Caesars (CZR) Q4 2025 Earnings Call Transcript

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DATE

Tuesday, Feb. 17, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• President and Chief Operating Officer — Anthony L. Carano
• Chief Executive Officer — Thomas Reeg
• Chief Financial Officer — Bret Yunker
• President, Caesars Digital — Eric Hession

TAKEAWAYS

• Consolidated net revenues -- $2.9 billion, up 4% year over year due to portfolio diversity and omnichannel strategy.
• Adjusted EBITDAR -- $901 million, increased 2% year over year, partially offset by weather-related impacts in regionals.
• Digital segment EBITDA -- $85 million achieved, a quarterly all-time record despite poor hold in October.
• Las Vegas segment EBITDAR -- Same-store adjusted EBITDAR was $447 million, down from $477 million year over year, with occupancy at 92% and average daily rate down 5%.
• Record slot volume -- Caesars Palace set an all-time high in slot volume for the year following targeted capital investments.
• Digital segment net revenue -- $419 million, with 4% growth in mobile sports handle and iCasino net revenue up 28% from active user growth.
• Monthly digital unique payers -- Total reached 585,000, up 19% year over year, attributed to retention and new product features.
• Regional revenues -- Increased by 4% year over year, with EBITDAR "down slightly" due to poor weather; absent weather, EBITDAR would have grown.
• CapEx initiatives -- Investments included major renovations at Caesars Palace and the upcoming Tahoe master plan, and the rebranding of Cromwell.
• Debt and share repurchase -- Continued progress on debt reduction and opportunistic share repurchases, with nearest debt maturity in 24 months.
• Digital technology rollout -- Universal digital wallet and proprietary player account management live in 26 jurisdictions, expected to cover all by next quarter.
• Digital marketing expense roll-off -- “A little over $35 million” in digital fixed marketing contracts rolls off in the second half of 2026, with “another 20-plus [million] in 2027.”
• 2026 outlook -- Anticipated benefits from decreasing CapEx, decreasing interest expense, and "well below $100 million" in cash taxes.
• iGaming expansion -- Management highlighted legislative progress in Maine and Virginia, stating, “Maine appears highly likely to launch.”
• New properties and projects -- Harrah’s Oklahoma is set to open April 9, and transition of Windsor property from managed to owned occurs in March.
• Hold normalization -- Fourth quarter digital segment hold-normalized adjusted EBITDA was $90 million, highlighting operational improvements.
• Flow-through metrics -- Digital segment flow-through for the quarter was 56% and 50% for the year, in line with stated targets.
• Event-driven Vegas performance -- F1, New Year’s Eve, and a 17% group/convention room night mix contributed to segment resilience during “peak events.”

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RISKS

• Winter weather in December caused a decline in regional EBITDAR, with management indicating EBITDAR “would have grown year-over-year” absent this impact.
• Leisure traveler demand remains soft on a year-over-year basis, though “not as pronounced as it was this summer,” affecting Las Vegas performance in non-event periods.
• Super Bowl's non-recurrence in Q1 will remove “a little over $10 million” in incremental EBITDA for New Orleans in the upcoming quarter, representing a difficult comparison.

SUMMARY

Management demonstrated clear strategic discipline by prioritizing capital reinvestment in flagship Las Vegas assets and accelerating digital growth initiatives, including the universal wallet rollout and new in-house digital content. The company reported tangible improvements in digital user growth and product innovation, aiding top-line acceleration and enhancing operational leverage reflected in record segment EBITDA and strong flow-through. Management signaled expected margin and free cash flow improvements in 2026, citing reduced CapEx, lower interest, and anticipated tax savings. Absent extraordinary weather disruptions and nonrecurring event comps, both Las Vegas and regional segments are positioned for sequential improvement, supported by group and event-driven demand and new property launches.

• Management views changes in digital marketing expenses as a catalyst for margin expansion as legacy contracts expire, particularly in football season’s second half.
• Legislative advances in iGaming could provide an incremental EBITDA lift equal to NFL contract savings at maturity, subject to favorable state outcomes.
• Event-specific Las Vegas demand was emphasized as a stabilizing factor amidst cyclical softness, with management confident about recovery trajectory as leisure and group activity normalize.
• AI and data analytics are being leveraged to optimize pricing and marketing, with management stating such investments should yield profitability and margin gains over time.

INDUSTRY GLOSSARY

• EBITDAR: Earnings before interest, taxes, depreciation, amortization, and rent expense, particularly relevant for property-heavy casino operators.
• Hold: The percentage of wagers retained by the gaming operator after winnings are paid out; a key gaming revenue metric.
• Flow-through: The rate at which increases in revenue convert into EBITDA, reflecting operational leverage and cost control.

Full Conference Call Transcript

Anthony L. Carano: with full year same-store enterprise net revenues increasing $266,000,000 or 2% year over year. These strong results were driven by the diversity of our portfolio, our omnichannel focus, and the delivery of unique experiences for our guests. Turning to the fourth quarter, results were in line with our expectations. Our diversified portfolio delivered fourth quarter consolidated net revenues of $2,900,000,000, up 4% year over year, and adjusted EBITDAR of $901,000,000, up 2% year over year. During the fourth quarter, our digital segment delivered an all-time quarterly EBITDA record of $85,000,000 despite experiencing poor hold in October.

