Outlook For 2025 And Q3 Performance

Caesars Entertainment executives spoke positively about 2025 during a Tuesday earnings call, but noted that October has been underwhelming in Las Vegas and that revenue for the upcoming F1 race should be just under 2023 numbers.

“We expected to be flat to up for the third quarter, and we ended up being down about $10 million in EBITDA,” said Caesars CEO Tom Reeg. “That’s all table-hold related. Our non-gaming revenue and cash flow were records, and our slot handle and win were flat. It wasn’t poor table hold; it was within our range of expectations. But it just wasn’t as strong as last year.”

New Developments And Q4 Expectations

Reeg expressed excitement about the completion of the Versailles Tower at Paris Las Vegas, noting that “quite strong” early returns will help the fourth quarter. Caesars had accrual for the union contract that won’t be a factor this year in the fourth quarter.

“I know there’s been a lot of chatter about F1 and the fourth quarter generally. For us, F1 was about a $17 million to $18 million lift last year in EBITDA versus the same weekend in 2022,” Reeg said. “I would say flat to down a couple of million dollars versus last year. That’s highly dependent on hold since it’s a high-end business. From an investment perspective of what it’s doing to our cash flow on a last-year basis, it’s not worth mentioning, except for all this chatter in the matter.”

Reeg anticipates room revenue to be up slightly year over year in the fourth quarter, indicating that there’s “nothing to read into Vegas other than continued strength.” Looking into 2025, he mentioned that the first quarter was difficult for them in terms of hold, so they expect to recoup some of that in the first quarter. He predicts a flat to slightly up trend for the rest of the year, noting that the convention segment for 2025 will be stronger than 2024, which was stronger than 2023.

Regional Properties And Competitive Landscape

Reeg also mentioned regional properties in 2005 “will have tailwinds that start to offset competitive impacts” during the last two quarters in Virginia and New Orleans, citing competition in Iowa and the Chicago area.

Digital Growth And Future Expectations

In terms of digital growth, Reeg stated they’re pleased with the performance, highlighting over 40% topline growth in aggregate and 83% in igaming.

“We’ve been outpacing our peers in growth by about two times, and coming into the quarter, I expect we’re closing to three times in the third quarter, and that’s without the rollout of the Horseshoe brand,” Reeg noted. “We feel good about the rollout of that brand. We have data on Michigan and how we migrated the Wynn (Resorts digital) customers over to our Horseshoe brand. We grew that business compared to where it was when it was Wynn. We recently added Pennsylvania and West Virginia and expect that to be a further building block in icasino after 83% growth in the quarter. This month is still growing.”

Reeg anticipates a strong fourth quarter for digital, despite less than optimal sporting outcomes in October, with NFL favorites winning.

“I think the future is very bright for our digital business, and that business is going to end up generating a hell of a lot more than the $500 million target that everyone has been wringing their hands about for the last three years,” Reeg stated.

Potential Asset Sales

Regarding potential asset sales, Reeg indicated that discussions about non-core assets are ongoing, following the sale of the World Series of Poker brand for $500 million and Linq Promenade in Las Vegas for $275 million.

“We’re still working down that path, but the stuff we’re working on has a longer tail or lower probability than the two that were executed.”

Reeg explained that such a sale would be more complex and take time to come together, with the price tag being between the World Series of Poker brand and LINQ Promenade. Caesars had previously discussed selling a Strip asset after the pandemic but has since backed off that in a higher interest-rate environment. When asked by a Wall Street analyst if interest is picking up from the outside with lower rates, Reeg responded.

“We have no asset-sale processes of actual casinos ongoing as we speak, but the biggest change I’ve seen in the last 90 days is the amount of incoming activity from people calling (and asking) what do you think about this asset and that asset,” Reeg said. “We’re economic animals, so if it ultimately makes sense that the best way to drive value is to transact, that’s a possibility. But there’s nothing ongoing. There’s a lot more activity post the first Federal Reserve (rate cut of a half-point in September).”