Caesars Entertainment Corporation Stock

Good day, and thank you for standing by. Welcome to the Caesars Entertainment Inc. 2026 First Quarter 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.

Well, thank you, Daniel, and good afternoon to everyone on the call. Welcome to our conference call to discuss our first quarter 2026 earnings. This afternoon, we issued a press release announcing our financial results for the period ended March 31, 2026. A copy of the press release and our investor presentation are available in the Investor Relations section of our website at investor.caesars.com.

As usual, joining me on the call today are Tom Reeg, our CEO; and Anthony Carano, our President and Chief Operating Officer; Bret Yunker, our Chief Financial Officer; Eric Hession, President Caesars Sports & Online; and Charise Crumbley, 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 Regulation G. Please visit our press release is located on our Investor Relations website. for a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure. And finally, Caesars Entertainment as a matter of policy does not comment on market rumors or speculation. We will not be answering any questions during Q&A today on this topic.

Over to Anthony.

Thank you, Brian, and good afternoon to everyone on the call. Caesars delivered solid results for the first quarter of 2026 as consolidated net revenues of $2.9 billion increased $77 million or 3% year-over-year. Adjusted EBITDAR of $887 million improved by $3 million over the prior year. Highlights for the quarter include continued sequential improvements in operating trends in Las Vegas, revenue and EBITDAR growth in the regional segment after excluding the impact of the Super Bowl in New Orleans last year and record Q1 revenues and EBITDA in our Digital segment.

Starting in Las Vegas. The company delivered adjusted EBITDAR of $426 million versus $433 million last year. on flat revenues. We experienced a significant sequential improvement in the hospitality vertical in Q1 with occupancy of 95.3% in the quarter and year-over-year ADR growth of 1%. This marks a dramatic improvement versus the second half of 2025.

Occupancy and rate trends benefited from a strong group and convention lineup with group occupied room during the quarter. While leisure trends were still down on a year-over-year basis versus the second half of 2025. We remain focused on elevating our product offerings in Los Vac. Our newly renovated villas at Caesars Palace guest room product and casino floor remodels continue to generate excellent feedback from our guests.

Looking ahead, I'm excited for the opening of the Omnia day club at Talison May 15. The full remodel of the Augustus Tower at Ceasars Palace for completion by early 2027 and the opening of Category 10 by Luke Combs later this year. For the remainder of 2026, we continue to forecast sequential improvement in Las Vegas operating trends driven by group and convention mix and stabilizing leisure trends.

Moving to our regional segment. The company reported net revenues of $1.4 billion, a 3% increase year-over-year and adjusted EBITDAR of $435 million, down $5 million from the prior year. The regional segment delivered improved EBITDAR results versus last year after excluding the benefit of the Super Bowl New Orleans last year.

Our targeted marketing reinvestment strategy within our regional segment continues to deliver positive results, driving increases in rate play in Q1. On March 3, we closed on the acquisition of Caesars Windsor. Results of Ceasars Windsor are now included in our regional segment. Additionally, on April 9, we opened our newest managed property, Harris Oklahoma, which expands Ceasars Rewards to a new market.

As we look ahead to 2026 in our regional segment, we expect to benefit from a group mix in Arena, the inclusion of Caesars Windsor, the completion of our $200 million Taco Master Plan renovation this month, hosting of select property events around the World Cup and continued return on investment on recent strategic marketing reinvestment.

With the completion of our Tahoe Master Plan scheduled in June 2026, we will have successfully completed all major large planned regional CapEx projects since the completion of the merger back in 2020. in total, we have invested over $3 billion in CapEx into our regional portfolio over the last 5 years. Our regional portfolio is positioned to benefit from these investments moving forward. I want to thank all of our team members for their hard work this quarter. Their dedication to exceptional guest service continues to be the driving force behind our company's achievements.

With that, I will now turn the call over to Eric for some insights into the first quarter performance of our Digital segment.

Thanks, Anthony. Caesars Digital delivered record first quarter net revenue and adjusted EBITDA of $374 million and $69 million, respectively. Flow-through during the quarter was strong at just over 66% and EBITDA margins expanded 566 basis points to 18.4%.

Our results were driven by the following underlying KPIs during the quarter. On the sports side, net revenue was up 9%. Total volume declined 3% with mobile sports volume declining 1% with the declines more than offset by hold, which increased 100 basis points to 8.3%. In addition, parlay mix, average like per parlay and cash out mix all increased versus the prior year period.

In iCasino, we delivered 18% net revenue growth driven by strength in volume and average monthly active users. We continue to elevate our product offering during the quarter to include new in-house games, improved bonusing capability and incented cross-play with brick-and-mortar through our remote exclusive product launches and customer events.

Overall, in Q1, our total monthly unique players increased approximately 2% to 512,000 and average revenue per monthly player was up 15% to $219. From a tech perspective, we continue to convert new jurisdictions to our universal wallet and proprietary player account management system, which is now live in 27 jurisdictions and should be live in all jurisdictions by the end of April this year.

As we look ahead, I'm pleased with the significant progress on the technology side of the business is driving net revenue growth in both sports and iCasino. The continuous progress we're making is showing up in our consolidated digital top line results. The revenue growth, combined with our efficient customer acquisition spend and our focus on operational excellence drive solid flow-through to EBITDA. We continue to see a business capable of achieving 20% top line revenue growth with 50% flow-through to EBITDA, which keeps us on track to achieve our long-term financial goals.

I'll now pass the call over to Brett for some comments on the balance sheet.

Thanks, Eric. As Anthony mentioned, on March 3, we acquired the operations of Caesars Windsor for USD 54 million and entered into a 20-year operating agreement with the Ontario Lottery and Gaming Corporation. We are excited to add Caesars Windsor to our regional portfolio.

Our first quarter consolidated results demonstrated the stability of our Las Vegas and regional segments and the continued growth in digital. We expect to deliver strong free cash flow in 2026 during the balance of the year as a result of continued operating momentum, lower cash interest expense and lower CapEx.

Over to Todd.

Thanks, Brett, and thanks, everybody, for joining. Happy with the start to the year, strong quarter for us. Vegas is obviously in a much healthier spot than it was kind of middle of last year.

Starting the summer, still a tale of a very, very strong market when big events and groups are in town and softness when that isn't the case. I'd tell you, the ConAg week here was spectacular across the market have talked to our peers that saw the same. That's really a spectacular event and those types of groups, the entire city gets to participate. So we love those weeks, and we want to find more of them, we're working with the LVCVA to find more prospects that look like that.

As we look into second quarter, when I told -- when we met on our last earnings call, I told you I'd expect second quarter to be up slightly year-over-year. I'd tell you, April was a little softer than we anticipated, largely because we didn't hold like we did last year. So I'd say we'll still likely be just short of last year, but again, much healthier than it's been. And then we cycle into comps versus last summer as everybody remembers that was a tough summer in Vegas. Vegas is the FIT business continues to improve. Our bookings feel good. It just feels like a healthier market than it did say, 10 months ago for us. So we feel good there.

Regionals, if you recall, last year, we had the Super Bowl in New Orleans. That was a little over $10 million of incremental EBITDA that obviously didn't repeat with Super Bowl, not in one of our regional markets. But absent that, Regionals had a growing quarter, are off to a very strong start in April. So we feel good about regionals, the rest of the year. As Anthony said, our Tahoe redevelopment will be complete by the beginning of the third quarter. It's less disruptive than it was last year right now. We have the largest group of bowlers. Recall, that's a 3-year cycle with this year being the largest. So group business sets up well in region. We feel very good about Regional.

Eric talked about digital highlights, pleased with that quarter. I know others have pointed to prediction markets as an impact on customer acquisition costs. Recall that the bulk of our customer acquisition comes from our Caesars Rewards database. That's a particular advantage now. We're not swimming in those same pools that where production markets are making acquisition costs higher. So you can see in our numbers, we had a very strong quarter, and we're off to a good start in second quarter as well.

Also remember that we have some significant partnership expenses that roll off in '26. The bulk of those benefits will flow to us in the third and fourth quarter of this year and then into the first quarter of '27. So digital looks very strong. We're still on the path that we laid out a long time ago toward $500 million or more of EBITDA. With the completion of our capital cycle, we're in a free cash flow harvesting stage now.

You've seen our capital expenditures come down we have been balanced between buying back stock and paying down debt. You'll see in the first quarter, we didn't buy back stock. First quarter for us is a heavy cash outflow quarter with our bonus payments, interest payments and then in this year's quarter, we spent the $50 million plus to buy out the Windsor contract. So you should expect, as we move forward through the year through our having free cash flow quarters, second through fourth then we'd be back to a balance between debt paydown and stock repurchase.

And with that, I'll open up the floor to questions.

[Operator Instructions] Our first question comes from Dan Politzer with JPMorgan.

First, I wanted to talk about Las Vegas a bit. Tom, you said the market feels a bolter than maybe 10 months ago. Can you maybe talk about what specifically you're seeing? Is there signs of stabilization in that leisure category, mid weekend, high and low end just kind of parse out the market a bit in more detail?

Yes, I'd say leisure market has continued to get healthier from the kind of the lows of last summer. We'd expect to see typical -- back to typical Vegas seasonality as we get into the hot months. But that leisure customer does feel a little bit firmer than it did kind of each quarter since third quarter of last year. As I said, it's a tale of weekends, weeks when the market has significant group events, significant sporting events, significant attractions, those are exceedingly strong, and we still do have weeks that are software weeks in April that were soft, where we just didn't have a great calendar in the market.

But group business this year should be another record for us on top of last year's record. We're excited in May, the State Farm Conference comes back. for us, that will be a nice lift for us. And we feel better each quarter about how Vegas is performing. And I think the quarters of there's a downdraft that we're trying to catch up to our in the rearview mirror. I think it should be pretty stable going forward.

And in terms of high end versus low end, I think it's -- as I've said before, I think Center Strip in general, has held up the best. Either end of the strip has held up less well. High-end has held up better than low end but Center Strip has kind of trumped high end versus low and we don't have a big bifurcation between, say, Caesars Palace and Heras in terms of performance, it's all fairly uniform for us.