Our Las Vegas segment delivered a quarterly sequential improvement in occupancy and rate trends as expected, leading to a 6% EBITDA decline in Q4, an improvement versus Q3. And finally, our regional revenues were up 4% year over year, driven by continued strong returns in our Danville and New Orleans, and the benefit from strategic reinvestment in our Caesars Rewards customer database. Regional EBITDAR declined slightly and was negatively impacted by poor winter weather in December. Absent the weather impact, regional EBITDAR would have grown year over year. Starting in our Las Vegas segment, we reported same-store adjusted EBITDAR of $447,000,000 versus $477,000,000 last year.

Segment results were driven by 92% occupancy, versus 96.5% last year, and an ADR decrease of 5%. During the fourth quarter, we benefited from a strong event calendar which produced a record F1 event for Caesars, a strong New Year’s Eve, and 17% group and convention room night mix during the quarter. We continued to elevate the customer experience in Las Vegas during the quarter with the addition of two new presidential villas at the top of the Colosseum Tower, as well as 29 new sky villas at the top of the Octavius Tower, both at Caesars Palace. I am excited to say feedback from our VIP guests on this product has been very strong.

These recent investments into our flagship Caesars Palace asset, including a fully remodeled Palace Court slots area, helped the property set the all-time record for slot volume in 2025. We also remain excited about additional upcoming CapEx projects in Las Vegas, including a new Omnia Day Club by Tao at Caesars Palace, a complete remodel of the Augustus Tower at Caesars Palace, a full renovation of Palace Court, our high limit table games area and salons, the rebrand of the Cromwell to the Vanderpump Hotel, and the recently announced Project 10 by Luke Combs that will occupy the vacant Margaritaville space at the Flamingo, just to name a few.

These projects continue our commitment to reinvest in our assets while providing our guests with unique experiences. As we look ahead to the outlook for Las Vegas, we continue to see trends improving sequentially throughout the year, driven by stabilizing leisure trends and a strong group and convention calendar. In our regional segment, we reported adjusted EBITDAR of $407,000,000, down slightly to last year. Absent the negative winter weather in December, EBITDAR would have grown in Q4 on a year-over-year basis. Results from our strategic customer reinvestments remain promising, driven by strong rated play trends in the quarter.

As we mentioned last quarter, we will continue to refine our marketing approach as we remain focused on delivering strong returns on these investments. As we look ahead to 2026 in our regional segment, we expect to benefit from a strong group mix in Reno, the transition of Windsor from a managed to an owned property in March, the completion of our $200,000,000 Tahoe master plan renovation this summer, hosting of select property events around the World Cup, and continued return on investment on recent changes in marketing. Finally, we are looking forward to the opening of our newest managed property, Harrah’s Oklahoma, expected to open on April 9.

I want to thank all of our team members for their hard work during 2025. Their dedication to exceptional guest service has been the driving force behind our accomplishments this year. I will now turn the call over to Eric for some insights into the fourth quarter performance of our digital segment.

Eric Hession: Thanks, Anthony. During the fourth quarter, Caesars Digital delivered net revenue of $419,000,000, adjusted EBITDA of $85,000,000, and hold-normalized adjusted EBITDA of $90,000,000. Flow-through during the quarter was better than target at 56%. Our core KPIs remained strong during the quarter with mobile sports handle growing 4% and total parlay mix improving by approximately 210 basis points year over year. In addition, we saw growth in average legs per parlay and a higher cash-out mix versus the prior year period. In iCasino, we delivered 28% net revenue growth driven by continued strength in volume and average monthly active users.

We continued to elevate our product offering during the quarter to include new in-house games, improved bonusing capabilities, and an elevated live dealer product. Overall, in Q4, our total monthly unique payers increased by 19% to 585,000. Our strong Q4 results drove our full year net revenues to $1,400,000,000, up 21% year over year, and EBITDA to $236,000,000, up 100% year over year, the combination of which resulted in flow-through of 50% in line with our target. From a tech perspective, we continue to convert new jurisdictions to our universal digital wallet and proprietary player account management system, which is now live in 26 jurisdictions and should be live in all jurisdictions by the end of this quarter.

This enhancement gives our customers a significant upgrade to their wagering experience. During the quarter, we also successfully launched sports betting in Missouri, which was the first state where we offered a shared wallet experience to our customers on day one. As we look forward to the full year of 2026, I am pleased with the significant progress on the technology side of the business that is driving strong customer engagement in both sports and iCasino. The continuous progress we are making is showing up in our top-line results and our focus on spending efficiency will drive solid flow-through to EBITDA.

We continue to see a business capable of driving 20% top-line growth with 50% flow-through to EBITDA, which keeps us on track to achieve our goals. I will now pass the call over to Bret for some comments on the balance sheet.

Bret Yunker: Thanks, Eric.

Anthony L. Carano: In 2025, we continued to reduce debt alongside executing opportunistic share repurchases. As we move into 2026, expect to benefit from decreasing CapEx

Eric Hession: decreasing interest expense, and well below $100,000,000 of cash taxes.

