Q2 2024 Caesars Entertainment Inc Earnings Call
Speaker Change: Hello. Thank you for standing by. Welcome to Caesars Entertainment Inc. 2024 Second Quarter Earnings Call.
Unknown Executive: 24, Second Quarter Earnings Call. At this time, all participants aren't in listen-only mode. After the speaking's presentation, there will be a question-and-answer session.
Operator: second quarter earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to turn the call over to Brian Agnew, Senior Vice President of Corporate Finance, Treasury, and Investor Relations. Sir, you may begin.
Speaker Change: At this time, all participants are in a listen-only mode.
Unknown Executive: To ask the question during this session, you will need to press Start 1-1 on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press start 1-1 again.
Speaker Change: After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.
Brian Agnew: I will now like to turn the call over to Brian Agnew, Senior Vice President of Corporate Finance, Treasury, and Investor Relations. Sir, you may begin.
Speaker Change: I would now like to turn the call over to Brian Agnew, Senior Vice President of Corporate Finance, Treasury, and Investor Relations. Sir, you may begin.
Brian Agnew: Thank you, Tuwanda, and good afternoon to everyone on the call. Welcome to our conference call to discuss our second quarter, 2024 earnings. This afternoon, we issued a press release announcing our financial results for the period ended June 30, 2024. A copy of the press release is available in the Investor Relations section of our website at investor.seasers.com.
Brian Matthew Agnew: Thank you, Wanda, and good afternoon to everyone on the call. Welcome to our conference call to discuss our second quarter 2024 earnings. This afternoon, we issued a press release announcing our financial results for the period ended June 30, 2024. A copy of the press release is available in the Investor Relations section of our website at Investor.Caesars.com.
Brian Matthew Agnew: Thank you to Wanda and good afternoon to everyone on the call. Welcome to our conference call to discuss our second quarter 2024 earnings.
Speaker Change: This afternoon we issued a press release announcing our financial results for the period ended June 30, 2024.
Speaker Change: A copy of the press release is available in the investor relations section of our website at investor.caesars.com.
Brian Agnew: As usual, joining me on the call today are Tom Rieg, our Chief Executive Officer; Anthony Carano, our President and Chief Operating Officer; Brett Younger, our Chief Financial Officer; Eric Hession, President, Cesar Sports and Online Gaming; and Cherise Crumbly in Investor Relations.
Brian Matthew Agnew: As usual, joining me on the call today are Tom Reeg, our Chief Executive Officer; Anthony Carano, our President and Chief Operating Officer; Bret Yunker, our Chief Financial Officer; Eric Hession, President of Caesars Sports and Online Gaming; and Cherise Crumbly in Investor Relations. 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 under the safe harbor federal securities laws, and these statements may or may not come true.
Speaker Change: As usual, joining me on the call today are Tom Reeg, our Chief Executive Officer, Anthony Carano, our President and Chief Operating Officer, Bret Yunker, our Chief Financial Officer, Eric Hession, President Caesars Sports and Online Gaming, and Charisse Crumbly in Investor Relations.
Brian Agnew: 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 under State Harbor Federal Securities laws, and these statements may or may not come true. Also, during today's call, the company may discuss certain non-GAAP financial measures as defined by SEC Regulation G. Please visit our press releases located on our Investor Relations website for a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure.
Brian Matthew Agnew: Also, during today's call, the company may discuss certain non-GAAP financial measures as defined by SEC Regulation G. Please visit our press releases located on our investor relations website for a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure. With that out of the way, I will turn the call over to Anthony. Thank you.
Speaker Change: 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 under safe harbor federal securities laws, and these statements may or may not come true.
Speaker Change: Also, during today's call, the company may discuss certain non-GAAP financial measures as defined by SEC Regulation G.
Speaker Change: Please visit our press releases located on our Investor Relations website for a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure.
Anthony Carano: With that out of the way, I will turn the call over to Anthony. Thank you, Brian, and good afternoon to everyone on the call. Our second quarter delivered consolidated net revenues of $2.8 billion and total adjusted EBITDAR of $1 billion, both flat first prior year. Our Las Vegas segment delivered a same-store second quarter net revenue record of $1.1 billion, and our adjusted EBITDAR of $514 million beat the prior year by 1.2 percent. These results were driven by continued growth in hotel cash revenue as a result of higher year-over-year occupancy and ADRs, and record performance from our food and beverage.
Anthony L. Carano: Thank you, Brian, and good afternoon to everyone on the call. Our second quarter delivered consolidated net revenues of $2.8 billion and total adjusted EBITDA of $1 billion, both flat versus the prior year. Our Las Vegas segment delivered a same-store, second-quarter net revenue record of $1.1 billion, and our adjusted EBITDA of $514 million beat the prior year by 1.2%. These results were driven by continued growth in hotel cash revenue as a result of higher year-over-year occupancy and ADRs and record performance from our food and beverage.
Speaker Change: With that out of the way, I will turn the call over to Anthony.
Anthony: Thank you, Brian , and good afternoon to everyone on the call. Our second quarter delivered consolidated net revenues of $2.8 billion and total adjusted EBITDA of $1 billion, both flat versus prior year.
Anthony: Our Las Vegas segment delivered a same-store, second-quarter net revenue record of $1.1 billion, and our adjusted EBITDA of $514 million beat the prior year by 1.2%.
Anthony: These results were driven by continued growth in hotel cash revenue as a result of higher year-over-year occupancy and ADRs and record performance from our food and beverage.
Anthony Carano: Recent room renovations that are newly rebranded Versailles Tower at Paris and Coltium Tower at Caesar's Palace are driving above plain returns on investment driven by strong gains in cash ADRs. The European Convention segment also delivered an increase in occupied room nightmares year-over-year, and recent forward pace for 2025 has strengthened. Las Vegas EBITDAR margins of 46.6 percent were down on only 40 basis points year-over-year, despite increases in labor. We remain encouraged for operating trends in Las Vegas segment based on our forward expectations for continued strong occupancy and hotel pricing trends, coupled with a decrease in room inventory on Las Vegas Strip.
Anthony L. Carano: Recent room renovations at our newly rebranded Versailles Tower at Paris and Colosseum Tower at Caesars Palace are driving above-plan returns on investment driven by strong gains in cash ADR. The group and convention segment also delivered an increase in occupied room nights year over year, and the recent forward pace for 2025 has strengthened.
Anthony: Recent room renovations at our newly rebranded Versailles Tower at Paris and Colosseum Tower at Caesars Palace are driving above plan returns on investment driven by strong gains in cash ADRs.
Anthony: The group and convention segment also delivered an increase in occupied room night mix year over year, and recent forward pace for 2025 has strengthened.
Anthony L. Carano: Las Vegas EBITDA margins of 46.6% were down only 40 basis points year-over-year, despite increases in labor. We remain encouraged by operating trends in the Las Vegas segment based on our forward expectations for continued strong occupancy and hotel pricing trends, coupled with a decrease in room inventory on the Las Vegas Strip. In our regional segment, adjusted EBITDA for the quarter was $469 million, down 8% year-over-year.
Anthony: Las Vegas EBITDA margins of 46.6% were down only 40 basis points year-over-year, despite increases in labor.
Anthony: We remain encouraged for operating trends in the Las Vegas segment based on our forward expectations for continued strong occupancy and hotel pricing trends, coupled with a decrease in room inventory on the Las Vegas Strip.
Anthony Carano: In our regional segment, adjusted EBITDAR for the quarter was 469 million, down 8 percent year-over-year. Results were driven by a combination of competitive pressures in certain markets, construction disruption, principally in New Orleans, and a difficult comparison in Reno due to a large group event last year. Offset by performance from our Danville in Nebraska properties.
Anthony: In our regional segment, adjusted EBITDAR for the quarter was $469 million,
Anthony L. Carano: Results were driven by a combination of competitive pressures in certain markets, construction disruption, principally in New Orleans, and a difficult comparison in Reno due to a large group event last year, although offset by performance from our Danville and Nebraska properties. However, despite revenue declines, EBITDA margins in our regional segment were down only 100 basis points, reflecting strong cost disparities.
Anthony: Results were driven by a combination of competitive pressures in certain markets, construction disruption, principally in New Orleans, and a difficult comparison in Reno due to a large group event last year, offset by performance from our Danville and Nebraska properties.
Anthony Carano: Police. Despite revenue declines, EBITAR margins in our regional segment were down only 100 basis points, reflecting strong cost discipline. During the quarter, we celebrated the opening of Harris Nebraska's permanent facility on May 17th, the company's first property in the state, which is off to a strong start. We look forward to the completion of our newly rebranded Caesar's property in New Orleans in October and the opening of the Danville permanent facility in December. Our elevated capital investment cycle is coming to an end, which will drive strong returns for the regional segment looking ahead. Our team members continue to deliver exceptional guest experiences as a result of their continued hard work and dedication.
Anthony: Despite revenue declines, EBITDA margins in our regional segment were down only 100 basis points, reflecting strong cost discipline.
Anthony L. Carano: During the quarter, we celebrated the opening of Harrah's Nebraska's permanent facility on May 17th, the company's first property in the state, which is off to a strong start. We look forward to the completion of our newly rebranded Caesars property in New Orleans in October and the opening of the Danville Permanent Facility in December. Our elevated capital investment cycle is coming to an end, which will drive strong returns for the regional segment in the coming years.
Anthony: During the quarter, we celebrated the opening of Harris, Nebraska's permanent facility on May 17th, the company's first property in the state, which is off to a strong start.
Anthony: We look forward to the completion of our newly rebranded Caesars property in New Orleans in October and the opening of the Danville Permanent Facility in December .
Anthony: Our elevated capital investment cycle is coming to an end, which will drive strong returns for the regional segment looking ahead.
Anthony L. Carano: Our team members continue to deliver exceptional guest experiences as a result of their continued hard work and dedication. I want to thank all of our team members for their contributions to our strong results, which are a product of their commitment to excellence. With that, I will now turn the call over to Eric for some detail on the second quarter results in our Caesars digital segment. Thank you.
Speaker Change: Our team members continue to deliver exceptional guest experiences as a result of their continued hard work and dedication. I want to thank all of our team members for their contributions to our strong results, which are a product of their commitment to excellence.
Anthony Carano: I want to thank all of our team members for their contributions to our strong results, which are a product of their commitment to excellence.
Eric Hession: Caesars Digital delivered second quarter net revenues of $276 million, up 28% year-over-year, and set a quarterly adjusted EBITDA record of $40 million versus $11 million in the year-ago period. Including this quarter, we have now generated trailing 12-month EBITDA of $76 million. Our net revenue flow-through to EBITDA in the quarter remained within our 50% range.
Eric Hession: With that, I will now turn the call over to Eric for some detail on the second quarter results in our Caesar's digital segment. Thank you, Anthony. Caesar's digital delivered second quarter net revenues of 276 million, up 28% year over year, and set a quarterly adjusted EBITAR record of 40 million versus 11 million in the year-ago period. Including this quarter, we have now generated trailing 12 month EBITAR of 76 million. Our net revenue flow through EBITAR in the quarter remained within our 50% range. Net revenues in our sports betting segment increased 19% year over year. We are driven by flat handle and hold of 7.2%, which improved 80 basis points versus last year.
Speaker Change: With that, I will now turn the call over to Eric for some detail on the second quarter results in our Caesars digital segment. Thank you, Anthony.
Eric: Caesars Digital delivered second quarter net revenues of $276 million, up 28% year-over-year, and set a quarterly adjusted EBITDA record of $40 million versus $11 million in the year-ago period.
Speaker Change: Including this quarter, we have now generated trailing 12-month EBITDA of $76 million. Our net revenue flow-through to EBITDA in the quarter remained within our 50% range.
Eric Hession: Net revenues in our sports betting segment increased 19% year-over-year, driven by flat handle and hold of 7.2%, which improved 80 basis points versus last year. Our product on the sports side continues to improve, and our customers are reacting positively to our increasing mix of parlay and in-game offerings. We continue to drive growth in our parlay wagers, with the percentage of that type of wager growing 380 basis points year over year, consistent with the trends we've observed throughout the year. In July, we closed on the acquisition of Zero Flux, a leading sports betting technology company based in Australia. The Zero Flux team has already started contributing to product innovation and driving hold improvements and customer engagement.
Speaker Change: Net revenues in our sports betting segment increased 19% year-over-year, driven by flat handle and hold of 7.2%, which improved 80 basis points versus last year.
Eric Hession: Our product on the sports side continues to improve, and our customers are reacting positively to our increasing mix of parlay and in-game offerings. We continue to drive growth in our parlay wagers, with the percentage of that type of wager growing 380 basis points year over year, consistent with the trends we've observed throughout the year.
Speaker Change: Our product on the sports side continues to improve and our customers are reacting positively to our increasing mix of parlay and in-game offerings.
Speaker Change: We continue to drive growth in our parlay wagers, with the percentage of that type of wager growing 380 basis points year over year, consistent with the trends we've observed throughout the year.
Eric Hession: In July, we closed on the acquisition of Zero Flux, a leading sports betting technology company based in Australia. Zero flux teams started contributing to the product innovation and driving hold improvements and customer engagement. In our eye gaming segment, net revenues grew 50% for the second consecutive quarter, driven by a 33% increase in volume and a 30 basis point year-over-year improvement in hold. Cesar's Palace Online continues to grow as a percentage of our total eye casino revenues. We're actively enhancing the product offering by adding new and exciting game content, including exclusively designed Cesar's themed games.
Speaker Change: in July .
