David Katz: That’ll work. Thank you very much.
Operator: Thank you. One moment for questions. Our next question comes from Barry Jonas with Truist. You may proceed.
Barry Jonas: Hey, guys, can you talk a little bit more about New Orleans, maybe timing there and your ROI expectations? Also curious to hear about what you think the ramp is going to be with and without next year’s Super Bowl. Thanks.
Tom Reeg: Yes. Barry, as you know, that’s a pretty dramatic transformation of that property. If you recall, when it was first opened, there were restrictions on what you could offer protections in place for both F&B and hotel in the city. So the current Hotel at Harrah’s is across the street. You have to go either across the street or go below through a tunnel to get to the property. The food and beverage offerings were fairly pedestrian and a little bit limited. And so this transforms into Caesars New Orleans. There’s a Caesars Hotel Tower that drops directly into the middle of the casino floor. The casino floor is entirely redone. As you – if you were to go there today, we’ve got about a third of the casino floor that’s under construction at a time and it’s rolling for the next six months or so.
It’s a stark difference in terms of what the new casino looks like versus the old. Basically an entirely new property. We’ve got restaurant product from Emeralds that’s already open. Have we announced the others? Yes. So we’ve got Nobu coming. And keep in mind, Four Seasons has a brand-new property across the street. Windsor Court is across the street. Lowe’s is across the street. So you’ve got a lot of the convention hotels in New Orleans are directly adjacent to our property and will feed into the venue and these F&B outlets. It should be a home run for us. So we’re expecting that this property will be among our largest regional properties once we’re complete. And that would be $200 million a year neighborhood of EBITDA.
Barry Jonas: Great. And then just…
Tom Reeg: Sorry to hit on Super Bowl. The Super Bowl is in New Orleans in next February, which is very well timed for us in terms of launching the product. New Orleans as a city has been slower to come back from a group standpoint than other convention cities. We would expect the Super Bowl will be a catalyst for that as well.
Barry Jonas: Awesome. And just as a follow-up, obviously, New York’s still ongoing, but I believe there are a number of regional land-based opportunities that have either come up more recently or being debated. Curious, if there’s any new expansion opportunities that interest you at the moment?
Tom Reeg: Nothing that’s on the front burner. We’re constantly approached with, would you do this? Would you do that? We’re pretty focused on the projects that we have underway and are really looking forward to kind of a break in the capital intensity – CapEx cycle that we’ve seen since we closed the merger, and we’re focusing on driving free cash flow for the next year or two.
Barry Jonas: Great. Thanks, Tom.
Operator: Thank you. One moment for questions. Our next question comes from Stephen Grambling with Morgan Stanley. You may proceed.
Stephen Grambling: Hi. Thanks. When you think about the path to $500 million in EBITDA in Digital, which I realize you’ve basically reiterated that I think each call this year. What has surprised you to the upside and or to the downside, as we think about market size, share, structural hold, marketing, et cetera from when you first put out that target?
Tom Reeg: Yes. I would say the size of the market has consistently exceeded our expectations. Growth in mature markets that have had OSB for a while or iGaming continue to grow at steady clips. I would say legalization has been – there has been no real surprises there in terms of jurisdictions that did or didn’t legalize our performance in iCasino since we launched Caesars Palace Online, we had pretty aggressive expectations and they’ve exceeded those and it continues to accelerate. Obviously, I didn’t foresee the Penn/ESPN transaction which allowed us to terminate an agreement that wasn’t profitable for us. So those are kind of big picture what’s changed since we first started this.
Stephen Grambling: And where do you think structural hold should be in the online sports betting business as we think about longer term?
Eric Hession: Yes. We’ve said around 7.5% to 8% for us. We do have a lot of larger players that we know from the casino side that straight bets that kind of bring down that average. But as I mentioned in the prepared remarks, our percentage of parlays and the percentage of legs per parlay do continue to be growing. We grew hold by about 100 basis points this year and it was fairly consistent throughout adjusting for kind of one off variances.
