The paragraph is an introduction to Caesars Entertainment's First Quarter 2025 Earnings Conference Call. The operator welcomes participants, explains the listen-only mode, and alerts them to a forthcoming question-and-answer session, noting the conference is being recorded. Brian Agnew, Senior Vice President, then speaks, noting that the financial results were announced in a press release available on their website and introduces the key speakers: Tom Reeg, Anthony Carano, Bret Yunker, Eric Hession, and Charise Crumbley. Agnew also cautions about potential forward-looking statements and the discussion of non-GAAP financial measures. The call is then handed over to Anthony Carano.

In the first quarter of 2025, the company reported a 2% increase in net revenues to $2.8 billion and a 4% rise in adjusted EBITDA to $884 million year-over-year, despite challenges like a tough Super Bowl comparison and less operational days. Las Vegas' performance was strong, with same-store adjusted EBITDAR at $433 million, marking the third-best Q1 on record. The Las Vegas team navigated challenges well, maintaining stable occupancy and marginally declining cash ADR, while slot and ETG volumes grew. Convention room nights accounted for 20% of the mix, setting a Q1 EBITDA record. Operating expenses decreased by 3%, improving EBITDA margins. New capital projects, including hotel remodels and F&B enhancements, delivered better-than-expected returns. The outlook remains positive despite economic uncertainties. Regionally, the company achieved $440 million in adjusted EBITDA, a 2% increase from last year.

The regional segment saw significant improvement compared to the previous three quarters of 2024 due to stable same-store performance and contributions from New Orleans and Danville projects, despite weather disruptions and an extra day in the previous year. The completion of these projects marked the end of a high capital expenditure phase, and both locations are performing well. The company has invested heavily in enhancing guest experiences over the last four years. The commitment and hard work of the team are acknowledged as key to the strong results. The call is then handed over to Eric Hession, who reports on the Digital segment's strong first-quarter performance, with Caesars achieving $335 million in net revenue, a 19% increase, and $43 million in adjusted EBITDA. The growth is attributed to effective cost controls and an increase in sports betting and iCasino revenues. On a hold-adjusted basis, the digital segment saw a substantial year-over-year revenue and EBITDA increase, with sports revenue growth driven by a higher hold and reduced promotional activities.

The paragraph discusses the positive response from sports betting and iGaming customers to product enhancements, with significant growth in net gaming revenue and user engagement. Caesars Palace Online is noted as the highest revenue-generating app, and the new Horseshoe app is also contributing to revenue growth. The launch of branded live dealer studios in Pennsylvania and New Jersey and an upcoming internally developed multihand blackjack game are highlighted. The company is focused on rolling out a player account management system across states, with 16 states integrated and full completion expected by 2025. Additionally, integration of a horse racing app into the shared wallet is underway. The paragraph concludes with financial updates, including an EBITDA exceeding $150 million and expected 2025 CapEx and interest expenses.

The paragraph discusses a company's financial activities and challenges during a recent quarter. It mentions tackling unsecured notes due in 2027 and repurchasing $100 million of stock. Despite difficult comparisons for Las Vegas due to a strong previous year during the Super Bowl and unfavorable holding rates, the company managed to maintain volume and activity levels. Regional operations faced weather challenges, and New Orleans experienced additional setbacks from a terrorist event and snowstorms, which impacted earnings in January. However, February saw a recovery with improved earnings, partially due to the Super Bowl, especially in New Orleans. Overall, the growth from newer additions like Caesars New Orleans and Danville, Virginia, helped offset competitive pressures in other markets such as Chicago and Indianapolis.

The paragraph highlights the company's strong financial performance in March 2025 and the first quarter, with over $16 million in EBITDA, notable year-over-year growth in digital gaming, and significant increases in iCasino revenue. The firm is optimistic about continued digital growth and strong regional and Vegas performance despite potential macroeconomic challenges like tariffs and inflation. Forward bookings and consumer demand appear robust, and the company is encouraged by their progress a third of the way through the year.

The paragraph discusses the financial outlook and strategic focus of a company, noting that despite potential downturns in consumer behavior, the growing digital segment positions them for significant EBITDA growth. The company is at a capital expenditure inflection point and is currently focusing on using free cash flow primarily to pay down debt, including a $250 million World Series of Poker note expected to monetize in 2025. While they remain open to buying back stock if favorable conditions arise, debt reduction remains the primary use of free cash flow. The response to a question by Carlo Santarelli notes the favorable outlook for Las Vegas bookings, especially for group events, with expectations for strong group pace in April, May, and the latter half of the year.