Speaker Change: We closed on the acquisition of Zeroflux, a leading sports betting technology company based in Australia. The Zeroflux team has already started contributing to the product innovation and driving hold improvements and customer engagement.
Bret Yunker: In our iGaming segment, net revenues grew 50% for the second consecutive quarter, driven by a 33% increase in volume and a 30 basis point year-over-year improvement in hold. Caesars Palace Online continues to grow as a percentage of our total iCasino revenue. We're actively enhancing the product offering by adding new and exciting game content, including exclusively designed Caesars-themed games. We successfully completed the acquisition of Winbet Operations in Michigan in June, which sets the stage for the introduction of our new iGaming app, which will be branded the Horseshoe in early Q3.
Speaker Change: In our iGaming segment, net revenues grew 50% for the second consecutive quarter, driven by a 33% increase in volume and a 30-basis point year-over-year improvement in hold. Caesars Palace Online continues to grow as a percentage of our total iCasino revenues.
Speaker Change: We're actively enhancing the product offering by adding new and exciting game content, including exclusively designed Caesars-themed games.
Eric Hession: We successfully completed the acquisition of WinFet operations in Michigan and June, which sets the stage for the introduction of our new eye gaming app, which will be branded the Horseshoe in early Q3. As we head to the back half of the year, we continue to be optimistic about the progress we're making in both sports and I casino, and I believe we are well set up for a strong finish to the year. We now offer sports betting in 32 North American jurisdictions, 26 of which offer mobile wagering.
Speaker Change: We successfully completed the acquisition of Winbet Operations in Michigan in June , which sets the stage for the introduction of our new iGaming app, which will be branded the Horseshoe in early Q3.
Bret Yunker: As we head to the back half of the year, we continue to be optimistic about the progress we're making in both sports and iCasino, and I believe we are well set up for a strong finish to the year. We now offer sports betting in 32 North American jurisdictions, 26 of which offer mobile wagering. I'll now pass the call back to Bret for some comments on the balance sheet.
Speaker Change: As we head to the back half of the year, we continue to be optimistic about the progress we're making in both sports and iCasino, and I believe we are well set up for a strong finish to the year. We now offer sports betting in 32 North American jurisdictions, 26 of which offer mobile wagering.
Brett Younger: I'll now pass the call back to Brett for some comments on the balance sheet.
Bret Yunker: Thanks, Eric. Strong pre-cash flow generation of over $100 million in Q2 was applied to permanently reduce our 2030 term loan fee. Our refinancing activity over the past two years has significantly extended our maturity profile, with our nearest maturity now three years away. We continue to monitor the capital markets to opportunistically lower our cost of debt. As Anthony noted previously, our elevated capital investment cycle is nearing completion, and we expect to see CapEx coming down by roughly $200 billion in 2025, setting the stage for increasing free cash flow, on top.
Brett Younger: Thanks, Eric. Strong free cash flow generation of over 100 million in Q2 was applied to permanently reduce our 2030 term loan fee. Our recent dancing activity over the past two years has significantly extended our maturity profile, with our nearest maturity now three years away. We continue to monitor the capital markets to opportunistically lower our cost of debt. As Anthony noted previously, our elevated capital investment cycle is nearing completion. And we expect to see CapEx coming down by roughly 200 million in 2025, setting the stage for increasing free cash flow over the time. Thanks to dig a little more deeply into numbers, starting in regional April was a terrible month for us when we last talked to you.
Speaker Change: I'll now pass the call back to Bret for some comments on the balance sheet.
Bret: Thanks, Eric. Strong free cash flow generation of over 100 million in Q2 was applied to permanently reduce our 2030 term loan fee. Our refinancing activity over the past two years has significantly extended our maturity profile, with our nearest maturity now three years away.
Speaker Change: We continue to monitor the capital markets to opportunistically lower our cost of debt.
Speaker Change: As Anthony noted previously, our elevated capital investment cycle is nearing completion and we expect to see CapEx coming down by roughly $200 billion in 2025, setting the stage for increasing free cash flow. Over to Thomas.
Bret Yunker: Thanks. To dig a little more deeply into the numbers, starting in regional. April was a terrible month for us when we last talked to you; we're obviously in April, you had the Easter calendar shift. It wasn't clear how the month would shake out. But if you look at the decline in regional year over year, April was more than 100% of that. May and June both were up year over year. If you look at Caesars specific items in the quarter, New Orleans.
Tom: Thanks. To dig a little more deeply into numbers starting in regional, April was a terrible month for us. When we last talked to you, we were obviously in April . You had the Easter calendar shift.
Brett Younger: We're obviously in April; you had the Easter calendar shift. It wasn't clear how the month would shake out, but if you look at the decline in regional year over year, April was more than 100% of that. May and June both were up year over year. If you look at Caesar specific items in the quarter, New Orleans were at peak construction disruption in the center of the casino right now. That's going to continue for the next month or so, so that hits us in this quarter as well. Reno, those of you who followed us a long time know that one of the biggest groups in Reno are the boulders.
Tom: It wasn't clear how the month would shake out, but if you look at the decline in regional year over year, April was more than 100% of that.
Tom: May and June both were up year over year. If you look at Caesars specific items
Bret Yunker: We're at peak construction disruption in the center of the casino right now, and that's going to continue for the next month or so. So that hits us in this quarter as well. Reno, those of you who have followed us a long time know that one of the biggest groups in Reno are the bowlers. This year's bowling group is about 20% of the size of last year, so we're missing well over 40,000 direct room nights from them, and likely more as they book through other channels.
Tom: in the quarter, New Orleans, we're at peak.
Tom: Construction disruption in the center of the casino right now. That's going to continue for the next month or so, so that hits us in this quarter as well.
Rino: Reno, those of you who have followed us a long time know that
Brett Younger: This year's bowling group is about 20% of the size of last year. So we're missing well over 40,000 direct room nights from them and likely more as they book through other channels. The combination of those two items in the quarter cost us 25 million dollars over 25 million of EBITDA, and those will continue into the third quarter. The boulders left end of July last year. New Orleans construction will complete Labor Day in addition. Churches, Terrahode property impacted Indianapolis in the quarter, and we anniversary the temporary opening in Virginia for about half of the quarter. So as I look forward, I'd expect you know third quarter looks something like this. Fourth quarter we get the benefit of a full quarter of New Orleans rolling out its new product recall that we've got about 80 million dollars there of incremental gaming revenue that the way taxes work in New Orleans would be without casino tax to us.
Rino: One of the biggest groups in Reno are the bowlers. This year's bowling group is about 20% of the size.
Rino: of last year, so we're missing...
Rino: well over 40,000 direct room nights from them.
Rino: and likely more as they book through other channels. The combination of those two items in the quarter cost us...
Bret Yunker: The combination of those two items in the quarter cost us $25 million, over $25 million of EBITDA. And those will continue into the third quarter; the bowlers left at the end of July last year. New Orleans construction will complete by Labor Day.
Rino: $25 million, over $25 million of EBITDA.
Rino: and those will continue into the third quarter, the bowlers left.
Rino: end of July last year.
Bret Yunker: In addition, Churchill's Terre Haute property impacted Indianapolis in the quarter, and we anniversary the temporary opening in Virginia for about half of the quarter. So as I look forward, I'd expect. You know, the third quarter looks something like this, and fourth quarter, we get the benefit of a full quarter of New Orleans rolling out its new product. Recall that we've got about $80 million there of incremental gaming revenue that, with the way taxes work in New Orleans, would be without casino tax to us, and then expect Virginia to open before the end of the year.
Rino: New Orleans Construction will complete Labor Day. In addition, Churchill's Terre Haute property impacted Indianapolis in the quarter.
Rino: And we anniversaried the temporary opening in Virginia for about half of the quarter.
Rino: So as I look forward, I'd expect...
Rino: You know, third quarter looks something like this.
Rino: fourth quarter, we get the benefit of a full quarter of New Orleans rolling out its new product. Recall that
Rino: We've got about $80 million there of incremental gaming revenue that the with the way taxes work in New Orleans would be without casino tax to us
Brett Younger: And then expect Virginia to open before the end of the year, so I would expect we'd be a grower in the fourth quarter. Third quarter probably looks similar to this, and then we feel good about 25 in regional in Vegas. Very pleased with the quarter. Keep in mind we had about 20 million of headwinds between union contract raises plus.
Rino: and then expect Virginia to open before the end of the year. So I would expect we'd be
Bret Yunker: So I would expect us to be a grower in the fourth quarter. The third quarter probably looks similar, and then we feel good about 25 in regional, in Vegas, very pleased with the quarter. You know, keep in mind, we had about 20 million in headwinds between union contract raises plus employees in venues that weren't open last year, so restaurants that were under construction and opened subsequent to the second quarter last year. So to fade away that 20 and grow.
Rino: A grower in the fourth quarter, third quarter probably looks similar to this.
Rino: And then we feel good about 25 in regional.
Rino: [inaudible]
Rino: Very pleased with the quarter. Keep in mind we had about $20 million of headwinds between union contract raises plus
Brett Younger: Yes, employees in venues that weren't open last year, so restaurants that were under construction and opened subsequent to second quarter last year, so to fade that 20 and grow, I'm particularly heartened that hold was a non-event in the quarter. We were in our range and the difference quarter over quarter was less than the increase in EBITDA. Obviously, we held margins well. Anthony mentioned the two hotel remodels that we did. Coliseum performing quite well. Versailles has not the cover off the ball for us. That's Versailles rooms are up $65 in ADR year over year, that's almost 60% lift and that's before the rooms with the balconies came online, just recently in the connector should open in this quarter that should have further tailwinds on that tower that's been our most successful hotel renovation in possibly the history of Caesars, certainly since we've been involved. So excited about that. Rest of the year looks strong, expect Vegas to post growth. I know that that's not what's been reflected in estimates, but we feel very good about the rest of the year into 25. Eric talked about digital, another quarter of nearly 30% net revenue growth, 50% flow through, which is what we've told you that we expected to deliver. July's off to a fantastic start, growth is in excess of that target, so we feel good about third quarter and then we'll get into, by the end of this quarter, we'll be into football. So feel very good about where digital's headed, expect that the Horseshoe brand, the second brand in Icocino can help us build on the gains that we've had since we rolled out Caesars Palace online. So momentum in digital is quite strong for us and all of the targets that we've laid out in the past still seem well within our grasp, so feel very good about that. And then, as Brad and Nancy both hit on, we will roll out, we'll finish our capex cycle that we entered into when we closed the merger in 2020 with the opening of Virginia by the end of the year. That'll bring that capex down a couple hundred million gross capex over 500 million and coupled with what's going on in digital and the brick and mortar portfolio, we're going to see a significant lift in free cash flow. As we stated, you know, you should expect us to be looking for what we'll do with that free cash flow. We continue to plan to is dead to reduce leverage at current levels in the stock.
Rino: employees in venues that weren't open last year, so restaurants.
Rino: that were under construction and opened subsequent to second quarter last year. So to fade that.
Bret Yunker: I'm particularly heartened that hold was a non-event in the quarter. We were in our range, and the difference quarter over quarter was less than the increase in EBITDA. Obviously, we held margins well. Anthony mentioned, "The two hotel remodels that we did, Coliseum is performing quite well, and Versailles has knocked the cover off the ball for us." That's Versailles rooms are up $65 in ADR year over year. That's almost a 60% lift. And that's before the rooms with the balconies came online.
Rino: 20 and Grow. I'm particularly heartened that Hold was a non-event in the quarter. We were in our range and
Rino: The difference quarter over quarter was less than the increase in EBITDA. Obviously, we held margins well, Anthony mentioned.
Speaker Change: The two hotel remodels that we did, Coliseum performing quite well.
Speaker Change: Versailles has knocked the cover off the ball for us. That's Versailles rooms are up $65 in ADR year over year. That's almost 60% lift.
Bret Yunker: Just recently, and the connector should open in this quarter, that should have further tailwinds on that tower. That's been our most successful hotel renovation in, possibly the history of Caesars, certainly since we've been involved. So, excited about that. The rest of the year looks strong.
Speaker Change: And that's before the rooms with the balconies came online.
Speaker Change: Just recently, and the connector should open in this quarter, that should have further tailwinds on that tower. That's been our most successful hotel renovation in...
Speaker Change: Possibly the history of Caesars, certainly since we've been involved.
Bret Yunker: Expect Vegas to post-growth. I know that that's not what's been reflected in estimates, but we feel very good about the rest of the year and into 25 Eric talked about digital. Another quarter of nearly 30% net revenue growth. 50% flow through, which is what we've told you that we expect to deliver. July's off to a fantastic start, and growth is in excess of that target.
Speaker Change: So, excited about that, rest of the year looks strong, expect Vegas to post-growth, I know that that's not what's been reflected in...
Speaker Change: Estimates, but we feel very good about the rest of the year and into 25.
Speaker Change: Eric talked about digital, another quarter of nearly 30% net revenue growth, 50% flow-through which is what we've
Eric: told you that we expect to deliver. July's off to a fantastic start. Growth is in excess of that target. So we feel good about
Bret Yunker: So we feel good about the third quarter, and then we'll get into football by the end of this quarter. So I feel very good about where digital is headed. I expect that the horseshoe brand, the second brand in iCasino, can help us build on the gains that we've had since we rolled out Caesars Palace online.
Eric: third quarter, and then we'll get into by the end of this quarter, we'll be into football. So feel very good about where digital is headed. Expect that the
Speaker Change: The Horseshoe brand, the second brand in iCasino can help us build on the gains that we've had since we rolled out Caesars Palace online. So momentum in digital is quite strong for us and
Bret Yunker: So momentum in digital is quite strong for us. And you know, all of the targets that we've laid out in the past still seem well within our grasp. So I feel very good about that.
