Participants

Brian Agnew; Senior Vice President, Corporate Finance, Treasury & Investor Relations; Caears Entertainment Inc

Anthony Carano; President, Chief Operating Officer; Caesars Entertainment Inc

Eric Hession; President, Caesars Digital; Caears Entertainment Inc

Bret Yunker; Chief Financial Officer; Caesars Entertainment Inc

Thomas Reeg; Chief Executive Officer, Director; Caesars Entertainment Inc

Carlo Santarelli; Analyst; Deutsche Bank

David Katz; Analyst; Jefferies

Brandt Montour; Analyst; Barclays

Daniel Politzer; Analyst; Wells Fargo Securities, LLC

Steven Wieczynski; Analyst; Stifel Europe

Barry Jonas; Analyst; Truist Securities

John DeCree; Analyst; CBRE Securities

Stephen Grambling; Analyst; Morgan Stanley

Jordan Bender; Analyst; Citizens JMP

Daniel Guglielmo; Analyst; Capital One Securities

Presentation

Operator

Good day and thank you for standing by.
Welcome to the Caesars Entertainment Inc. 2024 fourth-quarter and full year earnings conference call.
(Operator Instructions)
Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your speaker today, Brian Agnew, Senior Vice President of Corporate Finance, Treasury, and Investor Relations. Please go ahead.

Brian Agnew

Thank you, Tania, and good afternoon to everyone on the call.
Welcome to our conference call to discuss our fourth quarter and full year 2024 earnings.
This afternoon, we issued a press release announcing the financial results for the period ended December 31, 2024. As usual, a copy of the press release is available in the Investor Relations section of our website at investor.caesars.com.
Joining me on the call today are Tom Reeg, our Chief Executive Officer; Anthony Carano, our President and Chief Operating Officer; Bret Yunker, our Chief Financial Officer; Eric Hession, President, Caesars Sports and Online Gaming; and Charise Crumbley in Investor Relations.
Before I turn the call over to Anthony, I would like to remind you that during today's conference call, we may make certain forward-looking statements under Safe Harbor federal securities laws, and these statements may or may not come true. Also, during today's call, the company may discuss certain non-GAAP financial measures as defined by SEC Reg G. Please visit our press release located in our Investor Relations section of our website for a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure.
I will now turn the call over to Anthony.

Anthony Carano

Thank you, Brian, and good evening to everyone on the call.
During our fourth quarter, regional performance improved sequentially as we opened our Caesars New Orleans expansion in October and Caesars, Virginia in December. In Las Vegas, we posted roughly flat year over year results despite a tough comparison versus last year's inaugural Las Vegas Grand Prix F1 race.
Excluding customer-friendly outcomes in our digital segment in October and December, consolidated EBITDAR in Q4 would have been flat year over year.
For the full year of 2024, the company delivered consolidated same-store results of $11.2 billion in net revenues and $3.7 billion in EBITDAR , delivering an EBITDAR margin of 33.2%.
Moving to our segments and starting with Las Vegas. Same-store net revenues during Q4 were $1.1 billion, and adjusted to EBITDAR, it was $478 million, down 1% versus last year. We were pleased with results in Las Vegas, especially when compared against the inaugural F1 race held in 2023.
Margins in Las Vegas were 44.4%, in line with expectations. Occupancy for the full quarter was 96%, down slightly to last year against F1 comp. Our group business delivered another great performance, representing 16% of occupied room nights.
And recent investments in our Las Vegas room product and gaming offerings have delivered some of the strongest returns in our Las Vegas portfolio's history, driven by strong cash ADRs and increased gross gaming revenues.
Turning to our regional segment in Q4. Net revenues declined 1% and adjusted to EBITDAR declined 5%, and improvement sequentially in the rate of EBITDAR decline versus the second and third quarters in '24. During the quarter, we finished a complete remodel of Caesars, New Orleans on October 22 and opened the permanent facility in Danville, Virginia on December 17.
Results in our regional segment were driven by continued competitive pressures in certain markets offset partially by contributions of the two new facilities we opened later in the quarter, with both new properties exhibiting strong early results.
We are excited to capture a full year of results from both New Orleans and Danville in 2025. 2024 was the conclusion of an intensive capital investment cycle that began at the close of merger in July of 2020. We completed several large CapEx projects that will have meaningful contributions in 2025 and beyond, and we are cycling through competitive pressures in our regional segment that are becoming less negative.
Our investments in our property portfolio are evident, and our properties have never looked better. We expect that the returns on our investments and continued strength in both brick and mortar properties and Caesars Digital will produce a dramatic increase in free cash flow in 2025 and 2026.
Finally, I want to thank our team members for continuing to execute at the highest level and delivering on our commitment to exceptional family style service.
With that, I'll now turn the call over to Eric for some detail on our Caesars Digital segment.

