Q2 2025 Caesars Entertainment Inc Earnings Call
Good day, and thank you for standing by. Welcome to the Caesars Entertainment, Inc. 2025 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 the session, you will need to press *1, 1 on your telephone; you will then hear an automated message.
Ing. Your hand is raised to withdraw your question. Please press star 1 1 again, please be advised that this conference is being recorded, I would like to hand the conference over your speaker today. Brian Anu senior vice president of corporate finance Treasury and investor relations. Please go ahead.
Thank you. Kevin and good afternoon to everyone on the call. Welcome to our conference call to discuss our second quarter 2025 earnings
This afternoon, we issued a press release announcing our financial results for the period ended. June 30 2025.
A copy of the press release is available in the Investor Relations section of our website at investor.org.
Joining me on the call today are Tom Reed, our chief executive officer, Anthony Carano, our president and Chief Operating Officer Brett, yunker our Chief Financial Officer. Eric, hessen president Caesar Sports and online gaming and Sherice, Crumbley investor relations,
Certain forward-looking statements under Safe Harbor Federal Securities laws 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.
Also, I just wanted to make mention that our Q2 investor presentation has been posted to our website, and I did just look; our 10-Q has now been posted as well. I'm going to pass the call over to Anthony. Thank you, Brian, and good afternoon to everyone on the call.
We delivered second quarter Consolidated, net revenues of 2.9 billion and adjusted ebar of 955 million.
During the second quarter, our digital segment delivered its best quarter ever, producing $80 million of adjusted EBITDA. Our digital momentum continues to build towards the financial goals we originally laid out in 2021.
Our Las Vegas segment posted solid results in the face of software market demand and our Hospitality vertical, but we remain encouraged by 4 Forward group pay in Q4.
The first half of 26.
Regional revenues were up, year-over-year driven by the addition of 2 new properties and same store ggr growth resulting from strategic reinvestment in our, Caesar's Rewards customer database.
Starting our Las Vegas segment. We reported same store sales as the debut of $469 million.
Results were driven by 97% occupancy, versus 99% last year, and essentially flat rates.
Our gaming vertical phase is facing a difficult comparison to last year, which shows lower year-over-year table games volume and hold.
During the quarter of the group room night, mix of 15%. And the segment is on track to deliver a record. EBA year in 25 due to our strong Q4 booking pace.
Recent capex Investments at Flamingo, in Las Vegas, including a brand new pool experience, pinkies by Lisa Vanderpump Gordon Ramsay burger and Havana 57 are generating strong returns.
During the second quarter and into July World Series of Poker hosted, another very successful event and Remains the largest poker tournament in the world with over 500 million in prizes.
Turning to our regional segment, we reported adjusted EBITDA of $439 million. Tom will add additional insights during his remarks, but our regional segment was negatively impacted by several one-time items. During the quarter,
Excluding these negative one-time items, Q2 adjusted EBITDA would have been flat year-over-year.
During the quarter. Danville and New Orleans, generated strong returns. And we have strategically reinvested in our Caesar's rewards database, which drove higher gaming, revenues During the period.
Early results from our strategic customer reinvestments are promising, driven by strong-rated play trends in the quarter.
We will continue to refine our marketing approach as we remain focused on harvesting strong Returns on these Investments.
In addition to our strategic customer reinvestment, we have made additional investments in new slot capital that is driving higher year-over-year gaming revenues.
On July 1st, we rebranded Harvey's Lake Tahoe to Caesar's Republic Lake Tahoe.
We received encouraging guest feedback during the opening weekend and during Celebrity Golf regarding the new elevated property amenities.
Lake Tahoe experience significant construction disruption during the second quarter as a result of rooms being offline.
We'll start construction of Phase 2 in Tahoe in the fall and complete the project by the summer of 2026.
I want to thank all of our team members for their hard work. During this first half of 2025 the hard work resilience and unwavering dedication to exceptional guest service. Have been the driving force behind our accomplishments this year with that. I'll now turn the call over to Eric for some insights and digital
Thanks, Anthony. During the second quarter, Caesar's digital delivered. Net revenue is 343 million up 24% versus the prior year and set an all-time quarterly adjusted Eva record of 80 million dollars up a 100% to last year on an LTM basis, Caesar's digital has delivered approximately 200 million of adjusted evida our results in the quarter. Keep us firmly on track to achieve the financial targets we laid out in 2021.
Q2 results were driven by growth in sports and casino with net, revenues, increasing 28% and 51% year-over-year, respectively.
Adjusted EVA margins grew by 880 basis points to 23.3%.