Got it. And then more of a kind of high level one. Certainly you said you're going to be back in the market on share repurchases in the coming quarters. As you guys think high level philosophically about the value of the equity, can you just remind me or remind us of how you think about the proposition there? What do you think public equity investors are missing or overlooking as it comes to the stock valuation as you think about going back into the open market?

I mean we're looking at the returns we can get through buying our stock. There's obviously a free cash flow yield associated with that. Paying down debt, we are still more levered than we would -- then would be our preference. So there's continuing an active desire to delever. And then we have returns on growth capital projects. And as free cash flow comes in, we design which is the most attractive use of that cash flow. And as has been the case in the last year or so, the answer has typically been some mix of share repurchase and debt repayment, and that's what we'd expect going forward.

Our next question comes from [ Brent Montour ] with Barclays.

Hello, everybody. Maybe starting with regional, Tom, I was wondering if you could give us some comments on that customer and how they're sort of faring in this environment with slightly higher gas prices. Obviously, we have stimulus that started coming in better. But the March data industry-wide did seem to slow and now there are some calendar issues just Sort of how do those sort of puts and takes sort of net out for you guys and what you're seeing on the ground?

I would say the consumer in general, but particularly the regional consumer has been remarkably resilient through the noise that we've seen in the last couple of months. Regional business in general feels firm, we feel very good about what we're seeing there and what we see going forward. We do have some idiosyncratic stuff in Northern Nevada, in particular. That's a tailwind for us. But across the board, regionals feel pretty good for us.

Okay. Great. And then maybe for Eric, you said, Eric, that the digital is still capable of doing 20% top line. You guys reported in top line, the low teens in the first quarter. but you gain share and sort of beat the industry on the iGaming side. So how do you get back to that 20% overall net revenue in the current environment?

Yes. I think the first quarter, our sports volumes being down 1% lower than we would expect for the long term. I think it's just annualizing some of the effects from last year with the Super Bowl being in New Orleans, and the teams may be being not as exciting for people for the Super Bowl caused some of that. And then in addition, the high hold increases offset some of the handle growth. But I think if you have mid-single-digit handle growth and then the iCasino side continuing to grow like it is, that's how we can get to that 20% range.

As you saw, we grew much faster than the 50% from a flow-through perspective. So some months and quarters will have a flow-through that's going to be higher like we did this quarter. And we don't need to get that 20% revenue growth to get the bottom line growth that we're targeting.

Our next question comes from Lizzie Dove with Goldman Sachs.

Just going back to Vegas for a second. There was a lot of talk last year about bringing value back to Vegas, and we've seen one of your peers bring out these all-inclusive packages and whatnot to kind of stimulate that leisure consumer. I'm curious where you are in that kind of process of any kind of pricing changes or how you think about that in terms of bringing back the leisure consumer more in the remainder of the year?

Yes. The team is doing a great job here in Vegas looking at all of our properties and welcoming guests at every price point, we've got the all you can eat drink at a number of our properties on the east side. We've taken a look at price up and down all of our properties. And I think we're in a pretty good spot to attract every guest to Las Vegas.

And Lizzie, keep in mind, I know that narrative has been out there quite a while. We were over 95% occupancy this quarter. So we feel very good about where we are in terms of price value. .

Got it. Got it. And then just on the regional side, you're kind of lapping some one timers in 2Q and you've got some of these renovations you mentioned, Matahu and whatnot kind of coming online. Any way to think about that, at least sizing some of these impacts from these renovations that you've been doing and how much that can benefit the remainder of the year?

Yes, I'd rather not get that granular on a per property basis, but I would say I'd expect regional to be a healthy grower through the year and second quarter is off to a good start.

Our next question comes from Barry Jonas with Truist.

I just wanted to dig into that all-inclusive package a little bit more. You recently started out at some of your lower-end properties, I guess what are your expectations there? Should we think of it as sort of a breakeven proposition, but hopefully, you'll get upside from gaming? Just curious to dig in on that a little more.

Yes. We're not pricing anything to break even, Barry. We're looking to be profitable in everything that we do. We know what each room in the portfolio, all 20,000 of them, we would expect when you're filled, how much that generates in revenue regardless of what they paid to get in the door. So you should think of this as when you're in your software periods where there's not significant group lift that this is a way to bring in people profitably, you shouldn't view them as a loss leader or even a breakeven proposition for us.

Great. That's helpful. And then just for a follow-up. Curious if there's been any progress made in looking for some sort of solution to the VICI lease coverage issues you've talked about in the past?

Yes. I appreciate the question. As I said last quarter, I don't want to be providing a blow-by-blow every 90 days about talks that may or may not be happening between us and VICI. Everybody is well aware of where that lease sits. And when the 2 of us have something to report, I'll come back to you. I'm not going to -- I'm not going to keep updating every quarter, but I understand and appreciate the question. Barry.

Our next question comes from David Katz with Jefferies.

Sorry, just got myself unmuted. You've talked about this a little bit, but I wanted to just go out in a slightly different angle. Within the regional gaming, it's obvious the opportunities you have, where you deployed some capital. there have been a handful of properties that have seen some competition. How have you evolved and deployed your strategies to compete specifically in those markets where there's been some head-on competition?

Yes. We start with service, David, providing the best service in the industry. We've got Caesars Rewards, which we think is our largest acquisition and retention tool. And then as we've spoken to over the past few quarters, we've tweaked our marketing reinvestment, especially at competitive properties to become more competitive. We've ramped that down quarter-by-quarter over the past 4 quarters and to get more efficient. But the teams have done a fantastic job in our competitive markets. retaining our customers, delivering excellent service and giving them reasons to come visit a Caesars property versus one of the new competitors.

Understood. I know the mantra is sort of ramping down capital. But are there any singles and doubles type projects that may be out there in the regions to think about in the future? And how might we reflect those?

Yes, David, we're over $3 billion of capital in the last 5 years into the regional markets, the bulk of that into the properties that generate 80%-plus of our regional EBITDA. So if there's a thought that there's deferred capital out there in our portfolio that doesn't reflect what you see on the ground and what you see in the investments that we've made in the last 5 years. There is no big group of projects around the corner. This is normal capital cycle stuff as you come off a large capital expenditure program that's as broad-based as ours was. It's natural that you then spend some time harvesting that cash flow and then deciding what your next wave would be, but that's a couple of years away at a minimum at this point.

Our next question comes from John DeCree with CBRE Capital Advisors.

I wanted to ask a question about Caesars Rewards, I think earlier in the call, you mentioned it's one of your primary customer acquisition channels for your online business. I think it was relative to sports, but I assume the same for iCasino. Tom or Eric, can you tell us kind of where you are in terms of the penetration of that database as we think about kind of the growth targets going forward? Is there a lot more customer activation head? Is it more about just getting greater monetization from customers in the database, if you could elaborate, that would be helpful.

Yes, I would say that we continue to get better, but there's still a gigantic opportunity in converting customers in our database that are primarily brick and mortar with us. and play digitally elsewhere and bringing them into the fold. When we first launched our app on the sports side and frankly, on the iCasino side before Caesars Palace online, the experience lagged our peers. That's no longer the case. So it's going to those customers to get another look.

And what we find is brick-and-mortar customer that shows up in digital for us increases their brick-and-mortar spend with us. I don't think that's because they gamble more. I think it's because we're consolidating wallet share. That's true of across the Caesars Rewards database. The more places we touch you, whether that's physical and digital, whether that's multiple properties within a marketer that's multiple properties across market, the more times we touch you, the more valuable you become as a customer for us.

So that's a system-wide focus and effort. You'll see us in Vegas starting to talk to customers about the Caesars campus and all the things that you can do, you'll check into our property, and we'll be giving you information that shows all the places you can use your Caesars Rewards outside of the building that you're staying in. So we're leaning into that. We're doing more in digital, and it continues to get better, but that's an enormous opportunity for our digital business as we move forward and certainly as new states come online.

That's helpful. My follow-up would be right down the same path. You've talked about paying down debt, buying back stock, but at least once a year I ask you about M&A. You obviously -- I think Windsor was a unique situation, but are there markets where you would expand your reach, Canada, U.S. regionals where it would make sense to grow our rewards database. Is there still enough synergy? Have you contemplated or think about M&A at this point at all in terms of expanding the network?

Yes. And John, as you know, we're always willing to look. I would say that purchasing an asset or a portfolio of assets in the near term for us is unlikely given the yield that we can find in our own stock, which there's far more certainty in that number than what you'd model in an acquisition. So unlikely we'd be a significant buyer going forward. But as you know, that can change depending on the opportunity that's in front of you.

Our next question comes from Steve Wieczynski with Stifel. .

So Tom, as you think about the rest of the year in Vegas, obviously, comps are going to get easier in the back half and your comments that the FIT bookings look solid or I mean, obviously, you're pretty encouraging at this point. But I guess the question is around with the FIT business still probably booking more close in at this point, how do you weigh those solid bookings now versus, let's say, let's say, gas fuel prices stay relatively elevated for an extended period of time and what that can mean in terms of driving traffic or even while its spend is folks or Vegas. I guess maybe help us think about the sensitivity that you've seen there in the past?

So I would say correlation between gas prices and spend in our portfolio is not particularly high. Where our average customer, it typically is at a level of income and worth that, that doesn't become a significant factor in their decision. Obviously, as you can certainly get to a level or extended a period of time where that may change. But really, as long as real estate values in the employment picture are solid, our business has typically performed pretty well, and I'd expect that to continue to be the case.

Okay. Got you. And then sticking with Vegas, Tom, you talked about the 95% occupancy rate in Vegas this past quarter. Is there any way to help us think about how much of that 95% was incentivized, meaning did you guys have to promote more or do any more discounting in order to get that level of occupancy?

No, there was no meaningful shift in casino rooms. The shift you would have seen was more group business first quarter this year than last year, which crowded out some OTA business.

Our next question comes from Stephen Grambling with Morgan Stanley.

One more on Vegas. Just given all the talk about attracting more big conventions like ConAg, it seemed like there was a window coming out of the pandemic where seemed like Vegas was taking share from other markets given The Sphere, Allegiant expanded convention centers. So what are you hearing from meeting planners or the convention community on what the competitive environment for that business looks like? And what really moves the needle to get some of these to come to Vegas?