Anthony L. Carano: Our nearest debt maturity is our relationship bank financing, which matures 24 months from now. Over to Tom. Thanks, Bret, and thanks, everybody, for joining. For some additional color,

Thomas Reeg: last we talked to you, we were coming off a very, very soft summer in Vegas, with the softness dominated by the leisure traveler. The leisure traveler still remains soft on a year-over-year basis, but not as pronounced as it was this summer. We told you that group business would help us fill in the fourth quarter, and you saw that happened, and on a sequential basis, the year-over-year decline was less.

As I look into 2026, I would expect first quarter the same thing, group business offsetting leisure softness and further improvement on a sequential basis versus fourth quarter, and then as we get into second quarter, group business, including the State Farm conference at our properties, should put us in a position where we are looking at year-over-year gains. And then you get to the summer; it will be dependent on leisure recovery, but we feel good generally about the rest of the year. In Vegas, the way I would characterize the business is peak events, peak weekends, big conferences, the city and all of our properties are doing quite well.

It is the shoulder periods when there is not a big event or a big conference where demand is challenging. And from an operating perspective, that is a unique challenge for us and all of us in the market because you are operating a property in a softer period that may be occupied for us in the 80s, for others lower, and then you are ramping up to fully occupied that weekend or that next event. So it is quite a labor staffing challenge. So Shawn and his team in Vegas did a fantastic job of managing the business through that volatility in the fourth quarter and continue to.

You can see our margins are still holding in the mid-40s, which we are proud of. In the regional business, as Anthony said, October and November were quite strong for us, significant year-over-year growth. The last two weeks of the year, we had some ill-timed snow that probably cost us a little over $10,000,000 of EBITDA, but we ended up flat for the quarter. As you look out, recall the first quarter last year had the Super Bowl in New Orleans, so that is a little over $10,000,000 of incremental EBITDA in New Orleans that does not recur in the first quarter. But post the first quarter, at the end of the first quarter, early March, Windsor comes online.

We get the largest group of bowlers in Reno. That is primarily second quarter. You have got Tahoe’s completed expansion coming online for the third quarter. So we feel very good about regional growth for the year and particularly in the back three quarters of the year. Digital, as Eric said, we are still pacing kind of 20% top-line growth with 50% flow-through. Everybody knows targets that we have out there for digital. We still expect to exceed them as we move forward. One thing to call out in digital: fixed marketing expense is going to be significantly different in 2026 and 2027 as we have big contracts roll off.

Operator: In

Thomas Reeg: 2026, there is a little over $35,000,000 that runs off that will primarily impact the second half of the year. The majority of that hits in the second half, basically in football season. And then you have got another 20-plus in 2027, also football season. So first half of that year. The vast majority of that should flow straight to EBITDA, but we will take some of it and reinvest in marketing that has a return. So we think that is a significant booster for growth for us as we move forward. Prediction markets, I know everybody has got prediction markets questions. No smarter than you in terms of what will happen. To me, this is clearly gambling.

I think it will take a couple of years to wind its way through the courts, and you will have a patchwork of states where they are not allowed, states where they are allowed. In the current regulatory environment, you should not expect us to be participating in prediction markets. Some of our most valuable assets are our gaming licenses in each of the states that we operate, and it has been made clear to us in a number of states that if we pursue that avenue, some of our bricks-and-mortar licenses could be at risk. You should not expect us to do that.

But notwithstanding, if there becomes clarity that there is a legal path for prediction markets that satisfies regulators on the brick-and-mortar side, we will find a way to participate. But I would tell you unequivocally, we view this as gambling that should not be deregulated. These are not swaps. They are not miraculously finding the other side of a five-team parlay at the same time one side comes in. But we will let that play out through the courts. Notwithstanding, our handle grew in the fourth quarter and continues to grow. We are not seeing any impact that we can see in our regulated markets as we operate today.

And Bret touched on we expect to be a significant free cash flow generator in 2026. We were in 2025. You should expect us to utilize that cash between a mix of debt paydown and share repurchases. And with that, I will open the line to questions.

Operator: Certainly. And our first question for today comes from the line of Daniel Brian Politzer from JPMorgan. Your question, please.

Daniel Brian Politzer: Hey, good afternoon, everyone, and thanks for taking my questions.

Thomas Reeg: Tom, I was hoping to just

Daniel Brian Politzer: check in on Vegas here. I know you spent a good amount of time talking about that leisure customer and the uncertainty there. But as you look out in terms of the booking window, in terms of the kind of near-term trends, are you gaining any traction? And what do you think needs to be done from either a promotion or a value proposition perspective in order to get that customer back?

Thomas Reeg: I think this is normal economic cycle activity in leisure for us. You have got, you know, there is a unique flavor of what is going on with Canada in terms of international visitation. But I think this is just a kind of normal economic cycle. What we are seeing is F1 was a very strong event for us. Super Bowl, despite what you read on social media, was an extremely strong event for us year over year. The big event weekends, the big conferences are delivering. It is those soft patches in between. And keep in mind, we were, what, 92.5% occupied for the quarter across 20,000 rooms.