Continue to achieve strong year-over-year performance, hold increased, 170 basis points to a record 8.9% and handle was roughly flat versus the prior year period.
Total parlay mix improved by approximately 280 basis points year-over-year. And we saw growth in average likes per parlay and a higher Cash Out. Mix versus the prior year as well.
From a tech perspective, we announced the launch of our universal, digital wallet, and proprietary player account management system in Nevada. Earlier this month, that enhancement gives our customers a significant upgrade to their wagering experience within the state and now across 19 jurisdictions, we expect to complete the roll out, across all of our jurisdictions by early 2026.
In I Casino, we saw continued strength. Again, in volume hold and average Maus, which combined to grow net, revenues and impressive 51%.
We continue to elevate our product offering during the quarter to include new bonus capabilities. The launch of a Caesar's branded lives gaming studio in Michigan. And the introduction of our remote reels live slot Studio on the property floor of Tropicana Atlantic City.
Our in-house development Studio continues to make progress with 2 Proprietors as we head into the back, half of 2025. I'm becoming more and more optimistic. As I see how customers are reacting to the improvements. We have made in our application.
The Continuous progress made in all areas is showing up in our Top Line results. And our focus on spending affic is driving solid flow through to ibida. I will now pass the call over to Brett for some comments on the balance sheet.
Thanks, Eric. Q3 is off to a great start on the balance sheet front, as we fully redeemed our most expensive debt earlier this month using a mix of asset sale proceeds and our revolver.
Annual free cash flow savings from the redemption will exceed $40 million, and we continue to be optimistic about further interest expense reductions through rate decreases and/or debt reduction.
Our relationship Bank, facility is our next maturity in 2028 and our nearest Capital markets maturity is in 2029.
On the tax side, the BBB brought us. Good news in the form of increased interest and depreciation, expense, deductions that move our pro-forma estimate for cash taxes as a percentage of i-bidder down from 5% to 3 to 4%, which you'll see reflected in our investor presentation.
I'll turn it over to Tom.
Thanks, Brett. Thanks everybody for joining.
Uh, to unpack the quarter by segment uh, Vegas for us was as Anthony talked about softer than last year. We started, uh, with a strong April,
May and June started to decline in the booking window.
Uh, the contracted booking window in Vegas is.
About as short as I've seen it at this point.
Uh, and we saw we had in our own portfolio.
As he talked about, uh, high-end that we were missing in gaming. Recall, we had both Adele and Garth Brooks in last year's second quarter. We didn't have them this year, uh, missed out on some high-end trips that tend to.
resurface at other points during the year.
Uh, but Vegas started leaking as a market. Kind of end of May that leak accelerated into June,
um,
I'd expect third quarter to be soft but in the last
3 weeks. Or so, as we monitor forward, bookings, bookings, have stabilized. Uh, and as we look to
Fourth quarter, first quarter, and second quarter of fourth quarter of this year; first and second quarter of '26.
very strong group calendar for us. So we think this is a temporary phenomenon in Vegas, but make no mistake. The uh the summer is soft in Vegas. I would expect something in the third quarter. That looks like the second quarter on a comparative basis.
uh, regionals, we talk about
1 time impacts. We had about 30 million dollars worth.
The biggest of which was Construction.
Was in room Knights versus last year. We reopened the first phase of Caesar's Republic.
Before July 1st, and it has performed.
We've been very pleased with the performance and the strength. In that performance, there's a second phase that happens this off-season that will not be nearly as disruptive as the first phase was; that casino was.
Effectively closed for the second quarter. We also lost a couple of weeks in Metropolis due to flooding.
and had some significant lawsuit, um,
Settlement in Baltimore.
Almost 2 million bucks. Those were the chief
culprits that
were in the 30s of 1 time events.
you know, as we look at it as as it was happening, we looked at this these as 1 time events
as we get into third quarter in July, we can see that without those uh,
Occurring in July Regional, both revenue and EBA are up for July. So even inclusive of what happened.
Uh, in the second quarter, with the one-time items, we remain comfortable that.
Regional for the full year will be flat.
To up in ibida.
Uh I've had a number of conversations with many of you during the quarter about revenues, you know. We've told you
in the past that
You know, GGR, uh, monthly performance is not necessarily indicative of what's happening under the hood. If you'll recall.
Uh, we talked on prior calls about how in competitive markets in particular as we weighed back into new Battlegrounds with new new competitors.
We Market into those areas, increase the marketing and you saw some of that flow through our, our flow to ggr, some of you thought that was some harbinger of significant strength. In Regional, it's really um,
Reflecting what we're doing from a promotional standpoint.
