Caesars CEO suggests spinning off digital arm is an option

Caesars Entertainment CEO Thomas Reeg has refused to rule out the possibility of Caesars Digital being spun off as a separate, publicly owned company.

Addressing investors and analysts on the company’s Q4 earnings call yesterday, February 25, Reeg mentioned the possibility of “doing something strategically” if the market dictates.

Responding to a question from Deutsche Bank analyst Carlo Santarelli about how the company is thinking of ways to “monetize and/or unlock” value within digital, the CEO said: “The hardest part is building the business that has the value that we can talk about in this way – and we laid out that plan in the middle of 2021 in terms of where we anticipated getting to, and now it’s right on the horizon.

“We recognize that [with] a digital business trading at our blended brick-and-mortar multiple of seven to eight times, there’s dollars left on the table.

“Operationally it makes the most sense to keep everything together as one. But when the dichotomy is such that it’s been and is today […] we look to drive as much shareholder value as we can.

“This is why it’s important for us to own everything in the business, the entire tech stack, not [to] have partners, have our own PAM – which we’re in the middle of rolling out.

He continued: “But it’s a natural time to start to think about should you be doing something else strategically that allows investors a path to investing in that business on a pure-play basis.

“And if the market dynamics remain the same, and the business continues to grow as it has, you should expect that we would look at any and all avenues in terms of how we can drive the most value to our shareholders.

“We’re not married to any of our assets or markets. If we can drive value through sale transactions, we’ll look at those as well,” he concluded.

Back in 2022, Reeg was asked whether there would be a scenario where Caesars would want to spin off digital, yet he said it would be his preference to keep everything owned by parent company.

Caesars does have a track record for offloading prize assets, the latest being last year’s sale of World Series of Poker (WSOP) for $500m to GGPoker’s parent company, NSUS Group.

And back in 2016, the casino giant sold social casino business Playtika for $4.4bn to a consortium of Chinese investors, five years after Caesars snapped up the Israel-based studio for $103m.  

On the financial front, Caesars Digital, which includes Caesars Sportsbook, Caesars Palace Online Casino, and Horseshoe Online Casino, recorded net revenue of $302m for Q4, down slightly from the $304m reported the year prior.

Adjusted EBITDA was down from $29m to $20m for the final three months of the year, the firm announced.

For the year ending 31 December 2024, digital revenue grew from $973m to nearly $1.2bn, with adjusted EBITDA of $117m, compared with $38m in 2023.

Digital was supported by the rolling out of the Horseshoe Online Casino brand in Michigan and Pennsylvania, with the operator unveiling its first branded live studio in the latter in January.

While the operator did not break down igaming and online sports betting performance, bosses did state that customer-friendly sports results in Q4 were offset by more than 60% growth in igaming revenue.

Speaking on the analyst call, Reeg also noted that January igaming revenue was up 64% against last year, and February would end up “somewhere in the 50s in terms of growth rate.”

At a group level, management reported revenue of $2.8bn for Q4 2024 and adjusted EBITDA of $885m for the same period.

For the year ending 31 December 2024, revenue stood at $11.2bn, down from $11.5bn in 2023, with adjusted EBITDA of $3.7bn, falling from $3.9bn the year prior.

Caesars shares were down by less than 1% to 34.87 at the close in New York.