Q4 2025 Earnings Call — February 17, 2026
Analyst Dan Pulitzer (JP Morgan): Hey, good afternoon everyone. 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?
Executive Tom (Title): 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 gone 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. 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 fourth quarter and into first quarter.
Analyst: 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 of I guess, where do you stand in terms of the expectation there and the possible list? How close to these being done are they from a regulatory perspective?
Executive Tom (Title): I'm not a good predictor of politics, but Maine appears highly likely to launch. You should think of an iGaming state like Maine as 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. 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, 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. We're due for some good news in the political cycle, and it looks like there may be some coming. Thanks so much.
Analyst Lizzie Dove (Goldman Sachs): Hi there. Thanks for taking the question. I guess sticking with Vegas, obviously a lot of moving pieces. Appreciate your comments on, you know, leisure and the peak weekends and whatnot. You know, you've got some capital investments that you've mentioned. Obviously some good guys from conferences, you know, first half of this year and one for you, you know, 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?
Executive Tom (Title): 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 Octavius Tower, I'm sorry, the Augustus Tower at Caesars Palace over the summer. That's a little less than 1,000 rooms, so we'll time it so that 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 in 26 that you should consider.
Analyst Lizzie Dove (Goldman Sachs): Got it. That makes sense. And then I guess on the OpEx side, you've done a pretty good job of 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?
Executive Tom (Title): 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.
Analyst Brent Montour (Barclays): 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 calling back some of the programs that you have in place next year is a key tailwind for growth. When do you think we'll see that metric flip? And when you talk about it as a tailwind for growth, what are you sort of baking in for that factor to sort of turn into a tailwind?
Executive Tom (Title): 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 to follow up on Las Vegas, I was hoping we could maybe go one more layer deeper on some of the more tangible pain points that you kind of referenced, international, inbound, but California, interstate traffic, discount airline seats, some of these things that we can kind of put some at least qualitative feelings around, 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?
Executive Tom (Title): 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. 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 26th. Southern California drive-in was softer in 25. 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.
Analyst Stephen Pizzella (Deutsche Bank): 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?
Executive Tom (Title): 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 us to be more active in the second quarter than the first in a normal year, but we're gonna continue to balance as you've seen us throughout 25 as we go forward.
Analyst: 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?
Executive Tom (Title): 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.
Analyst John Decree (CBRE): 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, any uplift possibly from tax cuts under the big, beautiful bill, you know, what you typically see? I'm not sure if property managers have kind of reported anything at this point, but you don't think that's a meaningful tailwind for either regionals or Vegas?
Executive Tom (Title): 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, you know, withholding change January 1st. I think people are starting to see my checks a little bigger in 26 versus 25. And, you know, money that comes to consumers like that in kind of an unexpected 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.
Analyst: Maybe another kind of topic for this year, Olympics, World Cup events, you know, 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?
Executive Eric (Title): Yeah, there's always interest around the Olympics. The Summer Olympics, though, really drive a lot more volume than the Winter Olympics, and candidly, it's 80% on basketball. The Winter Olympics are fine, and we offer a great menu for the customers, but it doesn't drive huge amount of volume for us. You know, conversely, we do think that the World Cup will be very interesting. We plan to offer, you know, 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.
Analyst David Katz (Jefferies): Afternoon. Thanks for taking my question. I wanted to just look at regional gaming holistically. And it certainly looks like there's 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 skill games in some places or HRMs in others, and potentially iGaming, if you would consider that a competition. How are you thinking about sort of the Caesars value proposition in that context, which looks like just a busier landscape than it's been?
Executive Tom (Title): I mean, our benefit there is Caesar's rewards. We have a unique offering. We used, 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, you know, 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. 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, you know, for a very long time. If you look at the legacy Eldorado properties that came into Caesars Rewards in the merger, your average revenue left was in the mid single digits. And that was purely by entering the Caesars Reward Network. So that is our chief benefit and our chief calling card in regionals.
Analyst: Okay, got it. And if I can just go back to Las Vegas for a minute. 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?
Executive Tom (Title): I mean, I would say premium does hold up better, but I would point you to, you know, 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 rooms, 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.
Analyst Stephen Benchinski (Steeple): Hey, guys. Good afternoon. So, Tom, kind of sticking to what David's question just was, you mentioned a couple times a leisure traveler is – you know, it's 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 a, 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 books 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?
Executive Tom (Title): 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.
Analyst: Okay, gotcha. And then, Tommy, talk about the reinvestments you guys have done in the regional markets. It sounds like that's going well, given you mentioned their rate of 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?
Executive Tom (Title): Yeah, I look at what you saw yesterday. 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, you know, facing a competitor that added or just came into the market that has not anniversaried, that's a lower percentage than 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.
Analyst Barry Jonas (True Security): 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? You know, 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?
Executive Tom (Title): 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.
Analyst: Got it. Okay. And then just as a follow-up, you know, I think there remains a real variance between wholly owned versus leased EBITDA performance. Just curious how we should think about that variance playing out over time.
Executive Tom (Title): There's nothing unusual happening in terms of how we operate. Wholly owned versus leased has been, I guess, unusual. 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.
Analyst Stephen Grambling (Morgan Stanley): 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?
Executive Tom (Title): 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 the capital markets, the debt markets are strong, the debt market has been strong for quite some time. And, you know, 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.
Analyst: 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?
Executive Tom (Title): 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 significantly, 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.
Analyst Chad Bain (Macquarie Capital): 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 evaluation changes. But how are you thinking about, you know, spinning 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?
Executive Tom (Title): Yeah, Chad, you know, I'd say we will do what maximizes success, 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.
Analyst: Okay, 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 AI improvements that you guys are doing in-house or using with some vendors to help in the near term?
Executive Tom (Title): Yeah, the short answer is yes, Chad. 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 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.
Analyst Jordan Bender (Citizens): Hey everyone. Thanks for the question, Eric, maybe to start with you on the long-term structural targets. It looks like on average about 100 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 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%?
Executive Eric (Title): Yeah, I think you've said it pretty well. 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. I do feel very confident that we're going to get to 10%. And, you know, hopefully we'll do better than 100 basis points in 2026. But as you've seen, it's been pretty steady for the last three years.
Analyst: Great, thank you. 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. We kind of talked through the puts and takes in the first. Is it fair to assume you're implying 1Q could be down and in the remainder of the year should be up? Was that what you were kind of saying?
Executive Tom (Title): 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.
Analyst Trey Bowers (Wells Fargo): Hey, guys. 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 then 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.
Executive Tom (Title): Yeah, you know, appreciate the compliment on it standing out. It's 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 significantly. You know, 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.
Analyst Daniel Guglielmo (Capital One Securities): 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?
Executive Tom (Title): This was a unique situation for us, Daniel, in terms of we were a longtime manager of the asset. We effectively bought the APCO 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.