Hello, and welcome to Caesars Entertainment's 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. It is now my pleasure to introduce Senior Vice President, Corporate Finance, Treasury and Investor Relations, Brian Agnew.

Well, thanks, Andrew, and good afternoon to everyone on the call. Welcome to our conference call to discuss our third quarter 2024 earnings. This afternoon, we issued a press release announcing our financial results for the period ending September 30, 2024. A copy of the press release is available in the Investor Relations section of our website at investor.caesars.com. Additionally, we announced two press releases, one for the completion of the World Series of Poker sale and then we just had a late press release hit for the sale of the LINQ Promenade, which Tom Reeg will discuss in more detail during his remarks. 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 and Online Gaming; 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 Reg 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.

Thank you, Brian, and good afternoon to everyone on the call. Our third quarter delivered same-store consolidated net revenues of $2.9 billion and adjusted EBITDA of $1 billion. Results were driven by record non-gaming performance in Las Vegas and an all-time quarterly EBITDA record in our Digital segment, offset by new competition, construction disruption, and tough year-over-year comparisons in our Regional segment. Consolidated EBITDA margins of 35% for the quarter were flat compared to the prior year. In Las Vegas, our team delivered same-store net revenue of a billion dollars and adjusted EBITDA of $472 million, down 2% versus last year. Las Vegas segment results were driven by another record performance in hotel and F&B cash revenue, driven by strong ADRs and occupancy of 97.1%. Our Group and Convention segment continues to deliver strong operating results and the pace into 2025 has recently accelerated. Las Vegas segment EBITDAR margins of 44.4% were roughly flat year-over-year, driven by lower same-store operating expenses, a testament to our focus on driving efficiencies. Looking forward, we remain optimistic regarding operating trends as we look to the fourth quarter and into next year, driven by strong occupancy and ADR trends. In our Regional segment, adjusted EBITDA for the quarter was $498 million, down 13% year-over-year. This quarter was met with tough comparisons to the prior year, especially in Reno, competitive pressures in certain markets, and peak construction disruption in New Orleans. On October 22, we celebrated the ribbon-cutting ceremony for Caesars New Orleans, a $435 million capital project. The completely renovated and rebranded property added a new 340-room hotel, remodeled casino floor, and several high-profile F&B outlets for many of our celebrity chef partners, including Emeril, Nina Compton, Bobby Flay, and Nobu. Additionally, we are looking forward to the opening of our permanent facility in Danville, Virginia in December. The openings in Danville and New Orleans will complete the elevated CapEx cycle for the company as we now turn to harvesting the investments we made in these flagship destinations. Our team members continued to deliver exceptional guest experiences as a result of their continued hard work and dedication. I want to thank all of our team members for their contributions to our strong results. With that, I will now turn the call over to Eric for some detail on the third quarter results in our Caesars Digital segment.

Thanks, Anthony. Caesars Digital delivered third quarter net revenues of $303 million, up 41% year-over-year, which drove an all-time quarterly adjusted EBITDA record of $52 million versus just $2 million a year ago. With this performance, we have now generated trailing 12-months EBITDA of $126 million. Our net revenue flow-through to EBITDA in the quarter was slightly above our planned 50% range. In our iGaming segment, our net revenue growth rate accelerated in the quarter to 83%, driven by a 55% increase in volume and a 40 basis point increase in year-over-year hold. Our standalone Caesars Palace app continues to grow as a percentage of our total iCasino revenues. Subsequent to quarter-end, we launched the Horseshoe Casino brand in Michigan, Pennsylvania, and West Virginia with plans for Ontario and New Jersey by year-end. In our Sports Betting segment, our net revenue growth also accelerated in the quarter to 36% year-over-year, driven primarily by increased hold of 8.6% versus 6.5% last year. Enhancements we've made to the app drove higher parlay and cash-out mix, which helped drive structural hold improvements during the quarter. Given our roadmap and our customers' receptivity to the enhanced parlay options, we now believe that achieving structural hold above the 10% threshold is achievable over the next few years. As a result, you should expect to see consistently increasing structural hold as we are working off a relatively low baseline. In both iCasino and Sports, we're starting to see improved retention as a result of our segmented marketing campaigns. If you recall, we started constructing and testing the campaigns in April of this year. We currently have 40 campaigns active and are optimistic that further refinement in this area will drive additional improvements as we head into 2025. We now offer sports betting in 32 North American jurisdictions, 26 of which offer mobile wagering. I'll now pass the call over to Bret for some comments on the balance sheet.