Stephen Grambling: So just to be clear though, the 7.5% to 8% would be you have to get there through increased parlay mix from here that wouldn’t be additive?
Eric Hession: Yes. In order to get there, we’re going to need to continue to increase our parlay mix or change the number of legs for people that are already betting existing parlays. Combination of those two should drive us up to that 7.5% to 8%.
Stephen Grambling: Great, thanks. I’ll jump back in the queue.
Operator: Thank you. One moment for questions. Our next question comes from Julie Hoover with Bank of America. You may proceed.
Shaun Kelley: Hi, everyone. It’s Shaun Kelley on for Julie. Just two questions, if I could. First on the regional side, Tom, you’ve been calling out for a while just some extra competition in a handful of markets. And as we screen the data that seems to be in markets that are particularly overlap with Caesars properties. So just kind of curious, has that settled down at all? Is that something that you kind of lap and expect to not deteriorate further? Just how do you underwrite that? Because it is a little different than the stability we’ve seen, I think, more broadly across regional landscape. But again, we do see it in the numbers.
Tom Reeg: Yes. The biggest impact that we saw last year was in Tunica, the property that opened closer to Memphis in Arkansas. We’ve lapped that. So we don’t expect to see continued – obviously you’re continuing to compete with them, but we’re fairly steady state now and can build back. Chicago had quite a few additions in the last 12 months. There’s more to come. You got the Forge Creek [ph] property in the south suburbs, but we’ve managed that pretty well in terms of exposure. You had the Spectacle property in Gary moving to the highway. We’ve lapped that as well in Hammond that impacted Hammond. And then Nebraska we have the Lincoln properties online. The Omaha properties are expected to come online toward the end of this year. So there’s still impact in the Council Bluffs market to come. But from, in terms of what we’ve been referencing, the bulk of that we’ve lapped at this point.
Shaun Kelley: Great. Thank you very much. And then as my follow-up for you or for Eric, just how should we think about, let’s call it EBITDA flow through as we think about sort of the change in revenue to the change in EBITDA moving forward in digital? I think traditionally when we talk to some of the other operators, we think anywhere in the range of 40% to 60% depending on the state, depending upon whether or not it’s hold related or not. But there’s still a decent amount of variable cost. The question is can that – is that the right formula for Caesars? Can it be any better than that as some of those marketing agreements roll-off and as – and as the flows are any different, especially in the iCasino side.
Eric Hession: So good rule of thumb for us is 50% flow through as we sit here today, if iCasino continues to gain momentum you should expect to see that improve the runoff of the contracts will be helpful, but that’s fairly lumpy. So I would expect we’d be at the midpoint of your number toward the higher end as some of these things happen.
Shaun Kelley: Thank you very much.
Operator: Thank you. One moment for questions. Our next question goes from John Decree with CBRE. You may proceed.
John Decree: Good afternoon, everyone. Thanks for taking my questions. Maybe to go back to the regional markets, Tom, I apologize if I missed, and I think you may have answered it with your growth commentary about the 1Q. But absent the weather or after the weather in January, what you’ve seen in February was a typical resume to normal. Is that fair?
Tom Reeg: That’s fair.
John Decree: Thanks. And then I guess one other kind of housekeeping item and Vegas, the room disruptions that you cited in the 4Q, are they both complete and are there any kind of notable disruptions that we should think about in 2024 particularly in Las Vegas? I think you talked about some of the bigger ones in the regional market, so really just Las Vegas?
Tom Reeg: No, those rooms are back online. We’re building a bridge that connects that tower to the old Horseshoe to Paris, but that shouldn’t have any disruption.
John Decree: Right. Okay, that’s it for me, just those housekeeping ones. Thanks, Tom.
Operator: Thank you. One moment for questions. Our next question comes from Chad Beynon with Macquarie. You may proceed.