Those promotions it, you roll them out, you decide which ones are working, which ones aren't and you pull back the ones.
That aren't working that doesn't always neatly fit in the 90-day quarters that were reporting. So if you look at,
Regional on a, uh,
A full year basis, you should.
Assume that we were investing in the second quarter. We're bearing the fruits of that as we get into third quarter, which is why IBA does increasing, but we are pruning.
Programs that were designed to generate volume but may have done so unprofitably. Our rated gaming trends are rated gaming. Theo is up 8.5% in the quarter, which is the best performance we've had in 3 years. But I would tell you part of that is artificial based on what we were doing.
Marketing the customers but it is considerably stronger than it's been the last couple of years which bodes. Well for a particular Regional space over the next year or 2
Uh, digital.
Had a fantastic quarter. As you know, we laid out
At about 8 million dollars worth of World Series of Poker IBA.
So the true cop is verse 32 million of eval. Last year, we did $80.
There's another 8 million of That World Series.
headwind in the third quarter IBA number, but we would expect to
Top the the fully loaded number by a significant amount if you look at we've talked about partnership expenses rolling off. If you look at now through the end of 27.
We've got north of 70 million dollars worth of partnership ship expenses that we are dragging in our business. Right now, that will roll off by the end of 27.
And more than half of those will be gone.
In the first 4 months of 26, and all of that flows.
Straight to EBA so that business.
Is ramping.
Quickly toward that 500 million dollar number?
We certainly expect that this is not an endgame for us; we are going to continue growing.
Well, as we move forward,
Brett touched on, uh, the
The tax bills impacts on us.
If you think about that in a dollar amount, the...
The reduction in cash taxes this year.
We should offset the IBA for the shortfall in Vegas for the second and third quarters, so that free cash flow is not materially impacted in 2025, 2026, and 2027. You should be thinking of something like $80 to $100 million less in cash taxes than.
What we were anticipating before?
The bill was passed.
So, in short, we've got, you know, we are
We've battened down the hatches in Vegas for a soft summer. We see a strong fourth quarter, first quarter, and second quarter on the other side of that as we look at the group calendar coming into town.
uh, Regional remains on track for
Flat to, uh, a little bit of growth this year and growth in 26.
And digital continues.
Its strong growth and momentum.
And with that, I'll open it up to questions.
Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 1, 1 on your telephone. If your question has been answered, you may remove yourself from the queue by pressing star 1, 1 again. We'll pause for a moment while we compile our Q&A roster.
Our first question comes from Dan Pitsu with JP Morgan. Your line is open.
Hey, good afternoon everyone. Thanks for taking my question. Um, first one on Las Vegas. Tom, you mentioned you've seen a little bit of stabilization in the past few weeks. Can you maybe kind of unpack that? And as you think about that path to growth in the fourth quarter and first quarter and the first half of next year, you know, is there something tangible that we can lock on to just given that group calendar? Are there any kind of specifics you could put around that?
Yeah, so what you know, we see.
you know, pretty clearly the next 90 days forecasted,
Cash occupancy. We were down 27,000 room nights in.
the second quarter, and what we saw was
Every week, as those forecasts came out,
each of the next 3 months would show a decline week over week in forecasted cash Revenue.
That kind of started.
Middle of May accelerated into the middle of June.
And kind of in July. What we're seeing is that that those
Those 90-day numbers. Next 3 months.
You are stable. You're basically looking at the same forecast you were looking at a week ago, so I'm not suggesting that.
This is some huge bullish, turn. It was a
It was as if your tire had a leak, and you've patched it at this point. And if you look into...
Fourth quarter, first quarter, second quarter. We project a record group year in Vegas in 2025 for us. At the end of the third quarter, on a year-over-year basis, our group business will be down year-over-year. We knew that was going to be the case.
But we have an extremely.
robust fourth quarter group calendar, first quarter you add, you know, conag to the Citywide convention calendar, we have another robust group and then in the second early, second quarter,
State Farm, which is a substantial conference, that is Caesars.
specific and recurs once every 3 years.
That's in the 26 number. And so if you think about...
You know, as we're in the summer, your leisure is dominated. So, leisure.
Is softer? Has it been softer when you get that strong?
Group calendar. That, uh,
allows you that gives you leverage in rate, and that's
You've seen that for quite some time historically, it's really get out of the...
Group light.
Third quarter and into the group heavier, fourth quarter, first quarter, second quarter, when we have.
Significant business books. So but 25 should be a group.
Room night record for us, and 26 should be another 1.