Thanks, Eric. In October, we printed a $1.1 billion senior unsecured bond issuance at 6% with proceeds applied to our 08/08/2027 bond maturity. Our sale of the World Series of Poker brand closed today, yielding $250 million of upfront cash proceeds and a $250 million five-year note. We repaid our revolver balance in full and intend to use the bulk of incremental asset sale proceeds to further reduce debt. Reducing debt alongside reductions in our fixed and floating rate cost of debt will yield significant cash interest expense savings going forward. Our 2025 budgeted cash CapEx excluding our Danville JV is approximately $600 million. Go ahead, Tom.

Thank you, Bret. To begin with some general updates for the quarter, we incurred around $10 million in corporate expenses this quarter that I consider one-time costs related to lobbying efforts mainly in Missouri and claims impacts in our healthcare sector. As for each segment, I mentioned last quarter that we expected a continuation of the challenges experienced in the second quarter, particularly for New Orleans, which would face significant declines year-over-year due to disruptions. Reno was also expected to decline because we lacked a major group that had previously contributed to business last year. These predictions were accurate. Our competitors at Boyd have transitioned to land-based operations at a rather fortuitous time, coinciding with significant construction on our New Orleans gaming floor, which resulted in a notably challenging quarter for that property. When looking at our regional properties overall, many are still facing heightened competition. For instance, Horseshoe Indianapolis is being impacted by Terre Haute, Tunica is affected by Southland, and our three Chicago properties are feeling the effects of various market openings in Chicago. Council Bluffs is also facing competition from new racino openings in Nebraska. Unfortunately, we did not have any positive developments within our portfolio to counter these challenges. However, this changed last week with the opening of Caesars New Orleans, which we’ve discussed before. There is a significant opportunity for high incremental revenue due to the favorable tax structure in New Orleans. The property looks fantastic, and Anthony has detailed the improvements we made. So far, the reception has been overwhelmingly positive, and we are quite optimistic about future prospects in New Orleans. Also, we anticipate that Virginia will open before the year concludes, representing a notable increase in gaming positions at our highest win-per-position property. This has us excited as well. Regarding the quarter, we also experienced weather-related impacts on our Gulf Coast and Florida properties due to storms, but we hope those effects will be temporary. As we look ahead to 2025, we are beginning to consider it as the end of October approaches, and we expect the tailwinds in New Orleans and Virginia to help us mitigate some of the competitive effects we face in the Regional segment. Thus, we have a positive outlook for 2025 compared to the last two quarters in the Regional sector. In Las Vegas, I had previously anticipated flat to slight growth for the third quarter, but we ultimately experienced a decline of about $10 million in EBITDA. This was entirely attributed to table-hold performance. Our non-gaming revenue and cash flow set records, and while our slot handle and win remained steady, it was the table-hold that lagged behind. The table-hold itself wasn't poor, it just didn't meet last year's stronger performance. Looking ahead, I feel optimistic about the fourth quarter in Vegas, as the Versailles Tower is now operational, which was not the case last year, and early indicators are promising. We also recorded a catch-up accrual for the union contract in the fourth quarter that will not recur. Moreover, there's been significant discussion about F1 in the fourth quarter. For us, last year F1 contributed approximately $17 million to $18 million in EBITDA during the same weekend. In 2023, I anticipate it to be flat or down a few million dollars compared to last year, heavily influenced by hold rates due to our focus on high-end business. When it comes to our cash room revenue this quarter, despite the market fluctuations influenced by F1 last year, I expect our cash room revenue to show slight year-over-year growth for the fourth quarter. Overall, nothing to take away from Vegas other than we see continued strength. Looking forward to 2025, I recall the first quarter was challenging for us in terms of hold performance, and I would expect we can recover some of that in the first quarter of next year. Beyond that, I anticipate a flat to slight uptrend throughout the remainder of the year. The Convention segment's group business for next year appears stronger than it was in both 2023 and 2024. Switching to digital operations, I am very pleased with the progress we've made. Eric mentioned top-line growth exceeding 40% in aggregate with an impressive 83% growth in iGaming, which is remarkable. We have consistently outpaced our peers in growth—initially by about two times—coming into the quarter, and I believe we are now closer to three times that in the third quarter, even without the recent rollout of the Horseshoe brand. The transition in Michigan, where we migrated the WynnBet customers to our Horseshoe brand, has not resulted in any customer losses; in fact, we’ve seen growth in that segment. We have also recently launched in Pennsylvania and West Virginia, which are poised to contribute positively following the 83% growth seen this quarter. This momentum is continuing to grow month-over-month. Regarding our targets, I want to reassure you that there are no changes to our expectations. I anticipate a strong fourth quarter, even though October hasn’t yielded the best sporting results. There’s still ample time left in the quarter and a busy sports calendar for the next two months, which gives us confidence that we can recover some of that. Into next year, we expect sustained strong growth, as Eric noted. The structural hold continues to improve, and we are seeing this reflected in our results along with the growth in iGaming. The outlook for our digital business is exceptionally bright, and I believe we will exceed the $500 million target that has been a focus of discussions for the past three years. We are optimistic about this trajectory. On the strategic and financial side, we announced the sale of the Promenade retail lease portfolio today, achieving a multiple of about 14 times that will impact the EBITDA in the Vegas sector next year. We completed a $140 million share buyback in the third quarter, and looking forward, you can expect our capital expenditures, particularly with the opening of Virginia, to decrease year-on-year to a gross range of $600 million to $650 million, significantly below our previous spending levels. By year-end, we will have reduced our debt by 25% since the Caesars transaction, which remains our top priority. Alongside our share buyback efforts, we have another $500 million authorized for buybacks, though you should not expect this to be a fixed amount each quarter. Our approach will revolve around evaluating returns from capital spending, debt reduction, and share repurchases, with debt reduction as our primary focus. If we can continue to buy back our stock when the yield is attractive, we will pursue those opportunities as free cash flow comes in and we see inflows from our asset sales. In terms of future asset sales, we are in talks regarding non-core assets, but I want to clarify that the World Series and Promenade sales were the simplest to execute on. While Brian may have his opinions on the challenges of the Promenade sale, these were the most straightforward for us. As we move towards 2025, discussions around refinancing are ongoing. A 100 basis points reduction from the Fed translates to an additional $60 million in free cash flow for us, and the recent unsecured note offering has added another $20 million. Overall, we are positioned for dramatically increased free cash flow due to lower lease step-ups and capital expenditure reductions. Consequently, we believe we can continue to decrease our debt while responsibly buying back stock as part of our future plans. With that, I will now hand it over to Andrew for questions.

