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

Thank you, Kevin, and good afternoon to everyone on the call. Welcome to our conference call to discuss our second quarter 2025 earnings. This afternoon, we issued a press release announcing our financial results for the period ended June 30, 2025. A copy of the press release is available on the Investor Relations section of our website at investor.caesars.com. Joining me on the call today are Tom Reeg, our Chief Executive Officer; Anthony Carano, our President and Chief Operating Officer; Bret Yunker, our Chief Financial Officer; Eric Hession, President of 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 Regulation G. Please visit our press release located on our Investor Relations website for a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure. Additionally, our Q2 Investor Presentation has been posted to our website, and our 10-Q has now been posted as well. I will now pass the call over to Anthony.

Thank you, Brian, and good afternoon to everyone on the call. We delivered second quarter consolidated net revenues of $2.9 billion and adjusted EBITDA of $955 million. During the second quarter, our Digital segment delivered its best quarter ever, producing $80 million of adjusted EBITDA, and our digital momentum continues to build towards the financial goals we originally laid out in 2021. Our Las Vegas segment posted solid results in the face of softer market demand in our hospitality vertical, but we remain encouraged by forward group pace in Q4 and the first half of '26. Regional revenues were up year-over-year, driven by the addition of two new properties and same-store GGR growth resulting from strategic reinvestment in our Caesars Rewards customer database. Starting in our Las Vegas segment, we reported same-store adjusted EBITDA of $469 million. Results were driven by 97% occupancy versus 99% last year and essentially flat rates. Our gaming vertical faced a difficult comparison to last year, which drove lower year-over-year table games volume and hold. During the quarter, the group room night mix was 15%, and the segment is on track to deliver a record EBITDA year in '25 due to our strong Q4 booking pace. Recent CapEx investments at Flamingo in Las Vegas, including a brand-new pool experience, Pinky's by Lisa Vanderpump, Gordon Ramsay Burger, and Havana 57 are generating strong returns. During the second quarter and into July, the World Series of Poker hosted another very successful event and remains the largest poker tournament in the world with over $500 million in prizes. Turning to our regional segment, we reported adjusted EBITDA of $439 million. Tom will add additional insights during his remarks, but our regional segment was negatively impacted by several one-time items during the quarter. Excluding these negative one-time items, Q2 adjusted EBITDA would have been flat year-over-year. During the quarter, Danville and New Orleans generated strong returns, and we have strategically reinvested in our Caesars Rewards database which drove higher gaming revenues during the period. 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 harvesting strong returns on these investments. In addition to our strategic customer reinvestment, we have made additional investments in new slot capital that is driving higher year-over-year gaming revenues. On July 1, we rebranded Harvey Lake Tahoe to Caesars Republic Lake Tahoe. We received encouraging guest feedback during the opening weekend and during Celebrity Golf regarding the new elevated property amenities. Lake Tahoe experienced significant construction disruption during the second quarter as a result of rooms being offline. We'll start construction of Phase 2 in Tahoe in the fall and complete the project by the summer of 2026. I want to thank all of our team members for their hard work during this first half of 2025. The hard work, resilience, and unwavering dedication to exceptional guest service have been the driving force behind our accomplishments this year. With that, I'll now turn the call over to Eric for some insights on Digital.

