The speaker, Brian Agnew, welcomes participants to the Caesars Entertainment, Inc. 2024 Second Quarter Earnings Call. He introduces the other speakers on the call and reminds listeners that forward-looking statements and non-GAAP financial measures may be discussed. He then hands the call over to Anthony Carano, who reports on the company's second quarter financial results. Consolidated net revenues and total adjusted EBITDAR remained flat compared to the previous year.

In the second quarter, the Las Vegas segment of the company saw record net revenue and strong performance in hotel and food and beverage. The regional segment saw a decrease in adjusted EBITDAR due to competitive pressures and construction disruptions, but maintained strong cost discipline. The company also celebrated the opening of a new property in Nebraska and looks forward to completing renovations and opening new facilities in New Orleans and Danville. The company's elevated capital investment cycle is coming to an end, which is expected to drive strong returns for the regional segment in the future.

Caesars Digital had a strong second quarter, with net revenues of $276 million and a record adjusted EBITDA of $40 million. The sports betting segment saw a 19% increase in net revenues, driven by improvements in product offerings and customer engagement. The acquisition of ZeroFlucs has also contributed to hold improvements and growth in parlay wagers. In the iGaming segment, net revenues grew 50% for the second consecutive quarter and Caesars Palace Online continues to see growth. The company is actively adding new and exclusive game content to enhance their product offerings.

In June, the company completed the acquisition of WynnBet's operations in Michigan and will be launching a new iGaming app called Horseshoe in early Q3. They are optimistic about their progress in sports and iCasino and expect a strong finish to the year. The company has reduced their Term Loan B and extended their maturity profile. They expect a decrease in CapEx in 2025, leading to increased free cash flow. In regional markets, April was a difficult month but May and June showed year-over-year growth. New Orleans and Reno were impacted by construction and a decrease in bowling groups, respectively.

In the second quarter, the company experienced a loss of over $25 million in EBITDA due to the absence of bowlers in New Orleans, the impact of Churchill's Terre Haute property on Indianapolis, and the temporary opening in Virginia. However, the company expects to see growth in the fourth quarter with the completion of construction in New Orleans and the opening of Virginia. The company also saw growth in Vegas despite headwinds from union contract raises and venues under construction. The two hotel remodels and the success of Coliseum and Versailles contributed to this growth.

The company is pleased with the success of their recent hotel renovation and expects strong growth for the rest of the year and into 2025. They are also seeing strong momentum in their digital sector and anticipate the launch of a new iCasino brand to further drive growth. They will finish their current CapEx cycle with the opening of a new location in Virginia, which will lead to a significant increase in free cash flow. The company plans to use this cash flow to reduce debt and potentially buy back stock.

During a conference call, Joe Greff from JPMorgan asked a question about the recent results in Las Vegas. He noted that the margins were higher than expected and asked about the sustainability of this trend. Tom Reeg, who was on the call, responded by saying that their approach to promotions in Vegas has not changed and they have pricing power. He also mentioned that their team has been able to overcome headwinds and maintain strong EBITDA. Joe's second question was directed towards Tom or Eric, asking about their digital strategy.

Tom Reeg, CEO of Caesars Entertainment, discusses the company's strong performance in the iCasino sector and its goal of reaching $500 million in EBITDAR. He notes that while iCasino is more profitable than sports betting, the difference in margins is not as large as one might expect due to high tax rates in legalized states. Reeg expects the company to achieve its goal this year and hopes to do the same next year, with the added benefit of partnership contract roll-offs. Carlo Santarelli of Deutsche Bank asks about the company's performance in Las Vegas in the second half of the year.

Tom and Carlo discuss the $20 million of incremental costs, mostly related to the culinary union contract. Carlo asks for clarification on the contract's next escalator in October and its impact on the 3Q. Tom confirms that the increase will be minimal. Carlo then asks about the impact of the World Series of Poker on the company's assets. Tom and Eric discuss the benefits of the event, including filling rooms, increasing gaming play, and boosting food and beverage sales. Eric also mentions that the event had a record year and has a positive economic impact on the company.

The paragraph discusses the financial performance of online poker and land-based casinos for the year. It mentions that the online poker did okay but didn't make a lot of money, while the land-based casinos made between $20-25 million in EBITDA. The rest of the revenue came from "skins" and the Las Vegas market is expected to see a mid-single digit increase in pace for 2025. The next question asks about the increase in hotel room rates in Las Vegas, and the speaker speculates that it could be due to Reno leaving and the dynamics of hotel supply on the strip. They are optimistic about the sustainability of this growth for the rest of the year.

