Thank you for standing by and welcome to Caesars Entertainment Inc.'s fourth quarter and full year 2025 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Brian Agnew, Senior Vice President, Corporate Finance, Treasury, and Investor Relations. Please go ahead, sir.

Thank you, Jonathan, and good afternoon to everyone on the call. Welcome to our conference call to discuss our fourth quarter 2025 earnings. This afternoon, we issued a press release announcing our financial results for the period ended December 31st, 2025. A copy of the press release and our investor presentation are both available in the Investor Relations section of our website at investor.caesars.com. Joining me on the call today are Tom Riege, our CEO, Anthony Carano, our President and Chief Operating Officer, Brett Yonker, our CFO, Eric Hessian, President Caesars Sports and Online, and Sharice Crumbly from Investor Relations. Before I pass the call 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 releases located on our Investorations 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 Carano.

Thank you, Brian, and good afternoon to everyone on the call. Caesars delivered solid results in 2025, with full-year same-store enterprise net revenues increasing $266 million, or 2% year-over-year. These strong results were driven by the diversity of our portfolio, our omni-channel focus, and the delivery of unique experiences for our guests. Turning to the fourth quarter, results were in line with our expectations. Our diversified portfolio delivered fourth quarter consolidated net revenues of $2.9 billion, up 4% year-over-year, and adjusted EBITDA of $901 million, up 2% year-over-year. During the fourth quarter, our digital segment delivered an all-time quarterly EBITDA record of $85 million, despite experiencing poor hold in October. Our Las Vegas segment delivered a quarterly sequential improvement in occupancy and rate trends, as expected, leading to a 6% EBITDA decline in Q4 and improvement versus Q3. And finally, our regional revenues were up 4% year-over-year, driven by continued strong returns in our Danville and New Orleans and the benefit from strategic reinvestment in our Caesars Rewards customer database. Regional EBITDA declined slightly and was negatively impacted by poor winter weather in December. Absent the weather impact, regional EBITDA would have grown year over year. Starting in our Las Vegas segment, we reported same-store adjusted EBITDA of $447 million versus $477 million last year. Segment results were driven by 92% occupancy versus 96.5% last year, and an ADR decrease of 5%. During the fourth quarter, we benefited from a strong event calendar, which produced a record F1 event for Caesars, a strong New Year's Eve, and 17% group and convention room night mix during the quarter. We continued to elevate the customer experience in Las Vegas during the quarter, with the addition of two new presidential villas at the top of the Coliseum Tower, as well as 29 new sky villas at the top of the Octavius Tower, both at Caesars Palace. I'm excited to say feedback from our VIP guests on this product has been very strong. These recent investments into our flagship Caesars Palace asset, including a fully remodeled Palace Court slots area, helped the property set the all-time record for slot volume in 2025. We also remain excited about additional upcoming CapEx projects in Las Vegas, including a new Omnia Day Club by Tao at Caesars Palace, a complete remodel of the Augustus Tower at Caesars Palace, a full renovation of Palace Court, our high-limit table games area and salons, the rebrand of the Cromwell to the Vanderpump Hotel, and the recently announced Project 10 by Luke Combs that will occupy the vacant Margaritaville space at the Flamingo, just to name a few. These projects continue our commitment to reinvest in our assets while providing our guests with unique experiences. As we look ahead to the outlook for Las Vegas, we continue to see trends improving sequentially throughout the year, driven by stabilizing leisure trends and a strong group and convention calendar. In our regional segment, we reported adjusted EBITDA of $407 million, down slightly to last year. Absent the negative winter weather in December, EBITDA would have grown in Q4 on a year-over-year basis. Results from our strategic customer reinvestments remain promising, driven by strong rated play trends in the quarter. As we mentioned last quarter, we will continue to refine our marketing approach as we remain focused on delivering strong returns on these investments. As we look ahead to 2026 in our regional segment, we expect to benefit from a strong group mix in Reno, the transition of Windsor from a managed to an owned property in March, the completion of our $200 million Tahoe Master Plan renovation this summer, hosting of select property events around the World Cup, and continued return on investment on recent changes in marketing. And finally, we're looking forward to the opening of our newest managed property, Harrah's, Oklahoma, which is expected to open on April 9th. I want to thank all of our team members for their hard work during 2025. Their dedication to exceptional guest service has been the driving force behind our accomplishments this year. And with that, I'll now turn the call over to Eric for some insights into the fourth quarter performance of our digital segment.

