Jordan Bender

Jordan Bender asked for clarification on the weaker destination play across larger properties in the regions, specifically when this trend began. He also sought clarification on the 2.5x leverage target for 2026, asking if it referred to traditional or lease-adjusted leverage and if it was a year-end estimate.

Answer

President and CEO Keith Smith clarified that the regional destination weakness primarily refers to the IP in Biloxi, which has been impacted for the last six months, similar to Las Vegas. Smaller hotels in the Midwest and South are not significantly affected. CFO Josh Hirsberg clarified that the 2.5x was for *traditional* leverage, not lease-adjusted, and that lease-adjusted leverage would be 'just under 3.' He confirmed it was a 'year-end type of estimate for 2026.'

Jordan Bender asked for clarification on the timing and scope of weaker destination play in regional properties, specifically whether it's a newer trend or started with Las Vegas weakness last summer. He also sought clarification on the 2.5x leverage target for 2026, asking if it was traditional or lease-adjusted leverage and if it was a year-end target.

Answer

President and CEO Keith Smith clarified that the weaker destination play in regional properties primarily refers to IP Biloxi, which has been impacted for the last six months, similar to Las Vegas. Other regional hotels are not significantly affected. CFO Josh Hirsberg clarified that the 2.5x leverage target for 2026 was traditional leverage, not lease-adjusted, and was a year-end estimate, with lease-adjusted leverage expected to be just under 3x.

Jordan Bender asked for commentary on the low room rates in Las Vegas and the rationale behind increasing the quarterly share repurchase target to $150 million.

Answer

CEO Keith Smith acknowledged that Las Vegas room rates are lower than last year but stated Boyd will not chase rates down. EVP and CFO Josh Hirsberg explained the new $150 million repurchase target is a level they are comfortable setting as a market expectation, similar to the prior $100 million target, and it does not constrain other capital allocation decisions.

Jordan Bender asked about the underlying growth exit rate for the Las Vegas Locals market, the reasons for Boyd's outperformance, and the potential cost for the Par-A-Dice land-based casino project.

Answer

President and CEO Keith Smith attributed Boyd's outperformance to refreshed products, effective marketing, and operational discipline, estimating underlying market growth in the low single-digits. He stated the Par-A-Dice project cost would likely be similar to Treasure Chest's, around $100 million, though it is still in the design phase.

Jordan Bender asked for an outlook on the group and convention business for Las Vegas Locals properties heading into 2025 and requested a year-over-year comparison for the 49% EBITDA margin in the Las Vegas Locals segment (excluding Orleans and Gold Coast).

Answer

President and CEO Keith Smith stated he did not have enough visibility to provide a specific outlook on the 2025 group and convention business. EVP and CFO Josh Hirsberg provided the margin comparison, noting that the 49% margin in the current quarter compares to a 50% margin in the prior-year period for the same set of properties.

Jordan Bender asked for context on current Hawaiian travel levels compared to pre-pandemic years and inquired about the specific financial impact of weather during the quarter.

Answer

Executive Keith Smith explained that the strong Q1 growth in Hawaiian visitation was due to a favorable comparison against Q1 of last year, when airfares were temporarily inflated by the Super Bowl. He did not have specific comparison data for 2019 or 2021. Executive Josh Hirsberg quantified the negative weather impact on the business at approximately $5 million for the quarter.

Jordan Bender asked about the impact of 'bad game outcomes' in the NFL on variable revenue upside, given the increased fixed composition, and also inquired about the in-play mix remaining flat at 30% year-over-year and the long-term shift to in-play.

Answer

Mark Locke (CEO) explained that increased fixed composition from renegotiations provides more predictability and consistency, reducing week-to-week variability while retaining upside exposure. Regarding in-play, Mark Locke (CEO) noted it's early in the season and parlay mix matters, expecting growth over time, and highlighted BetVision's in-play mix at 70-75% for deeper engagement.

Jordan Bender asked if Genius Sports views its variable revenue upside differently given recent 'bad game outcomes' in the NFL and the shift to higher fixed contract composition. He also inquired about the in-play mix remaining flat at 30% year-over-year and the company's long-term outlook on the shift to in-play betting.