Speaker Change: You know, all of the targets that we've laid out in the past.
Bret Yunker: And then, as Bret and Anthony both hit on, we will roll out. We'll finish our CapEx cycle that we entered into when we closed the merger in 2020, with the opening of Virginia by the end of the year. That'll bring that CapEx down a couple hundred million in gross CapEx, over 500 million, and you, coupled with what's going on in digital in the brick and mortar portfolio, we're going to see a significant lift in free cash flow.
Speaker Change: Still seem well within our grasp, so feel very good about that.
Speaker Change: And then as Bret and Anthony both hit on, we will roll out, we'll finish our CapEx cycle that we entered into when we closed the merger in 2020 with the opening of Virginia by the end of the year.
Speaker Change: That'll bring Net CapEx down a couple hundred million gross CapEx.
Speaker Change: over $500 million and
Speaker Change: You coupled with what's going on in digital the brick-and-mortar portfolio. We're going to see
Bret Yunker: As we stated, you know, you should expect us to be looking for what we'll do with that free cash flow. We continue to plan to reduce debt to reduce leverage at current levels in the stock. I wouldn't be surprised you shouldn't be surprised if you see us become a buyer of stock as we get to that inflection. And with that, I will turn it back to you for questions.
Speaker Change: A significant lift in free cash flow. As we stated, you know, you should expect us to be looking for what we'll do with that free cash flow. We continue to plan to reduce
Speaker Change: Debt to Reduce Leverage
Brett Younger: I wouldn't be surprised. You shouldn't be surprised if you see us become a buyer of stock as we get to that inflection point.
Speaker Change: at current levels in the stock. I wouldn't be surprised, you shouldn't be surprised if you see us become a buyer of stock as we get to that inflection point.
Brett Younger: And with that, I will turn it back for questions. Thank you.
Speaker Change: And with that, I will turn it back for questions.
Unknown Executive: Ladies and gentlemen, as a reminder to ask a question, please first start one on your telephone. And then wait. To hear your name announced to withdraw your question, please first start one one again. Please stand by while we compile the Q&A roster.
Operator: Ladies and gentlemen, as a reminder to ask the question, please press star 1-1 on your telephone and then wait to hear your name announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Joe Greff with J.P. Morgan. Your line is open.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, as a reminder to ask a question, please press star 1-1 on your telephone and then wait to hear your name announced.
Speaker Change: To withdraw your question, please press star 11 again.
Speaker Change: Please stand by while we compile the Q&A roster.
Joe Greff: Our first question comes from the line of Joe Greff with JP Morgan. Your line is open. Good afternoon, everybody.
Speaker Change: Our first question comes from the line of Joe Greff with J.P. Morgan. Your line is open.
Joseph Richard Greff: Good afternoon, everybody. I want to start with a question about Las Vegas. Obviously, the results were nicely ahead of what we in the industry were forecasting, and margins of, you know, knocking on 47%, nothing to sneeze at there. Going through some of the various Vegas KPIs that you put in the queue, if I make certain assumptions for Slotland, it looks like the contra gaming revenue, or at least the relationship between casino revenue and gross gaming revenue, was very favorable.
Joe Greff: I want to start with a question on Las Vegas. Obviously, the results were nicely ahead of what we in the street were forecasting, and margins of knocking on 47% nothing to sneeze at there. Going through some of the various biggest KPIs that you put in the queue, if I make certain assumptions for slot length, it looks like the contrary gaming revenue or at least the relationship between casino revenue and gross gaming revenue was very favorable. I mean, the best it's been in 456 quarters here.
Joseph Richard Greff: Good afternoon, everybody. I want to start with a question on Las Vegas.
Speaker Change: Obviously, the results were nicely ahead of what we in the industry were forecasting and margins.
Joseph Richard Greff: of knocking on 47%, nothing to sneeze at there. Going through some of the various biggest KPIs that you put in the queue, if I make certain assumptions for Slotlin,
Speaker Change: It looks like the Contra gaming revenue...
Speaker Change: or at least the relationship between casino revenue and gross gaming revenue.
Joseph Richard Greff: I mean, the best it's been in, you know, four or five, six quarters here. Can you talk about maybe what's driving that and maybe the sustainability of that? And obviously, that would lead to a continuation of pretty good margins.
Speaker Change: was very favorable, I mean, the best it's been in, you know, four or five, six quarters here. Can you talk about maybe what's driving that and maybe the sustainability of that? And obviously, that would lead to a continuation of pretty good margins.
Joe Greff: Can you talk about maybe what's driving that and and needed a sustainability of that and obviously that would lead to a continuation of pretty good margins.
Anthony Carano: So Joe, I'd say, you know, from our standpoint, our approach to promotions in Vegas has not changed at all. I'm not looking at my queue. So I don't know what numbers that you're looking at, but we're, you know, what we found is we have pricing power in Las Vegas. We've known that for quite some time. We've got a great team here that has continued to raise the bar. If you look back to the second quarter of 22, was our all time EBITDA record. So we're comping two years ago. Was our all time EBITDA record. That was state farm.
Thomas Robert Reeg: So, Joe, I'd say, from our standpoint, our approach to promotions in Vegas has not changed at all. I'm not looking at my queue.
Speaker Change: So, Joe, I'd say, you know, from our standpoint,
Speaker Change: The
Thomas Robert Reeg: So I don't know what numbers you're looking at, but we're, you know, what we found is that we have pricing power in Las Vegas. We've known that for quite some time. We've got a great team here that, you know, has continued to raise the bar. If you look back to the second quarter of 22, it was our all-time EBITDA record. So we're comping two years ago was our all-time EBITDA record that was State Farm, that was a lot of international business coming and paying back that was a pre-union contract. There's about $76 million of headwinds since that quarter.
Joseph Richard Greff: Our approach to promotions in Vegas has not...
Joseph Richard Greff: changed at all. I'm not looking at my queue. So I don't know what numbers that you're looking at. But we're, you know, what, what we found is we have
Joseph Richard Greff: Pricing Power in Las Vegas. We've known that for quite some time. We've got a great team here that
Joseph Richard Greff: has continued to raise the bar. If you look back to...
Speaker Change: The second quarter of twenty-two.
Speaker Change: was our all time EBITDA record. So we're a company two years ago was our all time EBITDA record that was
Anthony Carano: That was a lot of international business coming and paying back. That was pre-union contract. That there's about $76 million of headwinds since that quarter. So two years ago, you had 76 million of stuff, whether it was lower expenses or revenue like the State Farm that doesn't recur every year. And our EBITDA is down a little under $30 million from that quarter. So that speaks to our team. We've been able to, despite 76 million of headwinds, we've eaten through 50 of that.
Speaker Change: State Farm, that was a lot of international business.
Speaker Change: coming and paying back. That was pre-union contract.
Speaker Change: There's about 76 million dollars.
Thomas Robert Reeg: So two years ago, you had 76 million in stuff, whether it was lower expenses or revenue like State Farm that doesn't recur every year, and our EBITDA is down, a little under $30 million from that quarter.
Speaker Change: of headwinds since that quarter. So two years ago, you had 76 million of stuff, whether it was lower expenses or revenue like the State Farm that doesn't recur every year.
Speaker Change: and our EBITDA is down.
Thomas Robert Reeg: So that speaks to our team. We've been able to, you know, despite 76 million headwinds. We've eaten through 50 of them. I think that's a testament to how our guys operate out here, and we're pretty proud.
Speaker Change: a little under $30 million from that quarter. So that speaks to our team. We've been able to, despite 76 million of headwinds, we've eaten through 50 of that. I think that's
Anthony Carano: a testament to how our guys operate out here, and we're pretty proud of that.
Speaker Change: a testament to how our guys operate out here and we're pretty proud of that.
Thomas Robert Reeg: Great. Then my second question is whether it's for you, Tom, or for Eric in digital. Clearly, you're doing a good job on the iCasino side of things, and I'm presuming that has a much higher margin than the OSB revenues. And I know you have a target out there of $500 million in EBITDA, but if you look at the next couple of years in consensus numbers, no one's sort of forecasting that. But it looks like this year you could be patient to do or knock on a couple of hundred million of EBITDA in this segment. Is that close to how you're thinking about it internally, obviously taking into account what you're forecasting in the next couple of quarters?
Joe Greff: Great. My second question, it's for a few time or for Eric in digital. Clearly, you're doing a good job on the eye.
Speaker Change: Great. Then my second question, it's for you, Tom, or for Eric in digital.
Eric Hession: I've seen a side of things, and I'm presuming that has a much higher margin than OFB revenues. I know you have a target out there of 500 million in EBIDAR, and if you look at it a couple of years, in consensus numbers, no one's sort of forecasting that. But it looks like this year you could be patient to do or knock on a couple of 100 million of EBIDAR in the segment. Is that close to how you're thinking about it internally? Obviously, you know, taking into account what you're forecast, even a couple of quarters. Yeah, so a couple of things.
Speaker Change: Clearly, you're doing a good job on the iCasino side of things, and I'm presuming that has a much higher margin.
Speaker Change: then OSB Revenues.
Speaker Change: and I know you have a target out there of 500 million in EBITDA and if you look at the next couple of years.
Speaker Change: In consensus numbers, no one's sort of forecasting that, but it looks like this year you could be patient to do or knock on a couple of hundred million of EBITDA in this segment. Is that close to how you're thinking about it internally? Obviously, you know, taking into account what you're forecasting the next couple of quarters.
Thomas Robert Reeg: Yeah, so a couple of things. I agree with you that iCasino is going to be more profitable from a margin perspective than sports as you look at, ultimately, more states legalizing it. But if you look at the states that are legal now and their tax rates, the delta between margin and high casino and sports spending is not as large as you would suspect. Um, you know, last quarter I laid out, we were a billion dollars in net revenue last year.
Eric Hession: I agree with you that I could see now is going to be more profitable from a margin perspective than sports. As you look at ultimately more states legalizing, but if you look at the states that are legal now and their tax rate, the delta between margin and eye casino and sportsmening is not as large as you would suspect. You know, last quarter I laid out we were a billion of net revenue last year. We were about 50 of EBIDAR, a little less than that, and talked about growing 30% on the top line. 50% flow through that should get you in the neighborhood of 200 million, and we're well on our way there this year.
Speaker Change: Yes, so a couple of things. I agree with you that iCasino...
Speaker Change: is going to be more profitable from a margin perspective than sports, as you look at ultimately more states legalizing, but if you look at the states
Speaker Change: that are legal now and their tax rate, the delta between margin and high casino and sports betting is not as large as you would suspect.
Speaker Change: You know, last quarter I laid out...
Thomas Robert Reeg: We were about 50 of EBITDA, a little less than that, and we talked about growing 30% on the top line. 50% flow through that should get you in the neighborhood of $200 million, and we're well on our way there this year. I feel good about that, you know. The key will be, can we do it again next year? And then we get the roll-off of the partnership contracts, which will also flow to the bottom line. And that's how we get to the same 500 we've been talking about for three years now. You know, you'll believe it at some point.
Speaker Change: We were a billion of net revenue last year.
Speaker Change: We were about...
Speaker Change: 50 of EBITDA, a little less than that. And
Speaker Change: talked about growing 30% on the top line.
Speaker Change: 50% flow through that should get you in the neighborhood of
Eric Hession: So feel good about that.
Speaker Change: 200 million, and we're well on our way there this year.
Eric Hession: You know, the key will be can we do it again next year and then we get the roll off of the partnership contracts that also will flow to the bottom line and that's how we get to the same 500 we was talking about for three years now. You know, you'll believe it at some point.
Speaker Change: feel good about that.
Speaker Change: You know, the key will be, can we do it again next year? And then we get the roll off of the
Speaker Change: partnership contracts that also will flow to the bottom line. And that's how we get to the
Joseph Richard Greff: Great. I appreciate the comments. Thanks, Tom.
Joe Greff: Great. Appreciate the comments. Thank you.
Speaker Change: You know, you'll believe it at some point.
Carlo Santarelli: Please stand by for our next question. Our next question comes from the line of Carlo Santa Rellie with Deturban. Yelana is open.
Operator: Please stand by for our next question. Our next question comes from the line of Carlo Santarelli with Detroit Bank. Your line is open.
Speaker Change: Great. Appreciate the comments. Thanks, Tom.
Speaker Change: Thank you. Please stand by for our next question.
Speaker Change: Our next question comes from the line of Carlo Santarelli with Detroit Bank. Your line is open.
Carlo Santarelli: Hey, Tom, everybody, Anthony, Bret, I just had two questions, both of which more or less relate to kind of the back half of the year in Las Vegas. The first one, and I just want to make sure I understand this properly. Tom, you talked a little bit about the twenty million dollars in incremental costs, some of which are the bulk of which related to the culinary union contract that contract. If I'm not mistaken, and this is where I'm looking for clarity, we'll see its next escalator in October, which means that in the 3Q, presumably, the only increase you should see from that would relate to, you know, whatever you might have under-accrued in the 3Q last year, so relatively minimal.
Carlo Santarelli: Hey Tom, everybody, Anthony, Brett, I was I just had two questions, both of which more or less relate to kind of the back hat of the year in Las Vegas. The first one, and I just want to make sure I understand this properly. Tom, you talked a little bit about the 20 million of incremental costs, some of which are the bulk of which related to the culinary union contract. That contract, if I'm not mistaken, and this is where I'm looking for clarity, we'll see its next escalator in October, which means that in the three queue, presumably the only increase you should see from that would relate to, you know, whatever you might have under accrued in the three queue last year.