Thanks, Anthony. During the fourth quarter, Caesars Digital delivered net revenue of $419 million, adjusted EBITDA of $85 million, and hold normalized adjusted EBITDA of $90 million. Flow-through during the quarter was better than target at 56%. Our core KPIs remained strong during the quarter, with mobile sports handle growing 4% and total parlay mix improving by approximately 210 basis points year over year. In addition, we saw growth in average legs per parlay and a higher cash-out mix versus the prior year period. In iCasino, we delivered 28% net revenue growth driven by continued strength in volume and average monthly active users. We continued to elevate our product offering during the quarter to include new in-house games, improved bonusing capabilities, and an elevated live dealer product. Overall in Q4, our total monthly unique payers increased by 19% to $585,000. Our strong Q4 results drove our full-year net revenues to $1.4 billion, up 21% year-over-year, and EBITDA to 236 million up 100% year-over-year, the combination of which resulted in flow-through of 50% in line with our target. From a tech perspective, we continue to convert new jurisdictions to our universal digital wallet and proprietary player account management system, which is now live in 26 jurisdictions and should be live in all jurisdictions by the end of this quarter. This enhancement gives our customers a significant upgrade to their wagering experience, During the quarter, we also successfully launched Sports Betting in Missouri, which was the first state where we offered a shared wallet experience to our customers on day one. As we look forward to the full year of 2026, I'm pleased with the significant progress on the technology side of the business that's driving strong customer engagement in both sports and iCasino. The continuous progress we are making is showing up in our top line results and our focus on spending efficiency will drive solid flow through to EBITDA. we continue to see a business capable of driving 20% top-line growth with 50% flow-through to EBITDA, which keeps us on track to achieve our goals. I'll now pass the call over to Brett for some comments on the balance sheet.

Thanks, Eric. In 2025, we continue to reduce debt alongside executing opportunistic share repurchases. As we move into 2026, we expect to benefit from decreasing CapEx, decreasing interest expense, and well below $100 million of cash taxes. Our nearest debt maturity is our relationship bank financing, which matures 24 months from now. Over to Tom.