Yes, there is a lot that goes into that. I'd tell you, for the types of conferences that we're talking about, it's super, super competitive. And that's been the case for -- regardless of the pandemic before or after we're talking about very lucrative conferences. There's no more -- everybody is kind of on the same footing as they were prior. There's really no jurisdiction anymore that's not recovered and competitive the way they were in the past.

So we, as a market, provide a very compelling, particularly in the group side. This is what gets lost in that value discussion. On the group side, we provide a very compelling value trade. This is a very easy city to get around for your group. There's an unusually broad spectrum of attractions in the market, entertainment, restaurants, shopping, golf that all feed into that. And then there's political elements that come in, in some of these things. There's just a lot of different levers, and it's unique for each group.

But for us, what we want and what we want the market to focus on is those events like ConAg that lift all boats and are not necessarily the highest profile, you're not going to be in a magazine because you got a great trade show or a conference versus some of the more high-profile stuff we've done. But those -- the meat and potatoes of that group business is really what drives the whole city. And I'm sure I know you talk to everyone in town, ConAg Week, there was not an unhappy operator in this time. And the more weeks we can fill like that during the year. These are -- this is elephant hunting as a market that you're going after. But if you can find even another 1 or 2 or 3, it moves the needle for everybody. And so that's what we're hoping we can deliver as time goes by.

Got it. And so just to clarify, it sounds it's less about really changing anything, CapEx or pricing, something like that, it's about telling the story?

That's right. .

And then maybe 1 unrelated follow-up on digital regarding the higher customer acquisition costs. It seems like we entered a window where there's not as many new states and handling ups have been slower in OSB. So with that in mind, should we be thinking about the higher customer acquisition cost impact is really more about replacing churn on the existing base? Or are you still finding opportunities to acquire customers?

We find opportunities to acquire customers, the chief opportunity for us, as we talked about is our database. But as you know, we've been 1/3 to 1/2 of the promo intensity of our peers. And our share has been fairly sticky. It's been growing in eye Casino. What that tells me is we have lower acquisition cost and lower churn than our peers, and that's been a significant benefit to us, particularly recently, as you've seen others start to talk about customer acquisition costs, ours have been pretty steady.

Our next question comes from Shaun Kelley with Bank of America.

Maybe to start while we were talking digital for a minute, going back to Eric. Just curious on a little bit more color around the iGaming trends you're seeing. Obviously, it's an important growth driver for you. The NGR side sounds super encouraging. Just digging in a little bit more, when we looked at some of the market-wide handle growth and then even kind of net of hold a little bit on the GGR side, feel like we saw that slow a bit in Q1. I think a lot of it might have had to do with just slower OSB trends in cross-sell, but just wondering if you could unpack a little bit about what you saw in the market? And specifically, are you seeing some competition pick up in states like Michigan as well?

Yes. I would say there hasn't been a huge change, Shaun, in any direction either way. Our handle was up 20% year-over-year. It might be down a little bit from the prior years, but also we're talking about a much larger scale. So as that happens, you're going to see the percentages decline to some degree, particularly because we haven't had any new states open in any -- in recent times here.

But in terms of additional competition, there have been a few new entrants just as companies have exited the market and others have taken their place. But I again would say that everything has generally been pretty consistent, we've been keeping our reinvestment levels relatively constant. And to Tom's point, our acquisition costs for the casino side have been kind of flat to down a little bit. And so we're kind of happy with how things are going.

Super. And then high level, Tom, earlier on, you made an interesting comment about you're not seeing as much if I caught it right, you're not seeing as much bifurcation between maybe high and low properties in the portfolio as maybe sort of location on the strip. And just sort of wondering if you could kind of expand on that as it relates to -- as we start to see some changes out there, maybe the opening of hard rock towards the latter end of next year, how do you expect that to play? Will that shift any of the center of gravity, 1 way or the other? Just how do you expect it to impact the Caesars portfolio?

Yes. So Shaun, I expect that to be a mixed bag for us. Given what they're building and the level of investment that's going in there, I think it's pretty clear that they're going to target the highest end of the market. And so while you've seen our regional CapEx cycle kind of move into a harvest phase, we've shifted capital toward Vegas and we shift our Vegas capital towards Caesars Palace and Paris, which are 2 that get high-end business.

Mirage coming offline for us was we can see things like the High Roller, The Zip Line, the shows on the east side of the Strip have struggled a bit without those 3,000 rooms online. So that will be a benefit to us when you have almost 4,000 rooms with the Guitar tower feeding, obviously, we're the closest neighbor on most sides of the what Hard Rock is doing. So I think we'll have a benefit there. But we're anticipating that the high end will get even more competitive. The entertainment space, we'll get more competitive, I'd expect the cost of the biggest acts will go up. So we'd expect them to be impactful.

But I'd also say, given the location and what they're building we're a little more optimistic that you'll get some of the -- what you and I saw back in the day where a new property opens and expands the market visitation goes up. It's not just cutting up the pet pie a little smaller. I think they can grow the pie a bit. So we're excited about what they're building and the fact that we're immediately adjacent to it, both on the East side and at Caesars Palace.

Our next question comes from Jordan Bender with Citizens.

Maybe to follow up on the last question. Tom, you kind of just talked about maybe how hard rock is going to impact like you and the market, but specifically like around kind of the playbook into next year, like should we anticipate that you guys to adjust pricing or change kind of the promotional strategy in the months kind of leading into that opening?

Yes. We'll have a full strategy to combat their opening. But Vegas is a totally different animal than regional. Vegas is a 95% cash business versus -- and you're generating profit from every vertical, whereas regionals are gaming centric and a lot of your nongaming is comp-based business. So keeping your properties full is paramount. So we'll have a strategy to combat that opening, but realize this is a 2% in capacity in terms of rooms. So this is not a huge -- it's not a seismic event from an occupancy perspective. So it's really just keeping your best customers in your system and minimizing the loss of your most profitable custom.

And continuing to elevate the product as Anthony talked about, full remodel of the Augustus Tower and all the new capital investments that are going into Caesars and Palace ahead of the hard rock opening, that's really the key strategy going forward as we prepare for their open.

Great. And then switching to more broadly. I think you have 2 union contracts coming up in the next several months. Anything to call out there in terms of either getting those done or extended and any impact maybe we should expect aside from that?

Nothing to talk about at this point. New Jersey comes up this summer, Vegas is not till '28.

Our next question comes from Chad Beynon with Macquarie.

Eric, I wanted to ask about the Alberta launch. Anything that you can share around that. I know it's a smaller population, but some good cities in there with big hockey fans that have probably been come into the market? How heavy are you guys thinking about leaning in there? And anything on a database that you already have ahead of the iGaming launch in July?

Yes. I would agree with kind of everything you said. It's a good opportunity. They actually have a fairly high average wealth per person it is on the smaller side in terms of the size of the province. But that said, it's both sports and casino. So we're very optimistic that it will be a great market. We're I would say, in terms of our performance in Ontario, it's kind of kind of middle down the road. And so here, when we launch our app is significantly improved from when it was when we launched Ontario.

And so we'll be putting a much more comprehensive launch plan together that will really go after the sports as well as the casino market and we'll launch with the Horse and Caesars Palace brand. So it will be a much more significant plan. In terms of having a database already seeded in the market, it's not all that significant. There's just not a huge amount of travel between the different the United States and Canada from that province. And then in addition, there are some restrictions in terms of how the data can be transferred because it is out of the country or in the country, depending on which way you're looking.

Got you. And then, Tom or Anthony, going back to the regional markets, revenues have been stable for several quarters, but margins have declined in the first quarter year-over-year. Obviously, the Super Bowl was a major headwind, so maybe you would have been closer to growing margins. But are we at the point where all things considered that we know right now that margins could start to improve if revenues are growing in this low single-digit range that we saw in the first quarter?

Yes.

Our next question comes from Trey Bowers with Wells Fargo. .

Just getting back to the kind of use of cash, is there a leverage ratio that you guys target that once you achieve that kind of all the cash flows will be used towards buyback? Or not all, but the significant portion of it.

I would say it's always going to be a decision as the cash flow comes in. There's not a magic number where all of a sudden, it's going to be all share buyback. But we want our leverage to be sub-5x on a lease-adjusted basis.

Okay. And then just on the iGaming side of things. It looked like we were pretty close in Virginia. Any thoughts around just which states out there you guys feel pretty good about that might be coming into the system in the next couple of years?

Very hard to handicap, Trey. It's I wish it were the case that it were kind of incremental, like a football drive where you get to mid-field 1 year and then field go arrange the next year and then it's done the year after that, it's more like a car accident that happens in your vicinity. This stuff comes together very quickly as states get under stress budget-wise and look to are looking for revenue. The Virginia situation went from wasn't really on our radar as a possibility to a week later seemed high probability and then ended up not happening.

Illinois, prior to their per wager tax a couple of days earlier, we were told they're going to legalize iGaming on Saturday night, and it was not even on the radar at the time as a real possibility. So it's very difficult to predict. What's easy to predict is state budgets are tight and getting tighter and states are going to be looking for avenues to raise revenue. And historically, gaming has been a place to do that. And if you look over the last couple of years, that's really only catalyzed in a way that was a headwind for us. It was tax increases or per bat taxes.

And the reality is those don't raise enough versus what they're trying -- the holes they're trying to plug what really moves the needle is legalizing OSB or iGaming. So I think if you're looking over kind of an intermediate time frame. I'm highly confident there'll be more jurisdictions available to us. I just hesitate to predict which ones those would be.

And our final question comes from Daniel Guglielmo with Capital One Securities.

I know it's a smaller piece of the business, but the other lines to entertain... was there anything to call out there this quarter or -- throughout the year? .

Sorry, Dan. It sounds like someone is hitting you with a fire hose in the middle of the question. We missed most of it.

Sorry, I took my headphones out. So I know it's a smaller piece of the business, but the other lines, so entertainment and retail performed well versus last year. Was there anything to call out there this quarter? Or is that an area where you can continue to improve on throughout the year?

The only thing I could think of is our show our entertainment calendar in Vegas is more robust than it was last year, and that will continue throughout '26. We've got more shows both in the Coliseum and in Planet Hollywood.

Okay. Great. And then just as a follow-up, table game drop was down in both segments. Is that just a different mix of customers coming to the casinos? Or is it more tactical on your part with maybe less offerings, higher minimums? Any color there would be helpful.