And our first question comes from Carlo Santarelli with Deutsche Bank.

Hi, thanks. Eric, I'd like to start with you. It seems that on the digital side, based on what I’ve read, you've taken about 300 basis points out of your promotional investment. With the launch of the second brand in the iCasino sector, should we anticipate that this trend will continue, or will you need to reinvest more in the near future? Also, could you share some insights into the sports reinvestment strategy compared to the iCasino promotional reinvestment strategy moving forward?

Yes, I'm glad you brought that last point up because there is a different strategy between the two. On the Sports side, you'll notice in the states that report the reinvestment levels, we're generally about half of what the market average is. And we feel that that's an appropriate strategy through our segmented marketing that may have the opportunity to come down even further. But on the Sports side, we're definitely on the lower end of reinvestment and we're able to keep our share roughly constant. On the Casino side, we're very much in line with the market, we believe. That's a bit of a different strategy on that strategy as you've seen, we believe that because of the brand, because of the app that we have, because of our database, and because of the opportunities that we have from the brick-and-mortar side, we think that there's a real opportunity to grow that business and grow share significantly as we've been doing this year and this quarter. And so we are investing at a higher rate, kind of right in line with the market. I wouldn't anticipate that changing with the launch of the Horseshoe. We're going to invest again, kind of consistently with the market on that product as well. I do think that our higher hold that we had in September through good sporting outcomes drove down the reinvestment that's reported in the quarter a bit. But broadly speaking, it should be in this range of around 20%, 22%.