Got it. Thanks and and just to clarify. Um, just your comment on third quarter, Las Vegas, being, you know, a comparative basis versus the the the second quarter should we interpret that. As as, you know, third quarter, Evar down high singles or, or somewhere in that range.
Yes.
Thanks so much.
1 moment for our next question.
Our next question comes from Brett MTO with Barklay. Your line is open.
Um, good morning every or sorry, good afternoon. Good evening, everybody. Um, thanks for taking my question. Uh, so curious Tom on the um, promotional, uh, stuff that you guys talked about, you know, when you think about, um, that effort, maybe talk about, you know what, you, I mean, you can only give me so much but what you're doing differently Now versus prior promotional um, campaigns or efforts that you've done. If there's uh, any any sort of, um, Omni Channel bent to it. And as well as sort of the Hub and spoke model that we know you well for historically, is that something that that is sort of a coincided with the Las Vegas slowdown? I'm just wondering if there there's sort of like a, um, a systemwide effort that you can type that you're tying that into to sort of help everything
Yeah. So, you know, we're working with our marketing and our analytics team to really dive into our database, which is our engine for growth.
And, you know, we're looking for targeted opportunities, to drive profitable revenues, and with 52 properties around the country. Uh, we can really test and learn and take take the ones that are working in in some parts of the country and take those, uh, throughout the entire country. And then, you know, continue to get more efficient as we, as we continue down this road. Uh, in addition we're really leaning on our database uh to fill rooms in Las Vegas. Uh, we're opening up uh, more of
More of the segments and working with our hosts across the country to drive people here, to Las Vegas.
Yeah, so, Brad, what you're seeing is in...
You know, the started as a response to...
the competitive openings in Regional that impacted us last year, going back into
You know, drawing your new Battleground markets and marketing to.
Those customers, and it's really just, you know, how rich is the offer that you're giving them, and what's the response to that? And does it flow?
Profitably, at the same time, with what's going on.
In Leisure demand in Vegas is Anthony, says, you're opening your Casino database.
2, lower segments of customers, uh, to, to fill your room. So they're getting a, a better offer. And then at the same time, we're we're, we're wrapping digital and brick-and-mortar in more, you know, every quarter, and it's the combination of that and that provides
A lot of data for us, but it's not immediate, right? So you're making marketing decisions. You're sending those out there; those go out through, um,
Mail and email and then you're going to see what the response is and there's some that flow well across the Enterprise. There's some that work in certain markets, there's some that don't work, uh, across the Enterprise and there's some that don't work in circuit certain markets and that's the tweaking.
That we started doing kind of late in.
Second quarter and into July that we're bearing.
The fruits of... But like I said, this doesn't necessarily fit into.
The quarter, the distinct quarter that we report. You've got a little bit of.
Quarter and very little of the pairing back. And now you've got.
In July, you're driving back to what's profitable. At the same time, we increased our slot spend by 25% in the CapEx numbers that we've provided for you, and we've deployed those machines in a lot of markets. We're seeing returns from those as well. We're always tweaking lease units and how much they're driving. Generally speaking, I would say that we're seeing positive results.
Lease units have been climbing a bit portfolio-wide, so all of that's going on.
At once, and your analytics group is measuring.
What's working? What's not working? And uh, you know, that's kind of what we've done is. We've
Typically, as we've bought companies, as you pull back, what's not working and you lean in to.
So, it is a lot of tests and control.
That that's really helpful, thanks for that. Um, and then another 1, uh, Tom, if you, if you could just give us some thoughts on what you think's going on in Vegas right now with the summer Leisure demand. You know, how much of, I mean, we all know it's a seasonally slow period, how much of its weather, how much of it is a hangover from tariffs, is there anything structural, um, whereby, you know, Las Vegas has been flying high and and perhaps there's some fatigue, uh, on pricing and maybe the value proposition.
Decision. Isn't it quite as good as it was in the past? Um, what do you, what do you think?
That's a tough one to... It's tough to put your finger on that. Um, you know, we had seen.
You know, we talked with our peers and had seen anecdotally that the
The ends of the Strip are referred to as the North End and the South End of the Strip.
Started to weaken, you know, maybe March, and April and we really hadn't seen anything. And, you know, you're, you're looking at,
Again, you're for us, you're looking at a quarter where you're 99% occupied.
27,000 room nights for us is going to flow through.
Non-gaming for us, you know, the gaming piece.
Of where we we were light versus last year. Was all high-end at Caesar's Palace. So gaming has held in in our portfolio center strip.
non-highest end very well, and that high end.
As I said, it's really a timing issue based on.