Thanks, Anthony. During the second quarter, Caesars Digital delivered net revenues of $343 million, up 24% versus the prior year, and set an all-time quarterly adjusted EBITDA record of $80 million, up 100% from last year. On a LTM basis, Caesars Digital has delivered approximately $200 million of adjusted EBITDA. Our results in the quarter keep us firmly on track to achieve the financial targets we laid out in 2021. Q2 results were driven by growth in sports and casino with net revenues increasing 28% and 51% year-over-year, respectively. Adjusted EBITDA margins grew by 880 basis points to 23.3%. In our sports book, we continue to achieve strong year-over-year performance. Hold increased 170 basis points to a record 8.9%, and Handle was roughly flat versus the prior year period. Total parlay mix improved by approximately 280 basis points year-over-year, and we saw growth in the average life per parlay and a higher cash-out mix versus the prior year as well. From a tech perspective, we announced the launch of our universal digital wallet and proprietary player account management system in Nevada earlier this month. That enhancement gives our customers a significant upgrade to their wagering experience within the state and now across 19 jurisdictions. We expect to complete the rollout across all of our jurisdictions by early 2026. In iCasino, we saw continued strength again in volume, hold, and average MAUs, which combined to grow net revenues an impressive 51%. We continue to elevate our product offering during the quarter to include new bonus capabilities, the launch of a Caesars branded live gaming studio in Michigan, and the introduction of our remote real live slot studio on the property floor of Tropicana Atlantic City. Our in-house development studio continues to make progress with two proprietary games now in the market, a third planned for launch in early August, and our first slot game on target for the middle of September. The games have all been well received by our customers. As we head into the back half of 2025, I'm becoming more and more optimistic as I see how customers are reacting to the improvements we have made in our application. The continuous progress made in all areas is showing up in our top-line results, and our focus on spending efficiency is driving solid flow-through to EBITDA. I will now pass the call over to Bret for some comments on the balance sheet.

Thanks, Eric. Q3 is off to a great start on the balance sheet front, as we fully redeemed our most expensive debt earlier this month using a mix of asset sale proceeds and our revolver. Annual free cash flow savings from the redemption will exceed $40 million, and we continue to be optimistic about further interest expense reductions through rate decreases and/or debt reduction. Our relationship bank facility is our next maturity in 2028, and our nearest capital markets maturity is in 2029. On the tax side, the BBB brought us good news in the form of increased interest and depreciation expense deductions that moved our pro forma estimate for cash taxes as a percentage of EBITDAR down from 5% to 3% to 4%, as you'll see reflected in our investor presentation. I'll turn it over to Tom.

Thanks, Bret. Thanks, everybody, for joining. To unpack the quarter by segment, Vegas for us was, as Anthony talked about, softer than last year. We started with a strong April, May, and June, but starting to decline in the booking window; contracted booking window in Vegas is about as short as I've seen it at this point. In our portfolio, as Anthony mentioned, we missed some high-end gaming. Recall that we had both Adele and Garth Brooks in last year's second quarter, and we did not have them this year. We missed out on some high-end trips that tend to resurface at other points during the year. However, Vegas started leaking as a market at the end of May, and that leak accelerated into June. I would expect third quarter to be soft, but in the last three weeks or so, as we monitor forward bookings, bookings have stabilized. As we look to fourth quarter, first quarter and second quarter of '26, we have a very strong group calendar for us. So we think this is a temporary phenomenon in Vegas. But make no mistake, the summer is soft in Vegas, and I would expect something in the third quarter that looks similar to the second quarter on a comparative basis. Regionals— we talked about one-time impacts. We had about $30 million worth, the biggest of which was construction at Lake Tahoe, Caesars Republic, the former Harvey's. We lost almost 50,000 room nights versus last year due to that, along with Bowling in Reno. We reopened the first phase of Caesars Republic before July 1, and we're pleased with its performance. The second phase that happens this off-season will not be nearly as disruptive as the first phase. We also lost a couple of weeks in Metropolis due to flooding and had a significant lawsuit settlement in Baltimore, almost $2 million. Those were the chief culprits behind the $30 million in one-time events. As we look ahead, we see the Regional segment, both revenue and EBITDA, are up for July, even considering what happened in the second quarter with those one-time items. We remain comfortable that Regional for the full year will be flat to up in EBITDA. I've had numerous conversations with many of you during the quarter about revenues. We've told you in the past that GGR monthly performance is not necessarily indicative of what's happening under the hood. If you'll recall, we discussed on prior calls how in competitive markets, particularly when we re-enter new battlegrounds with new competitors, we market into those areas and increase promotion to drive GGR. While some of you thought that was a sign of significant strength in Regional, it's really reflecting our marketing efforts. So from a full-year perspective, you should assume we were investing in the second quarter and that we will see the results in the third quarter, which is why EBITDA is increasing, as we are pruning programs that were aimed at driving volume but may have done so unprofitably. Our rated gaming trends—our rated gaming is up 8.5%, which is our best performance in three years. However, part of that is artificially based on our marketing strategies, but it still bodes well, especially for the Regional space over the next one to two years. The digital segment had a fantastic quarter. As you know, we laid out financial milestones in 2021 before launching Caesars Sports, and we remain on track to deliver over $0.5 billion of EBITDA in '26. The momentum in Digital is extraordinary, both from a volume and an EBITDA perspective. We're increasing handle year-over-year, and Eric mentioned that during the last four quarters, our ability to sharpen marketing efforts to customers led to significant growth in Handle. We've now achieved that during the quarter, and Handle is growing in July, on the sports side, mid-single digits. In iCasino, we continue to grow at nearly twice the rate of our peers, and we are very pleased with our performance. If you look at the prior year quarter, the $40 million we achieved then included about $8 million from World Series of Poker EBITDA that we sold. So the true comparison is versus $32 million of EBITDA last year, and we did $80 million. There's an $8 million impact from World Series on our third-quarter EBITDA, but we expect to outperform the fully loaded number by a significant amount. Additionally, we've discussed the rolling off of partnership expenses. If you look through to the end of '27, we have over $70 million of partnership expenses that we currently face, which will roll off by the end of '27, the majority of which will be gone in the first four months of '26. All of this will impact EBITDA. In short, we are bracing for a soft summer in Vegas but anticipate a strong fourth quarter, first quarter, and second quarter ahead. On the flip side, the group calendar looks promising, Regional is positioned for flat to slight growth this year, and Digital continues to showcase robust growth and momentum. With that, I will open it up to questions.