Thanks, Brad. Thanks, everybody, for joining. For some additional color, last we talked to you, we were coming off a very, very soft summer in Vegas with the softness dominated by the leisure traveler. The leisure traveler still remains soft on a year-over-year basis, but not as pronounced as it was this summer. We told you that group business would help us fill in in the fourth quarter, and you saw that that happened on a sequential basis. The year-over-year decline was less. As I look into 26, I'd expect first quarter the same thing, group business offsetting leisure softness and further improvement on a sequential basis versus fourth quarter. And then as we get into second quarter, group business, including the state farm conference at our properties, should put us in a position where we're looking at year-over-year gains. And then you get to the summer where it will be dependent on leisure recovery, but we feel good generally about the rest of the year. Yeah, in Vegas, the way I'd characterize the business is peak events, peak weekends, big conferences, the cities and all of our properties are doing quite well. It's the shoulder periods when there's not a big event or a big conference where demand is challenging. And from an operating perspective, that's a unique challenge for us and all of us in the market because you're operating a property in a softer period that may be occupied for us in the 80s, for others lower, and then you're ramping up to fully occupied that weekend or that next event. So it's quite a labor staffing challenge. So Sean and his team in Vegas did a fantastic job of managing the business through that volatility in the fourth quarter and continue to. You can see our margins are still holding in the mid-40s, which we're proud of. In the regional business, as Anthony said, October and November were quite strong for us, significant year-over-year growth. The last two weeks of the year, we had some ill-timed snow that probably cost us a little over $10 million of EBITDA, but we ended up flat for the quarter. As you look out, recall the first quarter last year had the Super Bowl in New Orleans, so that's a little over $10 million incremental EBITDA in New Orleans that does not recur in the first quarter. But post the first quarter, at the end of the first quarter, early March, Windsor comes online. You get the largest group of bowlers in Reno. That's primarily second quarter. You've got Tahoe's completed expansion coming online for the third quarter. So we feel very good about regional growth for the year and particularly in the back three quarters of the year. Digital, as Eric said, you know, we're still pacing kind of 20% top line growth with 50% flow through. Everybody knows the targets that we have out there for digital. We still expect to exceed them as we move forward. One thing to call out in digital, fixed marking expense is going to be significantly different in 26 and 27 as we have big contracts roll off. In 26, there's a little over $35 million that runs off that will primarily impact the second half of the year. The majority of that hits in the second half, basically, in football season. And then you've got another 20-plus in 27, also football season, so first half of that year. The vast majority of that should flow straight to EBITDA, but we will take some of it. and reinvest in marketing that has a return. So we think that that's a significant booster for growth for us as we move forward. You know, prediction markets, I know everybody's got prediction markets questions. We're no smarter than you in terms of what will happen. You know, to me, this is clearly gambling. I think it'll take a couple of years to wind its way through the courts, and you'll have a patchwork of states where they're not allowed, states where they're allowed. You know, in the current regulatory environment, you shouldn't expect us to be participating in prediction markets. We are, you know, some of our most valuable assets are our gaming licenses in each of of the states that we operate, and it's been made clear to us in a number of states that if we pursue that avenue, some of our bricks and mortar licenses could be at risk. You shouldn't expect us to do that. But notwithstanding if there becomes clarity that there is a legal path for prediction markets that satisfies regulators on the brick and mortar side, we will find a way to participate, but I would tell you unequivocally, we view this as gambling that should not be regulated. These are not swaps. They're not miraculously finding the other side of a five-team parlay at the same time one side comes in, but we'll let that play out through the courts. Notwithstanding, our handle grew in the fourth quarter, continues to grow. We're not seeing any impact that we can see in our regulated markets as we operate today. And Brett touched on, you know, we expect to be a significant free cash flow generator in 26. we were in 25, and you should expect us to utilize that cash between a mix of debt pay down and share repurchases. And with that, I will open the line to questions.

Certainly. And our first question for today comes from the line of Dan Pollitzer from J.P. Morgan. Your question, please. Hey, good afternoon, everyone, and thanks for taking my questions.

Tom, I was hoping to just check in on Vegas here. I know you spent a good amount of time talking about that leisure customer and the uncertainty there. But as you look out in terms of the booking window, in terms of the kind of near-term trends, are you gaining any traction? And what do you think needs to be done from either a promotion or a value proposition perspective that needs to – in order to get that customer back?

I think this is normal economic cycle activity. in leisure for us. You've got, you know, there's a unique flavor of what's going on with Canada in terms of international visitation, but I think this is just a kind of normal economic cycle. You know, what we are seeing is, you know, F1 was a very strong event for us. Super Bowl, despite what you read on social media, was an extremely strong event for us year over year. The big event weekends, the big conferences are delivering. It's those soft patches in between. And keep in mind, we were, what, 92.5% occupied for the quarter across 20,000 rooms. If you look back over the history of Caesars in Vegas, this was probably the third or fourth best fourth quarter of all time. So there's really no crisis happening in Vegas. It's normal cyclicality, and it'll play itself out. I know that the pricing gets focused on social media. I'm sure if I say the wrong thing in the next 30 seconds, I'll read it on Bloomberg or in the journal tomorrow. but that's not really what's happening in Vegas. You know, Center Strip is holding up quite well. The mix of what's available in Vegas, you know, Bill and team at MGM do a good job of running down, you know, between the Sphere and the Raiders and all of the entertainment and the food and beverage and all of the options you have here, they're unsurpassed. And, you know, the fact that we're 93% instead of 96% occupied, of course, we're going to work to get back to 96%, but this is not, there's nothing unusual happening here. I'd expect it to recover as time goes by, and we're already seeing that happen over, you know, fourth quarter and into first quarter.

Got it. Thank you. And then just turning to the digital side, in terms of iGaming, there's been headlines certainly in Maine and more recently in Virginia in terms of the potential legalization. I guess, where do you stand in terms of the expectation there and the possible list? And I mean, how close to these being done are they from a regulatory perspective?