What our entertainment acts were here, but you know, losing 27,000 room nights, you're losing that cash room revenue, and you're losing some F&B revenue.
our team did a great job of keeping operating expenses in check keeping our margins in check but that
um,
The period of softness when we are leisure dominated, you know, has extended into.
This quarter, and I look at this as, you know, I’ve been around.
Vegas a very long time, as a lot of you have been. This is
Kind of normal seasonality that we haven't seen in a while here. It's nothing that leaves me concerned about the.
Customers. Uh, but you know the only thing I can point to that is
Back to your comments is.
The international business, particularly Canadian.
So, if you look at our...
Missing room nights this year.
Um, Canadians are a significant piece of that, even though.
You know, they're only 3% or 4% of the total Pi for us.
But, you know, I don't really see anything, particularly when we look at.
The business as a whole, Vegas regional and digital. That suggests.
There's anything particularly concerning.
About the consumer. And as I said, we'd expect.
As groups fill in here, this looks very different.
Uh, end of the year and into early next.
Thanks everybody.
1 moment for our next question.
Our next question comes from David Katz with Jefferies.
Is getting to a run rate of 500, you know, by the fourth quarter. Um if you could help us just unpack that a little bit more and you know, point point to some of the key drivers for that can we you know what is a 2026 look like or the new aspirational targets we can think about maybe discussing even in general terms.
So I'd say, David, you know, as you get into football season, obviously it.
The voluntary facility of sports outcomes becomes.
Paramount. But if you look at a typical...
Second quarter versus fourth quarter.
Something like the fourth quarter being 2x, the second quarter is a reasonable expectation.
Which should obviously put us well above.
The run rate that you're talking about.
um,
you know, we've had
A strong July post a strong.
Second quarter. So the momentum is continuing. I've talked about the partnership expenses that roll off. So, you know, for us,
The 500 much debated.
500 million Target looks like.
It's going to arrive, you know? Right on the schedule that we put out there.
For 4 years ago.
And you know, as you look forward and think about, you know, into 2026, 2027, 2028, where you may have.
New eye gaming jurisdictions, where?
I would expect our
share of a new jurisdiction given.
Our product and the momentum in that business.
It would probably be something like 2x what our share is in.
The.
The Legacy markets.
You know, you can start to talk yourself into.
some pretty bullish outcomes.
In digital and we see, no.
Um, indication that anything slowing down.
you know, for us
The rollout of the single wallet in Nevada.
It is a wonderful customer acquisition tool. If you're a call before that.
All the customers that.
Would come to our properties in Nevada.
And open a Caesars Sports account so they could bet while they were in Vegas. They would go home and have to open a separate account, which is...
Obviously, less than ideal.
So, we think from a customer acquisition standpoint outside of Nevada.
That's going to be a powerful tool.
And add to the momentum that we've got.
Going in this space, so I don't want to, you know,
I've taken so much grief over the $500 million Target that we're ...
Right on the precipice of... I'm hesitant to.
Immediately put another target out there, but I'd say we're going to generate.
substantially more than $500 million of EBITDA.
From digital, if you're looking out a few years here.
Thank you, appreciate it.
1 moment for our next question.
Our next question comes from Lizzie Dove with Goldman Sachs. Your line is open.
Hi there, thanks for taking the question. Just going back to Vegas. You know, you mentioned some of the investments that have been making great returns at Flamingo. I'm curious, you know, beyond what you've already kind of talked about, if you think there's opportunity or need for any further incremental investment in other Vegas properties.
Yeah, we've got just our room remodels that we have coming up. We've got a tower at Caesars Palace. Um, we've got.
A partnership with Tau on a dayclub, where they're contributing the capital for an amazing dayclub out front of Caesars Palace.
Um, we've got some more room remodels throughout the city, but my under pump. Yeah, and then Vanderpump Hotel, um, at Cromwell, uh, kicks off design, uh, as we speak to her to model room there, the other day and it is, um, it is definitely amazing. We'll be a a wonderful new hotel, in a great location, uh, beyond that, the rest of our properties are in, in Pretty, in good shape right now. And we'll continue to keep them in good shape.
got it, and then
Target that you have out there and whether there was any kind of one-time factors in this quarter.
Yeah, sure. So that we definitely had favorable sporting outcomes this quarter. Uh I would say that uh the actual hold surpassed our you know theoretical hold from the sports book perspective. Um you know that said I wouldn't change our Target long-term Target of getting to 10%. Hold at this point we are really optimistic. I mentioned how our, uh, parlay percentage continues to rise. Our same game. Parlay percentage is rising and our cash out, percentages Rising. All 3 of those contribute significantly towards increased hold. So there is very much a, uh, upward Trend in our uh, structural hold. Uh, but you know, that said uh achieving the almost 9% hold this quarter was inflated by Good Sports outcomes.