Our first question comes from Dan Politzer with JPMorgan.

First one on Las Vegas. Tom, you mentioned you've seen a little bit of stabilization in the past few weeks. Can you maybe unpack that? And as you think about that path to growth in the fourth quarter and first quarter and the first half of next year, is there something tangible that we can lock onto just given that group calendar? Or are there any specifics you could put around that?

Yes. So what we see is pretty clear; the next 90 days forecasted cash occupancy was down 27,000 room nights in the second quarter. Each week as those forecasts came out, each of the next three months showed a decline week-over-week in forecasted cash revenue. This started in May and accelerated into June. And in July, we see that the 90-day numbers for the next three months are stable. You're basically looking at the same forecast that you were seeing a week ago. So I'm not suggesting this is a huge bullish turn; it’s like patching a tire with a leak at this point. And if you look into the fourth quarter, first quarter, second quarter, we project a record group year in Vegas in 2025 for us. At the end of the third quarter, our group business will be down year-over-year, which was expected. However, we have a very strong fourth quarter group calendar, the first quarter, and in the second quarter we add ConAg to the Citywide convention calendar for significant business. And then in early second quarter, we have State Farm, which is a substantial conference that recurs once every three years. So during the summer, you're leisure-dominated, and leisure has been softer. But with a strong group calendar, you can leverage rates. This has historically driven stronger performance as we move from a group light third quarter into the group heavier fourth quarter, first quarter, and second quarter with significant bookings. So we expect 2025 to be a record for group room nights, and 2026 should be even better.

Got it. And just to clarify, your comment on the third quarter Las Vegas being a comparative basis versus the second quarter should we interpret that as third quarter EBITDAR down high singles or somewhere in that range?

Yes.

Our next question comes from Brandt Montour with Barclays.

So curious, Tom, on the promotional stuff that you guys talked about. When you think about that effort, maybe discuss what you're doing differently now versus prior promotional campaigns or efforts. Is there any sort of omnichannel aspect to it, as well as the hub-and-spoke model that we're familiar with? Is that something that coincided with the Las Vegas slowdown? I’m just wondering if there's a system-wide effort that you can tie to everything.

Yes. We're working with our marketing and analytics teams to dive into our database, which is our engine of growth. We are identifying targeted opportunities to drive profitable revenues, and with 52 properties across the country, we can really test and learn. The effective strategies in some markets can be implemented throughout the country. Additionally, we are leveraging our database to fill rooms in Las Vegas—working with our hosts to drive targeted traffic to Vegas.