Eric Hession

Thanks, Anthony.
2024 delivered all-time records in net revenue, EBITDA, and cash flow within our digital segment. Total net revenue was $1.2 billion, up 20% year over year, and adjusted to EBITDA was $117 million versus $38 million a year ago.
For the quarter, we generated net revenue of $303 million and $20 million of adjusted EBITDA. Absent low hold in Q4, our digital segment would have generated approximately $370 million of net revenues and approximately $60 million worth of EBITDA.
Turning to segment results. iGaming delivered exceptionally strong performance all year, culminating with 65% net revenue growth during Q4. Our iGaming franchise continues to deliver industry-leading net revenue growth driven by our improved product offerings within the Caesars Palace online app and our new Horseshoe app, which is now available in all the jurisdictions in which we operate.
In January, we announced the launch of our first branded online Caesars Casino live dealer studio in Pennsylvania, and we plan to roll out similar branded studios in New Jersey and Michigan later in the first half.
We also announced a partnership with Bragg Gaming to develop Caesars own slot and table content that will help differentiate our offering versus peers.
Turning to sports betting during Q4. Net revenue declined during the quarter as a result of customer friendly outcomes in October and December. In addition, our overall volume declined slightly as we limited activity and reinvestment in unprofitable customer segments.
Our parlay, SGP, and cash out percentages achieved all-time records during the quarter, and absent the sport-friendly outcomes to customers, would have resulted in record hold percentage. The increases in these types of wagers, along with our improved customer user experience, support our belief that we will achieve in excess of 10% hold over time.
As we look to 2025, we're excited to complete the rollout of our proprietary player account management system, which will lead to a single wallet across all of our sports jurisdictions. Continued improvements in technology, structural hold, and customer experience will drive another strong year of revenue and EBITDA of growth in 2025 and keep us on track for a $500 million EBITDA goal.
I'll now pass the call to Bret for some comments on the balance sheet.

Bret Yunker

Thanks, Eric
.We had a productive fourth quarter utilizing non-core asset sale proceeds from WSOP and LINQ Promenade to repay $500 million in debt and repurchase additional stock. During calendar year 2024, we acquired 5.1 million shares for $190 million at an average price of $37 per share.
Our 2024 debt refinancings have positioned the company to take advantage of a lower cost of debt, driving significant interest expense savings in 2025. We also extended our nearest maturity out to 2027.
Over to Tom.