In the paragraph, Tom Reeg discusses the group's performance, mentioning that their room base in the first quarter was about 20%, a bit higher than the full year expectation. He predicts that 2025 will be a record year for group bookings, especially in the fourth quarter, and expects another record group year with significant strength in the first quarter. Forward bookings for cash room revenue seem consistent with the previous year. The company is not changing operations and has strategies to address potential economic downturns if necessary. Carlo Santarelli then asks Eric Hession about a significant revenue piece from the second quarter of the previous year outside of the iCasino and sports betting business, which Eric confirms resulted in a $6 million EBITDA headwind this year.

The paragraph discusses expected declines in certain revenue segments for the World Series of Poker and skin revenues due to seasonal patterns and market exits by smaller operators. Carlo Santarelli acknowledges these expectations, and the conversation then shifts to Brandt Montour from Barclays asking about the impact of weather and leap year on regional revenues. Tom Reeg estimates this impact to be over $10 million, with leap year adding another $6 million in Las Vegas. Montour also inquires about cost savings in Las Vegas and whether there are ongoing or one-time factors contributing to impressive margin performance.

In the discussion, Anthony Carano praises the team's ability to optimize various aspects of the business such as labor efficiencies, food and beverage, and vendor negotiations, while maintaining a great guest experience. Tom Reeg notes the impact of recent food and beverage expansions on staffing and margins, highlighting improvements over time. Brandt Montour acknowledges the insights. Steve Wieczynski inquires about customer behavior, particularly regarding lower-tier and non-rated customers. Tom Reeg responds that there's no significant change, though unrated play has been slightly softer since the stimulus checks, unlike rated play, which is up mid-single-digits.

The paragraph discusses the perspective that the general public is less affected by stock market fluctuations and more by factors like gas prices. It mentions that although factors on CNBC may show fear among investors, the average consumer feels secure as these changes do not yet impact them directly. The speaker feels positive about the business performance compared to 2024, despite potential macroeconomic shifts. The company is minimally affected by tariffs and has managed cost of goods sold amid inflation. The conversation shifts to real estate holdings, mentioning that owning a significant portion could help maintain a stable financial position should the macro environment negatively impact them.

The paragraph discusses the company's financial outlook and strategy, particularly in the context of an economic slowdown. It highlights that their business is experiencing significant year-over-year growth in EBITDA and is well-positioned despite potential economic softness. Steve Muszynski then shifts the focus to discussing the digital segment, specifically the roles of iGaming and sports betting. Tom Reeg mentions that sports betting currently generates more EBITDA than iGaming and is expected to continue generating significant revenue over the next 18 months. He notes that iGaming is performing well on a per-state basis but has limited jurisdictional availability. Reeg also comments on state tax rate changes in sports betting, which he attributes to states managing the allocation of American Rescue Plan funds.

The paragraph discusses the financial challenges faced by some jurisdictions, which may lead to a shift towards iGaming legislation in 2026 and 2027 as a means to address budget deficits. It highlights the volatility in sports betting due to small sample sizes and correlated outcomes, which can lead to unpredictable results. However, the steadiness and growth potential of iCasino hold is becoming more attractive to investors. While sports betting is performing well and generating significant EBITDA, iGaming presents even better opportunities for growth. Additionally, it is confirmed that Las Vegas trends are moving positively as of April, similar to the first quarter.

In the paragraph, Barry Jonas from Truist poses two questions to Tom Reeg. First, Barry asks for Tom's current views on the digital business's strong operational trends and potential market condition impacts. Tom responds that their priority is to meet the established goals from 2021 and to explore all options for creating shareholder value if their targets aren't reflected in the equity. Barry's follow-up question is about the impact of contract prediction markets, like CALSI and poly markets, on their sports betting business, and whether they would consider adding such a product. Tom states that there has been no impact so far and that they would explore opportunities to increase EBITDA if legislative or regulatory changes allow. Following this, Shaun Kelley from Bank of America is introduced and is about to ask Eric a question about handle growth in the online sports betting market.

In the paragraph, Eric Hession discusses the current state and growth trends of their business. He notes that overall volume has decreased due to reduced reinvestment at the low and high ends of their customer database, but growth is solid among their middle market segment, which includes recreational and large, but not extremely high-wager players. Despite a slowdown compared to past years, due to factors like the maturation of new state markets and events like the Olympics, the business is still experiencing high single to low double-digit growth. Additionally, the company's hold is improving as their parlay mix increases, which contributes to compounded growth in both volume and hold.