Carlo Santarelli: Is my understanding of that correct? That's accurate, Carlo. Okay, thank you. And then, obviously, the World Series of Poker is happening right now; you guys kind of, obviously have that in your properties, and has historically been a pretty good cash generator for you, not just for the tournament itself, but for gaming play in general. Could you comment a little bit about kind of the holistic impact that that brand is having across, you know, the assets at present?
Carlo Santarelli: Hey, Tom, everybody, Anthony.
Carlo Santarelli: I just had two questions, both of which more or less relate to the back half of the year in Las Vegas. The first one, and I just want to make sure I understand this properly, Tom, you talked a little bit about the $20 million.
Speaker Change: of incremental costs, some of which are the bulk of which related to the culinary union contract. That contract, um...
Speaker Change: If I if I'm not mistaken, and this is where I'm looking for clarity, we'll we'll see its next escalator in October Which means that in the 3Q presumably the only increase you should see from that would relate to
Carlo Santarelli: So relatively minimal. Is my understanding of that correct?
Speaker Change: You know, whatever you might have under-accrued in the 3Q last year, so relatively minimal. Is my understanding of that correct?
Tom Reeg: That's accurate, Carlo.
Tom Reeg: Okay, thank you. And then the second one, obviously, World Series of Poker is happening right now. You guys kind of have, you know, obviously have that in the properties, and it has historically been a pretty good cash generator for you. Not just for the tournament itself, but for gaming play in general. Could you comment a little bit about kind of the holistic impact that that brand is having across, you know, the assets that present.
Carlo: That's accurate, Carlo.
Speaker Change: Okay, thank you. And then second one, obviously World Series of Poker is happening right now.
Speaker Change: have obviously had that in the properties and has historically been a pretty good.
Speaker Change: is a cash generator for you, not just for the tournament itself, but gaming play in general. Could you comment a little bit about kind of the holistic impact that that brand is having across, you know, the assets at present?
Tom Reeg: Yes. So I'll talk about the holistic; Eric can talk about specifics of actual World Series. This was our best World Series ever from a financial perspective. It's; it fills a lot of rooms on the east side of the strip. You know, at a time when it can be, as we've noticed recently, almost 120 degrees here. So a good time. To have a group of a significant group of gamblers in house. We see benefits in our hotel. We see benefits in table games. We see benefits in slot play and in our food and beverage. That's all ancillary and hard to quantify.
Thomas Robert Reeg: Yeah, so I'll talk about the Holistic, and Eric can talk about the specifics of the actual World Series. This was our best. World Series ever from a financial perspective. Um, yeah. It fills a lot of rooms on the east side of the strip, you know, at a time when it can be, as we've noticed recently, almost 120 degrees here, so a good time to have a significant group of gamblers in-house. We see benefits in our hotel, we see benefits in table games, we see benefits in slot play, and in our food and beverage, that's all ancillary and hard to quantify.
Speaker Change: Yeah, so I'll talk about the holistic, Eric can talk about specifics of actual World Series. This was our best World Series ever from a financial perspective. It's...
Eric: It fills.
Eric: a lot of rooms on the east side of the Strip,
Eric: It can be, as we've noticed recently, almost 120 degrees here.
Eric: So a good time to have...
Eric: A group of, a significant group of gamblers in-house. We see benefits in our hotel. We see benefits.
Eric: In table games, we see benefits in slot play and in our food and beverage that's all ancillary and hard to quantify, but Eric can talk about the actual economics of the event for us.
Eric Hession: But Eric can talk about the actual economics of the event for us. Yeah, Carlo, if you it shows up in our P and L on that other line, it's basically the World Series of Poker plus the skin revenues that we received from renting our skins and other states. As Tom mentioned, we had a record World Series Poker here at the venue in Las Vegas from an economic perspective. It's actually very consistent. You know, the online poker does okay, but doesn't make a huge amount of money, and then the royalty streams and the land base, because you know, is where the economics are.
Eric Hession: Yeah, Carlo, if you do, it shows up in our P&L on that other line. It's basically the World Series of Poker plus the skin revenues that we receive from renting our skins in other states. As Tom mentioned, we had a record World Series of Poker here at the venue in Las Vegas. From an economic perspective, it's actually very consistent. You know, online poker does okay but doesn't make a huge amount of money.
Eric: Yeah, Carlo, if you it shows up in our P&L on that other line, it's basically the World Series of Poker plus the skin revenues that we received from renting our skins in other states. As Tom mentioned, we had a record World Series of Poker here at the
Eric: venue in Las Vegas, from an economic perspective, it's actually very consistent. You know, the online poker
Eric Hession: And then the royalty streams and the land-based casinos where the economics are, they make between 20 and 25 million for the year as a whole. And then the balance, and that's an EBITDA number. And then the balance is going to be the skins that you see there in that other line.
Tom: does okay, but doesn't make a huge amount of money. And then the royalty streams and the land-based casinos where the economics are, it makes between 20 and 25 million for the year as a whole. And then the balance, and that's an EBITDA number. And then the balance is gonna be the skins that you see there in that other line.
Eric Hession: It makes between 20 and 25 million for the year as a whole, and then the balance, and that's an EBITDA number, and then the balance is going to be the skins that you see there in that other line.
Carlo Santarelli: Great. Thank you, guys.
Anthony L. Carano: Great, thank you guys. And then, if I could just one quick follow-up, Anthony, you mentioned the 25 group pace for Las Vegas had strengthened in the period. Could you kind of give some parameters, i.e., what's booked, what you expect the mix could be, pace, things of that nature? Yeah, Carlo. I think
Carlo Santarelli: And then, if I could just one quick follow-up, Anthony, you mentioned 25 group, group pace for Las Vegas had strengthened in the period. Could you kind of give some parameters, i.e. what's both what you expect mix could be pastings of that nature? Yeah, Carla, I think we'll see about mid single debt digits above this year and going up into the mid teens of mix for the market. So a tick up there as well. Teen's been doing a great job, and future bookings are really, as I said, coming in very strong in the last couple of months for 25.
Speaker Change: Great, thank you guys. And then if I could, just one quick follow-up. Anthony, you mentioned 25 group pace for Las Vegas had strengthened in the period. Could you kind of give some parameters, i.e., what's booked, what you expect next could be, pace, things of that nature?
Anthony L. Carano: Yeah, Carlo, I think we'll see about mid-single digits above this year and going up into the mid-teens of mix for the market, so a tick up there as well. The team's been doing a great job in future bookings and is really, as I said, coming in very strong in the last couple of months for 25.
Speaker Change: Yeah, Carlo, I think we'll see about mid-single digits.
Speaker Change: above this year and going up into the mid-teens of MIX.
Speaker Change: for the market. So a tick up there as well. The team's been doing a great job in future bookings and is really, as I said, come in very strong in the last couple of months for 25.
Carlo Santarelli: Great. Thanks everyone.
Brent Montour: Thank you. Please stand by for our next question. Our next question comes from the line of Brent Montour with Barclays. Your line is open. Hi, everybody. Good afternoon or good evening, and thanks for taking my question. I first want to talk about the hotel room rate. If we, you know, back into room rates out of the queue, at least from what we can see, it seems like nice acceleration of room rate in Las Vegas quarter of a quarter.
Operator: Please stand by for our next question. Our next question comes from the line of Brandt Montour with Barclays. Your line is open.
Speaker Change: Great. Thanks, everyone.
Speaker Change: Thank you.
Speaker Change: Please stand by for our next question.
Brandt Antoine Montour: Hi, everybody. Good afternoon or good evening, and thanks for taking my question.
Speaker Change: Our next question comes from the line of Brandt Montour with Barclays. Your line is open.
Speaker Change: Hi everybody, good afternoon or good evening and thanks for taking my question.
Brandt Antoine Montour: I first want to talk about the hotel room rate. If we, you know, back into room rates out of the queue, at least from what we can see, it seems like a nice acceleration of room rates in Las Vegas quarter over quarter. I was curious, Tom, if you want to speculate on how much of that, well, there's some from obviously Rio leaving. Also, you mentioned the dynamics of hotel supply coming out of the strip, and maybe there's just incremental compression that you're finding, and you're able to yield, you're just, you know, able to yield up your assets here sequentially. How do you think about that? And is it, you know, how do you feel about the sustainability of that into the rest of the year?
Speaker Change: I first want to talk about the hotel room rate.
Speaker Change: If we, you know, back into...
Speaker Change: room rates.
Tom: Out of the queue, at least from what we can see, it seems like nice acceleration of room rate in Las Vegas quarter over quarter. I was curious, Tom, if you want to speculate on how much of that, well, there's some from obviously from Rio leaving.
Brent Montour: I was curious, Tom, if you want to speculate on how much of that? Well, there's some from obviously from Rio leaving. Also, you know, you mentioned the dynamics of hotel supply coming out of the Strip and maybe there's just incremental compression that you're finding and you're just able to yield up your assets here sequentially.
Speaker Change: Also, you know, you mentioned the dynamics of hotel supply coming out of the Strip and maybe there's just incremental compression that you're finding and you're able to yield you're just.
Tom Reeg: How do you think about that, and is it, you know, how do you feel about the sustainability that into the rest of the year? Yeah, Brent, we have, you know, with, we've not seen a lot of elasticity when it comes through pricing in Vegas, so we have continued to take price kind of across the board, not just rooms, you know, restaurants, ATM fees, you know, pool cabanas. There's just a massive amount of demand for, you know, Vegas, and that has continued, and, you know, if you look at, you know, where we're driving, we're driving a lot of it through non-gaming, and gaming is holding up well, and so that leads to more EBITDA overall, which is great.
Speaker Change: You know, able to yield up your assets here sequentially. How do you think about that? And is it, you know, how do you feel about the sustainability of that into the rest of the year?
Thomas Robert Reeg: Yeah, Brent, we've not seen a lot of elasticity when it comes to pricing in Vegas, so we have continued to take prices kind of across the board, not just rooms, you know, restaurants, ATM fees, you know, Pool Cabanas. There's just a massive amount of demand for Vegas, and that has continued. And, you know, if you look at where we're driving, we're driving a lot of it through non-gaming, and gaming is holding up well. And so that leads to more EBITDA overall, which is great.
Speaker Change: Yeah, Brent, we have, you know, with, we've not seen a lot of
Speaker Change: elasticity when it comes to pricing in Vegas. So we have continued to take price
Speaker Change: ...kind of across the board, not just rooms, you know, restaurants, ATM fees.
Speaker Change: you know, Pool Cabanas, there's just a...
Speaker Change: Massive amount of demand for Vegas and that has
Speaker Change: continued and you know if you look at you know where we're driving it we're driving a lot of it through non gaming and gaming is holding up well and so that leads to more EBITDA overall which is great
Brent Montour: Okay, great, thanks for that.
Brandt Antoine Montour: Okay, great. Thanks for that.
Eric Hession: And then, and then maybe for Eric over in digital, you know, hoping you could talk a little bit about the dynamic with handle, looking flat, your year in this quarter. You know, I know we talked about this last quarter, and you're getting a lot of growth from parlay mix and stepped up hold there. You know, how long can that dynamic carry you? So, in terms of you're getting overall OSB revenue growth to compound to the longer term EBITDA, to get to the longer term EBITDA, you guys have laid out, is that sustainable or do you need to go back and start growing player counts and volumes again here in the over the medium term?
Speaker Change: Okay, great. Thanks for that. And then maybe for Eric over in digital.
Eric: You know, hoping you could talk a little bit about the dynamic with Handel.
Eric Hession: And then maybe for Eric over in digital, you know, hoping you could talk a little bit about the dynamic with Handle looking flat again year over year in this quarter. You know, I know we talked about this last quarter, and you're getting a lot of growth from Parlamix and stepped up hold there. You know, how long can that dynamic carry you in terms of getting overall OSB revenue growth to compound to the longer term EBITDA targets you guys have laid out? Is that sustainable, or do you need to go back and start growing player counts and volumes again here in the medium term? Yeah, it's a good choice.
Speaker Change: Looking flat again year over year in this quarter. I know we talked about this last quarter and you're getting a lot of growth from Parlamix and stepped up hold there. How long can that dynamic carry you?
Speaker Change: in terms of you're getting overall OSB revenue growth to compound to the longer-term EBIT.targets to get to the longer-term EBIT.targets that you guys have laid out. Is that sustainable or do you need to go back and start growing player counts and volumes again here over the medium term?
Eric Hession: Yeah, it's a good question, and it's been a couple quarters that we've had, you know, basically flat volume and increased hold, and that's increased revenues on the sports betting side. We've taken some actions from a reinvestment perspective, and then also from a wagering perspective that have impacted the volumes. And one way to think about it is, as I mentioned on the previous quarter, we had just recently been able to launch our new marketing system that allows us to provide segmented marketing, trigger-based marketing, and a much more customized approach. Prior to that, we were investing with a much more peanut butter spread approach, and it caused us to be over-investing in some of the lower end of the database.
Eric Hession: Yeah, it's a good question. And it's been a couple quarters that we've had basically flat volume and increased hold, and thus increased revenues on the sports betting side. We've taken some actions from a reinvestment perspective, and then also from a wagering perspective that have impacted the volumes. And one way to think about it is, as I mentioned in the previous quarter, we had just recently been able to launch our new marketing system that allows us to provide segmented marketing, trigger-based marketing, and a much more customized approach.
Speaker Change: Yeah, it's a good question and it's been a couple quarters that we've had.