It's typically timing based in Vegas. In regionals, it's going to be heavily skewed by Super Bowl. There was a ton of high-end business in New Orleans last first quarter, which didn't repeat since the game wasn't there. There's nothing particularly -- there's nothing in our strategy or in consumer behavior other than timing of trips that would explain that.

Thank you. This concludes the question-and-answer session. I would now like to turn it back to Tom Reeg, CEO, for closing remarks.

All right. Thanks, everybody. We'll talk to you after next quarter.

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

Thank you for standing by, and welcome to Caesars Entertainment, Inc.'s Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] As a reminder, today's program is being recorded.

And now I'd like to introduce your host for today's program, Brian Agnew, Senior Vice President, Corporate Finance, Treasury and Investor Relations. Please go ahead, sir.

Thank you, Jonathan, and good afternoon to everyone on the call. Welcome to our conference call to discuss our fourth quarter 2025 earnings. This afternoon, we issued a press release announcing our financial results for the period ended December 31, 2025. A copy of the press release and our investor presentation are both available in the Investor Relations section of our website at investor.caesars.com.

Joining me on the call today are Tom Reeg, our CEO; Anthony Carano, our President and Chief Operating Officer; Bret Yunker, our CFO; Eric Hession, President Caesars Sports & Online; and Charise Crumbley from Investor Relations.

Before I pass the call 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 Regulation G. Please visit our press releases located on our Investor Relations 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 Carano.

Thank you, Brian, and good afternoon to everyone on the call. Caesars delivered solid results in 2025 with full year same-store enterprise net revenues increasing $266 million 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 $2.9 billion, up 4% year-over-year and adjusted EBITDA of $901 million, up 2% year-over-year. During the fourth quarter, our digital segment delivered an all-time quarterly EBITDA record of $85 million despite experiencing porthole 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 EBITDA declined slightly and was negatively impacted by poor winter weather in December. Absent the weather impact, regional EBITDA would have grown year-over-year.

Starting in our Las Vegas segment, we reported same-store adjusted EBITDA of $447 million versus $477 million 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 continue to elevate the customer experience in Las Vegas during the quarter with the addition of 2 new presidential villas at the top of the Tower as well as 29 new Sky villas at the top of the Octavius Tower, both at Caesars Palace. I'm 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 tau 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 EBITDA of $407 million, down slightly to last year. Absent the negative winter weather in December, EBITDA 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 million 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. And finally, we're looking forward to the opening of our newest managed property, Harrah's Oklahoma, which is 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.

And with that, I will now turn the call over to Eric for some insights into the fourth quarter performance of our Digital segment.

Thanks, Anthony. During the fourth quarter, Caesars Digital delivered net revenue of $419 million, adjusted EBITDA of $85 million and hold normalized adjusted EBITDA of $90 million. Flow-through during the quarter was better than targeted 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 Farley 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 continue to elevate our product offering during the quarter to include new in-house games, improve 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 $1.4 billion, up 21% year-over-year and EBITDA to $236 million, 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 wall experience to our customers on day 1.

As we look forward to the full year of 2026, I'm pleased with the significant progress on the technology side of the business that's 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'll now pass the call over to Brett for some comments on the balance sheet.

Thanks, Eric. In 2025, we continue to reduce debt alongside executing opportunistic share repurchases. As we move into 2026, we expect to benefit from decreasing CapEx, decreasing interest expense and well below $100 million of cash taxes. Our nearest debt maturity is our relationship bank financing, which matures 24 months from now.

Over to Tom.

Thanks, Bret. Thanks, everybody, for joining. For some additional color last we talked to you, we were coming off a very, very soft number in Vegas with the softness dominated by the leisure traveler, the leisure travelers 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, in the fourth quarter. And you saw that, that happened and are on a sequential basis, the year-over-year decline was less. As I look into '26, I'd 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 our -- the State Farm conference at our properties should put us in a position where we're looking at year-over-year gains. And then you get to the summer where it will be dependent on leisure recovery, but we feel good generally about the rest of the year.

Vegas, the way I'd characterize the business is peak events, peak weekends, big conferences, the cities and all of our properties are doing quite well. It's the shoulder periods when there's not a big event or a big conference where demand is challenging. And from an operating perspective, that's a unique challenge for us and all of us in the market because you're operating a property in a softer period that may be occupied for us in the '80s for others lower, and then you're ramping up to fully occupied that weekend or that next event. So it's quite a labor staffing challenge. So 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're proud of.

In the regional business, as Anthony said, October and November were quite strong for us, significant year-over-year growth. The last 2 weeks of the year, we had some ill-timed snow that probably cost us a little over $10 million 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's a little over $10 million 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. You get the largest group of boilers in Reno, that's primarily second quarter. You've 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 3 quarters of the year.

Digital, as Eric said, we're still pacing kind of 20% top line growth with 50% flow-through. Everybody knows the 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 '26 and '27 as we have big contracts roll off. In '26, there's a little over $35 million 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've got another 20-plus in '27, 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 that's a significant booster for growth for us as we move forward.

Prediction markets, I know everybody's got prediction markets questions. We're 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'll have a patchwork of states where they're not allowed states where they're allowed. In our -- in the current regulatory environment, you shouldn't expect us to be participating in prediction markets. We are -- some of our most valuable assets are our gaming licenses in each of the states that we operate, it's 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 shouldn't 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 regulated. These are not swaps. They're not miraculously finding the other side of a 5 parlay -- at the same time, one side comes in, but we'll let that play out. Through the cards notwithstanding our handle grew in the fourth quarter continues to grow. We're 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 '26, we were in '25. And 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.

Certainly. And our first question for today comes from the line of Dan Politzer from JPMorgan.

Tom, I was hoping to just check in on Vegas here. I know you spent a good amount of time talking about that lead your customer 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 proposition perspective that needs to in order to get that customer back?

I think this is normal economic cycle activity in leisure for us. You've got there's a unique flavor of what's 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's those soft patches in between. And keep in mind, we were at 92.5% occupied for the quarter across 20,000 rooms. If you look back over the history of Caesars and Vegas, this was probably the third or fourth best fourth quarter of all time. So there's really no crisis happening in Vegas. It's normal cyclicality, and it will play itself out.

We -- I know that the pricing gets focus on social media. I'm sure if I say the wrong thing in the next 30 seconds, I'll read it on Bloomberg or in the Journal tomorrow. But that's not really what's happening in Vegas. Center Strip is holding up quite well. The mix of what's available in Vegas, Bill and team at MGM do a good job of running down 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're unsurpassed. And the fact that we're 93% instead of 96% occupied, of course, we're going to work to get back to 96%, but this is not -- there's nothing unusual happening here. I'd expect it to recover as time goes by, and we're already seeing that happen over the fourth quarter and into first quarter.

Got it. And then just turning to the digital side. In terms of iGaming, there's 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 list? And I mean are these -- how close do these being done are they from a regulatory perspective?

So I'm not a good predictor of politics, but Maine appears highly likely to launch. And you should think of an iGaming state like Maine, something along the lines of what we saved in the NFL contract in terms of EBITDA at maturity for us. Virginia, as I'm sure you're aware, there's a bill that passed the house -- there's a separate bill to pass the Senate, it will go to conference, and then to the governor's desk. The fact that we're still alive at this point in the session is a good sign for brick-and-mortar operators. There's make well payments as part of the legislation that would benefit us. So our fingers are crossed in Virginia, that would be a very good outcome for us.

I would say, just -- I get asked to predict what's the next one to go. I would tell you in both Maine and now Virginia, weeks before, we were in the position that we're in now, we would have told you we don't -- we're 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've got a lot of states that have budget issues that are looking for revenue in many cases, with new leadership. Virginia has a new governor that's looking for revenue sources, that can be a good outcome for the casino business. I know in the last 18 months, that's been not a great outcome. We've seen taxes on OSB move up. We've seen perpet wager taxes were due for some good news in the political cycle, and it looks like there may be some coming.

And our next question comes from the line of Lizzie Dove from Goldman Sachs.

I guess sticking with betas, obviously, a lot of moving pieces. I appreciate your comments on leisure and the peak weekends and whatnot. You've got some capital investments that you've mentioned, obviously, some good guys from conferences. First half of this year for you, especially in 2Q. So just thinking -- I know it's early, but high level, how are you thinking about those puts and takes of how Vegas might play out this year overall?

Okay. Let me -- I don't -- we don't provide guidance, as you know. But I tell you, as I said, first quarter, I'd 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're redoing the Octavius Tower -- I'm sorry, the Augustus Tower at Caesars Palace over the summer. That's a little less than 1,000 rooms. So we'll time it so that it's -- the bulk of the work happens in that softer leisure period. And we'd expect to have those rooms back online for F1, but that is one take for us by -- in '26 that you should consider.

Got it. That makes sense. And then I guess on the OpEx side, you've done a pretty good job of managing that overall and your margins are still higher than certainly some of your public payers and one of your private payers 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?

Lizzie, 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're -- as I said, what will help is as occupancy smooths out, it's much easier to schedule. You're not running 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'll have in a non-COVID environment. I would expect that, that will get better as demand continues to firm.

Our next question comes from the line of Brandt Montour from Barclays.

So first is on regionals. 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 programs that you have in place next year is a key tailwind for growth. When do you think we'll see that metric slip -- and when you talk about it as a tailwind for growth? What are you sort of baking in for that sort of -- that factor to sort of turn into a tailwind?

Yes. I think you started to see it in the third quarter, fourth quarter when you hit by weather events that hit visitation, you had costs associated with promotional events that were happening in those periods that you can't recoup, so it looks that number -- it makes sense number look a little janky, I don't think it's 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 2 weeks of the year.

That's great. And just a follow-up on Las Vegas. I was hoping we could maybe go one more layer deeper on some of the more tangible pain points that you kind of referenced international inbound, but California interstate traffic discount airline seats. Some of these things that we can kind of put some at least qualitative feelings around. What's gotten better into the first part of the first quarter here? And what sort of still staying as depressed as it was in the fourth quarter?