Thomas Reeg

Thanks, Bret. Thanks everybody for joining.
I'll fill in some detail on fourth quarter, full year '25, and since we're almost two months into the first quarter, I'll give you some color on what we've been seeing during this quarter as well. As Anthony spoke to, fourth quarter in Vegas, we were proud of our performance versus last year's inaugural F1.
You could see we were roughly flat. Our volume indicators also flat, meet. Revenue -- cash room revenue for us was down less than 1% for the quarter despite the lack of the F1 business. F&B revenue similarly down a little less than 1%.
And our volume indicators in gaming were up slot coin in was an all-time record for us in Las Vegas. Table win was up year over year helped slightly by a little bit better hold. If you look at regional, recall that regional has $500 million or so of trailing EBITDA out of our $1.9 billion that's in the middle of facing new competitive threats in those markets with about $200 million of properties that have tailwinds behind them.
In the fourth quarter, you can see that even with just about 10 weeks of New Orleans and 2 weeks of Virginia, our year over year performance in regional is down about 5% as we talked about on the last quarterly call. We talked about the headwinds versus the tailwinds.
What I tell you is, since that call in October, we've been pleasantly surprised that the competitive impacts that we were anticipating have not been as severe as we anticipated. And the performance of our newly opened properties has been stronger than expected.
So that I'd expect regional instead of being a down slightly to flat here in EBITDA should be flat on the left side of the range and up slightly on the right.
So pleased with that, Eric talked about digital, the momentum, we're up 64% in iCasino in the quarter, and that's on top of a full quarter of Caesars Palace online last year where I think we were up 50% something. So we're stacking quarters on top of each other now. I feel very good about that. Everybody knows about the sports outcomes that are out -- that were unfavorable in the fourth quarter. We can see our structural hold efforts continuing to bear fruit.
We're off to a good start in the first quarter though. I'll get into a little more detail as we go.
In terms of '25, I spoke to you about regional, expect flat to slightly up in EBITDA across that vertical. In terms of first quarter, we're kind of right on top of last year recall that we lose a day with the leap year last year between now and the end of the quarter.
Frankly, that could be the difference between we're flat or we're down a couple million bucks, but it's -- our regional business continues to improve. We are now attacking properties that have opened. Our typical operating philosophy is for the first quarter or two, we don't try to spend into trial.
But once our customers have had the trial period, we're in fighting and we're increasing investment in battleground markets, and I'd encourage you to look at properties letter, earnings state monthly revenue reports out of Iowa, out of Indianapolis that show what's happening with share and revenue as we fight for those markets following competitive openings.
If you think about regionals going forward, Virginia has been beyond our wildest expectations in terms of performance. Typically, when you double capacity, gaming capacity, your revenues don't keep up with that pace. There's some delusion because you're adding so much product.
Virginia has kept pace. We've effectively doubled revenue. After doubling capacity, margins are obviously not quite as strong as they are in the tent where they were over 60%, but we're well into the mid-40s in terms of EBITDA margin. So that's driving strong results.
New Orleans had a spectacular Super Bowl. It had a very good fourth quarter. January was difficult. Recall that the terrorist event in New Orleans, four blocks from our site. It was December 31. We had a citywide convention that canceled shortly after that, and then you had the first measurable snow in the city of New Orleans since 1895. So we've had about 3.5 months now of performance, almost 4 months in New Orleans, but it's been a roller coaster given what's happened.
We're super proud of the property that we've built. We've been able to show it to our best customers, during the Taylor Swift show shortly after opening. And then the Super Bowl, it's been very well received. The numbers are very strong, excluding the noise around the terror and weather.
So we feel very good about where those two properties in particular are heading into '25 and through the first couple of months. In Vegas, if you think about '25 -- I'm sorry. To finish on regional, by the end of '25, the sole remaining competitive opening of any substance that we have not faced is the second PENN, Chicago area move from their current site to the new land-based site.
The bulk of what impacted us in '24 will be well over 12 months behind us, and there's very little coming behind that. So as I've said, we're more sanguine on '25 and regional '26 should be even better as competitive threats abate and New Orleans and Virginia continue to grow following those investments.
In Las Vegas, obviously, we had the Super Bowl last year and our peers have commented on headwinds relative to not having Super Bowl this year. If you recall last year, we were outside on the negative side our normal range of holds. So we held very poorly at the tables, In this quarter, we're back into our normal range, although not heroic. We're still at the left side of that range for the first two months, but the recovery back to normal hold should just about offset the loss of the Super Bowl room revenue.
So depending on how March comes in, we should be about flat in the first quarter, which I think is different from what you're hearing elsewhere in town. And group business will increase this year over last year. Group increases significantly again in '26 with CON/AGG, Citywide and the State Farm conference that's specific to Caesars early in '26.
Recall that that State Farm, group is big enough. It comes every three years. It's big enough that the -- final event three years ago -- two years ago now what was a sold out Garth Brooks conference sort of at Allegiant Stadium. So that's an awfully big group that's Caesars specific.
So '25 and '26 set up very well for us in Las Vegas. In digital, digital has had a exceedingly strong first quarter for us. If you look at iGaming for us, January was up 64% in net revenue keeping in mind that first quarter last year was up 54%.
February is tracking to the same number, but again, we'll have one last day. So I'd expect February to end up somewhere in the 50s in terms of growth rate. Cash flow continues to increase. I'd expect you're going to start seeing the best quarters that we've ever posted to date shortly.
And all of our targets remain the same. Recall that we laid out our targets before we even launched Caesars Sports that we could reach $500 million of EBITDA. We're well on that path.
The remaining piece at the end of '25 will be the roll off of some big partnership contracts in the beginning of '26. And then I'd expect that we'd be at our targets and recall those targets have not moved since those were just numbers on a spreadsheet almost four years ago at this point.
So the combination of that, Anthony talked about how our capital expense has come down significantly. We should have in the neighborhood of between among Interest expense, lease expense, total capital expenditures, and cash taxes in '25, our outflows will be around $3 billion.
So you can take whatever your EBITDA estimate and subtract that, and that's our free cash flow number. We did start to buy back stock in '24. You should expect that our majority with free cash flow remains paying down debt.
we want to continue to reduce leverage as we have since we closed the transaction in July of 2020, but now we have share buybacks as a (technical difficulty)
And with that, I'll throw it back to the operator for Q&A.

Question and Answer Session

Operator

(Operator Instructions)
Carlo Santarelli, an analyst.

Carlo Santarelli

Tom, Anthony, Bret, you guys -- Tom, you just laid out kind of rough guidance for '25 for both Vegas and the regionals. And obviously, if you look at Las Vegas in 2024 and you look at the regionals in 2024, I think regional labor expenses were down almost 1% year over year.
Same-store Las Vegas looks like it was up, but certainly, not as much as some of the contract hit and stuff from the labor union negotiations. Within the context of how you're thinking about 2025, how do you kind of foresee the expense side for both Las Vegas and the regionals?

Anthony Carano

Yeah. Carlo, it's Anthony. Team did a fantastic job fading that $50 million increase this year. It's a smaller increase in the contract for 2025 in Las Vegas. There's also a smaller increase in Atlantic City union contract in 2025 as well. That coupled with our operators who do an amazing job on the efficiency side, I think we'll be in a very good position on expenses in '25.

Thomas Reeg

And keep in mind that $50 million of labor, Carlo in Vegas, we had -- I wish I knew the number off the top of my head, call it a dozen or more F&B outlets and bars that were open in '24 that were not open in '23. So that is obviously increased expense.
So Anthony and Sean and the team did a fantastic job of managing costs while increasing our offerings to our customers.