So I'm not a good predictor of politics, but Maine appears highly likely to launch. And, you know, you should think of an iGaming state like Maine, you know, something along the lines of what we saved in the NFL contract in terms of EBITDA at maturity for us. Virginia, as I'm sure you're aware, there's a bill that passed the House, there's a separate bill that passed the Senate. It will go to conference and then to the governor's desk. The fact that we're still alive at this point in the session is a good sign. For brick and mortar operators. There's make well payments as part of the legislation that would benefit us. So our fingers are crossed in Virginia. That would be a very good outcome for us.

Got it. Thanks so much.

But I would say just, I get asked to predict, you know, what's the next one to go? You know, I would tell you in both Maine and now Virginia, you know, weeks before we were in the position that we're in now, we would have told you we're not particularly optimistic. So this stuff can come together very, very quickly and not necessarily on our radar, on anyone's radar, what will be next. The overarching truth is you've got a lot of states that have budget issues that are looking for revenue, in many cases with new leadership. Virginia has a new governor that's looking for revenue sources. That can be a good outcome for the casino business. I know in the last 18 months that's been not a great outcome. We've seen taxes on OSB move up. We've seen per-bet wager taxes were due for some good news in the political cycle, and it looks like there may be some coming.

Thanks so much. Thank you. And our next question comes from the line of Lizzie Dove from Goldman Sachs. Your question, please.

Thanks for taking the question. I guess sticking with Vegas, obviously a lot of moving pieces. Appreciate your comments on leisure and the peak weekends and whatnot. You've got some capital investments that you've mentioned, obviously some good guys from conferences, first half of this year, and one for you, especially in 2Q. So just thinking, I know it's early, but high level, How are you thinking about those puts and takes of how Vegas might play out this year overall?

Okay, let me, I don't, we don't provide guidance, as you know, but I tell you, you know, as I said, first quarter I'd expect continued sequential improvement versus fourth quarter. Second quarter starts to look even better. The second half of the year is dependent on what happens with that leisure customer. One take that I should highlight is we're redoing the Augustus Tower at Caesars Palace over the summer. that's a little less than a thousand rooms so we'll time it so that it's the bulk of the work happens in that softer leisure period and we'd expect to have those rooms back online for F1 but that is one take for us by in 26 that you should consider got it that makes sense and then I guess on the OPEX

side you know you've done a pretty good job but managing that overall and your margins are still higher than certainly some of your public peers and one of your private peers that comes to mind. How do you think about that long term in terms of where you can still kind of manage that cost side over time?

Lizzie, we manage it every day as do everybody else in the market. The labor contract increases are more manageable starting last year than they were in the first year of the deal. But we're, as I said, what will help is as occupancy smooths out, it's much easier to schedule. You're not running 1,500 basis point occupancy swings during a week in a property. so I would tell you the margin numbers that we put up in the fourth quarter that was about as challenging a period as you'll have in a non-COVID environment I would expect that that will get better as demand continues to firm Thank you Thank you and our next question comes from the line of Brant Montour from Barclays your question please Hi.

Thanks, everybody, for taking my question. So the first is on regionals. Looking at the flow through in the fourth quarter, it looks like it got a little bit worse quarter over quarter. You mentioned, you know, calling back some of the programs that you have in place next year is a key tailwind for growth. You know, when do you think we'll see that metric flip? And when you talk about it as a tailwind for growth, you know, what are you sort of baking in for that sort of, that factor to sort of turn into a tailwind?

Yeah, I think you started to see it in the third quarter, fourth quarter, when you get hit by weather events that hit visitation, you had costs associated with promotional events that were happening in those periods that you can't recoup, so it makes that number look a little janky. I don't think it's changed for us. You should expect to see continued improvement in first quarter and then on through the year. I think what you saw in fourth quarter was really the last two weeks of the year.

That's great. Thanks for that, Tom. And just a follow-up on Las Vegas, I was hoping we could maybe go one more layer deeper on And some of the more tangible pain points that, you know, you kind of referenced international inbound, but California, interstate traffic, discount airline seats, you know, some of these things that we can kind of put some at least qualitative feelings around, you know, what's gotten better into the first part of the first quarter here and what's sort of still staying as depressed as it was in the fourth quarter?