Um, now I would say though, um, as we head into football, football tends to have a higher party mix just in general. And so we do anticipate surpassing that 9% later in the year. But I think there's some natural effects just associated with the sporting outcome that's going to drive that as well.
But thanks.
Yep.
1 moment for our next question.
Our next question comes from Steve Azilla with Deutsche Bank. Your line is open.
Good afternoon, and thank you for taking our questions. Can you just talk about what you are seeing from an Opex and labor standpoint in Las Vegas and regionals, and how we should think about that moving forward?
Yeah, so we've got union contract increases in Vegas.
That uh, seen us.
lean into expenses so that our expenses were flat even though we have
um,
Increased labor, increased union rates. Um, nothing to speak of in digital. That's, I'm sorry, in regional, that's...
worth mentioning, you know, we're
kind of inflation-type increases across the board.
Not nearly as.
Impactful as the last couple of years on the whole.
Okay, great. Thanks. And then
Just wanted to follow up on what you are seeing in New Orleans. I believe you noted a 1-6.
New Orleans had another very strong quarter and has picked up the pace.
In July.
And Danville continues to perform extraordinarily well. Also, the additions to the portfolio.
Are driving.
Very strong results in Regional.
Okay, I appreciate it. Thank you.
1 moment for our next question.
Our next question comes from Stephen Noisy with Stifel. Your line is open.
Yeah, you guys, good afternoon. Um, so so Tom wondering if we can start with uh, with the Regionals. I'm I'm trying to square this up a little bit. So um, stick with me here SEC. So, um, there was 30 million of headwinds, um, you know, if we go back we we add those, you know, add those in the flow through still would have been a little bit lower year-over-year. Then there's this uptick in spending across the database which seems like that was kind of heavily with heavily weighted toward the second quarter. So I guess what I'm trying to figure out is
You know what those Regional margins, you know would have looked like on a more on a leg for like basis, meaning up down flattish and I'm I'm guessing moving forward, uh you know, those margins. Should now accelerate a little bit more given the the bulk of that heavy spending across the databases is essentially finished.
Yeah, I'd say obviously if you were not.
Doing the marketing that we were doing, margins would have been...
Uh, higher than they were. And as we pull back on,
As we pull back on the unprofitable,
Marketing that, as we call profitable, should see those margins improve from here. So that's accurate.
Okay, gotcha. Um,
Did you guys, you know, essentially...
Do anything to stabilize that customer.
You know, did you get more aggressive on whether it's promotions or room discounting or anything like that? Just trying to understand that a little bit more. Now, what I'm describing is a cash room revenue number. Most of our rooms...
In Vegas, cash. And so what stabilized was forward cash room expectations, which...
Had been leaking for the better part of a month and a half.
That stabilized, you know, beginning of July for us.
Okay, perfect. Thanks, Tom. I appreciate it.
1 moment for our next question.
Our next question comes from Barry Jonas with Truist. Your line is open.
Hey, guys. Uh, you're coming off your initial meeting in New York City with the CAC. How do you feel your chances are in that race? Thanks.
Yeah, we're proud of the submission that we have put forward.
Uh, we've got a strong partnership with.
A lot of local, uh, support. We are.
Mindful that Manhattan may be an underdog for a license. You know, if there is a
Casino awarded in Manhattan. We are confident. We would be the
Got it. And then just as a follow-up, you know, a lot of good color on digital and Outlook there. I'm just curious if you have any updated thoughts on a spin—maybe timing or some takes from your perspective. Thank you.
Yeah, you know, we have talked about.
Job 1 is to.
Deliver on the numbers that we've laid out.
We've.
Um, you know we're well on our way to that. There is internal plumbing.
That needs to happen.
To be in position to separate that foot. Well, with kind of, when we hit our numbers for our initial targets and.
We'll take a look at what we think of value. At that point, whether it's, we're getting it reflected, but.
You know, we will; we would absolutely pursue a separation if we believe that it would drive significant value to our shareholders, and we think.
You know, we'll be in.
Position where we're at our targets. At some point in the first half of '26,
So that's what you should be thinking about in terms of time frame.
Great. Thanks for that.
1 moment for our next question.
Our next question comes from John Decree with CBRE. Your line is open.
Hi. Good afternoon, everyone.
Uh, wanted to ask a question about, can the asset light opportunities, um, that have come up and I think OG, um, and Windsor and then some extension of the, the Caesar's Republic brand. And when we think about regionals kind of flat to up, um, seems like some of these things might might move the needle a little bit. So you know how how much more opportunity is there for you to kind of continue to utilize the brand in that way.