What you're observing arose from our response to competitive openings in the region that impacted us last year. We're going back to target those new battleground markets and enhance offers. As Anthony mentioned, we are offering better promotions to a wider segment of customers to fill our rooms with more competitive offers. At the same time, we are integrating digital and brick-and-mortar endeavors more efficiently every quarter. We're analyzing responses to these new offers, which is a process that can take significant time to show positive results. Bear in mind this doesn't fit neatly into the distinct quarters we report. There was a bit of rollout in the second quarter, and now in July, we are driving more profitability. We've increased our slot spending in '25, as included in the CapEx numbers provided, and we are seeing solid returns from those investments. Our analytics group is measuring what is effective and what isn't, which marks our ongoing refinement since we began this process at the end of the second quarter and into July.

That's really helpful. And then, Tom, if you could provide insights on what you think is going on with the leisure demand in Vegas during the summer period. How much of this is seasonally slow? How much could be weather-related? Is there potential structural fatigue in pricing or perhaps a less compelling value proposition than in the past? What are your thoughts?

It's difficult to pinpoint. We've talked with industry peers who have observed inflections at the strip's ends starting to weaken around March and April. However, for us, we’re looking at a quarter where we had 99% occupancies, seeing the cash flow impacted. Losing 27,000 room nights flows through non-gaming for us, particularly as gaming is primarily high-end at Caesars Palace. Overall, non-highest-end gaming has performed well, but we're still behind last year’s high-end year. The softness during the leisure-dominant periods has extended into this quarter. From my perspective, we can see the softening seasonality return to normalcy after a longer period. There's not a concerning trend, but a notable point is that our international business, specifically from Canadian markets, has softened. As we examine our shortfall in room nights this year, Canadians accounted for a significant portion, even though they represent only about 3% or 4% of our total. However, I don't see anything particularly disconcerting regarding our overall business—Vegas, Regional, and Digital—as we expect groups to fill in and the situation will change positively.

Our next question comes from David Katz with Jefferies.

Afternoon, everyone. I want to revisit Digital, which seems to have really accelerated. We've previously discussed the path to a run rate of $500 million by the fourth quarter. Could you help us unpack that a little more and outline some key drivers? What does 2026 look like? Are there any new aspirational targets we can look forward to discussing?

David, as we head into football season, the volatility of sports outcomes becomes pivotal. That said, comparing a typical second quarter to a fourth quarter, one can anticipate a fourth quarter sustaining approximately twice the performance of the second quarter, placing us well beyond your target. We've had a strong July following a robust second quarter, keeping our momentum intact. Our partnership expenses will be rolling off, and the $500 million target seems to be right within reach on our outlined schedule. Looking further into '26 and '27, with potential new jurisdictions for iGaming, I expect our market share in those areas to be substantially higher than in our legacy markets, leading to bullish outcomes in Digital. We're optimistic, and the rollout of the single wallet in Nevada serves as an excellent tool for customer acquisition since it will allow customers visiting Nevada to manage their accounts seamlessly across states—exciting for us as we advance in this area.

Our next question comes from Lizzie Dove with Goldman Sachs.

Going back to Vegas, you mentioned some investments that are providing great returns at Flamingo. Beyond what you've discussed, do you see the opportunity or need for further incremental investments in other Las Vegas properties?

Yes, we have room remodels coming up, including a tower at Caesars Palace and a partnership with Tahoe for a new day club in front of Caesars Palace that has significant capital contributions. There are also more room remodels planned throughout the city, and the Vanderpump Hotel at Cromwell is about to kick off designs. We've seen amazing potential there. Aside from these investments, the rest of our properties are currently in good shape, and we'll continue to maintain their quality.

Understood. Also, regarding Digital, there has been a nice uptick in the OSB hold this quarter, now tracking close to 9%. How do you assess the sustainability of this uptick? I realize you referenced sports variability in outcomes, but does this tie into the long-term target, and were there any one-time factors involved this quarter?