I mean, I would say between the fourth quarter and the first quarter, I wouldn't say there's been a meaningful shift in any of what you named. You know, the difference is there's more group business in first quarter than there is in fourth quarter, generally speaking. You know, what you've talked about, or what you touched on with, you know, Canadian business is a small percentage of total visitation to the market, but was an outsized percentage of room night loss in 26. Southern California drive-in was softer in 2025. That was coincided with immigration crackdowns that left people, let's call it, less willing to leave home and drive hours away. And I think as you put more quarters behind you from when the administration made those changes, I think it will gradually come back. The allure of the market has not changed. And we're optimistic as you move through 26 and beyond.

Great. Thanks, everyone.

Thank you. And our next question comes from the line of Stephen Pazella from Deutsche Bank. Your question, please.

Good afternoon. Thank you for taking our questions. As you look at that free cash flow generation you expect to generate in 2026, how are you thinking of balancing debt reduction and buybacks considering where the stock is trading today? So we're looking at the same thing you're looking at in terms of the free cash flow yield on the stock. You're going to look at how much cash flow you generate in a quarter. First quarter is a low free cash flow quarter. Second quarter is a big one. So if you think about timing-wise, you should expect it to be more active in the second quarter than the first in a normal year, but we're going to continue to balance as you've seen us throughout 25 as we go forward. Okay, thank you.

And then in Las Vegas, it looks like the other revenue line item was up about 7% year over year and a nice increase sequentially. Can you talk about the drivers of that line item and how we should think about that moving forward?

Let us get you to that on a callback. I don't have that level of detail off my head. Off the top of my head. Okay, thank you.

Thank you. And our next question comes to the line of John Decree from CBRE. Your question, please.

Hi, everyone. Maybe one broad question I don't think we touched on yet, and I know it's difficult to quantify, but kind of early days in tax refund season. Tom, how are you thinking about, from your consumer's perspective, of any uplift possibly from tax cuts under the big, beautiful bill. What you typically see, I'm not sure if property managers have kind of reported anything at this point, but I think that's a meaningful tailwind for either regionals or Vegas.

Yeah, I agree with you, John. I think that's a tailwind this year. You're just, obviously, just now getting to refund season, but you're in withholding change, January 1st. So I think people are starting to see my checks a little bigger in 26 versus 25, and money that comes to consumers like that in kind of an unexpected fashion, fashion. I don't know that the average consumer is focused on tax policy as much as, you know, the sample size we have on this call. As that money comes into the system, that's the kind of money that benefits all consumer discretionary businesses, entertainment-based businesses. So we think that can be a tailwind across the enterprise in 26.

Thanks, Tom. Maybe another kind of topic for this year, Olympics, World Cup, key events.

Maybe, Eric, specifically, have you seen any kind of material volumes around the Olympics and do you have any expectations for World Cup as it relates to the digital business for this year? yeah there's there's always interest around the olympics the the summer olympics though really drive a lot more volume than the winter olympics and you know candidly it's 80 on basketball uh the winter olympics are are fine and we offer a great menu for the customers but it doesn't drive a huge amount of uh volume for us you know conversely we do think that the world cup will be very interesting. We plan to offer a number of promotions. We're planning to really revamp the offerings that we have in terms of the markets that we list for soccer leading up to the World Cup. And so from that perspective, the World Cup is something that will drive significant volume and some hopefully good outcomes on the win side.

Thanks, Eric. Thanks, Tom.

Thank you. And our next question comes from the line of David Katz from Jefferies. Your question, please.

Afternoon. Thanks for taking my question. I wanted to just look at regional gaming holistically. And, you know, it certainly looks like there is, you know, not just for you, but for everyone, there is sort of a lot of pressures from a number of different directions. If I'm characterizing the right way, whether it's, you know, skill games in some places or HRMs in others, and, you know, potentially iGaming, if you would consider that a competition. How are you thinking about sort of the Caesars value proposition, you know, in that context, which looks like just a busier landscape than it's been?

