iGaming Earnings Season: What Investors and Players Should Watch Closely

We are officially in earnings season for both online and brick-and-mortar casino operators starting this week. And there will be a flurry of earnings calls from huge iGaming operators like Entain, Flutter, MGM, Caesars, Light & Wonder, and many others over the next few weeks.

Wall Street will quickly digest each one and decide on a new valuation, based not just on what the company did last quarter, but also on what it has to say about the upcoming quarter. 

And there are always many surprises buried in earnings, especially when it comes to casino companies, as fate can be a lot more fickle when you have high rollers trouncing your baccarat tables than if you are selling widgets down at the local mall. However, that being said, there are a few things that everyone following iGaming will be keeping a close eye on. The known unknowns, if you will; the surprises that everyone knows are about to happen. 

Flutter and DraftKings: Sports Betting vs. iGaming Smackdown

Chief among those will be the quarterly results for sports betting companies, in particular Flutter (majority owner of FanDuel) and DraftKings. DraftKings struggled in Q4 with what company CEO Jason Robbins has called 'player-friendly outcomes.' Still, the company saw revenue increase to $1.4 billion due primarily to an increase in monthly users in the quarter to almost 5 million. Still, the company cut its outlook by $250 million early in Q4 as they saw trouble ahead. 

This quarter certainly shows no signs of having gone better for the major sportsbook operator. The playoffs and Super Bowl once again delivered fan favorite outcomes, and the triple hit of the Philadelphia Eagles winning, covering the spread, and pushing the total over likely cost sportsbooks millions. On top of that, average hold across all states hovered just above 9%, offering little cushion for those losses.

March Madness went, if anything, more poorly, with holds in states like Pennsylvania just over 3% and across all states just over 6%, likely meaning another big hit for the sportsbook sides of these businesses in March, which has meant some stock analysts have already been busy marking down price targets for the near term. 

But that has to be balanced by the fact that in the seven states where iGaming is legal, the online casino industry has been booming, and both DraftKings and Flutter are at the top of these markets. New Jersey online casinos report $673 million in revenue across all iGaming operators in the first 3 months of the year, up 20% from the previous year’s Q1. Michigan casinos had their best iGaming month ever in March, with more than $260 million in revenue, up 19% year over year. And Pennsylvania casinos, another dominant force in the iGaming world, had record monthly revenues as well, at $238 million, up a whopping  24% year over year. 

With DraftKings and Flutter running neck and neck in all three states for number 1 and 2, some of this record revenue in online slots and live dealer table games has to offset some of the losses these two took on the field. 

The question that everyone who follows either of these stocks has to be asking is how much?  And just as many bettors waited with bated breath for the Eagles' Super Bowl game to be over, more than a few punters have likely taken a side on this showdown as well. 

Caesar’s Digital Spins or Not

Caesars Entertainment has been taking the old Rodney Dangerfield approach to swaying investors, lamenting that its digital arm, which operates Caesars Palace Online Casino, Horseshoe Online Casino, and Caesars Sportsbook, just can’t get any respect. This, despite the fact that this branch of the company generated more than $1.2 billion in revenue in 2024, along with a healthy $117 million in pure EBITDA.

In a different time and place, this might not be so important, as Caesars has stated more than once that they expect more than $500 million in EBITDA from Caesars Digital in 2025, but it’s currently looking at more than $12 billion in liabilities. 

Less than a month ago, billionaire activist investor Carl Icahn managed to place two of his nominees on Caesar’s board as he battles for more control of the company, of which he currently owns just under 5%. Both he and CEO Tom Reeg have often referred to the digital side of the business as underappreciated and undervalued, and Reeg even went so far as to say, when questioned about a possible spin-off to help pay down debt in February, “Everything is for sale, everyday.”

For a spin-off to make sense, the numbers have to add up. Right now, we do not have a clear picture of what Caesars' digital arm might be worth if it were separated and valued like a true online-only casino business, free from the weight of legacy casino and hotel operations. Most newer online operators are valued at 20 to 25 times earnings, but Caesars’ digital division was trading at roughly half that by the end of 2024.

Caesars’ earnings on 29 April will give us a much better idea of whether its digital arm continues its robust growth and weathers the market as a whole, and more importantly, whether Tom Reeg and Carl Icahn believe that people are finally starting to notice this hidden gem buried under all that legacy debt. 

With interest payments alone at almost $600 million just last quarter, neither will have very long to make a decision on what to do next if interest rates don’t come down soon, or worse, spike up.  

Other Tea Leaves To Read

Beyond the headline numbers, investors will be paying close attention to comments about two big issues. The first is the possibility of higher state taxes. The second is whether more states might legalize iGaming. Both of these factors could have a major impact on how investors value these companies moving forward.

Another key question is whether the market is beginning to mature. A mature market comes with new expectations. Investors will be looking for stability in user numbers, smarter promotional spending, and a clear path to profitability. If there are signs of slowing user growth or weaker retention, that could raise concerns. At the same time, progress in product quality and operating efficiency will be welcome.

Still, nothing moves the market like strong acquisition metrics. The companies that show healthy growth in new users and keep that momentum going are the ones most likely to earn investor confidence.

It is also important to consider the source of growth. Online casino games usually have much higher margins than sports betting. They also tend to deliver more consistent results because they are not affected by a few highly popular games or outcomes.

So many investors will be focused on whether companies are shifting more players from sports betting into online casino products. That shift could play a huge role in shaping future growth and may be the key to long-term success for the biggest operators in the space.