Yes, we had favorable sports outcomes this quarter. I would say that the actual hold exceeded our theoretical hold from the sportsbook perspective. That said, I wouldn't revise our long-term target of achieving 10% hold at this juncture. We remain optimistic; as stated, our parlay percentage continues to rise, reflecting a growing trend, and increases in cash-out percentages contribute to our higher hold. Thus, there is a significant structural upward trend, but achieving the near 9% hold this quarter was temporarily influenced by favorable sports outcomes. However, as we approach football season, which typically has a higher parlay mix, I expect to surpass that 9% later this year. Yet, clearly, there are natural effects associated with sporting outcomes that would affect this.

Our next question comes from Steve Pizzella with Deutsche Bank.

Could you elaborate on what you are experiencing from an OpEx and labor standpoint in Las Vegas and Regionals and how we should view that moving forward?

Yes. We have union contract increases in Vegas that you've noted, and while we've managed costs effectively, our overall expenses were flat despite increasing labor costs. Nothing of significant impact in Digital; the Regional markets just reflect standard inflationary adjustments without the intensity of impacts we've faced in the previous few years.

Great. Additionally, I wanted to follow up on New Orleans. I believe you indicated a $60 million EBITDAR run rate per month coming out of the first quarter. Is that still holding?

Yes, New Orleans had another strong quarter and has improved pace in July. Danville continues to perform extraordinarily well as well.

Our next question comes from Steven Wieczynski with Stifel.

Tom, I'm hoping to clarify some numbers with you regarding the Regionals. There were $30 million in headwinds this quarter. If we include those and calculate a comparison, we would find the flow-through still appears lower year-over-year. There's an uptick in spending across the database predominantly in Q2, so what would the regional margins have indicated under core comparisons? I'm guessing margins should see acceleration moving forward given that the bulk of that heavy spending seems to be coming to an end?

Yes, it's accurate to say that if we hadn't invested as much in marketing, the margins would have been higher. As we draw back on unprofitable marketing, those margins should improve from this point.

Understood. Now, on the other hand, regarding the Vegas market, it seems customer stability exists for the FIT cohort, yet, this is still early. I understand the booking window is compressed, but my question is, did you do anything specific to stabilize that customer base, such as increased promotions or room discounts?

No, we were describing a cash room revenue figure. Most of our Vegas rooms are cash bookings, so what stabilized was the outlook for cash revenue rather than changes in marketing efforts.

Our next question comes from Barry Jonas with Truist.

You're coming off your initial meeting in New York City with the CAC. How do you feel your chances are in that race?

Yes, we're proud of the submission we have put forward. We’ve established a strong partnership with considerable local support. While we are aware that Manhattan may have its challenges for a casino license, we are confident that if one is awarded in Manhattan, we would be the candidate.

Understood. As a follow-up, there was notable insight provided about Digital. Any updates on the Spin, perhaps in terms of timing or other considerations from your perspective?

Yes, our priority remains delivering on the numbers we previously outlined. We are on course for achieving those targets. There are necessary internal preparations to complete before we assess the separation's value. If significant shareholder value can be realized, we will certainly consider those options, likely positioning ourselves appropriately to meet our targets in the first half of '26.

Our next question comes from John DeCree with CBRE.

I wanted to ask a question about some asset-light opportunities, particularly with OLG and Windsor, in continuation of the Caesars Republic brand. Given that Regionals are flat to growing, could these ventures move the needle and is there additional opportunity to leverage the brand?

Yes, we have a couple of Indian management contracts that have completed financing, one in Oklahoma and one in Sonoma County, California. We expect these to generate around $20 million annually through management fees between the two. As noted, we will integrate Windsor at the end of the first quarter of '26, replacing managed EBITDA with substantial increases in Regional EBITDA. In total, all three ventures represent around $50 million of annual incremental EBITDA flowing through our asset-light business model. We will also continue to seek more management opportunities both domestically and internationally. While that can be unpredictable, we are proactively leveraging our brand and operational know-how.

And just to clarify, the incremental EBITDA expected through these asset-light channels translates to high free cash flow conversion without additional capital expenses?

That's right. That's directly contributing to free cash flow.

One last one regarding the group room mix; as we assess the stability in the fourth quarter and the first quarter into the second quarter, what constitutes the right mix? Are you actively pursuing larger events similar to State Farm, which occurs once every three years? Is there an initiative to capture more of those?

