if a customer came to our app.

The benefits that we have with Caesars rewards with a lot of the other things that we can offer that some of our competitors camp.

<unk> is going to allow them to stay with us and become a loyal customer, whereas I think if you were to say that same thing about a year year and a half ago that may not have been the case.

Got it appreciate it.

Thank you.

One moment for questions.

Our next question comes from Chad Beynon with Macquarie You May proceed.

Hi, This is Sarah on for Chad, Thanks for taking my questions.

First one is for Eric I wanted to ask about the watching streaming feature that you launched trying to fill this season and if you've seen any changes in customer engagement or betting behavior.

From implementing features so far and any thoughts around adding this feature for other sports.

Yes.

Very excited to be one of the few operators to basically trial. This for the NFL and our partners.

We do see uptick in terms of customers watching it on our App, we are able to measure how many people are viewing it and so forth.

The next big step is going to be able to overlay wagering opportunities while customers are watching it that we don't have yet, but it's under development and Thats why we still consider this to kind of be a trial.

So in terms of customer behavior change at this point, we're still waiting for more data to be able to determine that but a lot of the benefit that we feel we're getting out of this is the on the tech side being able to integrate it working with the data feed providers and then being able to measure how the customers are used.

Those will be the real benefits coming going forward in terms of doing it for other sports.

We are definitely interested in doing that it really depends on what the leaks policies are and how they plan to utilize that service.

Okay. Thanks, and then perhaps for Tom <unk>.

Recent market data showed that Las Vegas, Revpar growth has trended well into the double digits in October just wanted to get your view.

Given what youre seeing today in terms of bookings consumer behavior. The return of conferences in the overall events calendar 'twenty four where do you think strip revpar growth can get to in 'twenty four or at least in the first half of 'twenty four.

We're optimistic.

Generally the group calendar.

Head of us.

Don't really have much room and occupancy anymore or are we just reported.

Almost 97% occupancy for the quarter, so it'll come in right Youll see that.

As we shift mix more.

More into group and feel very good about 'twenty forward from that perspective.

Great. Thanks.

Thank you.

One moment for questions.

Our next question comes from Daniel Guglielmo with capital One Securities You May proceed.

Hi, Thank you for taking my questions.

The first one just any can you give a guide for maintenance projects spend looks like the midpoint of that spend went up around $40 million versus last quarter is that just construction and labor coming in higher than expected or has there been changes to the plan to close out the year.

Yes, we just caught up on some deferred spend from last year into this year, so slightly accelerated above pace within the calendar year spend on maintenance.

Okay. Thank you.

Then just going back to the table game drop for the brick and mortar portfolio I know, we've talked about Vegas earlier, but it's also slowed year to date on the regional side and it seems like cable game traffic volumes have diverged from slots in both segments is there anything there around certain demographics or a piece of the database not showing up for claims differently.

And Q table game players tend to be younger than slot players in brick and mortar.

So the answer to the last question is no.

Players across a regional casino don't have.

Particularly differences differences in ages in terms of.

Tables across the enterprise I can.

Point to any specific changes in <unk>.

Behavior Thats.

What number we're looking at.

Table games drop in Vegas, and reasonably was down versus slot volumes up.

Yes.

Really have anything.

Intelligent to say about that Didnt most of our regional properties table games, a fairly small piece of the business regional businesses driven by.

All swap revenue much more so than Vegas.

Okay. Thank you.

Thank you.

One moment for questions.

Our next question comes from Joe Stauff with <unk> you May proceed.

Thank you for taking my questions.

I just had two maybe on digital.

We can see some references of your reduction.

And OSB spend and just wondering.

Is it fair to assume is that a permanent reduction as you think about sort of your OSB product or is it likely that youll, just reallocate that spend and I'm talking largely say customer acquisition retention.

To your new Casino first product I know, it's still ramping so it's probably not one to one but just wondering.

How to think about that strategy going forward and then maybe.

See how Nevada did in the third quarter, you had just launched our new App your new App.

Just wondering if year over year that was up.

Yes, so Joe in terms of.

Nevada.

Yes, as we moved from <unk>.

CBS to Liberty and the functionality of our App that you see.

Where else what we saw was.

Kris and hold increase in volume increase in average <unk> per user.

As you would expect to see in terms of.

A.

Paul at this generation product versus.

Power generation.

In terms of what we're doing in promo you should expect that theres going to be.

<unk> that we've talked about in terms of launching casino, but given the way I casino works in the amount of states. There is nothing in the.

In terms of the intensity that you see in OSB stayed so youll see.

Launch spend there, but you should expect OSB will be pretty stable for us as Eric said, we've been.

Kind of 1.25% of handles for quite a while now over a year and we'd expect that to remain the case permanent is a long time. So I can't tell you it will never change, but we feel good about where we're at.

And maybe just one follow up.

For a casino.

Are you largely just mining your your large loyalty database for.

Let's see.

Cross promotional type of customer.

What are you seeing thus far on that.

Yes, I would say broadly speaking our database is more responsive to the new App as you had hoped.

When we built it it was designed to be much more similar to a traditional casino experience.

Search page social affiliates and then just from brand recognition.

And advertising that people will trial the app. So it's a good mix right now.

I think over time or.

A real differentiator, though is the ability to cross sell between online and bricks and mortar and so we're.

Eagerly looking forward to working with the slot providers to provide games and promos and.

Jackpots that span, both brick and mortar and digital.

Thanks, a lot.

Okay.

Thank you I'd now like to turn the call back over to Tom Reeg for any closing remarks.

Alright, thanks, everybody.

We will see you I'm sure at some conferences between now and then but happy holidays, and we'll see after first quarter.

Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.

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