Speaker Change: basically flat volume and increased hold and thus increased revenues on the sports betting side. We've taken some actions from a reinvestment perspective, and then also from a
Speaker Change: perspective that have impacted the volumes. And one way to think about it is, as I mentioned on
Speaker Change: Previous quarter, we had just recently been able to launch our new marketing system that allows us to provide segmented marketing, trigger-based marketing, and a much more customized approach.
Eric Hession: Prior to that, we were investing with a much more peanut butter spread approach, and it caused us to be over investing in some of the lower end of the database. So we've reduced that. And as you'd expect, the volumes have dropped off, but the profitability has gone up. And so the business that we are getting isn't really business that you'd be too concerned about losing because it was unprofitable. I think that what you'll start to see is revenue growth this quarter, and it'll accelerate as we start to lap some of the actions that we took. So I do think you'll see solid volume growth start, and the hold will continue to grow. And so that should compound as we head into this second half of the year.
Speaker Change: Prior to that, we were investing with a much more peanut butter spread approach, and it caused us to be over-investing in some of the lower end of the database.
Eric Hession: So, we've reduced that, and as you'd expect, the volumes have dropped off, but the profitability has gone up, and so the business that we were getting isn't really business; it'd be too concerned about losing because it was unprofitable. I think that what you'll start to see is revenue growth start this quarter, and it'll accelerate as we start to laugh some of the actions that we took. So, I do think you'll see solid volume growth starting, and the hold will continue to grow, and so that should compound as we head into this back half of the year.
Speaker Change: So we've reduced that, and as you'd expect, the volumes have dropped off, but the profitability has gone up. And so the business that we are getting isn't really business that you'd be too concerned about losing because it was unprofitable.
Speaker Change: I think that what you'll start to see is revenue growth start this quarter, and it'll accelerate as we start to lap some of the actions that we took.
Speaker Change: So, I do think you'll see solid volume growth starting and the hold will continue to grow and so that should compound as we head into this back half of the year.
Brent Montour: Perfect.
Unknown Executive: Thanks, everyone. Thank you.
Dan Politzer: Please stand by for our next question. Our next question comes from the line of Dan Pulitzer with Wells Fargo. The line is open. Hey, good afternoon, everyone. Thanks for taking my questions. First on the regionals, Tom, you mentioned that most of the decline in the quarter was coming from April, and that June was actually up. As we look at the gross gaming revenues for what's reportable, it looks to tell a different story.
Operator: Please stand by for our next question. Our next question comes from the line of Dan Politzer with Wells Fargo. Your line is open.
Speaker Change: Thanks, everyone.
Speaker Change: Thank you.
Speaker Change: Please stand by for our next question.
Daniel Brian Politzer: Hey, good afternoon, everyone. Thanks for taking my questions. First on regionals, Tom, you mentioned that most of the decline in the quarter was coming from April and that June was actually up. But, as we look at the gross gaming revenues for what's reportable, it looks to tell a different story. So when you mentioned that, were you talking about, you know, net revenues? And how do we kind of reconcile that? Is there a dynamic with promotions going on? That is also worth maybe talking about?
Speaker Change: Our next question comes from the line of Dan Politzer with Wells Fargo. Your line is open.
Daniel Brian Politzer: Hey, good afternoon, everyone. Thanks for taking my questions.
Daniel Brian Politzer: First on regionals, Tom, you mentioned that most of the decline in the quarter was coming from April and that June was actually up.
Dan Politzer: When you mention that, are you talking about net revenues, and how do we reconcile this? Is there a dynamic with promotions going on that is also worth maybe talking about?
Speaker Change: You know, as we look at the gross gaming revenues for what's reportable, it looks to tell a different story. So when you mention that, are you talking about, you know, net revenues and how do we kind of reconcile this? Is there a dynamic with promotions going on that is also worth with maybe talking about?
Tom Reeg: Dan, we've known each other a long time. I only talk about EBITDA, so whatever's going on in gross gaming revenue, I'm not paying attention to. We have not changed our promotional profile in any piece of our business. We were off at 30 something for the quarter, and 25 plus of that was New Orleans and Reno, as I described. The regional business as a whole continues to bump along. Obviously, as we've seen, you've got months that are not as strong and others that are stronger. April for us, as I said, was more than 100% of the decline. Both May and June grew in EBITDA, but there's nothing we're doing in promotions, nor are there anything we see others doing that we need to respond to in that segment.
Thomas Robert Reeg: Dan, we've known each other a long time. I only talk about EBITDA. So whatever's going on in gross gaming revenue, I'm not paying attention to it. We have not changed our promotional profile in any part of our business.
Speaker Change: Dan, we've known each other a long time. I only talk about EBITDA. So whatever's going on in gross gaming revenue, I'm not paying attention to.
Daniel Brian Politzer: We have not changed our promotional profile in any piece of our business.
Thomas Robert Reeg: Um, you know, I took we were off by about 30 percent for the quarter, and 25 plus of that was New Orleans and Reno, as I described. So, you know, the regional business as a whole continues to bump along. Obviously, as we've seen, you've got months that are not as strong and others that are stronger. April for us, as I said, was more than 100% of the decline. Both May and June grew in EBITDA, but there's nothing we're doing in promotions, nor is there anything we see others doing that we need to respond to in that
Daniel Brian Politzer: Got it. That's helpful.
Speaker Change: You know, we were off, what, 30-something.
Speaker Change: for the quarter, and 25 plus of that was New Orleans and Reno, as I described. So, you know, the...
Speaker Change: regional business as a whole.
Speaker Change: continues to bump along. Obviously, as we've seen, you've got months that
Speaker Change: are not as strong and others that are stronger. April for us, as I said, was more than 100% of the decline. Both May and June grew in EBITDA.
Speaker Change: But there's nothing, there's nothing we're doing in promotions, nor are there anything we see others doing that we need to respond to in that segment.
Dan Politzer: That's helpful.
Daniel Brian Politzer: And then in terms of the M&A environment, there's obviously been a lot in the headlines lately. Is there, you know, do you view your stock price here as a limiting factor to getting involved? Or, you know, are there opportunities that you could see, notwithstanding, you know, where your stock is trading, just given some of the headlines that we've seen out there?
Tom Reeg: In terms of the M&A environment, there's obviously been a lot in the headlines lately. Do you view your stock price here as a limiting factor to getting involved, or are there opportunities that you could see notwithstanding where your stock is trading just given some of the headlines that we've seen out there? I'd say we're just reading the same headlines.
Speaker Change: Got it. That's helpful. And then in terms of the M&A environment, there's obviously been a lot in the headlines lately.
Speaker Change: Do you view your stock price here as a limiting factor to getting involved, or are there opportunities that you could see notwithstanding where your stock is trading, just given some of the headlines that we've seen out there?
Thomas Robert Reeg: I'd say we're just reading the same headlines you are, we're not, we're not even tangentially involved in whatever's happening at Penn, which I know that's where your question's coming from. You know, in terms of what we'll do, I've said before that, you know, we are mindful that we've generated a lot of shareholder value through M&A through external opportunities. The M&A that we've driven value through in the greatest form used stock as a significant portion of our payment for those assets. I'm not an issuer of stock.
Tom Reeg: We're not even tangentially involved in whatever's happening at 10, which I know that's where your question's going. In terms of what we'll do, as I've said before, that we are mindful that we've generated a lot of shareholder value through M&A, through external opportunities. The M&A that we've driven value through in the greatest form have used stock as a significant portion of our payment for those assets.
Speaker Change: I'd say we're just reading the same headlines you are, we're not.
Speaker Change: There's...
Speaker Change: We're not even tangentially involved in whatever's happening at Penn, which I know that's where your questions going. You know, in terms of what we'll do, we I've said before that
Speaker Change: You know, we are...
Speaker Change: mindful that we've generated a lot of shareholder value through
Speaker Change: M&A through external opportunities.
Speaker Change: The M&A that we've driven value through in the greatest form have used...
Speaker Change: stock as a significant portion of our payment for those assets.
Tom Reeg: I'm not an issuer of stock at $36 wherever it was today. We're going to be even more significant free cash flow producer as the project spend runs down. That will open up a leg of shareholder returns. You should expect us to start buying in some of our stock. If the stock moves to a different neighborhood, that can change. All things equal, will drive more value if we continue to execute external opportunities, but I'm not going to give our stock away.
Thomas Robert Reeg: 36 bucks, wherever it was today, you know, we're going to be a significant, even more significant free cash flow producer as this, As the project spend runs down, so that will open up a leg of shareholder returns. So you should expect us to start buying in some of our stock. If the stock moves to a different neighborhood, that can change. We, You know, I think, all things equal, will drive more value if we continue to execute external opportunities, but I'm not going to give our stock away. So that's where we sit.
Speaker Change: I'm not an issuer of stock.
Speaker Change: As the project spend runs down...
Speaker Change: So...
Speaker Change: That will open up a leg of shareholder returns, so you should expect us to start buying in some of our stock. If the stock moves to a different neighborhood, that can change. We, you know, I think
Speaker Change: You know.
Speaker Change: All things equal will drive more value if we continue to execute external opportunities, but...
Daniel Brian Politzer: Got it. And then if I could just sneak in one quick clarification, you mentioned for the regionals in the third quarter, it will look similar to the second quarter. I'm assuming that was, you know, declining by a similar amount year over year, correct?
Dan Politzer: That's where, if I could just speak in one quick clarification.
Speaker Change: I'm not going to give our stock away. So that's where we sit today.
Dan Politzer: You mentioned for the regionals in the third quarter, it will look similar to the second quarter. I'm assuming that was declining by a similar amount year over year, correct? We have the same; we're dealing with all three that impacted us in the second quarter, in the third quarter. So New Orleans, Pete Disruption, Till Labor Day, Terahode obviously we're going through, I guess the second quarter, second full quarter since opening, and then the Reno Group Impact extended into July last year, so all three will be headwinds. This quarter, I think you start, start to flip toward the end of the quarter as New Orleans opens, and then as you get to fourth quarter and Virginia opens, I'd expect we're growing in that segment again. Recall that the wind per position in the temporary in Virginia is the highest in the entire enterprise, and will be about doubling gaming capacity when we move to the permanence, so that should be a strong driver, and I've already hit on the way the New Orleans casino revenue will flow through in the initial stages.
Speaker Change: Got it. And then, if I could just sneak in one quick clarification, you mentioned for the regionals in the third quarter it will look similar to the second quarter. I'm assuming that was, you know, declining by a similar amount year-over-year, correct?
Thomas Robert Reeg: Yeah, we have the same, we're dealing with all three that impacted us in the second quarter and the third quarter. So New Orleans peak disruption till Labor Day. Terre Haute, obviously, we're going through.
Speaker Change: Yeah, we have the same, we're dealing with all three that impacted us.
Speaker Change: In the second quarter, in the third quarter, so New Orleans.
Speaker Change: peak disruption till Labor Day.
Thomas Robert Reeg: So I guess the second quarter, the second full quarter since opening, and then the Reno group impact extended into July last year. So all three will be headwinds this quarter. I think you start to flip toward the end of the quarter as New Orleans opens and then as you get to the fourth quarter and Virginia opens. I'd expect we're growing in that segment again. Recall that You know, the win per position in the temporary casino in Virginia is the highest in the entire enterprise and will be about doubling gaming capacity when we move to the permanent casino, so that should be a strong driver, and I've already hit on the way the New Orleans casino revenue will flow through in the initial stage.
Speaker Change: Tara Hote obviously we're going through I guess the second quarter second full quarter since opening and then the Reno group impact extended into July last year so all three will be headwinds
Speaker Change: this quarter.
Speaker Change: I think you start to flip toward the end of the quarter as New Orleans opens and then as you get to fourth quarter and Virginia opens, I'd expect we're growing in that segment again. Recall that...
Speaker Change: You know, the win per position in the temporary in Virginia
Speaker Change: The highest in the entire enterprise and will be about doubling gaming capacity when we move to
Speaker Change: the permanent so that should be a strong driver and I've already hit on
Speaker Change: The way the New Orleans casino revenue will flow through in the initial stages.
Dan Politzer: Got it, super helpful.
Daniel Brian Politzer: Got it. Super helpful. Thank you.
Steven Wazinski: Please stand by for our next question. Our next question comes from the line of Steven Wazinski, which is evil. Yalan is open. Yeah, you guys. Good afternoon. Tom, another quick clarification here: when you were talking about Vegas for the second half of this year, you know, were you basically saying that you think you can grow EBITDA for the full year year in Vegas?
Operator: Please stand by for our next question. Our next question comes from the line of Stephen Wieczynski with Cecil. Your line is open.
Speaker Change: Got it. Super helpful. Thank you.
Speaker Change: Thank you.
Speaker Change: Please stand by for our next question.
Steven Moyer Wieczynski: Yeah, guys, good afternoon. Tom, another quick clarification. When you were talking about Vegas for the second half of this year, you know, were you basically saying that you think you can grow EBITDA for the full year, year over year, in Vegas? Did I hear that right?
Speaker Change: Our next question comes from the line of Stephen Wieczynski with Cecil, your line is open.
Steven Moyer Wieczynski: Yeah, hey guys, good afternoon.
Steven Moyer Wieczynski: Tom, another quick clarification here. When you were talking about Vegas for the second half of this year, were you basically saying that you think you can grow EBITDA for the full year, year-over-year in Vegas? Did I hear that right?
Steven Wazinski: Did I hear that right? You did not. I'd expect Vegas to grow in the second half of the year, both third and fourth quarter. We would, as I said, on last quarter's call, we would need a swing in hold. That offsets our hold impact from first quarter to be a grower for the year.