If you look back over the history of Caesars in Vegas, this was probably the third or fourth best fourth quarter of all time. So there is really no crisis happening in Vegas. It is normal cyclicality, and it will play itself out. I know that the pricing gets focused on social media; I am sure if I say the wrong thing in the next 30 seconds, I will read it on Bloomberg or in the Journal tomorrow. But that is not really what is driving what is happening in Vegas. Center Strip is holding up quite well.

The mix of what is available in Vegas—Bill and team at MGM do a good job of running down, you know, between the Sphere and the Raiders and all of the entertainment and the food and beverage and all of the options you have here—they are unsurpassed. And the fact that we are 93% instead of 96% occupied, of course, we are going to work to get back to 96, but there is nothing unusual happening here. I would expect it to recover as time goes by, and we are already seeing that happen over the fourth quarter and into first quarter.

Daniel Brian Politzer: Got it. Thank you. And then just turning to the digital side, in terms of iGaming, you know, there have been headlines certainly in Maine and more recently in Virginia in terms of the potential legalization. I guess, where do you stand in terms of the expectation there and the possible lift? And, I mean, how close to these being done are they from a regulatory perspective?

Thomas Reeg: So I am not a good predictor of politics, but Maine appears highly likely to launch.

Operator: And

Thomas Reeg: you should think of an iGaming state like Maine as something along the lines of what we saved in the NFL contract in terms of EBITDA at maturity for us. Virginia, as I am sure you are aware, there is a bill that passed the House. There is a separate bill that passed the Senate. It will go to conference and then to the governor’s desk. The fact that we are still alive at this point in the session is a good sign for brick-and-mortar operators. There are make-whole payments as part of the legislation that would benefit

Operator: us

Thomas Reeg: so our fingers are crossed in Virginia. That would be a very good outcome for us.

Operator: Got it. Thanks so much. But I would say just

Thomas Reeg: I get asked to predict, oh, what is the next one to go? I would tell you, in both Maine and now Virginia, you know, weeks before we were in the position that we are in now, we would have told you we are not particularly optimistic. So this stuff can come together very, very quickly and not necessarily on our radar, on anyone’s radar, what will be next. The overarching truth is you have got a lot of states that have budgets that are looking for revenue, in many cases with new leadership. Virginia has a new governor that is looking for revenue sources. That can be a good outcome for the casino business.

I know in the last 18 months, that has been not a great outcome. We have seen taxes on OSB move up. We have seen per-bet wager taxes. We are due for some good news in the political cycle, and it looks like there may be some coming.

Operator: Thanks so much.

Operator: Thank you. And our next question comes from the line of Elizabeth Dove from Goldman Sachs. Your question, please.

Elizabeth Dove: Hi there. Thanks for taking the question. I guess, sticking with Vegas, obviously, a lot of moving pieces. Appreciate your comments on leisure and the peak weekends and whatnot. You have got some capital invested that you have mentioned. Obviously, some good guys from conferences, you know, first half of this year and one for you, especially in 2Q. So just thinking, I know it is early, but high level, are you thinking about those puts and takes of how Vegas might play out this year overall?

Thomas Reeg: Okay. I do not—we do not provide guidance, as you know. But I tell you, as I said, first quarter, I would expect continued sequential improvement versus fourth quarter. Second quarter starts to look even better. The second half of the year is dependent on what happens with that leisure customer. One take that I should highlight is we are redoing the Octavius Tower at—I am sorry—the Augustus Tower at Caesars Palace over the summer. That is a little less than 1,000 rooms, so we will time it so that the bulk of the work happens in that softer leisure period, and we would expect to have those rooms back online for F1.

But that is one take for us in 2026 that you should consider.

Elizabeth Dove: Got it. That makes sense. And then, I guess, on the OpEx side, you know, you have done a pretty good job of managing that overall, and your margins are still, you know, higher than certainly some of your public peers and one of your private peers that comes to mind. How do you think about that long term in terms of where you can still kind of manage that cost side over time.

Thomas Reeg: Yeah, Elizabeth. We manage it every day, as do everybody else in the market. The labor contract increases are more manageable starting last year than they were in the first year of the deal. But we are, as I said, what will help is as occupancy smooths out, it is much easier to schedule. You are not running, you know, 1,500 basis point occupancy swings during a week in a property. So I would tell you the margin numbers that we put up in the fourth quarter, that was about as challenging a period as you will have in a non-COVID environment. I would expect that will get better as demand continues to firm.

Thomas Reeg: Thank you.

Operator: Thank you. And our next question comes from the line of Brandt Montour from Barclays. Your question please. Hi. Thanks, everybody, for taking my question. So the first is on regionals.

Eric Hession: I am looking at the flow-through in the fourth quarter. It looks like it got a little bit worse quarter over quarter. You mentioned calling back some of the that you have in place next year is a key tailwind for growth. When do you think we will see that metric flip? When you talk about it as a tailwind for growth, what are you baking in for that factor to sort of turn into a tailwind?

Thomas Reeg: Yeah. I think you started to see it in the third quarter, fourth quarter. When you get hit by weather events that hit visitation, you had costs associated with promotional events that were happening in those periods that you cannot recoup. So it makes that number look a little janky. I do not think it has changed for us. You should expect to see continued improvement in first quarter and then on through the year. I think what you saw in fourth quarter was really the last two weeks of the year.

Operator: That is great. Thanks for that, Tom.