Great. Thank you. And then, Tom, just for a follow-up, or Anthony, whoever wants to take this one, but you guys talked about kind of the outlook for Las Vegas and feeling fairly good about what 2025 looks like. Just in terms of visibility on the Group side, are there any kind of metrics you could provide? And additionally, is there anything from a citywide perspective that might be somewhat underappreciated at this point?

Carlo, I don't think anything from a citywide perspective is underappreciated. I think the Group and Convention segment continues to do a really good job filling out the forum and the rest of the space within the enterprise. But at a super high level, we would expect occupied room nights and rate to drive higher group total revenues and EBITDA in '25. So it's pacing to set another new record for the segment. So that's a good way to be thinking about it now.

Thank you. And our next question comes from the line of Joe Greff with JPMorgan.

Good afternoon, everybody. Tom, I was originally going to ask you a question about how you view your priorities in '25 and deploying excess free cash flow, but I think you kind of fleshed that out. The only kind of related question I have to that is, after closing on the World Series of Poker sale and then announcing today the LINQ Promenade sale, and you mentioned you have some other non-core asset sales that you're working on. Is it fair to assume that the other non-core asset sales are smaller in size and scale than these two that you've announced and closed on?

I would describe them as more complex and having a much longer timeline to come together. When considering chunkiness, we have assets that range from 275 to 500, with 275 being prominent and 500 representing the World Series. I would consider the assets as falling somewhere in between those figures. However, the complexity, timeline, and probabilities are different from those of the projects we've already completed.

Great. Thank you for that. Eric, going to you on the iCasino side. I know it's been a month or less in terms of launching Horseshoe. Can you talk about sort of the early launch and what you're seeing, particularly as you go from mono-brand to multi-brand? What you're seeing on the existing Caesars Palace online performance? And then, Tom, you referenced again the $500 million of annual EBITDA in digital at some point in the future. When you sit here now and you think about what you've been doing in iCasino as well as what you've been executing on in OSB, how do you break out between the $500 million related to iCasino? Thank you.

Yes. So to take your first question, Joe, it is very early. We have turned on maybe half of our marketing avenues at this point. The one thing that I would say is we did convert over the Wynn customers since we took over their skin, and they converted over very well. They're playing well and they are contributing the majority of the business right now. We're obviously signing up customers daily, and so that percentage will go down over time in Michigan, but we got a nice jump start by having those customers already active and convert them over. So I think what you'll see in the next month or so as we ramp up a little bit more of the advertising and marketing, particularly now that we have three states live, then we'll be able to get a better feel for the actual growth rate. But everything we're seeing is positive. Customers like the app, they're staying on the app. I would say that the average worth of the customer is slightly higher so far than on the Caesars app, but it is early to draw any conclusions from that.

And Joe, on your question of Sports versus iGaming, in our $500 million, the expectation is that it would be fairly well 50-50, give or take a few points. Obviously, that means iGaming on a per-state basis moves the needle dramatically more than Sports Betting. So if and when there are additional iGaming states as we move forward, those would be more impactful than a new Sports Betting state for us. And also keep in mind, what we're doing in iGaming is after we were very late to the game. Recall, in the prior, William Hill didn't have any real iCasino business developed to speak of. So we had to build the app, the brand, actually two brands and roll them out into a market where our peers had already been operating for multiple years. So we're pretty excited. If you look forward and there are future iCasino states, as Eric said, we operate from a marketing standpoint in iGaming pretty similarly to our peers. So we're curious in the future to see a state rollout in our new form with our new brands.

Thank you.

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

Good evening, everybody. Thanks for taking my question. So the first question is on OSB. Tom, you mentioned in October, we've all been watching with bated breath here. I know you haven't even closed the books on the month, but maybe you could compare and contrast how October OSB is faring versus last November? And if the structural hold, Eric, that you've mentioned and that lift is acting as a cushion versus those adverse sport outcomes?

