Caesars considering ‘all avenues’ for digital value; Morgan Stanley’s sportsbook concern

Following its Q4 2024 report on February 25, Caesars Entertainment will begin to consider “any and all avenues” to help drive value for its online gaming business, according to CEO Tom Reeg. 

“If the market dynamics remain the same, and the business continues 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,” Reeg said during the Q4 2024 conference call. 

Reeg also stated he believes the company’s digital properties, such as online sports betting and iGaming, have been undervalued because the verticals are grouped with its “much larger” brick-and-mortar casino business.

Morgan Stanley appeared to have equal sentiment after sharing its research into Caesars’ Q4 2024 performance, stating that the company believes the sports betting side of Caesars Digital “appears to be stalling.”

The segment’s revenue during Q4 2024 remained stagnant from results reported during the fourth quarter of 2023, as Caesars Digital managed to generate $302m throughout both periods. During full year (FY) 2024, Caesars Digital increased its revenue by 19.5% from the prior year period, however, reporting a FY2024 revenue of nearly $1.2bn. 

Good to know: Caesars released its new Pick & Win game in collaboration with Boom Entertainment on January 16, representing the first daily collect-and-win game to be launched on the operator’s iGaming platform

Caesars is currently trailing sportsbook market share leaders FanDuel and DraftKings, which account for nearly 70% of the legal online sportsbook handle across the US. BetMGM is in possession of third place for market share, while Caesars also continues to battle fellow sportsbooks such as Fanatics and ESPN Bet for handle. 

Morgan Stanley also highlighted struggles in performance from Caesars’ Las Vegas operations during Q4 2024, despite the segment still generating almost $1.1bn throughout the period. While Caesars acknowledged the slight drop in revenue year-over-year, the operator believes the next two years will show positive growth in Las Vegas due to stabilized operating costs and a “growing group calendar.”

The company’s Regional adjusted EBITDAR was in line with early projections – $410m against a presumed $404m – but Morgan Stanley believes core brick-and-mortar Regional trends remain “sluggish,” and that competitive pressures are “prevalent” in areas such as Chicago, Indianapolis and New Orleans. 

Caesars was said to still be in the active process of selling non-core assets, but that most of the “easy lift” in terms of assets were sold during 2024.

Kirk Geller

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