Thomas Reeg: And then just a follow-up on Las Vegas. You know, I was hoping we could

Eric Hession: maybe go one more layer deeper on some of the more tangible pain points that, you know, you kind of referenced international inbound but California interstate traffic, discount airline seats, you know, some of these things that we can kind of put some, at least, qualitative feelings around, you know, what has gotten better into the

Thomas Reeg: first part of the first quarter here, and what sort

Eric Hession: of still staying as depressed as it was in the fourth quarter?

Thomas Reeg: I mean, I would say between the fourth quarter and the first quarter, I would not say there has been a meaningful shift in any of what you named. You know, the difference is there is more group business in first quarter than there is in fourth quarter, generally speaking. You know, what you touched on with Canadian business is a small percentage of total visitation to the market but was an outsized percentage of room night loss in 2026. Southern California drive-in was softer in 2025. That coincided with immigration crackdowns that

Operator: left people

Thomas Reeg: let us call it, less willing to leave home and drive hours away. And I think as you put more quarters behind you from when the administration made those changes, I think it will gradually come back. The allure of the market has not changed. And we are optimistic as you move through 2026 and beyond.

Operator: Great. Thanks, everyone. Thank you. And our next question comes from the line of Steven Donald Pizzella from Deutsche Bank. Your question, please.

Thomas Reeg: Good afternoon, and thank you for taking our questions.

David Brian Katz: As you look at the free cash flow generation you expect to generate in 2026, how are you thinking of balancing debt reduction and buybacks considering where the stock is trading today?

Thomas Reeg: So we are looking at the same thing you are looking at in terms of the free cash flow yield on the stock. You are going to look at how much cash flow you generate in a quarter. First quarter is a low free cash flow quarter. Second quarter is a big one. So you think about timing-wise, you should expect us to be more active in the second quarter than the first in a normal year, but we are going to continue to balance as you have seen us

David Brian Katz: throughout 2025 as we go forward. Okay. Thank you. And then in Las Vegas, it looks like the other revenue line item was up about 7% year over year and a nice increase sequentially. Can you talk about the drivers of that line item and how we should think about that moving forward?

Thomas Reeg: Let us get you that on a callback. I do not have that level of detail off the top of my head.

David Brian Katz: Okay. Thank you.

Operator: And our next question comes from the line of John G. DeCree from CBRE. Your question, please.

Eric Hession: Hi, everyone. Maybe one broad question, I do not think we touched on yet. And I know it is difficult to quantify, but kind of early days in tax refund season. Tom, how are you thinking about

Anthony L. Carano: from your consumers' perspective

Eric Hession: any uplift possibly from tax cuts under the big beautiful bill? What you have typically seen. I am not sure if property managers have kind of reported anything at this point, but, you know, I think that is a meaningful tailwind for

Anthony L. Carano: either regionals

Operator: or Vegas.

Thomas Reeg: Yeah. I agree with you, John. I think that is a tailwind this year. You are just, obviously, just now getting to refund season, but you are in withholding change January 1. So I think people are starting to see

David Brian Katz: my check is a little bigger.

Thomas Reeg: In 2026 versus 2025. And money that comes to consumers like that in kind of an unexpected fashion, I know that the average consumer is not focused on tax policy as much as the sample size we have on this call. As that money comes into the system, that is the kind of money that benefits all consumer discretionary businesses, entertainment-based businesses. So we think that can be a tailwind across the enterprise in 2026.

Operator: Thanks, Tom.

David Brian Katz: Maybe another

Eric Hession: kind of topic for this year, Olympics, World Cup, key events, you know, maybe Eric specifically,

Steven Moyer Wieczynski: have you, you know, seen any kind of material volumes around the Olympics and do you have any expectations for World Cup and sort of relates to the digital business for this year.

Eric Hession: Yeah. There is always interest around the Olympics. The Summer Olympics, though, really drive a lot more volume than the Winter Olympics. And, candidly, it is 80% on basketball. The Winter Olympics are fine, and we offer a great menu for the customers, but it does not drive a huge amount of volume for us. Conversely, we do think that the World Cup will be very interesting. We plan to offer a number of promotions. We are planning to really revamp the offerings that we have in terms of the market that we list for soccer leading up to the World Cup.

And so from that perspective, World Cup is something that will drive significant volume and some hopefully good outcomes on the win side.

Steven Moyer Wieczynski: Thanks, Eric. Thanks, Tom.

Operator: Thank you. And our next question comes from the line of David Brian Katz from Jefferies. Your question please.

Anthony L. Carano: Afternoon. Thanks for taking my question. I wanted to just look at regional gaming holistically. And, you know, it certainly looks like there is, not just for you, but for everyone, there is sort of a lot of pressures from a number of different directions. I am characterizing the right way, whether it is, you know, skill games in some places or HRMs in others, and potentially iGaming if you would consider that a competition. How are you thinking about sort of the Caesars value proposition in that context, which looks like just a busier landscape than it has been?