I mean I would say between the fourth quarter and the first quarter, I wouldn't say there's been a meaningful shift in any of what you named. The difference is there's more group business in first quarter than there is in fourth quarter, generally speaking. What you've talked about -- 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 '26. Southern California drive-in was softer. In '25, that was coincided with immigration crackdowns that less people, let's call it, less willing to leave home and drive hours away. And I think as you put more quarters behind you, from when those administration made those changes, I think it will gradually come back the allure of the market has not changed. And we're optimistic as you move through '26 and beyond.

And our next question comes from the line of Steven Pizzella from Deutsche Bank.

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?

So that we're looking at the same thing you're looking at in terms of the free cash flow yield on the stock. You're going to look at how much cash flow you generate in the quarter. First quarter is a low free cash flow quarter, second quarter is a big one. So if 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're going to continue to balance as you've seen us throughout '25 as we go forward.

Okay. 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?

Let us get you that on a call back. I don't have that level of detail off my head -- off the top of my head.

And our next question comes from the line of John DeCree from CBRE.

Maybe one broad question, and I think we touched on yet, and I know it's difficult to quantify, but kind of early days in tax refund season. Tom, how are you thinking about from your consumers perspective, any uplift possibly from tax cuts under the big beautiful bill? What you typically see much of property managers have kind of reported anything at this point? But I think that's a meaningful tailwind for either regionals or Vegas?

Yes. I agree with you, John. I think that's a tailwind this year. You're just obviously just now getting to refund season, but you're in withholding change, January 1. So I think people are starting to see my checks a little bigger in '26 versus '25. And money that comes to consumers like that in kind of an unexpected fashion, I don't know that the average consumer is focused on tax policy as much as the sample size we have on this call as that money comes into the system, that's 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 '26.

Maybe another kind of topic for this year, Olympics, World Cup, Key events, maybe, Eric, specifically, have you seen any kind of material volumes around the Olympics? And do you have any expectations for World Cup and as it relates to the digital business for this year?

Yes, there's always interest around the Olympics. The Summer Olympics, though really drive a lot more volume than the Winter Olympics. And candidly, it's 80% on basketball. The Winter Olympics are fine, and we offer a great menu for the customers, but it doesn't 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 planning to really revamp the offerings that we have in terms of the markets that we list for soccer leading up to the World Cup. And so from that perspective, the World Cup is something that will drive significant volume and some hopefully good outcomes on the wind side.

And our next question comes from the line of David Katz from Jefferies.

I wanted to just look at regional gaming holistically. And it certainly looks like there's not just for you, but for everyone, there is sort of a lot of pressures from a number of different directions. If I'm characterizing the right way, whether it's skill games in some places or HRMs and 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's been?

I mean our benefit there is Caesars Rewards. It's -- 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 Erie, Pennsylvania to Shreveport, Louisiana, or to Reno between those places. The difference in Caesars is we've got 20,000 rooms on the strip. We've got destination properties likely Tahoe, New Orleans, Atlantic City that really create that hub-and-spoke system and allows us to differentiate ourselves to your point, the convenience-based slot-dominant product, it is hard to differentiate yourself from the product standpoint. So you do it in service and everybody us and all of our peers would tell you we're very good at service. We're better than others. As we know, that can't 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 in -- our Chief calling card in regionals.

Okay. Got it. And if I can just go back to Las Vegas for a minute. One of the debates we have everybody around sort of K-shaped economy. When you talk about sort of leisure weakness, are you able to sort of segment some of that weakness between higher end, lower end and whether that's discernible and whether you'd call it out and whether you'd classify it as K-shaped or not?

I mean I would say premium does hold up better. But I would point you to look at our -- look at our hotel numbers and look at MGM's hotel numbers for the quarter, they're pretty similar. And MGM has a higher skew towards premium play or premium room, sorry, premium properties. So it's not as simple as the low end, not doing well, the high end is doing well, that is part of it. But I think also location in the market plays a part. Center-Strip has held up better than either in 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's too simple to just say premium good value bad. There's a little more nuance in there.

And our next question comes from the line of Stephen Wieczynski from Stifel.

So Tom, kind of sticking to what David's question just was. You mentioned a couple of times the leisure traveler is still somewhat soft but has stabilized. I guess what I'm trying to figure out is -- is there any kind of data points that you could point us to that would make you say you've kind of indeed seen a bottom here in that traveler. And I'm not sure the right way to ask that question, but Obviously, that customer book is very close in. Is there anything whether that you're starting to see those folks book a little bit further in advance or anything else you could point to?

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

Okay. Got you. And then, Tom, you talked about the reinvestments you guys have done in the regional markets. It sounds like that's going well, given you mentioned there. Rated play was strong in the fourth quarter. Anything you could point to that would help us maybe a little bit understand better that those reinvestments are working like you expected?

Yes. Look at what you saw third -- I'm sorry, second quarter, third quarter, fourth quarter. I wish you saw in November, December on its own. We're seeing it flow and we're getting better at calling what's not working. I think you'll see more of that in first quarter. Part of it's what we're doing. Part of it is you get further from competitive openings in terms of properties that are facing a competitor that added or just came into the market that has not anniversaried, that's a lower percentage than it's been in prior quarters. And then as you look out to the rest of the year, we have more kind of Caesars or Caesars market-specific stuff that helps us like the Boeing calendar in Reno, the spend in Tahoe coming online and wins are going from a managed property to an owned property. So our regional picture should look pretty attractive in '26.

And our next question comes from the line of Barry Jonas from Truist.

There's obviously been activity in Virginia now beyond just iGaming. There's a bill for a Northern Virginia Casino and one for skill games legalization. Tom, how are you thinking about those expansion bills? Would you be interested in participating if the Northern Virginia happens? And any thoughts on impact from skill games beyond what you've already commented?

Yes. I would say we're always open to looking at new opportunities. Obviously, Danville, Virginia for us was a huge success. So that's a state that -- We have warm feelings the Commonwealth, we have warm feelings for the Commonwealth. Skill games, you're not going to see us involved in skill games, but if there's an opportunity in Northern Virginia, yes, we would take a look.

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

There's nothing unusual happening in terms of how we operate wholly owned versus leased. Leased was -- has been -- I guess, overimpacted 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's coincidental. As you move forward in that impact abates, I expect leased and owned to look similar in terms of performance.

And our next question comes from the line of Stephen Grambling from Morgan Stanley.

Maybe to piggyback on that, certainly starting to see interest rates come down even some modest cap rate compression in broader real estate. Now you've been thinking about monetizing real estate on the strip in the past. But as you look at the broader landscape and think about the structure of some of these agreements, how do you balance monetizing real estate on the strip going forward?

Yes. I mean, Stephen, we've talked before, we are always open for business. So if there's interest in any of our assets, we're happy to talk about them. You shouldn't expect to see us running a process on an asset anytime soon. While the capital markets, the debt markets are strong, that market has been strong for quite some time. And these are chunky assets that have a fairly short list of potential buyers. So it's more likely not a change in the capital markets that drives activity. It's somebody deciding, I'd like to own a strip asset and becoming aggressive.

Fair enough. And then maybe one other one on the digital front. I saw strong monthly active 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 to EBITDA longer term?

Yes. I would say that there really hasn't been a change in the value of the customers that we're signing up. We are improving our retention slightly so that if you look at the lifetime value of the average customer, it does trend up somewhat as their retention improves. The cost of acquisition has fallen slightly, however. So we're 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.

And our next question comes from the line of Chad Beynon from Macquarie Capital.

Sticking on the digital value. I know lately, there's been some valuation declines just on the back of the prediction cloud. Obviously, it sounds like there hasn't 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 spinning out this business, kind of the path of that, that you've talked about before? Or maybe just providing any more spotlight on the value of this business.

Yes, Chad. I'd say we're -- we will do what maximizes value to shareholders over the long term. I would say given what we've seen in valuations in the space over the past 6 to 9 months, this doesn't 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've told you in the past is our focus is on hitting our numbers, scaling the business, proving its scalable, and we're still in the midst of that and making great progress, expect to continue to make more. But in the current market environment, it's unlikely you should see us pursue a separation transaction.

Okay. And then lastly, on just AI benefits, whether it's searching for travel on the leisure side, I know that's been a big topic this quarter, geo versus SEO and maybe some potential savings. I'm not sure if there's still opportunities there, but maybe just in terms of search or other marketing or purchasing, should we expect any financial benefits from AI improvements that you guys are doing in-house or using with some vendors to help in the near term?

Yes. The short answer is yes, Chad. We price all sorts of stuff every day, hotel rooms being an obvious example, that's 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's opportunity there. There's a lot of different areas where we're looking at applying AI to further enhance our profitability and our margins, and you should expect to see benefits from that over time.

And our next question comes from the line of Jordan Bender from Citizens.

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 '27? And I just to unpack that maybe a little bit more kind of like what's losing the tank between like partly mix, average legs, improvement in the trading team anything that kind of helps us bridge between what we're seeing today to how we get to that 10%?

Yes. I think you've done -- said it pretty well. It's -- we've consistently improved our hold and it's not through any single action that's taken. It's 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're not able to get their bet through or why is it that we're not able to offer this product or what are the types of things that they want to do that our app is causing them to be unable to do. And then we fix those things or make it easier for them to find or bet. And typically, what customers like to do is they like to bet more parlays and they like to bet lot parlays and they like to bet it with more legs and then cash it out and all those things contribute to hold. And so the pricing department is not so much determining what specific margin we're going to charge for various wager. What they're doing is making sure that the pricing is available and that the price is up so that the customers can bet it they want. And then through the simple weighted average expected value that we get per bed, that increases over time as those higher hold bets come through with a higher frequency than the lower hold bets. And so what you're seeing is that -- I do feel very confident that we're going to get to 10% and hopefully, we'll do better than 100 basis points in 2026. But as you've seen, it's been pretty steady for the last 3 years.

Great. And Tom, just a 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 3 quarters of the year. Is that kind of caused you the puts and takes in the first? Is it fair to assume you're implying 1Q could be down and then the remainder of the year should be up. Was that what you're kind of saying?

I'm saying 1Q, we've got to overcome a little over $10 million of Super Bowl benefit in New Orleans to grow. And then we have really nothing but tailwinds the last 3 quarters of the year.

And our next question comes from the line of Trey Bowers from Wells Fargo.

