Caesars Entertainment, a prominent player in the gambling and entertainment industry, is considering splitting its online gaming business into a separate publicly traded company. This move comes as CEO Tom Reeg believes that the digital properties of Caesars—online sports betting and iGaming—have been undervalued due to being grouped with its larger brick-and-mortar casino business.
In a call reviewing Caesars’ Q4 and 2024 performance, Reeg stated that if the market dynamics remain the same and the digital business continues to grow, the company will explore avenues to drive the most value. Caesars reported $1.16 billion in net revenue from its digital operations in 2024, accounting for approximately 10% of all net revenue, up from 8% in 2023. The digital arm’s adjusted earnings before interest, taxes, depreciation, and amortization also saw a significant increase from $38 million to $117 million year-over-year.
Despite these positive results, Caesars’ stock price remained flat after-hours on Tuesday night. Like other sportsbook operators, Caesars faced challenges from 2024 NFL game results that favored the public. However, the company reported a 60% growth in iGaming net revenue for the year, which helped offset these short-term sports-related losses.
In terms of market share, Caesars currently trails behind industry leaders FanDuel and DraftKings, who collectively hold almost 70% of the legal online sportsbook handle in the U.S. Caesars is in third place, trailing BetMGM and now competing closely with Fanatics. Data from Legal Sports Report indicates that total sports betting wagers reached a new high in 2024, with U.S. sports betting revenue hitting a record of $13.71 billion, up from $11.04 billion the previous year.
Caesars’ stock saw a slight decline of less than 1% in Tuesday trading, closing at $34.87. This marks a decrease from its high of $119 in 2019. As the company continues to navigate the evolving landscape of online gaming and sports betting, the potential split of its digital business could unlock new opportunities for growth and value creation. With the industry showing strong growth potential, Caesars is poised to capitalize on the increasing demand for online gambling and sports betting services.