I mean, our benefit there is Caesars rewards. We have a unique offering. As you know, David, we used to run a one-card program at El Dorado, and the reality was not a lot of people wanted to go from Erie, Pennsylvania to Shreveport, Louisiana, or to Reno, between those places. The difference in Caesars is we've got 20,000 rooms on the Strip, we've got destination properties like Lake Tahoe, New Orleans, Atlantic City, that really create that hub-and-spoke system and allows us to differentiate ourselves. else to your point, the convenience-based slot-dominant product, it is hard to differentiate yourself from the product standpoint, so you do it in service, and everybody, us and all of our peers would tell you we're very good at service, we're better than others. As we know, that can't be the case for all of us, but we all believe that. But the Caesars Rewards Network is truly a unique animal in that space and has been beneficial in regionals for us for a very long time. If you look at the legacy El Dorado properties that came into Caesars Rewards in the merger, your average revenue lift was in the mid-single digits, and that was purely by entering the Caesars Reward network. So that is our chief benefit, our chief calling card in regionals.

Okay, got it. And if I can just go back to Las Vegas for a minute. But, you know, one of the debates we have with everybody around the sort of K-shaped economy, when you talk about sort of leisure weakness, are you able to sort of segment some of that weakness between, you know, higher end, lower end? And, you know, whether that's, you know, discernible and, you know, whether you'd call it out and whether you'd classify it as K-shaped or not?

I would say premium does hold up better, but I would point you to look at our hotel numbers and look at MGM's hotel numbers for the quarter. They're pretty similar, and MGM has a higher skew toward premium play or premium room, sorry, premium properties. So it's not as simple as the low end's not doing well, the high end's doing well. That is part of it. But I think also, you know, location in the market plays a part. Center Strip has held up better than either end. And going back to the MGM and Caesars comp, MGM has more down at the south end versus our center. and maybe that explains why the numbers look fairly similar. But I think it's too simple to just say premium, good, value, bad. There's a little more nuance in there.

Agreed. Thanks a lot. Thank you. And our next question comes from the line of Stephen Invenchitsky from Steve Foll. Your question, please.

Hey, guys. Good afternoon. So, Tom, kind of sticking to what David's question just was, You know, you mentioned a couple times a leisure traveler is, you know, is still somewhat soft but, you know, has stabilized. I guess, you know, what I'm trying to figure out is, is there any kind of data point that you could, you know, point us to that would make you say, you know, you've kind of indeed seen, you know, a bottom here in that traveler? And I'm not sure the right way to ask that question, but, you know, obviously that customer booked very close in. And is there anything, you know, whether you're starting to see those folks book a little bit further in advance or anything else you could point to?

The booking window is not changing much, Steve. What I tell you is we, our best measure is activity among our rated players, and that's been improving since the summer, but it's still not back above where it was, but it continues to get better, and then you roll in stronger group calendar, that's how you get to sequential improvement as we move forward.

Okay, gotcha. And in time, you talked about the reinvestments you guys have done in the regional markets. It sounds like that's going well, given you mentioned their rated play was strong in the fourth quarter. Anything you could point to that would help us maybe a little bit understand better that those reinvestments are working like you expected?

Yeah, look at what you saw second quarter, third quarter, fourth quarter. I wish you saw November, December on its own. We're seeing it flow and we're getting better at culling what's not working. I think you'll see more of that in first quarter. Part of it's what we're doing. Part of it is you get further from competitive openings in terms of properties that are facing a competitor that added or just came into the market that has not anniversaried. That's a lower percentage than And it's been, you know, in prior quarters. And then as you look out to the rest of the year, we have more kind of Caesars or Caesars market specific stuff that helps us like, you know, the bowling calendar in Reno, the spend in Tahoe coming online, and, you know, Windsor going from a managed property to an owned property. So our regional pictures should look pretty attractive in 26.

Okay, gotcha. Thanks for the color, Tom.

Thank you. And our next question comes from the line of Barry Jonas from True Security. Your question, please.

Hey, guys. Thanks for taking my questions. You know, there's obviously been activity in Virginia now beyond just iGaming. There's a bill for a Northern Virginia casino and one for skill games legalization. Tom, how are you thinking about those expansion bills? Would you be interested in participating if the Northern Virginia happens? And any thoughts on impact from skill games beyond what you've already commented?

Yeah, I would say we're always open to looking at new opportunities. Obviously, Danville, Virginia, for us, was a huge success. So that's a state that we have warm feelings for. the Commonwealth, we have warm feelings for the Commonwealth. Skill games, you're not going to see us involved in skill games, but if there's an opportunity in northern Virginia, yes, we would take a look.