The short answer is no. Two weekends ago was the worst combination of sports betting outcomes we've experienced since we began the business. The week before that was not good, but not as bad as two weeks ago. The other two weeks in October were relatively normal. The shift to parlays has been disadvantageous when we see sporting outcomes like that, where our parlay percentage is significantly higher than it was last November. When nearly every favorite won that week, it created a challenging scenario. Therefore, October is unlikely to appear positive for anyone compared to expectations, but this is simply part of the business. I don't believe it affects the overall story for us or anyone else in this industry.

That's very clear. Thanks for that. And then just a follow-up still on digital. The hold that you saw in iGaming year-over-year, the lift. Just curious how we should think about that if there's structural things going on or if it's just something that will sort of oscillate around these levels from here.

I mean, I'd say a big piece of it is more slots versus tables. So the launch of Caesars Palace online, remember the idea was our existing Liberty-based iGaming business was table heavy since you were coming through the sports app. That's a lower hold, more volatile business than the predictability of slots, and that's really what you saw roll through our numbers in the quarter.

Great. Thanks, everyone.

Thank you. One moment please for our next question. Our next question comes from the line of Dan Politzer with Wells Fargo.

Hi, good afternoon, everyone. Thanks for taking my question. Tom, I believe there was a cash inflow or distribution from Pompano in the quarter, around $40 million. Should we expect this to occur regularly, or can you provide more details on this? Additionally, could you clarify how we should approach free cash flow for next year regarding interest expenses or cash taxes, along with the other items you mentioned earlier? Thanks.

Yes. So I'll flip to Bret on the cash flow question. In terms of Pompano, yes, as it turns out, the way that we're developing the project with Cordish, it's heavy on outright sales of land to entities that are building the various pieces. So we started to distribute cash as a partnership during the second quarter, and your number is pretty close to where we were. And yes, you should expect there are some future distributions of that size in the coming quarters as additional pieces of that project get underway.

Dan, on the free cash flow bridge for '25, we're looking at rents going up just under 2%. So you should be right at around $1.35 billion on the rent number. On cash CapEx, we already talked about $600 million to $650 million depending on if you're picking up Danville or not. Cash interest expense depends on the pace of the Fed, but we're looking at $650 million to $750 million on cash interest expense. And then you can pick your EBITDA, but when you get down to free cash flow, your cash taxes will be roughly 15% to 20% of the free cash flow number.

Got it. And then just turning to Danville. Obviously, that property is running at a high level right now. I think slots 550 to 600 win per unit per day, and tables are doing well too. So as you think about kind of adding those gaming positions, broad strokes, is there any kind of directional guidance or expectation as you kind of expand that property? And then any kind of color on how we should think about margins relative to a full property versus a temporary property.

Yes. So that will be margin-dilutive certainly. That's running in the neighborhood of 60% EBITDA margins out of the tent. You should be looking at something more like our other regionals, kind of mid-30s or better going forward. You've talked about the win per position per day; I've told you it's the largest in our system. It will be dilutive to that as well, but you're looking at almost double the positions. So if you think about it, you're going to generate significantly more revenue, but you're going to have significantly more expense. So if you think about the total view of EBITDA, I would say, just cuffing it two-thirds to 70% of the total EBITDA was already being generated by the temporary property, but it's a meaningful lift to our regional segment to get the permanent.

That's helpful. Thanks so much.

Thank you. And our next question comes from the line of Steven Wieczynski with Stifel.

Hi, everyone. Good afternoon. To save some time, I’ll just ask one question. Tom, looking back a couple of years, you mentioned there was a possibility of selling an asset along the strip, but that opportunity changed due to the rate environment. If we look at today, with the improving rate environment, are you starting to see an increase in demand for your assets? I’m not implying you are or aren't doing anything; I just want to know if the level of interest is as strong as ever.

Yes, Steve. So to be 100% clear, we have no asset sale processes of actual casinos ongoing as we speak. But to your point, if I just break the year into the 90 days between these conference calls, the biggest change that I've seen in the last 90 days is the amount of incoming activity you've got from people calling us up and saying, what do you think about this asset, what do you think about that asset? And as you know, we're economic animals. So if it ultimately makes sense that the best way to drive value is to transact, that's a possibility. But again, there's nothing active ongoing, but there is a whole lot more inbound activity post the first Fed move.