Thomas Reeg: I mean, our

David Brian Katz: benefit there is

Thomas Reeg: Caesars Rewards. We have a unique offering. We used, as you know, David, we used to run a one-card program at Eldorado, and the reality was not a lot of people wanted to go from, you know, Erie, Pennsylvania to Shreveport, Louisiana or, you know, to Reno, you know, between those places. The difference in Caesars is we have got 20,000 rooms on the Strip. We have got destination properties, likely Tahoe, New Orleans, Atlantic City, that really create that hub-and-spoke system and allow us to differentiate ourselves. To your point,

Operator: the

David Brian Katz: convenience-based

Thomas Reeg: slot dominant product, it is hard to differentiate yourself from the product standpoint. So you do it in service, and everybody, you know, us and all of our peers would tell you we are very good at service. We are better than others. As we know, that cannot be the case for all of us, but we all believe that. But the Caesars Rewards network is truly a unique animal in that space and has been beneficial in regionals for us for a very long time. If you look at the legacy Eldorado properties that came into Caesars Rewards in the merger, your average revenue lift was in the mid-single digits.

And that was purely by entering the Caesars Reward network. So that is our chief benefit, our chief calling card, in regionals.

Operator: K. Got it.

Anthony L. Carano: And if I can just go back to Las Vegas for a minute. You know, one of the debates we have, everybody, around the sort of K-shaped economy. When you talk about leisure weakness, are you able to segment some of that weakness between, you know, higher end, lower end, and whether that is discernible and whether you would call it out and whether you would classify it as K-shaped or not.

Thomas Reeg: I mean, I would say premium does hold up better. But I would point you to, you know, look at our occupancy—look at our hotel numbers and look at MGM’s hotel numbers. For the quarter, they are pretty similar. And MGM has a higher skew toward premium properties.

Steven Moyer Wieczynski: So

Thomas Reeg: it is not as simple as the low end is not doing well, the high end is doing well. That is part of it. I think also, you know, location in the market plays a part. Center Strip has held up better than either end. And going back to the MGM and Caesars comp, MGM has more down at the south end versus our center, and maybe that explains why the numbers look fairly similar. But I think it is too simple to just say premium good, value bad. There is a little more nuance in there.

Steven Moyer Wieczynski: Agreed.

Anthony L. Carano: Thanks a lot.

Operator: Thank you. And our next question comes from the line of Steven Wieczynski from Stifel. Your question please.

Anthony L. Carano: Hey, guys. Good afternoon. So, Tom, kind of sticking with David’s question just was, you know, you have mentioned a couple of times a leisure traveler is still somewhat soft but has stabilized. I guess what I am trying to figure out is

Eric Hession: any kind of—is there any kind of data point that you

Anthony L. Carano: know, point us to that would make you say,

Eric Hession: you have kind of indeed seen a bottom here in that traveler, and I am not sure the right way to ask that question. But, you know, obviously, that customer books very close in. And is there anything, whether that you are starting to see those folks book a little bit further in advance? Or anything else you could point to?

Thomas Reeg: The booking window is not changing much, Steve. What I tell you is our best measure is activity among our rated players, and that has been improving since the summer, but it is still not back above where it was. But it continues to get better. And then you roll in stronger group calendar. That is how you get to sequential improvement as we move forward.

Anthony L. Carano: Okay. Gotcha. And then, Tom, you talked about the reinvestments you guys have done in the regional. It sounds like that is going well given you mentioned there. Rated play was strong in the fourth quarter. Anything you could point to that would

Eric Hession: help us, you know,

Anthony L. Carano: maybe a little bit understand better that those reinvestments are working like you expected?

Steven Moyer Wieczynski: Yeah. I look at what you are—you

Operator: saw

Thomas Reeg: second quarter, third quarter, fourth quarter. I wish you saw November, December on its own. We are seeing it flow, and we are getting better at culling what is not working. I think you will see more of that in first quarter. Part of it is what we are doing. Part of it is you get further from competitive openings in terms of properties that are facing a competitor that has not anniversaried or just came into the market. That is a lower percentage than it has been in prior quarters.

And then you look out to the rest of the year, we have more kind of Caesars- or Caesars market-specific stuff that helps us, like, you know, the bowling calendar in Reno, the spend in Tahoe coming online,

David Brian Katz: and

Thomas Reeg: you know, Windsor going from a managed property to an owned property. So our regional picture should look pretty attractive in 2026.

Anthony L. Carano: Okay. Gotcha. Thanks for the color, Tom. Appreciate it.

Operator: Thank you. And our next question comes from the line of Barry Jonathan Jonas from Truist Securities. Your question please.

Anthony L. Carano: There has obviously been activity in Virginia now beyond just iGaming.

Barry Jonathan Jonas: There is a bill for a Northern Virginia casino and one skill games legalization. Tom, how are you thinking about those expansion bills? You know, would you be interested in participating if the Northern Virginia happens? And any thoughts on impact from skill games beyond what you have already commented? Thanks.

Thomas Reeg: Yeah. I would say we are always open to looking at new opportunities. Obviously, Danville, Virginia for us was a huge success. So that is a state that we have warm feelings for the Commonwealth. We have warm feelings for the Commonwealth. Skill games, you are not going to see us involved in skill games. But if there is an opportunity in Northern Virginia, yes, we would take a look.

Barry Jonathan Jonas: Got it. Okay. And then just as a follow-up, I think there remains a real variance, wholly owned versus leased EBITDAR performance. Just curious how we should think about that variance playing out over time. Thank you.