Carlo Santarelli

And then if I could one follow up. Obviously, it's hard to look at peer valuations and kind of identify your hybrid owned leased mix and where the respective pieces of that mix are trading. But I don't think it's overly hard to look at kind of a comparable valuation and identify that the credit for the digital segment is hard to kind of distinguish.
I know, clearly, the space could foresee some -- there could be some activity in 2025, 2026. How are you guys thinking about ways to monetize and/or unlock some of the value that's presumably within the digital segment and maybe not reflected in the stock?

Thomas Reeg

Yeah. Carlo, we see the same thing that you see. To me, the hardest part is building the business that has the value that we can talk about in this way and we laid out that plan in the middle of '21 in terms of where we anticipated getting. And we -- now it's right on the horizon and we recognize that a digital business trading at our blended brick and mortar multiple 7 times or 8 times that there's dollars left on the table.
Operationally, it makes the most sense to keep everything together as one. But when the dichotomy is such that it's been and is today, you've known us for a long time. We look to drive as much shareholder value as we can.
This is why it's important for us to own everything in the business, the entire tech stack, not have partners. Have our own PAM which we're in the middle of rolling out, but it's a natural time to start to think about should you be doing something else strategically that allows investors a path to investing in that business on a pure play basis.
And if the market dynamics remain the same and the business continues to grow as it has, you should expect that we would look at any and all avenues in terms of how we can drive the most value to our shareholders.

Operator

(Operator Instructions)
And that message came from Carlo Santarelli, Deutsche Bank.
David Katz, Jefferies.

David Katz

I do want to just double click on the discussion about stock buybacks for the moment and how we think about that rolling forward. And frankly, balancing it with leverage reduction along the way.

Thomas Reeg

Sure. We have talked since the merger that we want to get our lease adjusted leverage toward 4 times and that remains our number one priority where you have seen us start to buy back stock has been in, asset sale transactions where we were trading assets out at significant premiums to our -- in current trading multiple and current leverage multiple.
You shouldn't expect to do -- see us do any share buybacks that are leveraging and really nothing that's close to that. You should expect that if you're looking at something in the neighborhood of $1 billion of free cash flow in '25, the vast majority of that would go toward debt paynow.

David Katz

And is there along the way, I know it's been a discussion in past quarters, but do you sort of have any updated thoughts in terms of the asset base of the company where there may be things that could be worth looking at selling?

Thomas Reeg

Yeah. David, you've heard me say many times we're a public company. Everything's for sale every day. The -- no M&A is an easy lift, but the easiest lift non-core assets were printed in 2024. We still own some assets that we would consider non-core non operating casinos. But have for some -- in some form or fashion are harder to monetize quickly but we're in active dialogue kind of around this stuff all the time.
I would say since the fourth quarter, we've seen an increase in incoming calls in terms of somebody saying, hey, what about this asset? What about that asset? I wouldn't tell you that that's transitioned into any particular trades that I think are imminent or even highly likely.
But that's after a couple of years where nobody was making calls at all. So that's a step in the right direction. We are not married to any of our assets, any of our markets if we can drive value through sale transactions, we'll look at those as well.

Operator

Brandt Montour, Barclays.

Brandt Montour

So Tom, on Las Vegas, you guys gave some helpful stats on the convention calendar and strength you're seeing in those bookings. I'm wondering if you could look at the bigger picture for Las Vegas. I know you guys -- you talked about 1Q.
But for the full year, what are the puts and takes in terms of the 2Q to 4Q scene growth in that market in EBITDA?

Thomas Reeg

It's really going to be driven by Increased yield out of our room product. That's part of the building of group business or the increase in group business. We'll replace lower value business. We've got a number of projects that are coming online at or have recently come online.
We opened Gordon Ramsay's Burger and Pinky's at Flamingo activating the strip frontage at Flamingo for the first time since we've owned Caesars. We opened Caramella's at Planet Hollywood. There's a number of food and beverage product that's come online.
We've still got returns from our hotel projects. We have an anniversary. The opening of the balcony rooms at Versailles. So we feel very good about what '25 looks like. And then as I said, '26 is a major group year on top of '25.

Anthony Carano

We also just opened a beautiful new high limit slot area at Caesars Palace. The previous high limit space hadn't been touched in about 25 years. The response has been tremendous out of that room. And in addition to that, we opened a new high limit pit area. That's adjacent to the high limit slot. Again, that came out beautiful and has had great response from our customers in there as well.

Brandt Montour

And then just to follow up maybe for Eric. The iGaming results continue to be very impressive. I'm sure you're looking for another big year in terms of iGaming top line. When you look at your KPIs and your drivers of that top line growth, are you thinking more about direct casino activation from your database or cross cell from OSB hold structural hold it continues to creep up. I know that's a function of your mix, but maybe you could flesh out some of the things that are that are that are driving that that growth and and and help us think about how it evolve in 2025.