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

Hi, good afternoon, everyone. Thanks for working me in. I wanted to just double back on kind of the Danville transition, right, and just make sure we have the cadence right for the next couple of quarters in general terms. If you could just talk about if we're pulling out the temporary facility, which is, to your point, is highly productive, and starting off with a new permanent facility. Should we be thinking about maybe some EBITDA dislocation for a quarter or two or three or more while that new property ramps, or is it really just more of a margin conversation?

Yes, it's the latter, David. We have a tent currently located in a parking lot for the permanent facility. This tent will continue to operate until we open the permanent facility, making the transition quite seamless. There won't be a shutdown period; all testing and preparations will occur while the temporary facility remains operational. It should feel like the temporary facility has simply expanded significantly overnight. In terms of modeling, you might consider the temporary facility operating until mid-December, after which there will be a few weeks of operation from the permanent facility. This timing may vary slightly, but it's a positive development.

And David, this is Anthony. We're really excited because it opens up a whole another segment of our database on that Eastern Seaboard, someone that may not come and just travel for the day, but we're going to have a beautiful new 340-room hotel, great restaurants with some celebrity chefs. And so it attracts a whole new clientele that may not be coming to the temporary facility today as well.

Got it. I've been to see it. And just quickly with respect to Vegas and any competitive or promotional changes, anything going on in the marketplace that we should be aware of, or is the promotional environment kind of status quo?

I would say the market has been remarkably stable. Although there has been erratic behavior on the investment side, we are not seeing any evidence of that in our operations. Our occupancy rates are operating in the high-90s, and they improve with group business. Group business contributes to growth in our non-gaming segment, and it comes down to how our table business compares to last year. This sets us up well for the first quarter. Additionally, we have Versailles online this year compared to last year. As of now, we do not anticipate significant changes in either direction for our business.

Perfect. Thank you.

Thank you. One moment please for our next question. Our next question comes from the line of Barry Jonas with Truist Securities.

Hi, guys. For digital, can you give us an update on some of the key functionalities you're working on, maybe like the shared wallet to help bridge any product gaps with the market leaders? Thanks.

Yes. The primary focus for us right now is the shared wallet that you mentioned. We are currently active in nine states and are gradually rolling it out, aiming for more than one state launch per month. We anticipate being fully transitioned to our own PAM by the middle of next year. If you're in one of those nine states and travel to another state with the same PAM, your wallet will automatically be shared. Currently, it's not connected to Nevada and a few other key states, but that is progressing well. Regarding our efforts to enhance our parlay offerings, this quarter we saw the fastest year-over-year growth in our parlay mix, achieving an all-time high, which is reflected in our hold percentage. There are still products we need to improve, particularly with live same-game parlays in some non-core markets, where we still lag behind competitors. However, overall, I believe we've made significant progress over the past year and have closed the gap considerably. This improvement allows us to reinvest at much lower levels while still retaining our customers.

Thank you. And our next question comes from the line of Shaun Kelley with Bank of America.

Hi, good afternoon, everyone. Thank you for taking my question. Tom, I want to revisit the regional outlook for a moment. Considering the various factors at play, we certainly have more positive influences as we move forward, but there are still competitive challenges emerging. I believe we are all aware of your approach to maintain discipline in responding to competition entering the market. My question is, as we assess these factors and focus on areas like the South suburbs and Chicago, where we are still encountering some additional challenges, do you feel confident that regional gaming will experience growth next year? Are we likely to remain flat? The challenges appear to be lessening, but there still seem to be some. I would appreciate your insights on this at a high level.