Answer

Mark Locke (CEO) (responded by Bryan Castellani) explained that the increased fixed composition in contracts reduces week-to-week variability while still exposing the company to upside, providing more predictability. Regarding in-play mix, Mark Locke (responded by Bryan Castellani) noted it's early in the NFL season and that the parlay mix matters, suggesting it's likely to grow over time.

Jordan Bender from Citizens Capital Markets and Advisory inquired about the potential positive impact of the ESPN and NFL partnership on Genius Sports' technology offerings and asked for elaboration on the long-term revenue potential of the Fanhub marketing platform.

Answer

Mark Locke (Co-Founder, CEO & Director) stated that the ESPN/NFL partnership is viewed as a positive development, expecting beneficial conversations around Genius's investments in BetVision, broadcast augmentation, and ad provisioning. Regarding Fanhub, he explained its revenue potential is tied to customer growth and advertising spend, projecting that the media business could, in the medium to long term, become larger than the betting business.

Jordan Bender asked about Genius Sports' capital allocation priorities, including M&A and the new share repurchase program, and questioned how the company balances revenue growth from the NCAA deal with the need to protect student-athletes.

Answer

CEO Mark Locke stated that the primary focus remains on tech investment and M&A, describing the share repurchase program as "good housekeeping" for opportunistic use in a volatile market. Regarding the NCAA, he framed the partnership as symbiotic, emphasizing that protecting game integrity and promoting responsible gambling is in the entire ecosystem's long-term interest and aligns with the goals of their sportsbook partners.

Jordan Bender asked about the investment and revenue recognition timeline for BetVision's global expansion. He also sought clarity on what new markets and cost increases were included in the 2025 guidance.

Answer

CFO Nicholas Taylor stated that direct revenue from the BetVision rollout is included in the 2025 guide, but the larger strategic upside is a future opportunity. He confirmed that all known variables, including the Brazil launch, potential new U.S. states, and contractual cost increases like Football DataCo, are fully baked into the 2025 forecast.

Jordan Bender asked about the legalization assumptions baked into the 20% medium-term revenue growth target and sought a more precise timeline for when Brazil's market might materially impact 2025 results.

Answer

CEO Mark Locke explained that their growth model uses a consensus view for legalization and market growth. Regarding Brazil, he reiterated his excitement but also his skepticism on the timing, advising a conservative outlook. He stated that while he believes Brazil will happen in 2025, he would not 'be banking on too early in 2025' for it to contribute meaningfully to the bottom line.

Jordan Bender inquired about Caesars' openness to potential asset sales in Las Vegas, considering current M&A market activity, leverage, and footprint, and also sought an update on the Caesars Forum Put Call agreement.

Answer

CEO Tom Reeg stated that the Caesars Forum Put Call option would likely be exercised by VICI towards the end of its period. He also clarified that while Caesars is not actively marketing a Vegas asset, they remain open to discussions if a strategic opportunity arises.

Jordan Bender inquired about the company's stance on potential asset sales in Las Vegas, given its leverage and footprint, and the status of the Caesars Forum Put-Call Agreement.

Answer

Tom Reeg, CEO, stated that the Caesars Forum put-call option would likely be called by VICI towards the end of the period, with Caesars choosing the lowest rent. He confirmed they are 'never closed' to M&A if it makes sense but are not actively marketing a Vegas asset.

Jordan Bender from Citizens Capital Markets and Advisory asked if the growing scale of the online business creates ambitions for international expansion. He also inquired about the remaining upside from the favorable tax structure in New Orleans.

Answer

CEO Tom Reeg and President of Caesars Sports & Online Gaming Eric Hession both indicated that while they wouldn't rule out international opportunities, the domestic market presents a far greater and less risky opportunity. Hession noted their product roadmap is full of high-return domestic projects. Regarding New Orleans, Reeg confirmed there is still opportunity left under the tax agreement and that the property's growth is a key part of the regional segment's positive outlook.

Jordan Bender asked about the potential for negative operating leverage in Las Vegas during a downturn and the timeline for improving the sports betting structural hold from the low 8% range to the 10% target.