David Brian Katz: There is nothing unusual

Thomas Reeg: happening in terms of how we operate wholly owned versus leased. Leased has been, and—or I guess over-impacted by competitive openings. If you think about our properties that have faced significant competitive openings in the last couple of years, they tend to more likely be leased rather than wholly owned. That is coincidental. You know, as you move forward and that impact abates, I would expect leased and owned to look similar in terms of performance.

Steven Moyer Wieczynski: Thanks, Tom.

Operator: Thank you. And our next question comes from the line of Stephen Grambling from Morgan Stanley. Your question please.

Thomas Reeg: Maybe to piggyback on that.

David Brian Katz: Certainly starting to see interest rates come down, even some modest cap rate compression in broader real estate. I know you have been thinking about monetizing real estate on the Strip in the past, but as you look at the broader landscape,

Steven Moyer Wieczynski: think about the structure of some of these agreements, how would you balance monetizing real estate

Eric Hession: on the Strip going forward?

Thomas Reeg: Yeah. I mean, Steve, we have talked before. We are always open for business. So if there is interest in any of our assets, we are happy to talk about them. You should not expect to see us running a process on an asset anytime soon. While the capital markets, the debt markets, are strong—the debt market has been strong for quite some time—and these are

David Brian Katz: these are chunky assets that have

Thomas Reeg: a fairly short list of potential buyers. So it is more likely not a change in the capital markets that drives activity. It is somebody deciding, I would like to own a Strip asset, and becoming aggressive.

Steven Moyer Wieczynski: Fair enough. And then maybe one other one on the digital front. I saw strong monthly actives year over year, particularly relative to the growth in sports betting handle. Can you elaborate a little bit more on how these new consumers or customers compare and contrast to the base? And are you finding generally this is more iGaming customers first? And does that change your view of the mix of online sports betting versus iGaming contribution EBITDA longer term?

Thomas Reeg: Yeah. I would say that there really has not been a

Steven Moyer Wieczynski: change in the value of the customers that we are signing up. We are improving our retention slightly so that if you look at the life value of the

Anthony L. Carano: average customer, it does

Eric Hession: trend up

Steven Moyer Wieczynski: somewhat as their retention improves. The cost of acquisition has fallen slightly, however.

Eric Hession: So we are actually able to spend slightly less money, acquire slightly more customers, and then those customers tend to retain a bit longer. And so when you look at our monthly active users, it is trending up through a combination of those factors.

Steven Moyer Wieczynski: Great. Thank you.

Operator: Thank you. And our next question comes from the line of Chad C. Beynon from Macquarie Capital. Your question please.

Anthony L. Carano: Good afternoon. Thanks for taking my question. Sticking on the digital value,

Eric Hession: I know lately there has been some valuation declines on the back of the prediction cloud.

Anthony L. Carano: Obviously, it sounds like there has not been much of an impact to you guys or others in the space. So, hopefully, that understanding or valuation changes. But how are you thinking about

Eric Hession: spinning out this business, kind of the path of that you have talked about before?

Anthony L. Carano: Maybe just providing any more spotlight on the value of this business? Thank you.

Thomas Reeg: Yes, Chad. I would say

David Brian Katz: we are

Thomas Reeg: we will do what maximizes value to shareholders over the long term. I would say, given what we have seen in valuations

David Brian Katz: in the space,

Thomas Reeg: over the past six to nine months, this does not seem like a market that screams you should come and offer some equity of any kind. So unlikely you see something in the near term. And what we have told you in the past is our focus is on hitting our numbers, scaling the business, proving it is scalable,

David Brian Katz: and we are still

Thomas Reeg: in the midst of that and making great progress. Expect to continue to make more. But in the current market environment, it is unlikely you should see us pursue a separation transaction.

Steven Moyer Wieczynski: Okay. Thanks.

Eric Hession: And then, lastly, on just AI benefits, whether it is, you know, searching for travel on the leisure side. I know that has been a big topic this quarter, geo versus SEO, and maybe some potential savings. I am not sure if there are

Anthony L. Carano: still opportunities there, but maybe just in terms of search or other marketing or purchasing. Should we expect any

Eric Hession: financial benefits from, you know, AI improvements that you guys are doing

Anthony L. Carano: in-house or using with some vendors to help in the near term? Thank you.

Thomas Reeg: Yeah, the short answer is yes, Chad. You know, we

David Brian Katz: price

Thomas Reeg: all sorts of stuff every day, hotel rooms being an obvious example. That is a place where AI can be helpful. AI can be helpful in the digital business in terms of the trading aspect of it. You think about how customers make reservations, how they interact with you on the front end. There is opportunity there. You know, there are a lot of different areas where we are looking at applying AI to further enhance our profitability and our margins, and you should expect to see benefits from that over time. Thank you.

Operator: Thank you. And our next question comes from the line of Jordan Maxwell Bender from Citizens. Your question please.

Steven Moyer Wieczynski: Hey, everyone. Thanks for the question. Eric, maybe to start with you on the long-term structural targets. It looks like on average, about 100 basis points of improvement every year. Is it kind of fair to assume that trend line continues and we can see 10% by 2027? And I just need to unpack that maybe a little bit more.