Yes, there are still more challenges than advantages for us. I anticipate a year that is slightly down to flat for my regional expectations next year. The Poarch Creek product will be introduced on November 11, which will have a significant impact on the Chicago market for both Jolie Ed and Hammond. As these properties open, our philosophy is that we should not hinder customer trials of new products. Customers will try the new offerings regardless of our actions. Some of these properties have been operating for a few quarters, allowing us to re-enter those markets and compete for customers. The key factor in determining whether 2025 will be a growth year for the region is how effectively we can compete in markets like Indiana, Chicago, Mississippi, and Iowa, which have already faced competitive pressures. Many of these markets will continue to see impacts into 2025, but we expect a much different outlook in 2025 compared to 2024.

Understood. Thank you for that. I have a high-level question about the legal aspects related to sports betting. You mentioned some potential expenses concerning Missouri, and I know that many are observing that market. I'm curious about how Caesars is currently viewing the broader expansion of online sports betting. Has your perspective on the advantages and disadvantages of online sports betting shifted? How do you consider it in comparison to iGaming? Are these areas distinct, or are you adopting a new strategy regarding digital expansion moving forward?

We'd like to see OSB and iGaming in every jurisdiction of the United States. We think it's important that it's done in a manner that makes sense for the operators and for the state. And you've got a well-established path of legalizing and licensing through the operators that have invested substantial amounts of capital, employed thousands of people, and paid hundreds of millions, billions of dollars in taxes. We think it's important that it continues on that path. But we would like to see OSB and iGaming in every jurisdiction that we possibly can.

Thank you very much.

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

Hi, thank you. As you've seen the handle share improving in iGaming and more engagement, are you seeing any change in the types of customers playing as we think about either new customers to the entire system, cross-sell from OSB and/or overlap with brick-and-mortar?

I would say that on the iCasino side, the main shift we've observed is with the introduction of the Caesars Palace Online standalone app. We've noted an increase in slot players making the transition. Additionally, there's been more interaction between our physical locations and the app, which is expected. I believe there's significant opportunity ahead. We're also becoming more integrated with the brick-and-mortar process through our hosts, our PD teams, and the marketing initiatives happening at the properties. Therefore, we are optimistic that the crossover percentage will keep increasing. Furthermore, we recognize that customers who engage with us in both physical and online settings tend to spend a higher portion of their budget with us, leading to greater value from those customers.

And as a follow-up, this may be an opportunity for Tom to pull a lot of the earlier questions together, but in the past, I think you had walked from, call it, $4 billion to $5 billion in EBITDA with a couple of building blocks. How would you characterize that walk now thinking through all the puts and takes from dispositions, new assets, some of the trends, and then the path on digital?

Yes. Shaun, we've had several consecutive quarters where we've been around $1 billion in EBITDA. This positions us as a $4 billion enterprise with minimal contributions from digital so far regarding EBITDA, though that is changing currently, and we've recently achieved a couple of solid quarters. I believe that reaching $500 million and beyond remains aligned with the roadmap we've discussed for over three years. On the brick-and-mortar front, we're seeing returns on investments in regional growth, especially in Las Vegas, which could bring in hundreds of millions of additional EBITDA over the next few years. This suggests a clear and achievable path toward the $4 billion to $5 billion range. Integrating the Caesars acquisition, establishing a digital business, and completing major projects has been a significant undertaking, and we're nearing completion on all fronts. You'll see how this impacts EBITDA and free cash flow as we progress. We are optimistic about the future.

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

Hi, guys. Two questions. Tom, you just spoke a question or two ago briefly about your thoughts on legalization of Online Sports Betting and iGaming, but I wanted to ask specifically about Florida, if you've had any discussions, or if you think there's an inroad there. I think a lawsuit against the Tribe has recently been settled. And so it looks like the path for you guys might be partnering with the Tribe. So curious if the size of that market, if you've had any meaningful discussion or a view on whether you might be able to enter Florida anytime soon?

Yes. I would say, John, I'm not as optimistic that we or any of the other non-seminole entities will enter Florida soon. I saw the same remarks or heard the same remarks from Jim Allen at G2E that kind of cracked open the door, but I don't think that happens in the near term.

Thanks, Tom. I appreciate that. And one, maybe housekeeping on CapEx, Tom, maybe for you or Bret. So obviously, CapEx is stepping down next year, but curious if you could give us kind of an update on what steady-state CapEx should be for you guys maintenance and if there's any routine kind of project CapEx that you're thinking about. So as we look beyond '26 and you look at the capital product budget, do we expect CapEx to kind of keep shrinking after '25, or does it kind of level off at a certain point?