Answer

CEO Tom Reeg explained that the primary lever in a downturn is managing room occupancy by tapping their extensive database, supplemented by adjusting operating hours for non-gaming amenities. President of Caesars Sports Eric Hession addressed the hold target, stating it requires technology enhancements, such as enabling player prop cash outs. He estimated reaching the 10% hold target by the latter part of 2026, contingent on the tech roadmap and customer behavior.

Jordan Bender asked if the levers to offset a tax increase are the same for iGaming as for sports betting, and whether the changing online customer mix affects the company's ~50% EBITDA flow-through assumption.

Answer

CEO Tom Reeg confirmed the levers are the same for both businesses, as reinvestment rates are adjusted based on the tax rate's impact on returns. President of Caesars Sports and Online Gaming Eric Hession clarified the customer mix change does not affect the flow-through assumption, as those adjustments occur above the net revenue line, from which the flow-through is calculated.

Jordan Bender asked for a breakdown of the online segment's revenue growth, questioning how much is driven by player growth versus higher ARPU, and how much potential remains in the omnichannel strategy. He also asked if the underperformance in regional hotel revenue was primarily due to the disruption in New Orleans.

Answer

Eric Hession, President of Caesars Sports and Online Gaming, explained that iCasino growth is driven by a rapid increase in users and volume, while sports betting growth comes from improved hold on relatively flat volume. CEO Tom Reeg confirmed that the underperformance in regional hotel revenue was indeed linked to the construction disruption at the New Orleans property, implying it should be recouped.

Jordan Bender inquired about the drivers behind the improved casino margins, specifically whether it's a function of mix, the Durango ramp, or expense management, and if these levels are sustainable. He also asked for the rationale behind the recent penny increase in the quarterly dividend.

Answer

Scott Kreeger, President, attributed improved casino margins to a post-COVID shift towards attracting high-end value customers through best-in-class high-limit rooms and amenities, alongside effective expense management. Stephen Cootey, EVP, CFO, and Treasurer, explained that the dividend increase reflects the board's recognition of the business's continued strength and long-term earnings power, with quarterly evaluations for future adjustments.

Jordan Bender asked about the sources of the strong operating leverage in the quarter, excluding Native American contributions, and inquired about any EBITDA impact from ongoing property renovations.

Answer

Stephen Cootey, EVP, CFO & Treasurer, attributed the strong flow-through to record performance in the casino segment, which had a flow-through rate north of 70%, complemented by record hotel revenue and near-record food and beverage results. He noted that renovation disruption was minimal in Q2 but expects roughly $15 million in impact over the next two quarters, primarily at Green Valley Ranch.

Jordan Bender asked about the structure of the North Fork financing with VICI and whether this partnership signals a change in view on using REITs for Red Rock's owned properties. He also asked for color on the significant 35% year-over-year drop in utility costs.

Answer

Executive Stephen Cootey clarified the VICI deal is a traditional loan, not a sale-leaseback, and praised VICI for providing best-in-class capital terms. Executive Scott Kreeger explained the utility cost reduction was market-driven and, while beneficial, is not predictable long-term. Cootey added the drop was mainly due to lower natural gas prices impacting electricity costs.

Jordan Bender of Citizens JMP Securities sought clarification on the timeline for backfilling revenue at the Red Rock property post-Durango's opening and asked about the comparative impact of the Super Bowl on Q1.

Answer

Executive Stephen Cootey affirmed that the revenue backfill at Red Rock is on track with the historical 2-3 year timeline. He also quantified that hosting the Super Bowl last year had a roughly $1 million positive impact on the hotel business. Executive Lorenzo Fertitta added that this year's game outcome was better for the company than last year's.

The analyst inquired about the revenue contribution from U.S. partnerships like Hard Rock and Caesars, the outlook for this segment to reach 15% of full-year revenue, clarification on future 'highly accretive growth opportunities', and any foreign exchange impact on the revised guidance.

Answer

The CFO stated that the company is still on a path for U.S. partnerships to represent 15% of the revised 2025 revenue target. He identified proprietary content as the primary 'highly accretive growth opportunity,' especially in the U.S. and other key markets. He also confirmed a slight, but not pervasive, FX impact on guidance from the weaker Euro.