Eric Hession

Sure, I believe we said previously and perhaps if not about 30% to 35% of our eye casino business comes from the sports book side of the side and the balance is being made up of the Caesars Palace online. App and then the newly introduced Horseshoe app.
If you think back a year and a half, neither of those apps existed and so largely, the majority of the growth is coming from Caesars Palace online app and then now the horseshoe. And so the customers that we're acquiring from there, some of them are Caesars Pala, Caesars Caesars Rewards customers, but the majority of the customers that we acquire are coming from other avenues such as the affiliates or Facebook and Google advertising and so forth.
The difference is that the customers that we get. That do participate in brick and mortar are worth many times more than customers that only participate with us either in brick and mortar or online and so when we think about a lot of the potential growth that we have, it's having customers experience both products and then being more loyal and sticking with us for a longer period of time and consolidating their spend both on the property level and on the online level with us.
And so specific KPIs that we look at are, the number of customers that we've acquired, the cost to acquire those, and then we look at, of course, our daily actives and then the volume that we have. And as you've noted, the hold has started to improve, which we think will continue and so if we're able to drive the volume up in all the different businesses that we have as well as the hold, then that'll translate into great gaming revenue.
And then as you've also seen, we've been very disciplined with our reinvestment levels both on sportsbook and on the casino side and so that flows through to net revenue and then the other costs as well we maintain those or reduce them and that'll allow us to get the flow through that we've guided to before of around 50% or slightly above that.

Operator

Dan Politzer, Wells Fargo.

Daniel Politzer

First, taxes, across both digital as well as brick and mortar have been and been very topical year-to-date. I was hoping maybe Tom, if you could kind of just give us a lay of the land of the landscape, from a regulatory standpoint and how you're thinking about that risk, and maybe kind of, I don't know, give some context this year versus prior years if you feel like this is, an increasing area of focus or just kind of the headline cycle we're in.

Thomas Reeg

I think it's a headline cycle we're in it's a function of where state budgets are, versus where they've been the last couple of years, and I think that you're. I know that whatever the headline of the day is grabs attention if you look at past.
History in gaming, you're at, you're likely to see a mixed bag of activity, you've seen states that have increased sports betting taxes, you've seen Illinois put a casino or a slot machine on every street corner, but you've also seen states legalized OSB state states legalized eye casino and I casino, this is going to be.
If you're looking out three to five years of states is gone, the surest way to raise the most revenue is to legalize eye casinos. So I think the opportunities are going to present themselves and yeah, there will be, you'll be you'll see negatives as well. You'll see, Baltimore appears, I'm sorry, Maryland appears.
Determined to raise more money out of gaming through additional taxes and we'll adjust to that but we think that states looking for more tax revenue from our sector is likely over a, if you're looking beyond, next month or the following month. It is likely to lead to more casino jurisdictions and that's an area where we're growing share or we're growing revenue about twice as fast as our peers and as you know we started from very little business in that area when we took over William Hill and very little in the way of employees and product. So we're quite keen to see what would a new i gaming jurisdiction casino jurisdiction look like for us.
So I know that what gets the tension is, all of this is negative. Somebody's saying they want more tax revenue from gaming the way you've seen it evidence itself over time is expansion of gaming which would be good for us.

Daniel Politzer

And then just to follow up on I gaming specifically, the hold really seems like it's picked up. I mean, it, my math is right. It is probably around 4% in the fourth quarter. I mean, I guess what's been driving that and, if that level, is that sustainable, can that move higher, and is it is function of customers or or slot mix versus tables or any additional detail you could share that would be great.

Eric Hession

Yeah, it has moved up. I'm not sure it's as high as you quoted. I think probably more around 3, 3.5 or 3.6 for the fourth quarter, but certainly, our goal is to get the hold into the force. I don't think that's an impossibility at all.
We're able to continually improve the product working with the vendors on the slot side. As I mentioned, we also have our studio that's going to produce some product. That will be of higher hold and then we also have side bets and other activities that we're able to offer people on the table game side including the live dealer with different game rules that will allow us to creep that that hold up but you know when you're talking about $11 billion or $12 billion or $14 billion worth of volume, modest hold increases really translate into significant gaming revenues.

Operator

Steven Wieczynski, Stifel.

Steven Wieczynski

So Tom, I want to go back to your comments about regionals now being flat to up slightly versus I think you said slightly down to flat. So just wondering if you can fill us in a little bit more about why you've kind of made that that change.
I know you you gave a little bit of a comment in your prepared remarks, but why you've kind of made that change in your outlook for regionals given we're only two months into the year? At this point, it seems like there's always something that pops up in terms of headwinds for regionals, weather or stuff like that.
So just wondering if your new outlook for regionals maybe incorporates any of those potential headwinds to give yourself, a little bit of a cushion here.