Got it. Okay. And then just as a follow-up, you know, I think there remains a real variance between wholly owned versus lease EBITDA performance. Just curious how we should think about that variance playing out over time. Thank you.

There's nothing unusual happening in terms of how we operate. Wholly owned versus leased. Leased has been, I guess, over-impacted by competitive openings. If you think about our properties that have faced significant competitive openings in the last couple of years, they tend to more likely be leased rather than wholly owned. That's coincidental. as you move forward and that impact abates, I'd expect leased and owned to look similar in terms of performance.

Thanks, Tom.

Thank you. And our next question comes from the line of Stephen Gramping from Morgan Stanley. Your question, please.

Hey, thank you. Maybe to piggyback on that, certainly starting to see interest rates come down, even some modest cap rate compression in broader real estate. I know you've been thinking about monetizing real estate on the strip in the past. But as you look at the broader landscape and think about the structure of some of these agreements, how would you balance monetizing real estate on the strip going forward?

Yeah, I mean, Steve, we've talked before, we are always open for business. So if there's interest in any of our assets, we're happy to talk about them. You shouldn't expect to see us running a process on an asset anytime soon. You know, while, you know, the capital markets, the debt markets are strong, the debt market has been strong for quite some time. And, you know, these are, these are chunky assets that have a fairly short list of potential buyers. So it's more likely not a change in the capital markets that drives activity. It's somebody deciding, I'd like to own a strip asset and becoming aggressive.

Fair enough. And then maybe one other one on the digital front. I saw strong monthly actives year over year, particularly relative to the growth in sports betting handle. Can you elaborate a little bit more on how these new consumers or customers compare and contrast to the base? And are you finding generally this is more iGaming customers first? And does that change your view of the mix of online sports betting versus iGaming contribution to EBITDA longer term?

Yeah, I would say that there really hasn't been a change in the value of the customers that we're signing up. We are improving our retention slightly so that if you look at the lifetime value of the average customer. It does trend up somewhat as their retention improves. The cost of acquisition has fallen slightly, however. So we're actually able to spend slightly less money, acquire slightly more customers, and then those customers tend to retain a bit longer. And so when you look at our monthly active users, it is trending up through a combination of those factors.

Great. Thank you.

Thank you. And our next question comes from the line of Chad Bain and from Macquarie Capital. Your question, please.

Good afternoon. Thanks for taking my question. Sticking on the digital value, I know lately there's been some valuation declines just on the back of the prediction cloud. Obviously, it sounds like there hasn't been much of an impact to you guys or others in the space, so hopefully that understanding or valuation changes, but how are you thinking about spitting out this business, kind of the path of that that you've talked about before, or maybe just providing any more spotlight on the value of this business? Thank you.

Yeah, Chad, I'd say we will do what maximizes value to shareholders over the long term. I would say, given what we've seen in valuations in the space over the past six to nine months, this doesn't seem like a market that screams you should come and offer some equity of any kind. So unlikely you see something in the near term. And what we've told you in the past is our focus is on hitting our numbers, scaling the business, proving it's scalable. And we're still in the midst of that and making great progress. Expect to continue to make more. but in the current market environment, it's unlikely you should see us pursue a separation transaction.

Thanks. And then lastly, on just AI benefits, whether it's searching for travel on the leisure side, I know that's been a big topic this quarter, geo versus SEO, and maybe some potential savings. I'm not sure if there's still opportunities there, but maybe just in terms of search or other marketing or purchasing, should we expect any financial benefits from, you know, AI improvements that you guys are doing in-house or using with some vendors to help in the near term?

Yeah, the short answer is yes, Chad. You know, we price all sorts of stuff every day, hotel rooms being an obvious example. That's a place where AI can be helpful. AI can be helpful in the digital business in terms of the trading aspect of it. You know, you think about how customers make reservations, how they interact with you on the front end. there's opportunity there. There's a lot of different areas where we're looking at applying AI to further enhance our profitability and our margins, and you should expect to see benefits from that over time.

Thank you.

Thank you. And our next question comes from the line of Jordan Bender from Citizens. Your question, please.

Hey, everyone. Thanks for the question. Eric, maybe to start with you on the long-term structural targets. It looks like on average, you know, you, about a hundred basis points of improvement every year. Is it kind of fair to assume that trend line continues and we can see 10% by 27?