Jordan Bender from Citizens inquired about how Flutter underwrites the risk of a significant capital outlay for prediction markets given potential political changes. He also asked if the new Illinois surcharge represents a company-wide policy for future tax hikes.

Answer

CEO Peter Jackson stated that Flutter considers Illinois an "outlier" and does not expect similar tax structures elsewhere, viewing the introduced fee as the fairest way to handle the situation. He declined to speculate on the specifics of assessing the prediction market opportunity.

Jordan Bender inquired if customer acquisition costs (CPAs) are falling equally across iGaming and sports betting and whether declining CPAs are the primary reason for increased investment.

Answer

CEO Peter Jackson stated that Q2 CPAs have decreased slightly year-over-year despite a significant increase in customer acquisition, and the company remains focused on acquiring customers that meet its return criteria. CFO Rob Coldrake clarified that the increased operating expenditure is driven by costs associated with the Beyond Play acquisition, higher payment processing fees, and investments in Flutter Edge capabilities and regulatory compliance.

Jordan Bender inquired if customer acquisition costs (CPAs) are falling equally across iGaming and sports betting and whether declining CPAs are the primary reason for increased investment.

Answer

CEO Peter Jackson noted that Q2 CPAs have decreased slightly year-over-year despite significant customer growth, emphasizing a consistent strategy to acquire customers as long as return criteria are met. CFO Rob Coldrake added that increased operating expenses are also driven by the Beyond Play acquisition, higher payment processing costs, and previously disclosed investments in the Flutter Edge and regulatory compliance.

Jordan Bender asked if the significant iGaming market share gains were driven by higher promotions or product and cross-sell improvements, and sought confirmation that the unchanged U.S. guidance was due to outperformance in North Carolina offsetting sports result headwinds.

Answer

CEO Peter Jackson emphasized that iGaming growth is driven by acquiring customers as long as they meet return criteria, supported by a strong product, sophisticated generosity, and cross-sell from the sports business. CFO Paul Edgecliffe-Johnson confirmed the guidance is maintained due to the very successful North Carolina launch, strong overall market share, and a positive outlook for the rest of the year.

Jordan Bender from Citizens JMP questioned whether U.S. iGaming market share gains were driven more by product innovation or increased promotional activity, and asked for clarification on why full-year guidance was maintained despite a $76 million headwind from sports results.

Answer

CEO Peter Jackson emphasized that iGaming growth is driven by acquiring customers as long as they meet return criteria, supported by sophisticated generosity application, strong product, and cross-sell from sports. CFO Paul Edgecliffe-Johnson confirmed guidance was maintained due to the very successful North Carolina launch, strong overall U.S. market share, and positive momentum heading into Q2.

Jordan Bender inquired about the growth drivers in Canada and whether the properties were benefiting from reduced Canadian travel to Las Vegas. He also asked for quantification of the potential financial impact from the BetMGM sports betting agreement in Missouri.

Answer

Erwin Haitzmann, Chairman & Co-CEO, noted it's difficult to measure the 'Vegas effect' but confirmed that Canadian properties now have a larger reach, attracting customers from further away. Peter Hoetzinger, Vice Chairman, Co-CEO & President, stated that the financial impact from the Missouri sports betting deal will be slightly less than the nearly $1 million per license seen in Colorado, without providing further detail.

Jordan Bender asked for clarification on why year-end leverage targets had increased despite positive business trends reported for March and April. He also inquired about plans to monetize the company's casino database in Alberta as the province moves toward legalizing online gaming.

Answer

Co-CEO Peter Hoetzinger explained the more cautious leverage outlook is due to general economic uncertainty, stating that the recent positive trend is too short a timeframe to project for the full year. Regarding Alberta, Co-CEO Erwin Haitzmann noted the primary opportunity they see is partnering with the Alberta Gaming Commission to share their database, mainly for sports betting.

Jordan Bender asked about the primary drivers for the weaker 2025 outlook, questioning if the low-end consumer was the main factor, and also requested an update on the 50% real estate ownership at the Nugget.

Answer

Co-CEO Peter Hoetzinger confirmed that weakness among low-end consumers is the sole reason for the softer outlook, particularly impacting properties like Rocky Gap and Mountaineer. He stated there were no new updates regarding the Nugget real estate.