Chad Beynon: Good afternoon. Thanks for taking my question. With respect to the North Carolina launch, this one seems kind of as fair as it gets. You have a database with the Cherokee property and it sounds like Eric, all the features are pretty much almost there. So how should we think know what an expectation should be for you guys, whether it’s market share or profitability or customer acquisition, should this look different in terms of share versus other states? Thanks.
Tom Reeg: No, is the short answer. I’d look at what Michigan just reported. I think our peers were 3 to 4x our promo to handle. I’d expect that to look similar in North Carolina.
Chad Beynon: Thank you, Tom. And then a follow-up to the last question, just in terms of the Vegas portfolio. So following the Versailles Tower and some of these F&B refreshers that you’re doing, I know there’s nothing else near-term, but how are you thinking about other, maybe transformative or kind of larger projects in Vegas? And how does the outcome of the Oakland A’s [ph] situation change, what you’re thinking from a timing standpoint? Thanks.
Tom Reeg: I would for the second question the outcome of the Oakland A’s [ph] situation doesn’t impact what we’ll be pursuing at all. What we’re doing this year in addition to finishing the Versailles connector, is work at Flamingo in terms of improving the strip frontage. There’s a number of outlets that are subpar and substandard in terms of what they generate relative to other similarly positioned spaces on the Strip. These are not huge dollar numbers, but they should help transform that property. Should be very high ROI, but you should be thinking about in Vegas, capital projects are $10 million $20 million, $25 million for a couple of things that we’re doing in a building, not $100 million like Versailles.
Chad Beynon: Thank you. Appreciate it.
Operator: Thank you. One moment for questions. Our next question comes from Daniel Guglielmo with Capital One Securities. You may proceed.
Daniel Guglielmo: Hello, everyone. Thank you for taking my questions. Just around labor at the properties. You guys have a good advantage of kind of the U.S. with the portfolio makeup has turnover. From a labor perspective, has it been similar this year to last year? Is there anything you’re seeing within the different regions that would be helpful?
Tom Reeg: Yes, I would say nothing particularly informative. The period post reopening after COVID was about as chaotic from an employment turnover standpoint as we’ve seen. That stabilized kind of in 2023, and it’s been stable for a little while now. So it feels more like pre-pandemic in that area than it had immediately post opening.
Daniel Guglielmo: Okay, great. Thank you. And then we’ve talked a lot about the capital flexibility in 2025 and just thinking about the VICI option for the Centaur [ph] properties outside of the share repurchases. And then I think you had said debt focus. Is there anything else you’re kind of gearing up forward looking at when thinking out two years?
Tom Reeg: No. Obviously, VICI has that option that expires at the end of 2024. They’ve indicated an intention to exercise it, and there’s regulatory process that they need to go through. And – you should not expect us to exercise our option, but we do anticipate that they’d like to exercise theirs.
Daniel Guglielmo: Thank you.
Operator: Thank you. One moment for questions. Our next question comes from Jordan Bender with Citizens JMP. You may proceed.
Jordan Bender: Great. Thanks for taking my question. With the new app, you mentioned a shift into more slot play and not that hold shouldn’t move much for iGaming. But is there any upside to iGaming hold as you shift away from some of the lower margin table play?
Tom Reeg: Yes, that’s been a big lift for us in iGaming. That table dominant player that we had is typically 100 to 150 basis points lower in hold than the slot dominant player that we find in Caesars Palace Online. So that’s helped us in our momentum as well.
Jordan Bender: Okay, and then just to follow-up, I assume you pick up the Wynn database in the state as well. How should we just think about that customer mix versus what you currently have in that state? Thank you.
Bret Yunker: Yes, we do pick up the database, and we’ll work closely with Wynn as we transition to move the customers over, so that they can trial our app. The database is different from ours, but in terms of the customers, but it’s very similar in terms of what we’re trying to accomplish with the apps that we’re launching. So it’s a slot –centric customer at a slightly higher end, and then from a table perspective, it’s also on a slightly higher end from what we normally have in our database. So we’re excited to introduce those customers to the product that we have.