Thomas Reeg

Yeah. Steve, as you know I'm telling you what I know as I sit here today and I know more than I did four months ago when we were back here before, in terms of how our properties are going to respond to competition, how our efforts to claw back in battlegrounds is going to bear fruit. And the returns that we're going to get from New Orleans and Virginia.
And line all those up. Every one of those is better in terms of where my thoughts were end of October when we released third quarter. So it's really a function of that, we had a poor weather quarter last year, first quarter, and the hope was that would be a boon for regional this year.
And I think as Boyd told you and we'd agree with whether really hasn't been any. Any better, particularly this year's first quarter it's been about the same and yet you know we're still seeing that business perform better and if you look at council bluffs and you look at Indianapolis.
And see us starting to claw back in areas where we're now fighting for that customer after we've gone through the trial period that bodes well for other markets that are in similar situations. So it's really just four months has elapsed. You learn a lot in four months and a lot of assumptions that I was making in October have proven to be too conservative, and this is where I sit today.

Steven Wieczynski

And then if we kind of stay on the regional side of things, I mean, I guess, you would probably characterize regionals as being pretty stable at this point. I don't want to put words in your mouth, but can you give us any color around, and I don't know if you've said this in your prepare marks, but any color around unrated play. And maybe how that has fared recently, and then maybe some, have you seen any spend pattern changes across your database tiers, just, trying to figure out that low rated, that low tier rated player if you've seen any softness there or it's been pretty stable.

Thomas Reeg

I would say pretty stable unrated has actually gotten a little better for us recently. Now that's, after a number of quarters of softness post the stimulus checks, but at worst it's stabilized. It actually appears to be getting better. I see the same things that you see from our other consumer facing brethren in terms of concern about segments of the of the consumer or particular areas, what I would tell you is.
Our customer is pretty solid and stable across both regional and Vegas. Now we We don't have a ton of visibility, we've got 90 days into Vegas that looks strong regional. You really don't have a lot of forward visibility, but the tone seems fairly firm for us and got a little better post-election. I think that was really just a function of.
You stop seeing ad advertisements about how horrible everything was at every commercial break. I don't think that's a particular com comment on the outcome just getting past that seem to be good for our customer and we've seen that over the last four months.

Operator

Barry Jonas, Truist.

Barry Jonas

Wanted to follow up on the state tax increase question for digital, especially with Jersey just announcing something a few hours ago. Do you see that as a potential risk in the near term to hitting your $500 million target, or are there offsets you and the wider industry can quickly pivot to?

Thomas Reeg

Well, Barry, I'd say give me more than a couple hours on New Jersey, in terms of what we'd anticipate but we are well on the path to our targets, it does that move the can something move the date a month or two, sure, but there's no there's no doubt in the room that we are getting to where we've been telling you for four years and also that that's not the end of it that we're going to continue to grow.
I see the estimates for our digital brethren out there and I have no reason to believe that there's anything wrong with those estimates, but I tell you, if they're going to hit the numbers that you and your peers have out for them, we're going to do a hell of a lot more than $500 million of EBITDA out of digital.

Barry Jonas

And then just to follow up for Vegas, can you talk a little bit about how the Versailles tower is is doing and maybe or talk about any other opportunities for kind of high ROI investment in Vegas beyond that?

Anthony Carano

Yeah, the Versailles tower continues to improve. Cash ADR up to $67 this year, so up 61%. We're seeing similar results in other hotel towers that we've remodeled Caesars Palace, Colosseum Tower, and Octavia Towers, both up 20% and 29% was out of the capital we're putting into our room product.
Other projects that we recently deployed Pinky's at Flamingo and Gordon Ramsay's Burgers. Tom spoke to Carmella's all great assets, and then we're getting ready to open a brand new pool at Flamingo. That'll be one of the nicest resort pools on the Strip, so the return from that should be exceptional as well.

Operator

John Decree, CBRE.

John DeCree

I wanted to ask in the quarter on the sports betting handle, it goes down double digits year over year and I'm curious if you give us some color on that, is that kind of customer mix that you're seeing or is there, related to the big hold swing? Not sure if you have some additional color.

Eric Hession

Yeah, it's really related to two different things.
One is if you think back to last year we'd commented on how we had introduced our marketing tool that allowed us to do segmented marketing in the middle of the year. Prior to that we had been unable to have different offers go out to different segments.
And so as a result we were overinvesting in a lot of the lower end segments which made them unprofitable. And so we've changed that dynamic and really pulled back on the reinvestment to that segment, making it flip to a positive contributor. However, as you'd expect, the volume fell fairly significantly in that group. And then the other segment is kind of the very high end customer.
A lot of it's over the counter at the retail books, and those customers we've also cut the reinvestment level too for those that have been particularly sharp and low hold, and we've reduced the limits in some of the cases as.

Thomas Reeg

Well. And when is that anniversary?

Eric Hession

Yeah, it should anniversary beginning in the second quarter.

John DeCree

Tommy, do jumped right to my second question, my follow-up. So, maybe I'll throw one into Las Vegas or broadly if you have comments or Anthony on the slot play, I guess particularly Saul in Las Vegas, some of your peers said the same thing.
Also noting high limit slot rooms in new areas that have done well. Is there something that that's kind of budding with the slot customer that it's playing higher? Are they kind of new customers or was it, a bit more of a 4Q phenomena that we're seeing, but it seems like, there's a little bit of a trend of of high limit slot players that are playing more or coming back. So curious if you have any thoughts on that, and that's it for me.