And I just, to unpack that maybe a little bit more, kind of like what's left in the tank between like, you know, parlay mix, average lags, improvement in the trading teams, anything that kind of helps us bridge between what we're seeing today to how we get to that 10%. yeah i think you've you've done it you know said it pretty well it's we've consistently improved our hold and it's not through any single action that's taken it's through a combination of lots of different efforts towards basically creating a product that the customers want so what we do is we go through we say what are they trying to bet and why is it that they're not able to get their bet through? Or why is it that we're not able to offer this product? Or what are the types of things that they want to do that our app is causing them to be unable to do? And then we fix those things or make it easier for them to find or bet. And typically what customers like to do is they like to bet more parlays. And they like to bet live parlays. And they like to bet it with more legs and then cash it out. And all those things contribute to hold. And so the pricing department is not so much determining what specific margin we're going to charge for a various wager. What they're doing is making sure that the pricing is available and that the price is up so that the customers can bet it whenever they want. And then through the simple weighted average expected value that we get per bet, that increases over time as those higher hold bets come through with a higher frequency than the lower hold bets.

So what you're seeing is that. um there i do feel very confident that we're going to get to 10 percent and you know grow you know hopefully we'll do better than 100 basis points uh in 2026 but as you've seen it's been pretty steady for the last three years great thank you um and tom just to follow up on the regional side i think you said you feel good about growth for the whole year but you feel better about the last three quarters of the year is that you know we kind of talked to the puts and takes in the first Is it fair to assume you're implying 1Q could be down and then the remainder of the year should be up? Was that what you were kind of saying?

I was saying 1Q, we've got to overcome a little over $10 million of Super Bowl benefit in New Orleans to grow. And then we have really nothing but tailwinds the last three quarters of the year. Understood. Thank you.

Thank you. And our next question comes from the line of Trey Bowers from Wells Fargo. Your question, please.

I just wanted to build a little on an earlier question around the monthly unique payers. You guys are really a standout in that category, especially against some of the peers out there. Just curious, one, how high do you think that number can go? Is this the right KPI for us to focus on? Should that growth continue to accelerate? I know you talked about retention, but at 19% growth in the quarter and that's accelerated every quarter last year, just would really like you guys to dig in a little more there because it seems like a real standout in the industry.

Yeah, you know, appreciate the compliment on it standing out. This is a metric that we mainly report because it's an industry metric that others use. What we do is we try to drive the components up that contribute to that metric. So like I mentioned, you know, retention is a big one for us. You know, number of active wagers per customer is also important because that indicates their retention is going to be higher. You know, number of states where they play with us. If they go to a brick-and-mortar property, that customer becomes very loyal. And so what we try to do is provide them opportunities to do that, and through a combination of all of those things, it really is a metric of retention. The acquisitions that we get go up and down based on competitive natures and states opening, but really if we can change the retention over, say, an 18-month period by even a few points, what you'll see is a shift fairly significantly in these unique players. And so I would expect it to continue to increase. 19% is strong, so I don't really have any guidance on that. But every activity that we do from the tech perspective, from the customer service perspective, and from the marketing perspective all ultimately result in that improvement in terms of the unique customers that are using our product. Great. Thanks, guys.

Thank you. And our final question for today comes from the line of Daniel Guglielmo from Capital One Securities. Your question, please.

Hi, everyone. Thank you for taking my question. Just one from me. With Caesars-Windsor moving into the regional segment this March, you obviously had to do some work with some of the folks in Canada. Are there additional opportunities for expansion up north, or was this just a unique situation that worked out?

This was a unique situation for us, Daniel, in terms of we were a longtime manager of the asset. We effectively bought the Opco EBITDA at 2x what it's doing now and think we'll be able to improve upon that as a wholly owned entity. We would look elsewhere in Canada, but I tell you, most of what you find in Canada comes with, to get a property the scale of Windsor, you have to operate a number of very, very small properties in tough locations, and that's not typically been interesting to us.

Great. Appreciate that, Colin.

Thank you. All right. Thanks, everybody. We'll see you next quarter.

Thank you, ladies and gentlemen, for your participation in today's conference. This does include the program. You may now disconnect. Good day.