Thomas Robert Reeg: You did not. I'd expect Vegas to grow in the second half of the year, both in the third and fourth quarters. We would, as I said on last quarter's call, need a swing in hold that offsets our hold impact from the first quarter to be a grower for the
Speaker Change: You did that.
Tom: I'd expect Vegas to grow.
Speaker Change: In the second half of the year, both third and fourth quarter, we would, as I said on last quarter's call, we would need a swing in hold that offsets our hold impact from first quarter to be a grower for the year.
Steven Moyer Wieczynski: Okay, thank you for that. And then, just going through the queue, and I know you don't have it in front of you, but there was, you know, a comment in the regional segment, which basically said that you saw a little bit of a decline in your gaming volumes, which was, you know, basically a mix shift. Basically, your, you know, your rated play remained steady with some growth, but the unrated play had some, some reduction there. And I'm just wondering if that unrated play reduction is pretty much across the entire, you know, portfolio, or there, you know, certain geographies where you're seeing a little bit more pressure on that, that unrated play.
Steven Wazinski: Okay, thank you for that. And then in the, just going through the queue, and I know you don't have it in front of you, but there was, you know, a comment in the regional segment, which basically said, you know, you saw a little bit decline in your gaming vines, which was basically a mix ship. Basically, your rated play remained steady with some growth. But the unrated play had some reduction there. And I'm just wondering if that unrated play reduction is that pretty much across the entire, you know, portfolio or there, you know, certain geographies where you're seeing a little bit more pressure on that unrated play?
Speaker Change: Okay.
Speaker Change: Thank you for that. And then in the, just going through the queue, and I know you don't have it in front of you, but there was, you know, a comment in the regional segment, which basically said,
Speaker Change: You know, you saw a little bit of a decline in your gaming volumes, which was a, you know, basically a mix shift. Basically, your, you know, your rated play remained steady with some growth.
Speaker Change: but the unrated play had some reduction there. And I'm just wondering if that unrated play reduction, is that pretty much across the entire portfolio or are there certain geographies where you're seeing a little bit more pressure on that unrated play?
Tom Reeg: I would say there is always variability in a portfolio of our size. The, you know, this, you feel it more in unrated than rated where unrated, you know, worse off than call it the average regional property. It's due to a competitive opening, you know, in the same geography.
Thomas Robert Reeg: I would say that there's always variability in a portfolio of our size. Yeah, this. You feel it more in unrated than rated, where unrated is worse off than, call it, the average regional property. It's due to a competitive opening, you know, in the same geography. So, you know, if you think about it, how does Terre Haute affect us? You know, we had people that were coming from, you know, a couple hours away from Indianapolis to the West.
Speaker Change: I would say...
Speaker Change: There's always variability in a portfolio of our size.
Speaker Change: Yeah. This...
Speaker Change: You feel it more in unrated than rated, where unrated is worse off than rated.
Speaker Change: call it the average
Speaker Change: regional property. It's due to a competitive opening, you know, in the same geography.
Tom Reeg: Murphy. So, you know, if you think about how does Tara Hode affect us, you know, we had people that were coming from, you know, a couple hours away from Indianapolis to the west, and now you've got, you've lost some of them for good because Tara Hode's much more convenient, and then you're going to have a battle around somewhere in between you like you have that other properties. And, you know, if I'm looking at unrated versus rated, it's like, it's more unrated, and the decline in unrated in that property would be more than our typical regional because of that competition.
Speaker Change: So, you know, if you think about how does Terre Haute affect us, you know, we had people that were coming from.
Thomas Robert Reeg: And now you've got, you've lost some of them for good because Terre Haute is much more convenient. And then you're going to have a battleground somewhere in between you like you have at other And, you know, if I'm looking at Unrated vs. Rated, it seems like it's more unrated. And the decline in unrated in that property would be more than our typical regional because of that competition.
Speaker Change: a couple hours away from Indianapolis to the West. And now you've got
Speaker Change: You've lost some of them for good because Terre Haute's much more convenient and then you're going to have a battleground somewhere in between you like you have at other properties.
Speaker Change: And, you know, if I'm looking at unrated versus rated, it's like it's more unrated and the decline in unrated in that property would be more than our typical regional because of that competition.
Steven Wazinski: Okay, gotcha. Thanks, Tom.
Steven Moyer Wieczynski: Okay, gotcha. Thanks, Tom. I appreciate it.
Steven Wazinski: Appreciate it.
Operator: In the interest of time for the remaining participants asking questions, can we please limit it to one question and then we'll try to take some follow-ups? We've got a bunch of people in the queue that we want to get to.
Unknown Executive: In the interest of time for the remaining participants asking questions, can we please limit it to one question, and then we'll try to take some follow-ups. We've got a bunch of people in the queue that we want to get to. Thank you.
Speaker Change: Okay, gotcha. Thanks, Tom. Appreciate it.
Speaker Change: In the interest of time for the remaining participants asking questions, can we please limit it to one question, and then we'll try to take some follow-ups. We've got a bunch of people in the queue that we want to get to.
Sean Kelley: Please stand by for our next question. Our next question comes from the line of Sean Kelly with Wink of America. Dylan is open. Good afternoon, everyone. Thanks for taking my question.
Operator: Please stand by for our next question. Our next question comes from the line of Shaun Kelley with Bank of America. The line is open. Good afternoon.
Speaker Change: Thank you. Please stand by for our next question.
Shaun Clisby Kelley: Good afternoon, everyone. Thanks for taking my question. Just in the spirit of time, Eric, I wanted to go back to sort of the CAC or promotional environment a little bit in terms of what you're seeing in digital. Obviously, 50% flow-through in the quarter is great. Have you seen any environmental changes, and especially as you're thinking about ramping up or seeing ramping volumes on the OSB side? Because I think there's some increasing concern about flow-through rates as we start to look into the third and fourth quarters. And obviously, I think there's a lot of expected competition and new products expected to be rolled out, particularly right around the NFL season opener. Thanks.
Shaun Clisby Kelley: Our next question comes from the line of Shaun Kelley with Bank of America. The line is open. Hi, good afternoon, everyone. Thanks for taking my question. Just in the spirit of time, Eric, I wanted to go back to sort of the CAC or promotional environment a little bit in just terms of what you're seeing in digital. Obviously, 50% flow through in the quarter is great. Have you seen any environmental change, and especially as you're thinking about ramping or seeing, ramping volumes on the OSB side? Because I think there's some increasing trepidation about flow through rates as we start to look into the third and fourth quarter. And obviously, I think there's a lot of expected competition and new products expect to be rolled out, particularly right around the NFL season.
Sean Kelley: Just in the spirit of time, Erica wanted to go back to sort of the CAC or promotional environment a little bit in terms of what you're seeing in digital. Obviously, 50% flow-through in the quarter is great. Have you seen any environmental change, and especially as you're thinking about ramping or seeing, you know, ramping volumes on the OSB side? Because I think there's some increasing trepidation about flow-through rates as we start to look into the third and fourth quarter. Obviously, I think there's a lot of expected competition and new products expected to be rolled out, particularly right around the NFL season opener.
Eric Hession: Thanks. Yeah, sure. I would say that over the last two to three months, we've seen the cost of acquisition drop fairly significantly on the sports betting side. It's kind of across the board, both on paid search, paid social. The affiliates are contractually based, but even there to a little bit degree. So, from the sports betting side, I would say that the intensity has dropped from acquiring customers. On the casino side, I would say that the costs have remained pretty constant for us throughout the year. On the casino side, we definitely target a certain cap for each of the channels, and then we don't go about that.
Eric Hession: Yeah, sure. I would say that over the last kind of two to three months, we've seen the Cost of Acquisition drop fairly significantly on the sports betting side. It's kind of across the board, both on paid search and paid social. The affiliates are contractually based, but they're even there to a little bit of a degree.
Speaker Change #101: season opener. Thanks.
Speaker Change #100: cost of acquisition dropped
Speaker Change #102: It's kind of across the board, both on paid search, paid social, the affiliates are contractually based, but even there to a little bit degree.
Eric Hession: So from the sports betting side, I would say that the intensity has dropped when it comes to acquiring customers. On the casino side, I would say that the costs have remained pretty constant for us throughout the year. On the casino side, we definitely target a certain CAC for each of the channels, and then we'll don't go above that. In certain instances, we're not able to satisfy the amount of money we would have spent otherwise because the demand's not there, and it does drop off in the summer to some degree.
Speaker Change #103: So, from the sports betting side, I would say that the intensity has dropped.
Speaker Change #103: from Acquiring Customers.
Speaker Change #103: On the casino side, I would say that the costs have remained pretty constant for us throughout the year.
Speaker Change #103: On the casino side, we definitely target a certain CAC.
Eric Hession: In certain instances, we're not able to satisfy the amount of money we would have spent otherwise because the demand's not there. And it does drop off in the summer to some degree. So I would expect that our spend would go up just in aggregate dollars as we head into the third and fourth quarter, particularly in late August and September as everybody signs up for football. But in terms of the cost per acquisition, I'm seeing nothing at this point that would indicate a real change from the trends in the last three months.
Speaker Change #103: for each of the channels and then don't go above that.
Speaker Change #103: you know, instances were not able to satisfy the amount of money we would have spent.
Speaker Change #103: Otherwise, because the demand's not there, and it does drop off in the summer to some degree. So I would expect that our spend would go up just in aggregate dollars as we head into the third and fourth quarter, particularly in late August and September as everybody signs up for football. But in terms of the cost per acquisition, I'm seeing nothing at this point that would indicate a real change from the trends in the last few months.
Eric Hession: So I would expect that our spend would go up just in aggregate dollars as we head into the third and fourth quarters, particularly in late August and September as everybody signs up for football. But in terms of the cost per acquisition, I'm seeing nothing at this point that would indicate a real change from the trends in the last few months. Thank you.
Sean Kelley: Thank you very much.
Unknown Executive: Thank you. Please stand by for our next question.
Operator: Thank you. Please stand by for our next question. Our next question comes from the following: Hello. Stephen, your line is open. Check to see if you're on mute.
Speaker Change #104: Thank you very much.
Deep Dapper: Our next question comes from the Hello. Steven Yulana, so open check to see if you're on mute. Hey there, I couldn't hear that. Was my name? It's Deep Dapper Second. Can you hear me? Yep, you're good. Yep, so on one other on digital, given the strong flow through and as you open up Horseshoe, I just anticipate any kind of investment behind that that could reverse some of the operating leverage we've seen, and is there any thoughts that you can provide on how quickly you think that brand launch could build from here? No, launch costs eating into flow through.
Speaker Change #105: Thank you. Please stand by for our next question.
Speaker Change #106: Our next question comes from the.
Speaker Change #106: Hello?
Speaker Change #106: Stephen, your line is open. Check to see if you're on mute. Hey there. I couldn't hear. That was my name. It bleeped out for a second. Can you hear me?
Speaker Change #107: Yep, you're good.
Stephen White Grambling: Yeah, so on one other on digital, given this strong flow through and as you open up Horseshoe Eye Casino, should we anticipate any kind of investment behind that, that could reverse some of the operating leverage we've seen? And is there any thoughts that you can provide on how quickly you think that brand launch could build from here?
Unknown Executive: Um, no on launch costs eating into flow through. You saw us launch Caesars Palace online with, generating this kind of flow through I'd expect, nothing different here. I want to speak expectations about the build. Yeah, we're launching it slightly.
Eric Hession: You saw launch Caesars Palace online with generating this kind of flow through. I'd expect nothing different here.
Speaker Change #110: flow through, we, you saw us launch.
Speaker Change #107: Caesars Palace Online with
Eric Hession: I want to speak on expectations if I've built. Yeah, we're launching it slightly differently than we did with Caesars Palace. Where we're going to do effectively one state at a time. So pending regulatory approvals, we're going to launch in Michigan in September timeframe, and then we'll roll out into the other states throughout the year, ending in Ontario in Q1. So from that standpoint, it'll be a little bit different. I also would tamper the expectations. Just Horseshoe is a great brand, and it really, we feel like it's going to resonate with a lot of customers, but Caesars is even a better brand.
Speaker Change #108: Generating this kind of flow through, I'd expect.
Speaker Change #108: Nothing different here, Eric. You want to speak up?
Eric Hession: Yeah, we're launching it slightly differently than we did with Caesars Palace, where we're going to do it effectively one state at a time. So, pending regulatory approvals, we're going to launch in Michigan in the September timeframe, and then we'll roll out into the other states throughout the year, ending in Ontario in Q1.
Eric: Expectations about the belt.
Eric: Yeah, we're launching it slightly differently than we did with Caesars Palace, where we're going to do effectively one state at a time. So pending regulatory approvals, we're going to launch in Michigan in September timeframe, and then we'll roll out into the other states throughout the year, ending in Ontario in Q1.
Eric Hession: So from that standpoint, it'll be a little bit different. I also would temper the expectations. Just Horseshoe is a great brand, and we really feel like it's going to resonate with a lot of customers. But Caesars is even a better brand, and quite frankly, that's going to be the flagship app that we have. And it's got a year's lead over the Horseshoe. So I would expect the Horseshoe to perform very strongly, but I don't think it'll command the market share that Caesars' app will.
Eric: So from that standpoint, it'll be a little bit different.
Eric: I also would tamper the expectations, Horseshoe is a great brand and we feel like it's going to resonate with a lot of customers.
Eric Hession: And quite frankly, that's going to be the flagship app that we have, and it's got a year's lead over the horseshoe. So I would expect the horseshoe to perform very strongly, but I don't think it'll come in the market share that Caesars app will. Great.