Yeah, so, John, we've got a couple of...
uh, Indian management contracts that
have raised their financing: one in Oklahoma and one in Sonoma County, California.
That we would expect.
You know, when they're up and operating, it should be.
something on the order of $20 million of annual management fees.
Between the 2 of them.
To Caesar's as you've.
noted we bring in, um,
Windsor.
First and end of the first quarter of.
26. So that will remove
um,
IBA from the manage line.
but it's replaced by Regional IBA, which is well in excess of
What was bringing in managed? So we have...
You know, between all three of those, you're almost $50 million of incremental.
Ebita, that's flowing through.
Asset-like deals for us and we
continue to pursue more both.
Uh, International markets as well.
That's a bit of.
Elephant hunting. You know where maybe something comes together?
More likely, it doesn't. But we're active out there with our brand and our management expertise.
and Tom just
Clarify that incrementally, but, uh, kind of an asset like capacity, um, is high free cash flow conversion right there. Would there be any, um, you know, expected kind of? That's right. That's right, free cash flow.
Got it, thanks. If I could ask about group room mix, big picture, as we kind of look at...
Um, you know, the stability that Q4, Q1, and Q2 present is kind of all shaping us, either specific event. And what's the right group room? It's probably something.
You and Anthony and team calibrate all the time. But is there an opportunity to actively looking to to kind of hunt for some more of those large events that can kind of really provide meaningful growth. I think all state he says once every 3 years. So it's kind of wondering if there's a focus on on getting more of those or if the group room mix is kind of you know where it needs to be.
uh, we we love
To increase our group room mix, we have increased it.
Since the merger, we, you know, we should be well into the high teams, uh, this year and next, but we are constantly looking for groups like State Farm, uh, that we can bring.
To Las Vegas in our group.
The sales team, led by Mike, is doing a fantastic job.
Uh, has done a fantastic job and continues.
In terms of building that business. But, you know, we're not, we're not stopping in the High Teens, we'd like to, to take that.
To 20 and Beyond.
Got it. Thanks Tom.
1 moment for our next question.
Our next question comes from Sean Kelly with Bank of America. Your line is open.
Hi, good afternoon, everyone. Thank you for taking my questions. Um, uh, Tom or whoever is the right person. You know, just one in Las Vegas and then one sort of big picture strategy question. Uh, but to start with Las Vegas. Um, if we just kind of do the balance, uh, it seems like there are a lot of shifts that are also impacting Q4, uh, group. You know, you've got the sort of the timing of the Jewish holidays, which I think has an impact here as well. Kind of when you line up all the pieces and you think about your own, you know, company level comps, you know, can Q4, uh, you know,
Up year-over-year, and is that sort of the baseline expectation that we should have?
Q4 can be up year-over-year for Caesars.
Perfect. Thank you. And then um, big picture just zooming out, you know, the the Opex investment or sort of what you're doing on the promotional side is is interesting, kind of the test and learn piece. You know we see across the industry is a lot more on the Capitol Front. You know, a lot of land-based conversions uh you know some Capital Renovations that sort of thing. So kind of as you start to turn the page or think about 2026 and Beyond, are there things in the portfolio. You start to look at, you know, from the capital side and say, hey, maybe we ramp a little bit here. We look at these given some of the rois that have been delivered out there. Um, you know, kind of how do you think about that and maybe with some of the cash freed up by the uh big beautiful Bill, thanks.
Yeah, Sean. If you think about our regional portfolio and the...
Large drivers of EBITDA in there. The bulk of them have seen significant capital in the last, certainly,
Since the merger, if you think about...
Atlantic City, New Orleans, Danville, Virginia, Lake Charles, Indianapolis.
Uh, now Tahoe Reno.
Those are our biggest.
Cash flow producers in Regional.
All of those that I've named have had, you know, nine-figure investments in them in the last
3 plus years.
So there's not a, you know, there's not a Round the Corner, another big.
Capital cycle for Caesars. It's really harvesting.
What we've invested since the merger; there are pieces that we will add. You should expect.
that we will add hotel product to
Assets that don't have hotels that, you know, could be our money, but more likely it's a partnership with a third-party developer. Um, you know, we've got.
Boat-to-land-based conversions available to us that are high return investments, but you're, you know, you're not talking about.
A burst of capital activity is around the corner.
Perfect, thank you.
1 moment for our next question.
Our next question comes from Chad Bo with Macquarie. Your line is open.