Tom Reeg discusses the pricing and demand in Vegas, noting that they have continued to take price increases in various areas due to high demand. Eric Hession, in the digital sector, discusses the dynamic of flat handle and increased hold, which has been sustained for a few quarters due to reinvestment and changes in marketing strategies. This has resulted in lower volumes but higher profitability.

Tom Reeg, the speaker, explains that the business they have been receiving is not a major concern because it was not profitable. He predicts that there will be an increase in revenue growth this quarter and it will continue to accelerate as they move forward. He also mentions that the volume growth will be solid and the hold will continue to grow. The next question is from Dan Politzer who asks about the decline in regionals. Tom responds by saying that he only focuses on EBITDA and that there has been no change in their promotional profile. He explains that the decline was mainly due to New Orleans and Reno, and that the regional business has been consistent. He also mentions that the decline in April was the largest and that both May and June showed growth in EBITDA. The speaker concludes by saying that there has been a lot of M&A activity in the industry recently.

The speaker is not concerned with the current stock price and is focused on generating shareholder value through external opportunities. They plan to buy back stock if the price remains low, but will not give it away. The third quarter is expected to have similar challenges as the second quarter for the regional markets.

Tom Reeg clarifies that Vegas is expected to grow in the second half of the year, but would need a swing in hold to offset the impact from the first quarter in order to be a grower for the year. In the regional segment, there was a decline in gaming volumes due to a mix shift, with steady growth in rated play but a reduction in unrated play. This reduction in unrated play is not specific to any particular geography and there is always variability in a portfolio of this size.

The speaker discusses the impact of competition on the unrated and rated properties, specifically in the Terre Haute region. Due to a new property opening, there is a decline in unrated properties and this decline is greater than the typical regional decline. The speaker also mentions that there may be changes in the promotional environment and flow-through rates as new products are expected to be rolled out during the NFL season opener.

The cost of acquiring customers for sports betting has decreased in the past few months, while it has remained constant for casino. The company plans to increase spending for football season, but does not anticipate a change in cost per acquisition. There are no plans for launch costs to affect flow through, as seen with the launch of Caesars Palace online.

Eric Hession, speaking on expectations for the launch of the Horseshoe brand, mentions that it will be rolled out in different states throughout the year, starting in Michigan in September and ending in Ontario in Q1. He also notes that while the Horseshoe is a strong brand, it may not perform as well as the flagship Caesars app, which has a year's lead. In response to a question about the recent tax increase in Illinois, Tom Reeg states that the impact on the company is minimal and they do not plan on changing their behavior. The graduated tax system may offer an opportunity to gain share if other competitors change their reinvestment levels or odds.

During a conference call with analysts, Caesars Entertainment CEO Tom Reeg and CFO Eric Hession discussed the company's M&A strategy and potential sales of non-core assets. Reeg stated that they are not planning to sell any operating casino assets but may take advantage of opportunities to sell non-core, non-operating assets at a higher multiple. Analyst John DeCree asked about the breakdown of iGaming and sports betting in the company's growth, and Hession mentioned that iGaming is growing at a faster pace and the new Horseshoe app will contribute to this growth.

The company predicts that there will be solid growth in sports betting, but it will likely be around 20%. Eventually, iCasino will be more profitable than sports betting. The company's blended tax rate is higher on the casino side, so the flow through is lower. In the second quarter, all of the company's properties are performing similarly. The closing of the Mirage may be beneficial for the company in terms of having less competition for rooms.

Tom Reeg, CEO of Caesars Entertainment, states that the proximity of a new theater property to their existing properties will not be a significant driver in either direction. He expects to benefit from increased occupancy and better yield, but notes that they will lose 3,000-plus rooms in the neighborhood that would have fed each other. In response to a question about VICI's option to call the real estate under the Indianapolis assets, Reeg clarifies that they will not exercise their put option and expects proceeds of around $2.2 billion, which will likely be used to pay down debt with some return of capital.

The speaker from Citizens JMP asks a question about the increase in sports sponsorship obligations, wondering if there is flexibility to reduce exposure in case of consumer weakness. The company responds that the obligations have been declining and will continue to do so in the future, and that there were various small factors that contributed to expense efficiencies in the quarter.

The speaker discusses the company's efforts to run more efficiently since becoming a public company. They expect margins to hold up despite a significant increase in labor costs in Vegas. They also mention that regional operations will likely face similar challenges in the third quarter. No further questions were asked and the call was concluded.

This summary was generated with AI and may contain some inaccuracies.