Eric: but Caesars is even a better brand. And quite frankly, that's gonna be the flagship app that we have, and it's got a year's lead over the Horseshoe. So I would expect the Horseshoe to perform very strongly, but I don't think it'll command the market share that Caesars app will.
Operator: Great, thank you. Thank you. Please stand by for our next question. My next question...
Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Barry Jonas with Truest Securities. Your line is open. Illinois. Illinois.
Barry Jonas: Please, the next question comes from the line of Barry Jonas with Truist the Parody. Your line is open. Hey, I'm John. Illinois recently raised its OSB tax rate. It's curious if there are ways you can talk about maybe the offset that higher tax, and at the same time, does that graduated tax has been in the state offer you maybe an opportunity to gain share. Thanks.
Speaker Change #111: Great. Thank you.
Speaker Change #111: Thank you. Please stand by for our next question.
Speaker Change #112: Our next question comes from the line of Barry Jonas with Truist Securities. Your line is open.
Barry Jonathan Jonas: Hey guys, Illinois recently raised its OSB tax rate. Curious if there are ways you can talk about maybe to offset that higher tax, and at the same time, does that graduated tax system in the state offer you maybe an opportunity to gain share? Thanks.
Barry Jonas: Yeah, because it's a graduated tax, you know, I think, you know, we're not in favor of tax increases at all, but a graduated tax is certainly favorable, I think, to a flat tax. The impact to us is under $5 million a year. We're not planning to change our behavior based on that change. If some of the others that are impacted more change their reinvestment levels, or their odds, or some other type of action that they take in the state, it's potentially beneficial to us. But at this point, I haven't really seen anything that would indicate that that's happening.
Barry Jonathan Jonas: Yeah, because it's a graduated tax. You know, we're not in favor of tax increases at all, but a graduated tax is certainly preferable to a flat tax. The impact on us is under $5 million a year. We're not planning to change our behavior based on that change. But if some of the others that are impacted more change their reinvestment levels or their odds or some other type of action that they take in the state, it's potentially beneficial to us. But at this point, I haven't really seen anything that would indicate that it's happening.
Speaker Change #114: Yeah, because it's a graduated tax, you know, I think, you know, we're not in favor of tax increases at all, but a graduated tax is certainly favorable, I think, to...
Speaker Change #115: do a flat tax.
Speaker Change #117: The impact to us.
Speaker Change #116: is under $5 million a year. We're not planning to change our behavior based on that change.
Speaker Change #118: If some of the others that are impacted more change their reinvestment levels or their odds or some other type of action that they take in the state.
Speaker Change #118: It's potentially beneficial to us, but at this point, I haven't really seen anything that would indicate that that's happening.
Barry Jonas: God, thanks.
Unknown Executive: Thank you. Please, anybody for our next question?
Eric Hession: Thank you. Please stand by for our next question. Our next question comes from the line of John DeCree with CBRE. Your line is open.
Speaker Change #119: Got it. Thanks.
John Decree: Our next question comes from the line of John DeCree with CBRE. The line is open. Thanks, everyone. Maybe one more on the M&A front, Tom. I think your views on the by side are pretty clear. If you could speak to your strategy or any thoughts on possibly selling some stuff or going to portfolio on the non-core side that might not maybe hit the overall enterprise at this point. How do you like Agnew laying down the hammer? But John, on sales, you shouldn't expect that we're going to sell any operating casino assets. As I said previously, there are non-core, non-operating casino assets in the portfolio that I think could trade at a significantly accretive multiple for us, and you should expect us to try to take advantage of those opportunities.
Speaker Change #122: Thank you. Please stand by for our next question.
Operator: Thanks, everyone. Maybe one more on the M&A front, Tom. I think your views on the buy side are pretty clear. Curious if you could speak to your strategy or any thoughts on possibly selling some stuff or calling the portfolio on the non-core side that might not.
Speaker Change #120: Our next question comes from the line of John DeCree with CBRE. Your line is open.
John G. DeCree: Thanks everyone. Maybe one more on the M&A front, Tom. I think your views on the buy side are pretty clear. Curious if you...
John G. DeCree: Could speak to your strategy or any thoughts on possibly, you know, selling some stuff or calling the portfolio on the non-core side that might not maybe fit the overall enterprise at this point.
John G. DeCree: Yeah, John, how'd you like Agnew laying down the hammer? But, uh, John, on sales, you shouldn't expect that we're going to sell any operating casino assets. As I said previously, there are non-core, non-operating casino assets in the portfolio that I think could trade at a significantly accretive multiple for us, and you should expect us to try to take advantage of those opportunities. So there will be no change.
Speaker Change #123: Yeah, John , how do you like Agnew laying down the hammer?
Speaker Change #124: But John , on sales, you shouldn't expect that we're going to sell.
Speaker Change #125: any operating casino assets, as I said.
Speaker Change #126: Previously there are non-core, non-operating casino assets.
Speaker Change #127: in the portfolio that I think could trade at a significantly accretive multiple for us. And, you know, you should expect us to try to take advantage of those opportunities.
Tom Reeg: So no change there. Thanks, Tom.
Thomas Robert Reeg: Thanks, Tom. I'll get out of the queue quickly to avoid the yacking hammer.
John Decree: I'll get out of the queue quickly to avoid the act of hammering.
Speaker Change #127: So no change there.
Unknown Executive: Thank you. Please stand by for our next question.
Speaker Change #127: Thanks, Tom. I'll get out of the queue quickly to avoid the accident.
John G. DeCree: Thank you. Please stand by for our next question. Our next question comes from the line of David Katz with Jeffreys. Your line is open.
David Katz: Our next question comes from the line of David Katz with Jeffrey. Cielan is open. Afternoon, everyone. One more for Eric.
Speaker Change #128: Thank you. Please stand by for our next question.
Operator: Afternoon, everyone. Just one more for Eric.
Speaker Change #129: Our next question comes from the line of David Katz with Jeffries. Your line is open.
Eric Hession: As we get to that 500, can you paint a picture for us as to what the mix looks like between eye gaming and sports betting, how much of each? You know, anything qualitative would help us. Thank you. Sure. I think that the growth rates, the relative growth rates of the two sports betting and Icasino are going to continue. You know, as we mentioned, the Caesar's Palace Online app continues to grow as a percentage of our iCasino business. So it's accelerating at a faster-than-50% pace. Obviously, you know, it's just over a year old. And then I think that the horseshoe app will be incremental to that.
David Brian Katz: Afternoon, everyone. One more for Eric. As we get to that 500, can you paint a picture for us as to what the mix looks like between, you know, iGaming and sports betting? How much of each? You know, any anything qualitative?
David Brian Katz: As we get to that 500, can you paint a picture for us as to what the mix looks like between, you know, iGaming and sports betting? How much of each? Any qualitative information would help us. Thank you.
Speaker Change #131: would help us. Thank you.
Eric: Sure, I think that the relative growth rates of the two, sports betting and iCasino, are going to continue.
Eric Hession: Sure, I think that the relative growth rates of the two, sports betting and iCasino, are going to continue. You know, as we mentioned, the Caesars Palace Online app continues to grow as a percentage of our iCasino business, so it's accelerating at a faster-than-50% pace, obviously, since it's just over a year old. And then I think that the Horseshoe app will be incremental to that, and so you'll see the iCasino app continue to grow at a significantly faster pace than the sports betting side.
Speaker Change #132: You know, as we mentioned...
Speaker Change #131: The Caesars Palace Online app continues to grow as a percentage of our iCasino business.
Speaker Change #133: So it's accelerating at a faster than 50% pace.
Speaker Change #133: and the Horseshoe app. Obviously, since it's just over a year old. And then I think that the Horseshoe app will be incremental to that. And so you'll see the iCasino app continue to grow at a significantly faster pace than the sports betting side. From the sports betting side, we do feel like there's still going to be solid growth there, but it's probably going to be more like you're seeing now where it's in the 20% range.
Eric Hession: And so you'll see the high casino app continue to grow at a significantly faster pace than the sports betting side. From the sports betting side, we do feel like there's still going to be solid growth there, but it's probably going to be more like you're seeing now, where it's in the 20% range. And so, over time, the relative revenues from those two will converge. And as Tom mentioned, we do have a slightly higher blended tax rate on the casino side. So the flow through is a little bit lower on that incremental revenue. But eventually, I think that the Icasino will be more profitable than the sports betting in total dollars.
Eric Hession: From the sports betting side, we do feel like there's still going to be solid growth there, but it's probably going to be more like you're seeing now, where it's in the 20% range. And so, over time, the relative revenues from those two will converge. And as Tom mentioned, we do have a slightly higher blended tax rate on the casino side, so the flow-through is a little bit lower on that incremental revenue, but eventually, I think that iCasino will be more profitable than sports betting in total dollars.
Tom: And so, over time, the relative revenues from those two will converge, and as Tom mentioned, we do have a slightly higher blended tax rate on the casino side, so the flow-through is a little bit lower.
Tom: on that incremental revenue. But eventually, I think that the iCasino will be more profitable than the sports betting in total dollars.
David Katz: Helpful. Thank you. I'm rewarded.
David Brian Katz: Helpful. Thank you. Hammer avoided.
Unknown Executive: Thank you. Please stand by for our next question.
Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Chad Beynon with Macquarie. Your line is open.
Speaker Change #134: Helpful. Thank you. Hammer avoided.
Chad Beynon: Our next question comes from the line of Chad Baynon with Macquarie. The line is open. Thanks for taking my question. In terms of Vegas, Tom, first off, thanks for the commentary on terms of growth in the back half of 24 with respect to Q2. Did you see any major difference in terms of the tiers of the property? And then I guess, more importantly, since we've seen some capacity come out, should we expect that there's a rising boat effect? Or does that actually help some of your mid-end properties given what's come out of the market? Thanks.
Speaker Change #135: Thank you. Please stand by for our next question.
Chad C. Beynon: Afternoon, thanks for taking my question. In terms of Vegas, Tom, first off, thanks for the commentary in terms of growth in the back half of 24. With respect to Q2, did you see any major difference in terms of the tiers of the property? And then, I guess more importantly, since we've seen some capacity come out, should we expect that there's a rising boat effect? Or does that actually help some of your mid-end properties, given what's come out of the market?
Speaker Change #136: Our next question comes from the line of Chad Beynon with Macquarie. Your line is open.
Operator: Thanks.
Chad C. Beynon: Afternoon, thanks for taking my question. In terms of Vegas, Tom, first off, thanks for the commentary in terms of growth in the back half of 24. With respect to Q2, did you see any major difference in terms of
Chad C. Beynon: the tiers of the property. And then I guess more importantly, since we've seen some capacity come out, should we expect that there's a rising boat effect? Or does that actually help some of your mid end properties, given what's come out of the market? Thanks.
Chad Beynon: Yeah, Chad, so I've seen the rhetoric around, you know, maybe the non-luxury properties are underperforming luxury. That's not what we're finding in our portfolio. All of our properties are performing in a similar fashion, obviously. The Caesars Palace has the bulk of our highest end business, so it's the most volatile from a table game's perspective, but in terms of visitation, pricing, power, growth, they all look pretty similar for us. Thank you very much. Appreciate it.
Thomas Robert Reeg: Yeah, Chad, so I've seen the rhetoric around. Maybe the non-luxury properties are underperforming luxury. But that's not what we're finding in our portfolio. All of our properties are performing in a similar fashion, obviously. Caesars Palace has the bulk of our highest-end business, so it's the most volatile from a table games perspective, but in terms of visitation, pricing, and power growth, they all look pretty similar for us.
Chad C. Beynon: Yeah, Chad, so I've seen the rhetoric around...
Speaker Change #138: You know, maybe the non-luxury properties are underperforming luxury. That's not what we're finding in our portfolio. All of our properties are.
Speaker Change #138: performing in similar fashion, obviously.
Speaker Change #138: Caesars Palace has the bulk of our highest end business, so it's the most volatile from
Speaker Change #138: a table games perspective, but in terms of visitation, pricing, power, growth, they all look pretty similar for us.
Chad C. Beynon: Thank you very much. I appreciate it.
Tom Reeg: Oh, and then I'm sorry, on closing the Mirage, I think that's a mixed bag for us. I think it's helpful in terms of, there's less rooms in the market, we'll get our share of those rooms, but given its proximity to our existing properties, we think that it served a bit of a feeder to our other assets, the estate at Mirage, and if you went walking, you probably ended up at one of our properties. So I really don't think that's going to be a material driver in either direction. I think we'll benefit from a little more occupancy, be able to yield a little bit better, but we lose that, you know, 3,000 plus rooms in the neighborhood that would have, you feed each other.
Thomas Robert Reeg: Oh, and then, I'm sorry, and on... Closing the Mirage. I think that's a mixed bag for us. I think it's helpful in terms of there being less there's less room in the market. We'll get a we'll get our share of those rooms. But given its proximity to our existing properties, we think that it would serve as a bit of a feeder, a feeder to our other assets, the estate at Mirage. And if you went walking, you probably ended up at one of our properties.
Speaker Change #139: Thank you very much. Appreciate it. Oh, and then, I'm sorry, and...
Speaker Change #140: I think that's a mixed bag for us. I think it's helpful in terms of
Speaker Change #141: There's less there's less rooms in the market. We'll get a we'll get our share of those rooms. But given its proximity to our existing properties, we think that it served a bit of a feeder
Speaker Change #141: feeders to our other assets, the estate at Mirage. And if you went walking, you probably ended up at one of our properties. So I really don't think that's going to be
Thomas Robert Reeg: So I really don't think that's going to be a material driver in either direction. I think it would benefit from a little more occupancy to be able to yield a little bit better, but we lose that, you know, 3000 plus rooms in the neighborhood that would have you feed each other.
