Caesars Out With Earnings: Las Vegas Flat, Online up 18.8%

Caesar's Palace Casino first-quarter numbers and their subsequent earnings call were being watched closely, as the stock had a bumpy start to 2025, down more than 15% from the beginning of the year. 

Special attention was being paid to Caesar’s digital arm, as its continued improvements had not been reflected in Caesar's stock and had resulted in many, including Caesar's CEO Tom Reeg, discussing the potential for splitting off this online gaming-based unit into a separate entity. 

Overall earnings were about what had been expected. Net Revenue for the quarter was basically flat at $2.8 billion, while the net loss narrowed to $115 million from $158 million last year. Same-store EBITDA rose modestly to $889 million, up from $849 million in Q1 2024. Meanwhile, Caesars Digital was the star of the show, with EBITDA climbing from $5 million to $43 million.

Caesars maintains substantial exposure to the Las Vegas market. After Nevada reported a 5% drop in Las Vegas strip revenue in March there was some concern since the company currently operates Planet Hollywood, Paris Las Vegas, Nobu Hotel, The Linq, Harrah’s Las Vegas, Flamingo Las Vegas, Horseshoe Las Vegas, The Cromwell ZCasino and of course Caesars Las Vegas, just along Las Vegas BLVD. 

However, net revenue in the Las Vegas segment totaled approximately $1 billion, down just 1.9% YOY, and Caesars’ Las Vegas EBITDA was down less than 1%, coming in at $433 million.

That EBIDTA number was still $433 million just in Nevada, and another $440 million in EBITDA from their regional segment. As mentioned, the Caesars Digital segment brought in $43 million, and Branding and Managed Properties added another $16 million, while Corporate incurred $48 million in losses. This resulted in an impressive $884 million in EBITDA, a 4.4% increase from last year.

While the operating side was impressive, the problem has been and remains with the debt side of the balance sheet. The company has set aside more than $884 million in cash and cash equivalents for a rainy day, but it still has outstanding debts of $12.3 billion, unchanged from its reported debt load at the end of Q4.

Interest expense alone for the quarter was $574 million, and another charge, after EBITDA, of $357 million for depreciation and taxes resulted in a loss of $ 115 million. 

Caesar’s Digital Delivers Record Quarter

On the earnings call, Eric Hession, President of Caesars Sports and Online Gaming, laid out what can only be described as a breakout quarter for Caesars Digital, not just in terms of growth but also in terms of efficiency.

Online gaming posted a net revenue of $335 million, up 19% year over year, and $43 million in adjusted EBITDA, an 8x jump from the same quarter last year. Hession credited improved flow-through rates that were more than 50%  above target.

If not for having to adjust for yet another quarter of “player-friendly” sports outcomes, he estimated hold-adjusted revenue would have grown 31% and EBITDA by approximately $60 million. Despite these headwinds, trailing EBITDA for the past 12 months is still in excess of $150 million. 

In iGaming specifically, Caesars delivered another record quarter:

• Net gaming revenue up 53% year over year

• Driven by 28% volume growth

• Higher hold percentages, yet lower reinvestment rates.

He also highlighted the rapid growth of their new online casino brand, The Horseshoe, which already accounts for 7% of all iCasino revenue, the very successful launch of live dealer studios in both Pennsylvania and New Jersey, and an in-house-designed new multi-hand Blackjack game and account management software that will allow a single-player wallet across various state lines, both of which will roll out shortly. 

What Does It Mean For A Potential Spin-Off?

Caesars online casino is becoming a standout story in terms of rapid growth and operational efficiency. Yet this bright spot in Caesar's portfolio continues to be ignored in the stock's price, which has dropped more than 5% in the three days since earnings were released. 

Strangely, both Reeg and Hession were quiet about future plans for the segment during the call, especially when they’ve been so vocal in the past, which may be yet another indicator that plans are in motion. 

If the next quarter or two look anything like this one, it’s hard to imagine a world where Caesars doesn’t make a move to monetize what is clearly becoming one of the most valuable assets in its portfolio.