Anthony Carano

Yeah. We've been seeing the slot business grow for a couple of years now at our strip properties and growing higher at that at the high end of the database, obviously with the investment in the new Caesars Palace slot room, but I'd also say our hosts and our and Sean and the property teams are doing a phenomenal job at curating events around these slot customers and driving them to town, and it's really showing on the results of the last few quarters.

Thomas Reeg

And Anthony and the team have made some Dramatic changes in slot for layout and design when we close the transaction, the Caesars. A family of properties slot floors were not particularly well laid out, customer friendly, and we found in a number of properties we didn't have enough slot machines, so we're adding additional slots and not seeing any degradation and win per unit, and we think there's still opportunity there, particularly in Caesars Palace.

John DeCree

Is that Vegas specific or are there some opportunities in regionals as well?

Thomas Reeg

There's opportunities in regional as well, you should see us. We're spending a little bit more on slat capital in 25, in our capital numbers that allow us to tackle some floors that we think were more dated, but what we're finding is.
You as you bring new product on the floor, you increase machine count you increase open table hours across the regional business you're seeing returns on that gaming revenue growing and you should expect us to continue to push that into '25.

Operator

Stephen Grambling, Morgan Stanley.

Stephen Grambling

A couple of follow ups on the digital side. As you think about the $500 million gold, do you need sports betting handle for OSP to hit that break even and then, on the monetization, is that $500 million target a fully loaded number comparable to public peers, or should we, how should we think about any incremental product technology or other kind of cost?

Thomas Reeg

I think about it apples to apples. I'm not following your second question. The first one.

Brian Agnew

Steve, we would expect volume, as Eric talked about, once we get through the mix segmentation in the in the second quarter to start to grow again in the back half of the year for sports. Obviously you continue to see very strong volumes in the i gaming segment, but if you think about the components towards growth and marching improvements, Eric.
It will drive higher parlay mix so it's a lot of variables, but yes, to your specific question we would expect to see volumes on the sports side start to grow again in the back half of this year.

Stephen Grambling

And just the second question just to repeat it and I was breaking up or it seemed like there was some background there but is the $500 million just a fully loaded EBITDA if you were to have that as a stand-alone business or there are incremental costs would have to be allocated?

Thomas Reeg

That's where you, so yeah, there are if you were to separate the business. There would be some modest disynergies associated with that because it does digital does rely on our centralized functions as they sit here today, but if you're talking about something modest in terms of difference and a significant multiple discrepancy in terms of how the businesses are valued. I don't think that would be a determinative, piece of the puzzle, but it would be something you'd consider.

Stephen Grambling

And and with the data with the customer go along with that, or would there be any sort of tie in to total rewards?

Thomas Reeg

Well, considering we're just talking about what we would explore, I'd rather stay out of how you would functionally separate the businesses, but you're getting along the lines of how would you go about doing it? You've got a document the way the businesses interact, you have the digital business, a key piece of it, in terms of advantages is access to Caesar's rewards, so you shouldn't expect a transaction that we would pursue that would shut it out of that.

Operator

Chad Beynon, Macquarie.

This is Sam on for Chad.
Based on your New York sports betting numbers in '25, it looks like the hold rate improved quite a bit relative to the rest of the market sequentially. So just wondering what were the main drivers and with better KPIs and single wallet. Any potential change to your player reinvestment strategy in certain states?

Eric Hession

Yeah. I do think our hold has closed the gap somewhat over the course of the year, particularly in New York. Obviously with the high tax rate, the reinvestment strategy is different in New York than in other states, and so it is a fact that we close the gap a bit more in New York.
But it's a combination of all of the factors that we talked about, we're getting more legs per wager on the parley side. We're getting a higher percentage of. We're getting a higher percentage of cash out and so all of those things contribute to the improved hold percentage that you're seeing.
I'd also say that the good news is that our competitors have even higher percentages on all of those than we do and so there's a, good road map there to close the gap even further, or at least if they continue to improve on hold then we will as well and and get to that 10% threshold. And then, what was your second question?

If higher hold rates and KPIs could lead to a change in the reinvestment strategy for the broader online check in.

Eric Hession

Yeah, we target a reinvestment as a percentage of the volume, so our, reinvestment level as a percentage of GGR is actually declined throughout the year and and compared to last year.
I don't anticipate us changing that reinvestment level, from a target perspective. It does vary based on certain tax changes and certain dynamics, but broadly speaking. It's not a competitive dynamic that would change that reinvestment decision. It's much more of a test and control, type, decision where we believe that we can make more money by, changing it to a certain segment of the.
So I would anticipate that the reinvestment level as a percentage of the volume would remain constant, and it might change slightly between states or between segments, but not broadly speaking across the business.