Daniel Edward Guglielmo: Kinda like what is left in the tank between, like, you know, parlay mix, average legs, improvement in the trading team, anything that kind of helps us bridge between what we are seeing today to how we get to that 10%.

Barry Jonathan Jonas: Yeah, I think you have said it pretty well. We have consistently improved our hold.

Steven Moyer Wieczynski: And it is not through any single action that is taken. It is through a combination of lots of different efforts towards basically creating a product that the customers want. So what we do is we go through. We say, what are they trying to bet? And why is it that they are not able to get their bet through? Or why is it that we are not able to offer this product? Or what are the types of things that they want to do that

Eric Hession: our app is causing them to be unable to do? And then we fix those

Steven Moyer Wieczynski: things or make it easier for them to find or bet.

Eric Hession: And typically, what customers like to do is they like to bet more parlays, and they like to bet live parlays, and they like to bet it with more legs and

Steven Moyer Wieczynski: then cash it out. And all those things contribute to hold. And so the pricing department is not so much

Eric Hession: determining what specific margin we are going to charge for a various wager. What they are doing is making sure that the pricing is available and that the price is up so that the customers can bet it whenever they want. And then, through the simple, you know, weighted average expected value that we get per bet, that increases over time as those higher-hold bets come through with a higher frequency than the lower-hold bets.

Steven Moyer Wieczynski: And so what you are seeing is that there—

Eric Hession: I do feel very confident that we are going to get to 10%. And

Steven Moyer Wieczynski: hopefully, we will do better than 100 points

Eric Hession: in 2026. But as you have seen, it has been pretty steady for the last three years.

Daniel Edward Guglielmo: Great. Thank you. And, Tom, just to follow up, on the regional side, I think you said you feel good about growth for the whole year, but you feel better about the last three quarters of the year. Is that—you know, we kind of talked to the puts and takes in the first. Is it fair to assume you are implying 1Q could be down and then the remainder of the year should be up? Was that what you are kind of saying?

Thomas Reeg: I was saying 1Q, we have got to

Steven Moyer Wieczynski: overcome

Thomas Reeg: a little over $10,000,000 of Super Bowl benefit in New Orleans to grow. And then we have really nothing but tailwinds the last three quarters of the year.

Daniel Edward Guglielmo: Understood. Thank you.

Operator: And our next question comes from the line of Trey Bowers from Wells Fargo. Your question please.

Thomas Reeg: Hey, I just wanted to build a little on an earlier question around the monthly unique payers. You guys are really a standout in that category, especially against some of the peers out there. Just curious, one, how high do you think that number can go? Is this the right KPI for us to focus on? Should that growth continue to accelerate? I know that you talked about retention, but

Anthony L. Carano: at 19% growth in the quarter, and that has accelerated every quarter last year. Just would really like you guys to dig in a little more there because it seems like a real standout in the industry. Thank you.

Eric Hession: Yeah. You know, appreciate the compliment. It is standing out. It is a metric that we mainly report because it is an industry metric that

Barry Jonathan Jonas: others use. What we do is we try to drive

Daniel Edward Guglielmo: the components up

Barry Jonathan Jonas: that contribute to that metric. So like I had mentioned,

Eric Hession: retention is a big one for us. Number of active wagers per customer is also important because that indicates their

Steven Moyer Wieczynski: retention is going to be higher. Number of states

Eric Hession: where they play with us. If they go to a brick-and-mortar property, that customer becomes very loyal. And so what we try to do is

Steven Moyer Wieczynski: provide them opportunities to do that.

Eric Hession: And through a combination of all of those things, it really is a metric of retention. The acquisitions that we get go up and down

Steven Moyer Wieczynski: based on competitive natures and states opening. But really, if we can change the retention

Eric Hession: over, say, an 18-month period by even a few points, what you will see is a shift fairly significantly in these unique players. And so, you know, I would expect it to continue to increase. Nineteen percent is strong, so I do not really have any guidance on that. But every activity that we do from the tech perspective, from the customer service perspective, and from the marketing perspective all

Anthony L. Carano: ultimately

Eric Hession: result in that improvement in terms of the unique customers that are using our product.

Daniel Edward Guglielmo: Great. Thanks, guys.

Operator: Thank you. And our final question for today comes from the line of Daniel Edward Guglielmo from Capital One Securities. Your question, please.

Steven Moyer Wieczynski: Hi, everyone. Thank you for taking my question.

Daniel Edward Guglielmo: Just one from me. With Caesars Windsor moving into the regional segment this March, you obviously had to do some work with some of the folks in Canada. Are there additional opportunities for expansion up north, or was this just a unique situation that worked out?

Thomas Reeg: This was a unique situation for us, Daniel, in terms of we were long-time manager of the asset. We effectively bought the OpCo EBITDA at 2x what it is doing now and think we will be able to improve upon that as a wholly owned entity. We would look elsewhere in Canada, but I tell you, most of what you find in Canada comes with—to get a property the scale of Windsor, you have to operate a number of very, very small properties in tough locations. And that is not typically been interesting to us.

Daniel Edward Guglielmo: Great. Appreciate that color.

Thomas Reeg: Thank you. Alright. Thanks, everybody. We will see you next quarter.

Operator: Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.

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