Jordan Bender inquired about the status of the two casino licenses in Poland that were not renewed and whether this development alters the company's strategy to sell its Polish assets.

Answer

Executive Co-CEO Peter Hoetzinger clarified that the two un-relicensed casinos were smaller and their closure does not have a meaningful impact on the segment's expected annual EBITDAR run-rate of $10 million to $12 million. He confirmed that this situation does not change the company's plans to sell the Polish operations, as interested investors are focused on the core, intact properties.

Jordan Bender from Citizens Capital Markets and Advisory asked about the strategy for cross-selling players into the standalone iCasino app and whether the timing of Alberta's launch would affect 2026 profitability targets.

Answer

CEO Jay Snowden explained that the Hollywood Casino brand is more effective for attracting retail slot players to iCasino than the ESPN Bet brand was, leading to high incrementality. EVP Todd George noted the Hollywood Greektown rebrand aided this effort. CTO Aaron LaBerge confirmed sportsbook cross-sell also remains healthy. Snowden stated the 2026 profitability target for the interactive segment already accounts for the expected launch in Alberta.

Jordan Bender asked about the 'low-hanging fruit' in the ESPN partnership that could drive customer growth and retention. He also questioned if PENN would consider a strategic move for its online business before the 2026 contract opt-out, given the stock's valuation.

Answer

CEO Jay Snowden and CTO Aaron LaBerge identified the upcoming ESPN DTC streaming launch and deep product integrations as key near-term catalysts. LaBerge emphasized that the integrated fantasy football experience will be a major differentiator. Regarding strategy, Snowden reiterated that the contract has a 2026 opt-out clause for both parties if certain thresholds aren't met. He stated the current focus is on execution, and the best path forward will become clearer over the next few quarters.

Jordan Bender of Citizens JMP asked for clarification on the drivers of the wide interactive guidance range and for any quantifiable impacts from the ESPN-branded retail sportsbooks on digital acquisition.

Answer

CFO Felicia Kantor Hendrix explained the guidance range is sensitive to market share, with the low and high ends driven by a +/- 100 basis point variance for ESPN BET share and +/- 50 basis points for iCasino share. Head of Operations Todd George highlighted the Super Bowl as a successful event for sign-ups and cross-play. CEO Jay Snowden emphasized that the omnichannel strategy has successfully lowered the average age of their active database from 53 to 44.

Jordan Bender of Citizens JMP asked for a breakdown of new digital database members since the ESPN BET launch by acquisition channel (ESPN vs. other). He also inquired if there is a difference in churn rates between these customer cohorts.

Answer

CEO Jay Snowden stated that while they haven't provided a detailed breakdown, the majority of new users since the launch have come from the ESPN ecosystem. He confirmed that retention is stronger for customers acquired through ESPN, and this is enhanced by features like account linking. The focus remains on reactivating dormant users and optimizing CPAs from other digital channels.

Jordan Bender of Citizens Capital Markets and Advisory asked about the year-over-year decline in pre-game handle and inquired about any observed changes in customer betting patterns or wallet share related to the growth in in-play betting.

Answer

Co-Founder & CEO Jason Robins explained that handle is not viewed in isolation and can be lighter in a quarter with strong hold and efficient promotion. He emphasized the strong growth in in-play betting, with handle up 16% year-over-year, and positioned it as the primary source of handle growth for the industry in the coming years. He highlighted DraftKings' leadership in this area with superior uptime and a wider offering.

Jordan Bender of Citizens JMP asked about the trend in pre-game handle, which was down year-over-year, and whether it's expected to grow. He also inquired about changes in customer betting patterns and wallet share as a result of the increasing focus on in-play betting.

Answer

Co-Founder & CEO Jason Robins explained that handle is not viewed in isolation, as lower handle can be a result of higher hold and more efficient promotions. He emphasized the strong growth in in-play betting, with handle up 16% YoY, and positioned it as the key growth driver for the industry, where DraftKings holds a leading position.

Jordan Bender inquired about DraftKings' thoughts on large-scale global M&A and its broader ambitions for international expansion. He also asked for clarification on whether the H2 hold guidance implied a slowdown in year-over-year growth.

