Word on the Vegas Strip is that debt-laden, top-heavy bricks-and-mortar Caesars Entertainment, having delivered a flatline FY24, is looking to monetize by hiving off its iGaming baby, its singular bright spot on the digital horizon poised to go US$500 million EBITDA-positive sometime soon, claims the company.
While Caesars Full Year 2024 revenue was down US$300 million (£236.7m) to US$11.5 billion (£9.07bn), year-on-year, the online vertical, Caesars Digital, reported revenue of US$1.16 billion (£915.2m), up from $973 million (£767.69m) in 2023.
And Digital’s Adjusted-EBITDA in FY24 surged by over 200 percent from US$38 million (£29.98m), in the previous year, to US$117 million (£92.31m).
It’s been reported that Caesars CEO Tom Reeg has now told investors: “We recognize that a digital business trading at a blended brick-and-mortar multiple of 7-8x means there’s dollars left on the table.”
Adding, in shortspeak for potential spinoff: “It’s a natural time to start to think about doing something strategically that allows investors a path to investing in that business on a pure-play basis.
“If it can continue to grow as it has, you should expect that we would look at any and all avenues in terms of how we can drive the most value to our shareholders.”
Debt Burden
Caesars estimates that its online arm will go US$500m (£394.5m) EBITDA-positive in short order, a highly-placed source told iGamingFuture.
“Soon-come” US$500m EBITDA-positive? Seems like a number plucked out of thin air and the same figure quoted by MGM Resorts International–another top Vegas player who came relatively late to the digital table–when they were expressing similar hopes for BetMGM, their iGaming and sports book joint-venture with the UK’s mired Entain omnichannel.
Meantime, concern of paying down yet more of the company’s significant debt, currently riding at some US$12.5 billion (£9.86bn), will pressage even more asset-stripping–along the lines of last October’s sale of the LINQ Promenade in Vegas–, predict gambling industry insiders.
Overall Caesars’ Las Vegas operations generated US$4.27 billion (£3.37bn) in revenue for FY24, down from $4.47 billion (£3.52bn) in 2023, while Regional operations across the U.S. contributed US$5.54 billion (£4.37bn).
“As we look ahead to 2025, the brick and mortar operating environment remains stable,” affirmed Reeg.
As for Caesars Digital, the company is expecting: “Another year of strong net revenue and Adjusted EBITDA growth.”
And quite possibly formal independence.
Watch this space.