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 at 19% growth in the quarter, and that's accelerated every quarter last year. I just would really like you guys are digging a little more there because it seems like a real standout in the industry.

Yes. I appreciate the compliment on it standing out. This is a -- it's a metric that we mainly report because it's an industry metric that others use. What we do is we try to drive the components up that contribute to that metric. So like I mentioned, retention is a big one for us. Number of active wagers per customer is also important because that indicates their retention is going to be higher. A number of states 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 provide them opportunities to do that. 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 based on competitive natures and states opening. But really, if we can change the retention over, say, an 18-month period by even a few points, what you'll see is a shift fairly significantly in these unique players.

And so I would expect it to continue to increase [ 19% ] strong. So I don't really have any guidance on that. But every activity that we do from the tech perspective, from the customer service perspective and from a marketing perspective, all ultimately result in that improvement in terms of the unique customers that are using our product.

And our final question for today comes from the line of Daniel Guglielmo from Capital One Securities.

Just one for me. With Caesars Windsor moving into the regional segment in 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 the unique situation that worked out?

This was a unique situation for us, Daniel. In terms of -- we were a long time manager of the asset, we effectively bought the OpCo EBITDA at 2x what it's doing now and think we'll be able to improve upon that as a wholly owned entity. We would look elsewhere in Canada, but I'd 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's not typically been interesting to us.

All right. Thanks, everybody. We'll see you next quarter.

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

Good day, and thank you for standing by. Welcome to the Caesars Entertainment, Inc. Third Quarter 2025 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.

Thank you, Shannon, and good afternoon to everyone on the call. Welcome to our conference call to discuss our third quarter 2025 earnings. This afternoon, we issued a press release announcing our financial results for the period ended September 30, 2025. A copy of the press release is available in the Investor Relations section of our website at investor.caesars.com.

As usual, joining me on the call today are Tom Reeg, our CEO; Anthony Carano, our President and Chief Operating Officer; Bret Yunker, our CFO; Eric Hession, President Caesars Sports & Online; and Charise Crumbley, 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 Regulation G.

Please visit our press release is located on our Investor Relations website for a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure. Our Q3 investor presentation has been posted to our website. and our Form 10-Q has also been issued as well. We experienced hold volatility in our reported results. Management will discuss hold normalized results in our call today and a full reconciliation can be found in our earnings presentation posted on our website on Slide 21. I will now turn the call over to Anthony.

Thank you, Brian, and good afternoon to everyone on the call. Our diversified portfolio delivered third quarter consolidated net revenues of $2.9 billion and adjusted EBITDA of $884 million. On a hold-normalized basis, the company reported $927 million in consolidated EBITDA. During the third quarter, our digital segment delivered strong volume growth in both sports and iCasino.

Adjusted EBITDA in our Digital segment was negatively impacted by NFL hold in September and faced a difficult comparison to last year, which included WSOP results. Our Las Vegas segment posted solid results in the face of softer market-wide visitation and adjusted for power table games hold. We are seeing sequential improvement in operating trends in Las Vegas as we enter the fourth quarter. Regional revenues were up year-over-year, driven by strong returns in Danville and New Orleans and same-store net revenue growth resulting from continued strategic reinvestment in our Caesars Rewards customer database. Regional EBITDA grew 4% on a hold-normalized basis during the quarter.

Starting in our Las Vegas segment, we reported same-store adjusted EBITDA of $379 million and hold normalized EBITDA of $398 million. Segment results were driven by 92% occupancy versus 97% last year, and ADR decreased 5% as a result of citywide visitation weakness during the quarter. As we progress through the quarter, trends improved sequentially, with September delivering the strongest results of the quarter.

During the quarter, the group room night mix was 13% and the segment is on track to deliver a record EBITDA year in 2025 due to our strong Q4 booking pace, where group mix should increase to 17%. Recent CapEx investments at the Flamingo in Las Vegas, including a brand-new pool experience, Pinky's by Lisa Vanderpump, Gordon Ramsey Burger and Havana 57 continued to exceed return expectations. We are excited about upcoming CapEx projects in Las Vegas, including a new Omnia Day Club by Tau at Caesars Palace, the rebrand of the Cromwell to the Vanderpump Hotel and the recently announced Project 10 by Luke Combs that will transform the vacant Margaritaville space at the Flamingo.

These exciting projects continue our commitment to reinvest in our assets while elevating our guest experiences. As we look to the fourth quarter in Las Vegas, we see trends improving sequentially, driven by positive leisure trends and a strong group and convention calendar. In our regional segment, we reported adjusted EBITDA of $506 million and hold normalized EBITDA of $517 million, driven by 6% net revenue growth. Early results from our strategic customer reinvestments are promising, driven by strong rated play trends in the quarter.

We will continue to refine our marketing approach as we remain focused on delivering strong returns on these investments. Margins improved sequentially this quarter, driven by better flow-through on these investments. New projects in Danville and New Orleans continue to generate strong returns, and we look forward to completing Phase 2 of the master plan currently underway at Caesars Republic Lake Tahoe in mid-2026.

I want to thank all of our team members for their hard work through the first 3 quarters of 2025. Their dedication to exceptional guest service has been the driving force behind our accomplishments this year. With that, I will now turn the call over to Eric for some insights into the third quarter for our Digital segment.

Thanks, Anthony. During the third quarter, Caesars Digital delivered net revenue of $311 million, adjusted EBITDA of $28 million and hold-normalized adjusted EBITDA of $40 million. Recall that last year, in Q3 2024, we benefited from approximately $8 million of net revenue and EBITDA contribution from the World Series of Poker, the World Series of Poker was sold in Q3 of last year. And so now we fully annualize the impact of the sale on our EBITDA comparisons. In addition to the effect of the poor hold and the loss of the World Series of Poker revenues impact on flow-through.

We had a number of other headwinds this quarter that included incremental state taxes, higher acquisition marketing spend and some bad debt. As we previously noted, there will be volatility across quarters. but we're on track to exceed our 50% target flow-through for the year. Our core KPIs remained strong during the quarter. Specifically in sports, total parlay mix improved approximately 210 basis points year-over-year and we saw growth in average legs per parlay and a higher cash out mix versus the prior year period. In addition, we realized volume growth of 6%, a notable sequential improvement, which was unfortunately more than offset by the negative sports outcomes our industry experienced in September. In eye Casino, we delivered 29% net revenue growth driven by continued strength in volume and average monthly active users.

We continue to evaluate -- or elevate our product offering during the 2 quarters to include new in-house games, improved bonusing capabilities and elevated live dealer product. We look forward to a redesigned Horseshoe online casino update in Q4.

Overall, in Q3, our total monthly unique payers increased 15% to 460,000, 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 22 states. The enhancement gives our customers a significant upgrade to their wagering experience. Pending regulatory approval, we plan for the Missouri State sports betting launch December of this year to be the first state where we offer a shared wallet experience to our customers from day 1.

We continue to expect a complete rollout of our universe of wallet product on our proprietary TAM by early 2026. As we head into Q4 and 2026, I'm pleased with the significant progress on the technology side of the business is driving strong volumes in both sports and iCasino. The continued progress in all areas 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 long-term goals. I'll now pass the call over to Bret for comments on the balance sheet.

Thanks, Eric. In addition to redeeming $546 million of senior notes during the quarter, we repurchased $100 million of stock, including October activity. We've now repurchased close to $400 million of stock since mid '24, shrinking our share base by 6%. Our balance sheet remains in great shape with our nearest maturity in 2028, and a floating rate debt mix that will continue to benefit from interest rate cuts. Our weighted average cost of debt currently sits at just over 6%. We expect to continue using our strong and growing free cash flow to both reduce debt and opportunistically repurchase stock. Turning it over to Tom.

Thanks, Bret. To jump into a little more detail. We told you on the last call that Vegas was going to be a soft summer. It was a soft summer. Our ADR was down a little over 6% occupancy percentage -- our occupancy was down about 5 percentage points. So that's about 90,000 room nights for us that flows through all of the nongaming pieces of the business. On the gaming side, volumes held in pretty well. slot handle was down only 2%, even though we had 90,000 less room nights. I hate talking about hold, but this is a quarter where you can't get away without talking about hold. Hold was down almost 600 basis points in Vegas in the quarter. On a year-over-year basis, it impacted us a little over $30 million. And it's -- and there were another 10 -- a little over $10 million of onetime items that benefited us last year that don't repeat the largest of those being cancellation of the sponsorship contract on the Planet Hollywood live theater in Vegas.

The quarter got better throughout. So July was the worst month of the quarter. August got better, September got better. What we told you when we talked to you in the beginning of the quarter was it would be soft. We would expect recovery in the fourth quarter, that is what we are seeing. Our cash room revenue forecast for the quarter is down just slightly cash room revenues in the third quarter were down a little over 11%. So that's considerable improvement. A lot of that is the group calendar that Anthony referenced.

We have some Caesars-specific groups that benefit us, not necessarily the entire market. We had the Oracle conference that was in 3Q last year and was in early October this year. And then we have BravoCon coming up as the quarter continues. F1 for us is looking considerably better than it did last year than it performed last year, not as good as year 1, but up from last year. The headwind for the remainder of the year is New Year's Eve is middle of the week this year, which is not particularly helpful calendar-wise. But other than that, we see Vegas coming back strongly. I know that's a big question has been a big question. Again, what we laid out in July of soft summer recovery in the fourth quarter, continued recovery in the first quarter is still what we see today.

Group should be, as Anthony said, a record in '25 versus '24. That's largely on the strength of the fourth quarter, and then first quarter should be a new all-time record ahead of '25 -- I'm sorry, '26 should be a full-time -- a new record for the full year ahead of '25 largely on strength in the first quarter of the year. So it was a difficult summer. There is definitely -- has been softness in leisure demand for Las Vegas in the summer months, particularly in properties that I would view as price takers those that are -- as you go down the customer spectrum or you move out from the center of the strip demand for those were soft. Premium has held up better, but it's the return of group business in the fourth quarter and first quarter that allows rate compression that brings us back to a much healthier-looking market as we look at this quarter and into '26.