Answer

CEO Jason Robins reiterated that while DraftKings has long-term global ambitions, the immediate focus is on the high-growth U.S. market, setting a very high bar for any international M&A. He also clarified that the H2 guidance does not imply a slowdown, stating that the company expects to see continued structural hold increases in the back half of the year.

Jordan Bender of Citizens JMP questioned why the 2025 adjusted gross margin guidance is the same as the original 2024 range, considering various positive and negative factors.

Answer

CEO Jason Robins attributed the margin pressure primarily to higher-than-expected new user growth, which increases promotional spending. However, he pointed to the 300 basis point year-over-year improvement in Q3 gross margin as evidence that the metric is trending in the right direction as the business scales.

Jordan Bender from Citizens Capital Markets and Advisory inquired about the potential ceiling for sportsbook margins given parlay penetration and asked about the strategic benefits of implementing crypto payments, including customer acquisition and cost structure improvements.

Answer

CEO Neal Menashe suggested that with parlay products, sportsbook margins could approach 20%, balanced with single bets. Regarding cryptocurrency, he highlighted its potential to significantly reduce high payment processing costs, particularly in Africa, and attract a new customer demographic. He noted that improvements in processing efficiency would translate directly to bottom-line profit.

Jordan Bender sought clarification on the mention of "new revenue streams," asking if this referred to ongoing initiatives or potential new verticals. He also questioned the significant improvement in Q2 free cash flow conversion despite prior guidance for a decline.

Answer

CEO Carsten Koerl clarified that new revenue streams refer to existing strategic initiatives like their iGaming platform and AI-driven content distribution to media partners, not entirely new verticals. CFO Craig Felenstein explained that quarterly free cash flow can fluctuate due to the timing of large sports rights payments, which caused the Q2 outperformance, but the full-year outlook for conversion growth remains consistent.

Jordan Bender asked about the potential for M&A to accelerate scale in the iGaming content business and inquired about the specific levers that will drive the step-up in incremental margins from 40% to 50% in 2025 and beyond.

Answer

CEO Carsten Koerl noted excitement for iGaming, using Brazil as a test market before scaling. CFO Craig Felenstein added that any M&A must be accretive to their high-growth model. Regarding margins, Felenstein cited continued strong revenue growth over a manageable and highly visible cost base as the key lever for future margin expansion.

Jordan Bender sought to clarify if the financial projections for the IMG deal assume the exiting of any contracts from the acquired portfolio. He also asked for a reconciliation of the strong Q4 growth rate with the lower guided growth rate for the full year 2025.

Answer

CFO Craig Felenstein stated definitively that the financial assumptions do not involve exiting any of the acquired rights contracts. He explained that the 2025 growth guidance of ~15% is lower than the Q4 rate because 2024's growth was significantly boosted by the initial step-up from the new NBA and ATP deals. The 2025 growth is based on outperforming the market by increasing wallet share and expanding into adjacent markets.

Jordan Bender asked for more granular detail on the expected revenue and cost synergies from the XLMedia acquisition. He also inquired about the key factors that will determine whether the company reaches the lower or upper end of its long-term 25-30% EBITDA margin target.

Answer

CEO Carsten Koerl explained the XLMedia acquisition adds a valuable U.S. affiliate business to its 360-degree marketing proposition. CFO Craig Felenstein noted the 2024 financial impact will be minimal, with 2025 benefits dependent on integration. Felenstein also stated that reaching the higher end of the long-term margin target will be driven by the strength of revenue growth and continued effective management of the overall cost base.

Jordan Bender of Citizens Capital Markets and Advisory asked about the company's use of cash, contrasting share repurchases with investments in M&A or new markets, and questioned how the Colombian market might look after the temporary VAT tax expires.

Answer

CFO Kyle Sauers explained that capital allocation prioritizes new market launches, especially for iCasino, over programmatic share buybacks, which remain opportunistic. CEO Richard Schwartz added that they are committed to returning capital but want to preserve dry powder for future iCasino opportunities. Regarding Colombia, Schwartz stated that since RSI is absorbing the tax, the player experience is unchanged, and they expect business as usual post-tax, but with higher ARTMAU from reduced bonusing.