Speaker Change #141: a material driver in either direction, I think will benefit
Speaker Change #141: from a little more occupancy be able to yield a little bit better, but we lose that.
Speaker Change #141: You know 3,000 plus rooms in the neighborhood that would would have
Chad Beynon: Interesting, thank you very much.
Chad C. Beynon: Interesting. Thank you very much.
Speaker Change #141: You feed each other.
Jonathan Navaretti: Thank you. Please stand by for our next question. Our next question comes from the line of Jonathan Navaretti with T.D. Cohen, your line is open. Hey, good up there, everyone.
Operator: Please stand by for our next question. Our next question comes from the line of Jonathan Mavoretti with TBA Cohen. Your line is open.
Speaker Change #142: Interesting. Thank you very much.
Speaker Change #143: Thank you.
Speaker Change #144: Please stand by for our next question.
Jonathan Mavoretti: Hey, good afternoon, everyone. Tom, in the third quarter of 22, you said that Vichy had been clear with Caesars that they had the intention to exercise the option on the Centaur assets. I know it's been a lot since then, but has the current regional performance changed that, or do you still expect to get around, I think you mentioned 2.5 billion gross proceeds. And just if you were to get that 2.5 or whatever ends up being in net proceeds, would all of that be earmarked to repay that, or can we expect some capital return as well? Thank you.
Speaker Change #145: Our next question comes from the line of Jonathan Mavoretti with T.J. Cohen. Your line is open.
Tom Reeg: Tom, in the third quarter of '22, you said that Vichy, having clear with these, that they have the intention to exercise the option on the center assets. I know it's been a lot since then, but has the current regional performance changed this, or do you still expect to get around, but I think you mentioned 2.5 billion gross proceeds. And just if you were to get those 2.5 or whatever ends up being in that position, would all of that be earmarked to be paid that, or can we expect some capital return as well? Thank you. Yeah, thanks for the question.
Jonathan Mavoretti: Hey, good afternoon, everyone.
Jonathan Mavoretti: Tom, in the third quarter of 22, you said that Vichy had been clear with Caesars that they had the intention to exercise the option on the Centaur assets. I know it's been a lot since then, but has the current regional performance changed this or do you still expect to get around, I think you mentioned $2.5 billion in gross proceeds?
Speaker Change #147: And just if you were to get those 2.5 or whatever it ends up being in that proceeds, would all of that be earmarked to repay that or can we expect some capital return as well? Thank you.
Thomas Robert Reeg: Yeah, thanks for the question. Vici, you'd have to ask them there that is their option in terms of calling the real estate under the Indianapolis assets by the end of the year. We have a put option that we will not exercise; we've been pretty, Oh, clear on that since this option became into existence. The proceeds are formulaic, so 1.3 times coverage, 13 times EBITDA. The last I checked, that gets to like $2.2 billion, something like that. If we were to get those proceeds, the bulk of those, you should expect, would pay down debt. But, yes, you should also expect that there would be some return on capital.
Tom Reeg: Vichy, you'd have to ask them there; that is their option in terms of calling the real estate under the Indianapolis assets by the end of the year. We have a put option that we will not exercise. We've been pretty clear on that since we had this option become into existence. The proceeds are formulaic, so 1.3 times coverage, 13 times EBITI. The last I check that gets to 2.2 billion, something like that. If we were to get those proceeds, the bulk of those you should expect would pay down that. But yes, you should also expect that there would be some return of capital elements.
Speaker Change #148: Yeah, thanks for the question. Vici, you'd have to ask them. That is their option in terms of...
Operator: Great, thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Jordan Bender with Citizens J.N.
Speaker Change #149: Calling the real estate under the Indianapolis Assets by the end of the year. We have a put option that we will not exercise. We've been pretty clear on that since.
Speaker Change #149: We had this option became into existence.
Speaker Change #151: Proceeds are formulaic, so 1.3 times coverage.
Speaker Change #151: 13 times EBITDAI, the last I checked, that gets to like 2.2 billion, something like that.
Speaker Change #151: if we were to get
Speaker Change #149: Those proceeds that would the bulk of those you should expect would pay down debt But yes, you know, you should also expect that there would be some return of capital element as well
Unknown Executive: as well. Great.
Jordan Bender: Please stand by for our next question.
Speaker Change #150: Great. Thank you.
Jordan Bender: Our next question comes from the line of Jordan Bender with Citizens JMP. Yeline is open. Good afternoon, everyone. Bender Q, you give sports sponsorship obligations. You know, that number has increased pretty substantially in the last several years, which I assume is just driven by the online business. You know, my question is in the event that we face some consumer weakness across really any part of your portfolio. Do you have the flexibility to reduce your exposure to some of that? Yeah, so those sports sponsorship deals were all signed as we launched the Caesars Sports App in 2021.
Speaker Change #150: Thank you.
Speaker Change #152: Please stand by for our next question.
Speaker Change #153: Our next question comes from the line of Jordan Bender with Citizens JMP. Your line is open.
Operator: Please stand by for our next question. Our next question comes from the line of Jordan Bender with Citizens JMP. Your line is open. Good afternoon, everyone.
Jordan Maxwell Bender: Good afternoon, everyone. In your queue, you give sports sponsorship obligations. You know, that number has increased pretty substantially in the last several years, which I assume is just driven by the online business.
Speaker Change #155: My question is, in the event that we face some consumer weakness across really any part of your portfolio, do you have the flexibility to reduce your exposure to some of that?
Jordan Maxwell Bender: Yeah, so those sports sponsorship deals were all signed as we launched the Caesars Sports app in 2021. They had varying terms.
Speaker Change #156: Yeah, so those sports sponsorship deals were all signed as we launched the Caesars Sports app in 2021. They had varying terms.
Jordan Bender: They had varying terms. So some have rolled off already, ESPN being the big one that rolled off as they launched ESPN. But we have still significant pieces that roll off or mature in a bulk of them in early 26. And we expect to see significant savings there that will flow directly to bottom line.
Unknown Executive: So some have rolled off already, ESPN being the big one that rolled off as they launched ESPN, BAT. We still have significant pieces that will roll off or mature in the bulk of them in early 26. And we expect to see significant savings there that will flow directly to the bottom line.
Speaker Change #157: So, some have rolled off already, ESPN being the big one that rolled off as they launched ESPN.
Speaker Change #158: We have still significant pieces.
Speaker Change #159: that roll off or mature in the bulk of them in early 26. And we expect to see significant savings there that will flow directly to bottom line.
Jordan Bender: Great. Jordan, just to be clear, those contractual obligations have been declining.
Jordan Maxwell Bender: Jordan, just to be clear, those contractual obligations have been declined on a go-forward basis in the queue. We can go through it offline afterwards.
Speaker Change #160: Great. Thanks, all.
Speaker Change #161: Jordan, just to be clear, those contractual obligations have been declining.
Unknown Executive: I'm going to go forward basically in the queue. We can go through it offline afterwards. Okay, thank you.
Speaker Change #162: on a go forward basis in the queue. We can we can go through it offline afterwards.
Daniel Guglumau: Thank you. Please stand by for our next question.
Operator: Please stand by for our next question. Our next question comes from the line of Daniel Guglielmo with Capital One Securities. Your line is open.
Jordan Maxwell Bender: Okay, sounds good. Thank you.
Jordan Maxwell Bender: Thank you.
Daniel Guglumau: Our next question comes from the line of Daniel Guglumau with Capital One Securities.
Speaker Change #164: Please stand by for our next question.
Daniel Guglumau: Yeline is open. Hi, everyone. Thank you for taking my question. For each segment, it looks like you all found expense efficiencies this quarter versus the last quarter. Is there anything specific across the company that you all can point to there? And can we expect those margin levels to main so cold through their second half to understanding there's some seasonality there? Yeah, I really can't point to an overarching big one. It's a lot of little stuff. Like if you looked at our Vegas quarterly review, there's a full page of things that both on the revenue or expense side added a few hundred thousand dollars, or maybe a million or two.
Speaker Change #169: Our next question comes from the line of Daniel Guglielmo with Capital One Securities. Your line is open.
Daniel Edward Guglielmo: Hi, everyone. Thank you for taking my question. For each segment, it looks like you all found expense efficiencies this quarter versus last quarter. Is there anything specific across the company that you all can point to there? And can we expect those margin levels to hold through their second half, understanding there's some seasonality there?
Daniel Edward Guglielmo: Yeah, there I really can't point to an overarching big one. It's a lot of little stuff like if you looked at our Vegas quarterly review, there's a full page of things that either on the revenue or expense side added you know, a few hundred thousand dollars or maybe a million or two. Um, it's just this is kind of who we've been since. We've become a public company in terms of constantly trying to run more efficiently, and that's why you see what you're seeing.
Speaker Change #167: Yeah, I really can't point to...
Speaker Change #165: an overarching big one. It's a lot of...
Speaker Change #166: little stuff. Like if you looked at our
Speaker Change #168: Vegas Quarterly Review. There's a full page of...
Speaker Change #168: things that both on the revenue or expense side added.
Tom Reeg: It's just this is kind of who we've been since we've become a public company in terms of constantly trying to run more efficiently. And what you're seeing is a result of that. I would expect margins, save for seasonality, to hold up. Well, obviously we've held up in the face of a significant lift in labor costs in Vegas. We're not going to see anything in any of our segments that's nearly that impactful. And as we talked about in Carlos' earlier question, we're through year one; the subsequent lifts in Vegas are much smaller than the year one lift one.
Speaker Change #168: You know, a few hundred thousand dollars or maybe a million or two. It's just, this is kind of who we've been since...
Speaker Change #168: We've become a public company in terms of...
Daniel Edward Guglielmo: As a result of that, I would expect, save for seasonality, margins to hold up. Well, obviously, we've held up in the face of, you know, a significant lift in labor costs in Vegas. We're not going to see anything in any of our segments that's nearly that impactful. And as we talked about in Carlo's earlier question were through year one, the subsequent lifts in Vegas are much smaller than the year one lift was.
Speaker Change #168: constantly trying to run more efficiently and that's you see what you're seeing as a result of that I would expect
Speaker Change #168: margins save for seasonality to hold up. Well, obviously, we've held up in the face of, you know, a significant lift in labor costs. In Vegas, we're not going to see anything.
Speaker Change #168: In any of our segments, that's nearly that impactful. And as we talked about in Carlo's earlier question, we're through year one. The subsequent lifts in Vegas are much smaller than the year one lift was.
Unknown Executive: Thank you.
Unknown Executive: Please stand by for our next question.
Speaker Change #170: Great, thank you.
Speaker Change #171: Thank you.
David Katz: We have a follow-up question from the line of David Katz with Jeffrey. Your line is open. Your line is open, David.
Operator: Please stand by for our next question. We have a follow-up question from the line of David Katz with Jeffrey. Your line is open. David. Check to see if you're on mute.
Speaker Change #172: Please stand by for our next question.
Speaker Change #173: We have a follow-up question from the line of David Katz with Jeffries. Your line is open.
David Katz: Check to see if you're on mute. Sorry about that. Thank you for taking the follow-up. I just wanted to follow up on the region. I think what you're referencing for 3Q is a similar decline of down 8%, not a similar number of 469 of either. Correct? Yeah, and I don't even know that I'm pointing to 8%. I'm telling you we're facing the same headwinds that we faced in the second quarter. So I would expect third quarter regional to fall short of 2020. 2023. Don't take that as I'm telling you it's 8%. I'm just telling you we're facing the same stuff.
David Brian Katz: Sorry about that. Thank you for taking the follow up. I just wanted to follow up on the comment, Tom, about regionals. I think what you're referencing for 3Q is a similar decline of 8%, not a similar number of 469 of EBITDA, correct?
Speaker Change #174: Your line is open, David. Check to see if you're on mute.
David Brian Katz: Sorry about that. Thank you for taking the follow-up. I just wanted to follow up on the comment, Tom, about regionals. I think what you're referencing for 3Q is a similar decline of down 8%, not a similar number of 469 of EBITDA, correct?
Thomas Robert Reeg: Yeah, and I don't even know that I'm pointing to 8%. I'm telling you, we're facing the same headwinds that we faced in the second quarter. So I would expect third quarter regional to fall short of 2023. Don't take that as... I'm telling you it's 8%. I'm just telling you we're facing the same stuff. Yeah, got it. Thank you.
David Brian Katz: Got it. Thank you.
Tom: yeah and I don't even know that I'm pointing to 8% I'm telling you we're facing the same headwinds that
Tom: in the second quarter, so I would expect third quarter regional
Speaker Change #175: 2023. Don't take that as I'm telling you it's 8%. I'm just telling you we're facing the same stuff. Yep. Yep. Got it. Thank you. Appreciate it.
David Katz: Yeah, yeah, got it. Thank you. Appreciate it.
Unknown Executive: Thank you.
Tom Reeg: Ladies and gentlemen, I'm showing no further questions in the queue. I will now like to turn the call back over to Tom Reed for closing remarks. All right. Thanks, everybody. Enjoy the rest of the summer.
Operator: Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Tom Reeg for closing remarks.
Speaker Change #175: Thank you.
Speaker Change #176: Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Tom Reeg for closing remarks.
Thomas Robert Reeg: All right. Thanks, everybody. Enjoy the rest of the summer.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Unknown Executive: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Thank you.
Thomas Robert Reeg: All right, thanks everybody. Enjoy the rest of the summer.
Speaker Change #178: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.