We're eager to enhance our group room mix. We've seen increases since the merger, aiming to reach high teens this year and next. Our goal is to increase that even beyond 20%. Our group sales team, led by Michael Massari, is focused on capturing significant events, including State Farm, to boost our presence in Las Vegas.

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

Tom, when considering Las Vegas, it seems multiple external factors around Q4 could affect group trends, including the scheduling of the Jewish holidays. As you assess the landscape and your company's performance comparisons, do you anticipate Q4 growth year-over-year, and could that be baseline expectations from your perspective?

Q4 may very well reflect an increase year-over-year for Caesars.

Understood. As a broader strategy, considering the increased OpEx and promotional investments that you've made, it seems the sector is also ramping up land-based conversions and renovations. As you start to consider 2026 and beyond, are there capital expenditures you see as potential opportunities based on past ROIs?

If you look at our Regional portfolio, our major EBITDA drivers have undergone substantial investment in recent years—especially Atlantic City, New Orleans, Danville, Lake Charles, Indianapolis, Tahoe, and Reno. All fourth assets have seen significant capital allocation since the merger. Thus, another large capital cycle is not on the horizon; we’re focused on maximizing returns from what we’ve invested so far. We will augment hotel products where opportunities arise, likely in collaboration with third-party developers. Additionally, some boat-to-land conversions can generate good returns; however, we’re not expecting a surge in capital activity imminently.

Our next question comes from Chad Beynon with Macquarie.

Tom and Bret, I noticed the $100 million in share repurchases during April, and you noted intentions to remain opportunistic in that regard. Can you clarify why there were no further repurchases this quarter? Was that due to trends in business requiring a careful approach? Additionally, given you've spent $100 million in one month, could this number be achievable again or will there be a more established benchmark going forward?

This quarter, our focus was on redeeming our highest coupon debt, explaining the absence of share repurchases. Looking ahead, you can expect a combination of share repurchases and debt repayments. Given our positive outlook for Digital's scaling and momentum, alongside our share price movement, we consider our stock appealing. We will remain buyers especially ahead of the value recognition for Digital, whether it surfaces through our current equity or as part of some separation transaction.

On the prediction markets, we've seen some digital companies express interest, but we have no new updates currently. We are actively monitoring the situation to ensure we remain informed.

Our next question comes from Jordan Bender with Citizens.

Tom, you mentioned the earnings power and potential of the online business in future years. Considering your scale, are you considering expanding into international markets beyond North America?

We're always open to opportunities that drive shareholder value. However, currently, there’s no international market that rivals the potential we see domestically. I wouldn’t rule out exploring these opportunities, but I find it unlikely we'll encounter markets that compare to the prospects we have here.

If I may add, when we evaluate our project roadmap and planning phase—beginning midpoint next year—we are excited about the opportunities presented. The risk associated with execution appears manageable. Therefore, our focus remains on domestic growth rather than international expansion due to the robust domestic opportunities.

Understood. Regarding New Orleans, the initial $75 million in gaming revenue wasn't subject to additional taxes. Is there remaining upside, and how does that integrate into achieving flat to up EBITDAR for the entire year?

There is still room for potential growth. New Orleans' gaming performance is vital for our overall Regional strategy and will contribute towards growth this year and next. The momentum is building as we head towards the Super Bowl, and we’re optimistic about our future there.

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

I wanted to return to your comments about feeling better about the business results in the current year compared to last. Do you maintain that sentiment, and is there anything specific about this year's business that you feel may be underappreciated?

The reason for consolidating the company was to benefit from the diversified business model, allowing segments to support each other. At present, as I mentioned, we expect a soft summer in Vegas. However, I am very optimistic after the third quarter about future prospects. The confidence in Regional is consistent with our previous discussions, while Digital continues to gain momentum each quarter, and I believe that strength may be underappreciated right now. The scaling we are witnessing and its trajectory is promising, and I believe we won't be waiting much longer before reaching our outlined objectives.

I am not showing any further questions at this time. I'd like to turn the call back over to Tom Reeg for any closing remarks.

Thanks, everybody. We will see you next time.

Ladies and gentlemen, this concludes today's presentation. You may now disconnect, and have a wonderful day.