$400 million area of maintenance CapEx is a good number and $200 million to $250 million of growth in other CapEx is a steady state going forward.

Great. Thanks, Bret. Appreciate it. Thanks, everyone.

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

Good afternoon. Thanks for taking my question. Eric, on your business, the iGaming business, the flow-through 57% this quarter was ahead of that targeted 50% and as a result of better revenue growth; obviously, the EBITDA came in ahead of expectations. So I know that you have a lot of things rolling off in '25, so maybe flow-through isn't the right way to think about it. But can you maybe help us just more in the near term if hold is normal? Should this 50% still make sense, maybe absent some of the bigger roll-offs of expenses? Just trying to figure out how this ramps maybe over the next four to eight quarters here. Thanks.

Yes. I think when we provided that rough expectation that we should be able to flow through at 50%, it was pretty broad-based and overtime. So there are certain factors that are going to contribute to that this year that aren't going to be there next year, and there are some next year that we aren't experiencing this year. In a quarter like this, where we had record iCasino growth and then extremely strong sports growth, we were able to achieve better than the 50% target. As I mentioned, I think on the last call, I would expect it to bounce around a little bit, sometimes it will be a little lower and sometimes a little higher, but we still think 50% is a reasonable expectation for the flow-through on the incremental revenue for certainly next year. And then as we head into '26, we get additional roll-offs of some of the marketing. So I would expect it to continue at that level as well.

Okay, perfect. And then on the Regional side, if you're able to somehow split out or separate the competition, weather, et cetera from just normal consumer business. Did you see any more deterioration in that lowest tier in the unrated part of the business in your Regional segment in Q3?

I wouldn't say we saw more deterioration. There is a segment of the customer base that's been challenged by recent pricing trends, and that continues to be the case. I don't identify anything concerning in the Regional business. Most of what we're experiencing is due to competitive impacts from significant properties that have opened in multiple markets, and after we surpassed the opening of the temporary facility in Virginia, we lacked positive momentum. However, that started to change last week with New Orleans.

Thanks, Tom. Appreciate it, guys.

One moment please for our next question. Our next question comes from the line of Jordan Bender with Citizens JMP.

Good afternoon, everyone. You've given a lot of good info on the Online segment. But as we think through and in broad strokes, the 30% online revenue growth that you've talked about in the last couple of quarters, can you maybe help us understand how much of that is coming from just pure player growth versus maybe expanding your ARPU? And then the second part of that is, how much dry powder do you think you have left in the omnichannel that's going to help you grow iGaming revenue next year and in '26? Thank you.

Yes. I think you have to look at the two kind of lines separately, the Casino and the Sportsbook. The Casino business is growing users and daily actives at a very rapid pace. So Tom referenced we measure things in month-over-month performance, and our users continue to grow, our actives continue to grow, the volume continues to grow. And then as we're seeing the hold ticks up a bit. So that business is very consistent and very strong. On the Sports side, it's a little bit different. As you've seen, the volumes are somewhat flat right now. That's due to some reductions in very high-end wagers that we were getting. Last year that didn't translate into profitability. And then through the segmented marketing that I talked about as well, we're seeing some lower-end unprofitable customers not returning. And so what we are seeing, though, is many more bets per user. The average bet size is coming down as you'd expect. And as a result, the volumes are flat or so, but they're being more than made up by the improvement in the hold percentage. So from our standpoint, they're very different behaviors. The average worth of the customer on the Sports side is going up significantly as the volume stays the same and the hold improves.

Great. And then just on the follow-up. In the Regional segment, if I look at your hotel revenue, is it fair to assume that some of that underperformance is just New Orleans and we should expect you to recoup that next year?

Yes.

Thank you. I'll now hand the call back over to CEO, Tom Reeg for any closing remarks.

All right, Andrew, thanks. Thanks, everybody. Happy holidays. Our next call is in February. We'll see you there.

Ladies and gentlemen, thank you for participating. This does conclude today's program, and you may now disconnect.