Afternoon, uh, Tom and, and Brett. You guys spent about purchases in April. Um, and you mentioned that you'll continue to be opportunistic here. Can you just talk about? You know, why you decided to, to not spend any more in the quarter was that just
Um, you know, the trends that you were seeing in the business and you wanted to make sure you had a handle on it. And then going forward, given that you spent $100 million in one month, if the stock remains depressed and now that you're past some of these CapEx.
Uh, needs. Um, is that a potential number that you could hit again in certain months? Or is there a bogey that we should think about from a quarterly basis? Thanks.
Yeah, I'd say this quarter. The focus was on taking out.
The 8 and eights, our highest coupon debt. That's why you didn't see.
Cherry purchased during the quarter.
You know, I would tell you you should expect.
A balance of cherry purchase and debt repayment.
But you know, given what we see.
happening in digital, in terms of,
Scaling and momentum.
And where the shares are trading. And the fact that we're likely to generate.
Something on the order of 50% of our
Market cap and free cash flow over the next.
2 and a half years.
I think our stock is looking particularly attractive and.
I’d like to own more of it.
Ahead of digital, being digital value, being recognized, whether that's.
Within Caesars' current equity or its...
Um, part of a separation transaction. So
We like our stock. You should expect us to be a buyer.
Thanks, Tom. Uh, Eric, on the prediction markets, we've seen some digital companies at least speak about dipping their toe into that. Obviously, a lot of questions in terms of how the CFTC will...
Categorize this but any updated views on on your end. How you see that?
Yeah, I would say at this point, no updated views. You know, we're actively watching the situation, um, you know, and we'll.
Make sure that we're, uh, we're not caught flat-footed on that. But um, yeah, the the I think from change from the last quarter, there really hasn't been anything material a lot more, uh, people objecting to it. But really nothing's really moved through the uh, court system at this point.
Thank you, appreciate it.
1 moment for our next question.
Our next question comes from Jordan Bender with Citizens. Your line is open.
Hey everyone, good afternoon. Tom, you spoke to the earnings power and scale of the online business, and I’m curious if your eventual size and scale open up any ambitions of expanding your footprint into international markets outside of North America.
uh, we're
Always open to what will drive shareholder value.
if we're looking at,
Where do we spend our time and effort? There is not.
An international market that is anywhere close to the opportunity. That's what.
What is here domestically?
So, you know, while I wouldn't shut the door, it would surprise me if...
We saw something internationally that looked anywhere close to.
The opportunity that we're prosecuting here.
Yeah, if I just add...
When you look through the list of projects that we have, and we're planning, you know.
Looking internationally because of the full roadmap and just the opportunities we see in front of us for the existing business.
Understood. I want to follow up in New Orleans. I believe the first $75 million of gaming revenue or so wasn't subject to any incremental tax. So how much of that upside might be left, and how does that tie into either flat up in totality for the whole year?
There is still opportunity there, and obviously the IBA growth in.
New Orleans is a piece of the entire.
Uh, regional puzzle, and will help drive us to growth this year and next. You know, New Orleans for us.
Is.
We're tied to the City of New Orleans, so group business recovery in the city is extremely important to our property there. Momentum has built into the Super Bowl and continues to build. We like the picture we see going forward in New Orleans.
thank you very much.
1 moment for our next question.
Our next question comes from Daniel Limo with Capital One. Security, your line is open.
Hi everyone. Thank you for taking my question. Just one from me. Tom, last call you had said that you're feeling better about the business this year versus any point last year. Do you still feel that way today? And is there something about the business this year that you don't think folks fully appreciate?
Um, you know, I tell you this is the
The reason we put the company together is...
The diversification of the business and the way that business.
Could comp compliments.
Each segment complements the other. And right now, I tell you.
As I've said, we expect a soft summer in Vegas, so I felt better about Vegas.
Last year, I feel great about Vegas after the third quarter, given what's going on in the group calendar. I feel the same confidence in Regional that we've been talking about.
For both this year and next, and
You know, my confidence in digital.
Every 90 days, I talk on one of these calls. I'm more confident.
than I was 90 days ago. The momentum that we've got there is
Tremendous.
and I think that's the
You know, that's the piece that's underappreciated in terms of.
The momentum there, the fact...
of how it's scaling and where it's headed and
I don't think we're going to have to wait much longer to be.
At the numbers that we laid out four years ago.
Great. Thank you.
And I'm not showing any further questions at this time. I'd like to turn the call back over to Tom Rick for any closing remarks.
Thanks, everybody. We will see you next time.
Ladies and gentlemen, this concludes today's presentation. You may now disconnect and have a wonderful day.