For regionals, we talked about how last quarter we've embarked on increase in marketing reinvestment starting in properties that were competitively impacted and moving beyond that as we saw what was working as the quarters go by. I think I've said this to you a number of times, you'll see us refine that take out what's not working expand what is to more markets. We have a lot of test and control out all of the time. And you can see better flow-through. You would have seen even better flow-through if we had held both brick-and-mortar and Vegas hold percentage was the lowest that it's been in over 3 years, and that's particularly unusual in regional, regional is pretty -- is pretty stable. But what we're seeing in regional is the flow-through of the marketing is improving. You should expect that to continue to grow -- to continue going forward and demand in regional is pretty solid. Like we have no complaints about what we're seeing in regional.

In Digital, obviously, we've got the sports outcomes that have been -- there's been a lot of conversation about those both here and elsewhere, so I won't belabor those. We're happy with where we are margin-wise, happy to see us growing handle iGaming continues to perform quite well. So all of our goals remain in front of us in terms of what we've laid out for digital and fully expect that we'll get there. So we feel good about that story as well.

And then in terms of free cash flow, you should expect that we'll remain balanced in using our free cash flow between paying down debt and repurchasing our stock. At current levels, our stock is attractive to us. You should expect us to be active as we go through the remainder of the year. And with that, I'll open it up to questions.

[Operator Instructions] Our first question comes from the line of Brandt Montour with Barclays.

So Tom and team, I want to start with Las Vegas. And I want to just sort of dig into some of the comments that you made, Tom, specifically around leisure demand. And I heard positive leisure recovery, but I also heard that the group fill-in is most of the sequential improvement that you are looking for or seeing into the fourth quarter. And so maybe you could highlight some other metrics in terms of how we should think about is sort of very near-term sequential leisure recovery, whether that's bookings, 4 weeks out, occupancy, et cetera, or anything else that might be helpful there.

Yes. So when we talked to you last quarter, we're looking at the same forward booking calendar that we can see. Now looking at that point, it looked particularly soft, which is why we told you we were expecting a soft summer that came in when you adjust for hold about where we anticipated it would be. As we sit -- and if you think about sequentially and the quarter that you're in. Because it's the third quarter, it's a leisure-dominated quarter. There's not a lot of group business in Vegas when the weather is particularly hot relative to other quarters. And that leisure customer continued to get better during the quarter. July was the worst, August built on that. And then September, October has continued, but that leisure customer is still softer on a year-over-year basis.

The difference is what you get in group activity allows us to compress rate much better than we were able to in the third quarter, and you don't have nearly the amount of miss in occupied rooms. We have 90,000 in the third quarter, about 500 basis points of occupancy. Our occupancy looks better and our rate looks better than it did third quarter.

Great. And maybe moving over to regional. You guys put up a hold adjusted regional number that did show growth, and you had told the market that you were promoting more last quarter and perhaps rolling out promos to less -- more impacted -- more nonsupply-impacted markets. But it looks like that hasn't started yet or you're getting pretty good returns on those tactics. And so I guess the question is, -- are you -- is this the type of flow-through that we can expect from this program, whether it's supply impacted or nonsupply impacted markets as you sort of move through the evolution of those new programs.

Yes, Brandt, that's a great question. And we would expect as the quarters go by, we become more efficient in that marketing you're dialing back more that's not working and expanding what does. And I want to be clear, there was a sense that we were getting into some sort of promo war I heard that from a lot of investors. The way we look at it in most of our -- in all of our markets, Caesars Rewards is the most impactful customer program that there is among any operator.

In many of our markets, we have a property as well that is better than others. So that's higher quality. So if you think about the way marketing works, you may lean on those advantages a little bit and say, "I'm not going to be as generous in my give back as others, and you're still going to perform quite well. I think that, that gap got to be a little larger than we needed it to be in properties that were not competitively impacted. So I would think of what we're doing is kind of taking up that slack, not entering into a promotional war. And we're not seeing significant response from competitors that suggest that this is going to keep going higher. What I'd expect you'd see going forward is what you saw this quarter where the flow-through from that revenue growth continues to look better as the quarters move on.

Our next question comes from the line of Dan Politzer with JPMorgan.

I just want to go back to Vegas in that leisure customer. I mean, it sounds like things are getting a little bit better, just group is obviously helping in terms of compression. But I mean, how do you kind of look to stimulate that leisure customer? Do you think that there are structural issues in Las Vegas that need to be addressed in terms of pricing. And then it sounds like in terms of fourth quarter, things have gotten better. So I don't know if there's any way to kind of frame kind of that bouncing off of the third quarter in terms of some kind of broad estimates

Yes. So on the pricing question, we price hundreds, thousands of items across Vegas every day from obviously rooms and restaurants to ATM fees to everything that you purchased in Vegas. And we're constantly adjusting them. What was interesting -- there's a few things that are interesting to me in that conversation.

And I don't discount that. There are areas in our business and in Las Vegas that got -- might have gotten over their skis pricing-wise. But to put it in context, we're in a quarter where while we're talking about pricing and degradation of demand. Our occupancy percentage was over 90% in the quarter. It's stronger as we move into fourth quarter. But most interestingly, while those stories were out there, most days that you read those stories, you could have gotten a room in Vegas for $29 plus a resort fee on the Strip. So there's a there's a value trade -- and what's great about Vegas is there's something for everybody. Sean McBurney, our Regional President out here, who does such a fantastic job. He uses the example of -- you can come see Paul McCartney and pay $500-plus a ticket, the same weekend that you're going to see -- you can see Donny Osmond for $60. So there's something that every price point.

And keep in mind, in a quarter where we're -- it was undeniably soft versus last year, and we're glad to see it coming back in the fourth quarter. It doesn't take a lot to turn that back the other way. You're talking about 5 percentage points of occupancy got us to a 10% decline in adjusted EBITDA, you don't need much to swing back the other way to where you're right back to where you were before.

So -- and 1 more point. We're talking about a quarter where we did about $400 million of adjusted EBITDA in the third quarter, so the summer in Vegas. That quarter typically premerger was $300 million to $320 million of EBITDA. So this is still a very strong market. It offers something for every price point. I'm sure when you're pricing thousands of things every day as we are and our peers are, it's going to be easy to find things where you say, look at how much this bottle of water costs.

But the value proposition in Vegas stacks up versus just about anywhere that you could want to travel and what you can do in -- while you're in town is the breadth of what's available, you cannot line that up with any city in the world. So we feel fantastic about Vegas fundamentally. And we think it won't be very long until that's a story where we'll be talking about. Remember when -- remember the summer when we talked about $25 bottle of water and -- that's not what was driving activity.

Right. Okay. That's really helpful detail. just pivoting to Regionals, this is more of a high-level one. But obviously, in terms of that more promotional strategy, and I get it's kind of more short-term oriented, but how did you kind of think through that versus maybe the puts and takes of putting more capital into the ground at some of these properties to improve the amenities if there would have been a return on that as opposed to just being more promotional?

Yes. I mean we since the merger, we have invested $3.1 billion in just our regional assets, $2.8 billion of that is in the 16 properties that generate 75% of our regional EBITDA. So the properties that have been less touched by capital, and all of them have been touched are those that are pretty small, may not have hotel. I think the -- if you look at the regional capital investment across us and our peers, we've outpaced everybody in the last 5 years. And we're really in -- let's harvest those investments and let's give people a reason to come and see them.

You spend the capital. Keep in mind, these are properties that are in somebody's neighborhood. They pass it or they pass the billboard every day for 10, 15, 25 years. If you put the money that we put into these properties, over the past 5 years, the customer is not going to automatically know it, unless you stimulate a visit, get them into the property, and that's what we see is as we reactivate customers that didn't know the money that was put in New Orleans being a great example.

You start to see organic momentum build because you're showing customers a property that's different than they remember. And so that investment has been made. This is the -- this is the message of, hey, come and see us and see what we've done. And what we see out of that is organic follow through. And like I said, this doesn't -- this doesn't happen neatly in 90-day periods. This stuff happens over a longer period of time, but we are particularly encouraged by the trends that we're seeing that suggests that what we're doing is working and driving more aggregate cash flow, which is the goal of this whole enterprise. That's

Shannon, for Q&A, we've got a lot of people in the queue. Can we just have everybody ask 1 question and then circle back if possible.

Sure. Our next question comes from the line of Steven Pizzella with Deutsche Bank.

Just wanted to ask on the regional performance. From the state level data, it looked like trends decelled a little bit in September from July and August levels. Did you see that in your business, and then how do you think about the fourth quarter from a cost perspective for Regionals given we saw an acceleration of the data starting in October of last year.

So the September question, recall that last year, Labor Day Sunday was in September and this year, it was in August. So that's 1 of the biggest weekends of the summer, and that's a significant calendar shift. So I would look at August numbers and September numbers together. The only market I can think of that saw a significant shift in demand in September was Atlantic City. The rest of the countries performed kind of as you'd expect. Cost side, I don't have anything in particular to call out on the regional side, what you -- in terms of driving incremental margin, that will be a function of as we refine our marketing as we move through the quarters, you should expect flow-through and margin to increase.

Our next question comes from the line of Lizzie Dove with Goldman Sachs.

I guess big picture, longer term or for next year, specifically for Vegas. There's a lot of moving pieces. You've got the capital investments you mentioned, some good guys from conferences, but also maybe 1 or 2 comments leaving the system, macro TBD, high level, I know it's early, but just curious how you're thinking about how those kind of puts and takes play out to Vegas next year.

Yes. The big question, Lizzie, is the consumer, is this leisure demand -- are we going to see it continue to improve and recover? Or do we stall at some point that's shy of where we were before. That's a difficult question to answer. That's a macroeconomic question. I know that the mix will be better for us, in particular, recall that we have the State Farm conference early in the second quarter, which is a particularly large conference for us to drive significant EBITDA and then you've got the market-wide stuff that's well understood.

But the -- we're now, what, 4 months into this step-down in leisure demand for Vegas, and we're -- while we're better than we were in July, we're still not back to where we were on a year-over-year basis. So that will be the question in '26 in my mind is how quick does that recover.

Our next question comes from the line of David Katz with Jefferies.

I just wanted to double back on digital, if I may, for the fourth quarter. I know that the sequential cadence can be tricky where there is some preseason spending in 3Q. I recall a comment, Tom, that indicated the fourth quarter should be super strong. We're still focused on kind of that run rate of $500 million by the fourth quarter. If you could just update us there, please?