Thomas Reeg

And that's really the key. We're getting much have gotten much better, continue to get much better on identifying our most valuable players and incentivizing them to continue to play with us. And spending less money on those that are not valuable to us but kind of give you empty handle which has been part of the the remarks to date.
So if you're thinking we would say okay now. Promo instead of being one in change of handle, it's going to three, that's not going to be what happens. But if you think you're going to invest more in your most valuable players and get a bigger share of their wallet, that's certainly part of the road map.

And then just quickly on Vegas, wondering if you guys have seen any changes in international visitation trends in '25 just given stronger dollar and perhaps some political headlines headwinds.

Thomas Reeg

No. I mean, the political headwinds argument gets a lot of chatter on cable news networks that leaks into the investment community. You don't really see a lot of political statements being made by our guests. They want to come have a good time. They want to get away from, the political environment and so there's nothing to speak of in terms of change there.

Operator

Jordan Bender, Citizens.

Jordan Bender

One more on the tax changes I think we have a pretty good grasp on what happens when the sports betting tax rate increases just given that we've seen it before. So generally and not related to New Jersey, but are the levers to offset the tax increase the same for an Igaming business compared to a sports betting business, or is there anything in that i gaming business model do you think that will differ in terms of promos and marketing if adjusted?

Thomas Reeg

Short answer is it's the same. Tax rate is part of your calculation of return, and so if the tax is different, your, from our standpoint, we can only speak for us, the reinvestment rates will move.

Jordan Bender

Easy enough, okay, and then Eric, maybe just following up on the right sizing of the online customer base. Does the changing customer mix change the flow through assumptions that you guys have provided around 50% at all?

Eric Hession

No, I don't believe it does because, the guidance that we've given on our flow through was in relation to net revenue down to EBITDA. And so the mix that we're doing and changes that we're making in terms of our reinvestment levels is above the net revenue line on the on the P&L.

Thomas Reeg

But you're basically replacing high volume very low hold customers with customers that are more apt to play parlays and more apt to play more legs of parlays. So it's a piece of how our structural hold is improving as well.

Operator

Daniel Guglielmo, Capital One Securities.

Daniel Guglielmo

You mentioned attacking properties in battleground markets, which is great. Can you lay out the different metrics you look at to judge the team's success there?

Thomas Reeg

Yeah, I mean, we're looking at what does you, you're looking at a lot of things in each market. You're looking at what is the relative strength of my property versus the competitive property. So to give you an example in co Bluffs, we have a highly developed two properties on the Iowa side that are seven minutes further away from Omaha.
Than the commercial casinos that the tribes opened in Omaha, but they had financing constraints, so they didn't open properties that are physically competitive with ours. So we're going to be very aggressive in that market in terms of getting people back because you're not asking them to go very far, and you've got a superior product. You got a property like Indianapolis, where, had its own, an entire ring to itself.
Fort Wayne opened and encroached on that a bit. But again, Fort Wayne is a more modest property in terms of what it is in terms of scale versus what we have in Indianapolis. So that's another one where we're going to go back toward them. It's not going to be just the middle.
We're going to be getting back into markets where we think we can gain traction and what you're looking at is county by county, what's my investment in this county? What's that doing to share? Is it bearing fruit? And you can see it happening in Indianapolis and Council Bluffs, there's properties that are tougher where.
A competitive asset like Poarch Creek opened right in the feeder market for Hammond that was already facing. The move of hard rock into a better location on the interstate. So you've got a locational disadvantage and you have newer properties versus older property.
That's a tougher hand to play in terms of how aggressive you get, but the fundamentals are the same. You're going to decide how aggressive do I get in the various. A counties and what are my returns as I do and you've seen our history, we have a very long history of not just feudally flushing money if it's not driving returns, but that's where we're, we are in the bulk of the assets that were impacted in '24 and the early results are such that we're more confident about '25.

Daniel Guglielmo

As a quick follow up, you all provided the 2025, CapEx ranges in the K. Can you highlight any chunkier regional projects that are implied in the growth or maintenance lines there?

Anthony Carano

Yeah, we've got Tahoe, that's under construction as we speak. The first phase of this Tahoe project, if you recall, it's the Harvey's Tower, great location close to the lake. We are under construction on all. A public areas basically casino floor, valet lobby, one of the hotel towers, we should have that wrapped up in mid to late June, open for the busy summer season up there.
We'll take a break during the summer season, then come back and finish the second half of the casino convention space, and a few other areas, but Really transform that property, as I said, beautiful location, great destination market for all of our Caesar rewards members to go to.
So we'll really reposition our oldest property into a really very nice new property in Tahoe.

Thomas Reeg

And Dan, if you think about pacing of that, that's about $160 million total project. There was a little money spent on that in '24, the remainder is split between '25 and '26.

Operator

And I'm showing no further questions. I would now like to turn the conference back to Tom Reeg for closing remarks.

Thomas Reeg

Thanks, everybody. I appreciate your time and we'll speak to you pretty soon after first quarter.

Operator

And this concludes today's conference call. Thank you for participating. You may now disconnect.