In the paragraph, Tom Reeg discusses how the growth of the betting industry should be expected to decline when new states aren't joining, highlighting the need for operators to focus on efficient marketing to the right customers to drive profitability. He mentions that unprofitable customers will bet less, resulting in slower handle growth compared to periods with many new states entering the market. The conversation then shifts to a Q&A, where John DeCree asks about digital growth, specifically the reported increase in the iCasino segment. Tom Reeg clarifies that the focus is on MGR (not GGR), with Eric Hession adding that the growth is due to ongoing enhancements to the app and the launch of in-house designed games.

The paragraph discusses the success of branded and exclusive content in driving customer engagement and improving cost efficiency. The company expects continued growth with internally designed games, noting the rapid growth of the Caesars Palace app and the accelerating performance of the Horseshoe app. The company has improved its customer relationship management (CRM) with Optimove, enhancing campaign segmentation and reducing unnecessary reinvestment. This has led to higher net gaming revenue (NGR) growth compared to gross gaming revenue (GGR) growth because of reduced promotional expenses, creating a virtuous growth cycle. The expectation is that the 50% growth trend will persist for the year. Tom Reeg adds that the business is primarily domestic with consistent international high-end play, and that there has been no change in international demand, even amidst broader declines and stronger U.S. dollar concerns.

The paragraph discusses the impact of Canadian visitation on Las Vegas, indicating a noticeable reduction, but they have managed to replace that business while maintaining high occupancy rates of 97-98%. John DeCree acknowledges this observation. Chad Beynon from Macquarie asks about regional margins, noting that despite positive contributions from Danville and New Orleans, year-over-year margins were flat, suggesting a decline in same-store margins for the rest of the portfolio. Tom Reeg explains that while Danville and New Orleans are compensating for competitive pressures elsewhere, they are still growing the segment. Virginia's margins have exceeded expectations, and overall EBITDA and margins are expected to improve as they adapt to competitive impacts. There will be another change regarding Penn Illinois in early 2026.

The discussion centers on the company's strategy and financial outlook, particularly regarding stock buybacks and operating leverage in Las Vegas. Tom Reeg notes that the company will remain active in stock buybacks, especially if the stock value drops significantly, and they have strategies to manage costs during potential economic downturns in Las Vegas. He implies that maintaining high occupancy in Las Vegas is crucial for optimal financial performance. Additionally, there's a question about bridging the structural hold from current levels to a long-term target, indicating an ongoing focus on financial metrics and performance goals.

Eric Hession discusses the company's efforts to address a technological bottleneck that currently prevents player prop cash outs on their app. They are working on removing this issue to improve their hold and offer more profitable cash-out options, expecting to reach a 10% hold by the end of next year. Customer behavior could potentially accelerate this timeline as more customers engage with SGPs and player prop wagers. Jordan Bender acknowledges the update, and then the focus shifts to Daniel Guglielmo's question about customer spending in Las Vegas for March and April. Tom Reeg responds, stating that there has been no change in consumer spending patterns in their business despite broader economic trends.

In this interaction during an investor conference call, Daniel Guglielmo inquires if there are any supply chain issues impacting the expected $25 million CapEx spend, to which Bret Yunker responds that there is no impact on the CapEx guidance. The discussion then shifts to Stephen Grambling from Morgan Stanley asking Tom Reeg and Eric about the volatility in sports betting hold and EBITDA. Tom Reeg explains that sports betting volatility is inherent, unlike outcomes in games like blackjack, and this variability is due to human elements impacting odd setting. He mentions that larger numbers will provide more accurate odds over time. Reeg also notes that public betting behavior, such as favoring favorites and overs, can't be changed significantly, and he indicates that increased parlay betting is positively impacting the hold percentage in the industry.

The paragraph discusses the strategies and observations related to sports betting, focusing on the impact of parlay betting on volatility. Eric Hession notes that despite unfavorable NCAA outcomes, the company improved its hold year-over-year by better performance in sports like tennis and soccer. This suggests an expectation of rising average holds, albeit with increased volatility due to parlay betting. Stephen Grambling then asks about the company's omnichannel strategy. Anthony Carano explains their efforts to integrate digital and brick-and-mortar sports betting by leveraging a team of hosts who incentivize players to engage with both online platforms and physical locations. Incentives and events like the Super Bowl are part of this holistic strategy to enhance customer engagement through the Caesars Rewards program.

The paragraph discusses an initiative where events are being attended by both brick-and-mortar and digital customers, highlighting a collaboration with AGS to launch a product simultaneously at physical and online locations. This initiative is presented as a unique offering for customers. The conversation then transitions to the conclusion of a call, with Tom Reeg mentioning the next scheduled update in July.

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