Jordan Bender asked about the operational learnings from the Colombian VAT tax situation and what adjustments RSI could make to improve Net Gaming Revenue (NGR). He also questioned the impact of Pennsylvania joining the Multi-State Internet Gaming Agreement (MSIGA) on RSI's poker strategy and cross-sell opportunities.

Answer

Executive Kyle Sauers explained that RSI is adjusting by trying to reduce deposit turnover and has slightly lowered marketing spend in Colombia, while monitoring competitors. CEO Richard Schwartz stated that the company's poker platform was built to be ready for multi-state liquidity. He emphasized that poker is treated as an amenity to cross-sell players to the higher-value casino and sportsbook verticals.

Jordan Bender questioned why the implied EBITDA flow-through for 2025 is lower than what was achieved in 2024. He also asked if RSI is reconsidering entry into any online sportsbook-only states as the competitive promotional environment eases.

Answer

Executive Kyle Sauers explained the lower flow-through is primarily because 2024 benefited from an absolute decrease in marketing dollars, whereas 2025 plans include an increase in marketing spend. CEO Richard Schwartz addressed market entry, stating that RSI is unlikely to enter OSB-only states unless the long-term strategic outlook, such as the potential for future iCasino legalization, changes, as the company has better opportunities to pursue elsewhere.

Jordan Bender from Citizens JMP followed up on the Delaware discussion, asking if any market dynamics or the single-operator model could prevent the market from doubling in size. He also asked for the specific EBITDA impact from the $10 million Q3 revenue tailwind.

Answer

Executive Kyle Sauers clarified that his projection for Delaware's potential was based on a mathematical comparison to other iCasino markets and was not a formal target, but it illustrates significant remaining opportunity. He stated there's no specific dynamic preventing growth, as the product is resonating well. Regarding the tailwind, Sauers estimated the incremental EBITDA impact was closer to $5-6 million, not $7-8 million, due to varying margins across markets.

Jordan Bender from Citizens Capital Markets and Advisory asked for the company's perspective on the rise of prediction markets and their potential impact on horse racing, given existing legal protections.

Answer

CEO William Carstanjen responded that while he follows the topic closely, prediction markets are not a significant concern for horse racing. He explained that the pari-mutuel wagering structure is not an attractive target for such platforms and, crucially, the Interstate Horse Racing Act provides intellectual property protection, requiring racetrack approval for any wagering on their races.

Jordan Bender asked for details on the implementation of electronic table games (ETGs), including the scope and potential tax implications, and also sought clarification on whether the 'comparable' Derby performance refers to revenue or EBITDA.

Answer

CEO William C. Carstanjen explained that the rollout of ETGs is primarily a regulatory and taxation challenge, not a technological one, and will be approached slowly and conservatively. He noted that tax rate discussions with legislators are a critical step. Regarding the Derby, he clarified that when he says 'comparable' to last year, he is primarily referring to adjusted EBITDA, though he expects performance to be similar across all key financial metrics.

Jordan Bender from Citizens JMP Securities asked how the company's regional gaming business fits into its future investment strategy, given the heavy capital focus on HRMs and the Kentucky Derby.

Answer

CEO William C. Carstanjen responded that the company does not view regional gaming monolithically but assesses each property and market individually. He stressed that the company's focus is on growth, and capital is directed toward opportunities with long-term growth potential. All properties are continuously evaluated on their ability to contribute to this goal.

Jordan Bender inquired about the balance sheet, asking if reaching the target leverage range would enable larger growth projects, especially with a major multiyear track project announced.

Answer

CEO William C. Carstanjen affirmed that as the company has grown, its capacity to execute larger projects has increased. He expressed confidence in funding the new Derby projects, noting that strong cash flow from recently completed investments will allow for rapid deleveraging. This, in turn, provides more 'firepower' for capital deployment on new, large-scale opportunities, always with a focus on total shareholder return.

Jordan Bender of Citizens JMP Securities asked if the renewed focus on deleveraging was primarily a function of the new debt agreement's favorable terms. He also inquired about the adoption rate of Virtual Sports in Brazil and any potential revenue targets for the market.