Yes. The big swing factor there, David, is game outcomes. Obviously, we had a fourth quarter -- or third quarter that wasn't great. We're 4 of 13 weekends into the fourth quarter. That was -- outcomes have not gotten substantially better. So we are hold for the first 4 weekends was above last year's hold, but below our budgeted hold. So that will have an impact on where the fourth quarter comes in. But this -- the -- as you have seen sports outcomes are particularly volatile. So I wouldn't take 4 of 13, whether it's positive or negative as determinative at this point, but that's where we stand as we sit here today.

Our next question comes from the line of John DeCree with CBRE.

Hi, everyone. Maybe, Eric, I wanted to circle back to your prepared remarks. I think you were kind of dissecting the quarter a little bit and had mentioned, if I heard it correctly, some higher acquisition marketing spend in the quarter. If I heard that correctly, I'm wondering if you could elaborate a little bit, was that kind of expected or unexpected? And was that more customers than you thought getting on board? Just curious if you could give us a little bit more color there.

Sure. Yes, it wasn't kind of unexpected. It was spend that as we went through the quarter, we steadily increased heading into football and heading into a strong acquisition period for the iCasino side. We acquired a lot more customers during the period as a result of that spend. We believe that over time, those -- that spend will come to fruition with the lifetime values of the customers. However, in the period in which we spent it, it shows up as a drag. And so because on a year-over-year basis, -- we did increase the spending. I wanted to call that out as 1 of the reasons why the flow-through was challenged in the quarter.

Our next question comes from the line of Steven Wieczynski with Stifel.

So Tom, why don't I go back to the regional reinvestment and ask that question maybe a little bit differently. But it's 1 of the questions we get a lot from investors is the fact that when you were at Eldorado and you were out buying things like [indiscernible] , I mean you were kind of known as the kind of the king of cutting promotions and basically getting your peers to kind of do the same thing and I understand that was kind of a smart business decision.

Now you're somewhat kind of pivoting away from that, and you mentioned a lot of that decision is tied to total rewards and the power of that platform. So I know you said that hasn't started a promotional war yet, but just trying to get a little bit more color as to what gives you the confidence that doesn't eventually happen?

Well, I mean we see it down to the granular customer level what the customer responding to what -- whether they're not responding to -- the point I was trying to make is, in most markets, there's going to be a gap between what we're spending and what our peers are spending, but we're going to be spending less. That gap in hindsight may have gotten too wide. And so -- what you're seeing is recovery in that, not 1 up in ship. And when you change that, it's like when you make an investment, the customer notices that you're making an effort to win their business and all of the reasons that they came to the property before into the rewards program are -- make them sticky when you get them back.

So this is this evolves every day. You're competing in these markets all the time. I would say the level of discipline throughout the business is far better than it was before we started this, and we're not seeing anything that suggests that this needs to keep climbing higher and higher. And you should be able -- you should start to -- or you can start to see that in the flow through as we go through the quarters that -- this quarter was better than last quarter, and you'd expect -- I would expect that to continue.

Our next question comes from the line of Barry Jonas with Truist

Some of your competitors are looking at the predictive markets. What's your view there for Caesars Digital? And have you seen any impact as these markets are starting to make inroads into sports?

Yes. To answer your second part first. So far, we haven't seen any impact. I suspect most of the volume that they're generating is coming from states that don't have legalized sports betting. And then there's probably some on the margin that is coming from the legalized states that we might not have been able to access anyway, like 18 to 21-year-old and that type of customer demographics. In terms of the overall plan, we're actively watching it.

As we've said before, we can't be out on the lead on this one. We're going to monitor it, make sure that we're not left behind if there's regulatory clarity and that we have a good plan in place. or should that outcome happen. But in terms of our current actions when there's still uncertainty, and I'm sure you've seen some of the letters from the regulatory agencies, our best approach at this point is to monitor it, put our plans in place, make sure that we're adequately resourced and be ready to move if there's a legalization definition in either direction.

Yes. We will not put any of our licenses at risk. We believe what's happening in prediction markets is sports gambling. If there is a -- if there's a path that develops where we can participate in a way that doesn't put licenses at risk, you should expect we would be -- we are preparing -- would be prepared to go down that path, but we're watching it the same as you want.

Our next question comes from the line of Shaun Kelley with Bank of America.

Tom or Eric, just wondering if we could get your thoughts or help on sort of both the seasonality of the digital segment as we kind of move into Q4 because it is a peak sport season. Obviously, you mentioned we appreciate there's some outcome headwinds, but just more broadly, how you'd expect that to trend?

And then secondarily, if you could, Eric, given the lean-in on marketing, this kind of in this period, your thoughts around customer acquisition as we move into next year, especially as digital wallet is kind of up and running and just you feel really good about the product.

So I'll -- let me take the seasonality question. Obviously, fourth quarter is your highest volumes given that it's football season and football dominates sports betting, the way that we account for our partnerships is that those -- that spend hits during a play. So if you think about some of our large contracts that will roll off in '26. The bulk of that expense hit in the fourth quarter. So it makes volatility it makes volatility in hold -- sports hold outcomes more impactful because you're carrying a bigger fixed cost than we're carrying in any other quarter of the year. But then I'll let Eric take the rest.

Yes. And then in terms of the marketing spend, I would expect it to go back to normal levels for Q4 versus prior year. So nothing -- no incremental acquisition spend along those lines versus kind of where we were trending prior to that. But to your point about heading into next year, I would say the vast majority of our marketing spend has traditionally been earmarked towards the direct channels like Facebook, Google, Snap, those types of things, and very more limited on the brand side.

I think to your point, with the app in the shape that it is and with the shared wallet now being active in nearly every state and will be in the first quarter. There is an opportunity to do a little bit more of the top of funnel type advertising because the retention rates are going up and the customer response to the app is improving. So I would look at that mostly as a shift, though, not necessarily as incremental spend, but we'll evaluate it as we go through. And if we're getting really short paybacks on certain spend. We might increase it slightly, but I wouldn't anticipate anything major next year.

And it's -- Shaun, that's similar to what I just talked about in Regionals, right? And our we did our big brand campaign in '21 when sports betting kicked off, and our app was not as competitive as it needed to be versus our peers. We've done a lot of work in getting the app up to par, culminating with shared wallet, as you pointed out, we need to give that customer a reason to take a look again. And so that's kind of the top of funnel that Eric is referring to.

Our next question comes from the line of Stephen Grambling with Morgan Stanley.

Two quick follow-ups on digital. Just given you've seen a lot of moving parts in the regulatory environment across brick-and-mortar and digital, what do you see as the key milestones you're watching for to get comfort on the prediction markets? Is it really just waiting until we get maybe all the way to the Supreme Court? Or are there other things that could happen between now and then? And then given the outsized wins on behalf of consumers, are you seeing any change in how much money is being kept in accounts that might be indicative of future wagers or strength further into the football season?

So I'll do the first 1 to have Eric do the second one. I wish there would be a point of clarity and certainty in the near term around prediction markets. It seems like the path this is going to go on will ultimately be decided at the court level, ultimately, the Supreme Court level. And I'd expect that there's going to be rulings that go in both directions along the way. And ultimately, if something gets appealed up to the Supreme Court, there is a states' rights versus federal rights question here that's larger than just sports betting that might argue that the court takes it up relatively quickly.

There's also the argument there's a lot of stuff bubbling up to the Supreme Court and maybe this gets pushed back further than we'd like. But we -- I would expect we're going to be in this cloudy period for quite some time.

And then on the second part of the question, we -- after customers have a good weekend, we do see the balances higher. It doesn't necessarily persist all that much over time. They tend to either draw them down or recycle it throughout the week and into the next weekend. But there is definitely a loose correlation between the customer outcomes and the volume, as you'd expect when the hold goes down. But I would say that the outcomes of the customers in well as to their favor, our core volume growth was still much stronger than in prior periods. So that -- the entire result wasn't driven by the customer outcomes.

Our next question comes from the line of Chad Beynon with Macquarie.

During the quarter, I know the [ city ] ran a few ad campaigns, not sure if that stimulated demand. So A, I wanted to ask about that. And then secondly, is this something that you think we could be could continue to see throughout 2026 to just help the perception of value for some of those customers that have fallen away.

Yes to both, Chad. So we participated in the sale that you're referring to. Our bookings picked up considerably during that sale. So it was effective and we know that LVCVA intends this to be an ongoing campaign. So you should expect this not to be 1 shot in terms of the messaging around value in Las Vegas.

Our next question comes from the line of Jordan Bender with Citizens.

There's been some movement in the M&A market. Is your -- as you think about your leverage and your footprint in Las Vegas, I just want to check your temperature around potential asset sales in Las Vegas? And then also how you think about the Caesars Forum put-call agreement outstanding.

The call option, the put-call option is you should expect that if that's exercised, it would be called by VICI. I'd anticipate that they'd be doing that towards the end of that period of time. And -- but I don't want to speak for them. We choose the rent, it would be -- we would choose the lowest rent then. We're able to choose. In terms of M&A, we would -- we're never closed. So if there was something that made sense for us, I'd say we're open to talking about each and every asset but we are not actively involved in marketing a Vegas asset.

Our next question comes from the line of Daniel Guglielmo with Capital One Securities.

We've seen some OpEx pressure this quarter and last. And as you start budgeting for next year, are there certain expenses outside maybe the marketing that we've hit on that you all are going to spend more time thinking about for 2026.

I mean, labor is always our biggest and we're constantly looking to optimize labor across the enterprise. We're well into the union contracts in both Vegas and Atlantic City. So you're kind of a manageable increases as we move forward. There's nothing that -- that stands out as you asked that question to me.

But if you're looking at labor in the 10-Q, specifically in the regional segment, that's not exactly same store because you've got Danville New Orleans in there, and there were some onetime benefits in the prior year quarter. So it's not really a same-store number. if you're looking at that labor line in the queue.

Yes. So Danville and New Orleans are both substantial integrated resorts that had Danville wasn't open in New Orleans was much smaller last year.

Thank you. And we've run out of time. I would now like to turn the call back over to Tom Reeg for closing remarks.

Thanks, everybody. We'll see you next time.

This concludes today's conference. Thank you for your participation. You may now disconnect.