Answer

Executive A. Weil clarified that the deleveraging strategy was always implicit due to the growth of the capital-light digital business, but the new debt terms, which were negotiated with deleveraging in mind, provide a direct incentive. Executive Brooks Pierce added that while they have the top two customers in Brazil, they need to sign the other half of the market. He noted that localized content is performing well and they remain very bullish on Brazil's long-term potential.

Jordan Bender asked for an update on the status of the U.K. white paper and its potential impact on the business in 2025, and also questioned if the previous Q1 cash balance guidance of $50 million to $55 million was still accurate.

Answer

Executive Brooks Pierce stated that the impact from new stakes limits is factored into forecasts and is expected to be minimal, while the company hopes for a liberalization of B3 cabinet restrictions. CFO Eric Carrera and Brooks Pierce clarified that the Q1 cash balance will likely be lower than previously guided due to delays in collecting receivables and an acceleration of certain supplier payments.

Jordan Bender of Citizens JMP sought details on the Hybrid Dealer product, asking about the customer profile and the key data points used to demonstrate its value to new operators. He followed up by asking if the company would consider using debt to finance share buybacks.

Answer

Executive Brooks Pierce explained that early data for Hybrid Dealer shows strong growth in active and repeat players, indicating high engagement. Key metrics tracked are GGR, active players, and repeat players. On the follow-up, Executive A. Weil stated definitively that the company would not incur incremental debt to buy back stock.

Inquired about the potential impact of tariffs on construction material prices for the American Place project and whether the company is hedging this risk. Also asked about recent reports of M&A activity and the company's current stance on acquisitions.

Answer

The company is not actively hedging against material price increases but is incorporating worst-case assumptions into their $325 million budget, drawing on experience from the Chamonix build. Regarding M&A, the company is not actively looking for acquisitions, stating that their focus is on executing their current high-upside projects (American Place, Chamonix, Rising Sun relocation), which they believe offer a better return for shareholders than most available deals.

Jordan Bender inquired about the growth and expense outlook for 2025 across the legacy portfolio, specifically excluding the newer Illinois and Colorado properties.

Answer

Executive Daniel Lee provided a property-by-property outlook, stating he hopes the Silver Slipper can improve EBITDA to the high-teens or $20M with its new GM. He described Tahoe's performance as consistent, with future growth dependent on the hotel owner's renovation plans. For Rising Star, the focus is on maintaining profitability while pursuing the long-term upside of a potential relocation to Fort Wayne. Executive Lewis Fanger added that American Place EBITDA is expected to continue growing in 2025.

Jordan Bender asked for an outlook on the Colorado property heading into its busy season, inquiring about revenue trends for April and May and the expense outlook for Q2 after the property reported a loss in Q1.

Answer

CEO Daniel Lee stated that Q2 is seasonally stronger than Q1 and he expects the Colorado property to be profitable. He detailed significant cost-cutting measures after discovering operational inefficiencies and making wholesale management changes. Lee expressed long-term confidence, drawing parallels to the successful openings of major Las Vegas resorts. He also provided a detailed update on the permanent American Place project in Illinois, covering design, construction management, and financing plans. Executive Lewis Fanger added that the bond market, a key financing source, has shown signs of recovery.

Jordan Bender of J.P. Morgan inquired about the conditions that would trigger an increase in capital expenditures for the AMC GO! plan and asked for management's perspective on the evolving dynamic between theatrical releases and streaming services, specifically referencing the IMAX deal for 'Narnia'.

Answer

CEO Adam Aron clarified that capital expenditures will remain constrained around $200 million annually until the company secures dedicated growth capital, assuring that any significant increase would be communicated in advance. Regarding streaming, Aron expressed optimism about partners like Apple and Amazon who are increasingly embracing theatrical releases. He views deals like the one for 'Narnia' as encouraging signs and believes a successful theatrical run enhances a film's value on streaming platforms, suggesting the two models can coexist and mutually benefit.

Jordan Bender asked about The STRAT's positioning to capture an expected uplift in group and convention business, and also inquired about 2025 operating expense growth for the tavern segment.

Answer

President and CFO Charles Protell stated that The STRAT's occupancy gap compared to 2019 is primarily midweek, which will benefit from convention overflow as citywide business returns. He also noted that tavern operating expenses should improve as six recently acquired and revamped locations ramp up through 2025. For the broader company, CEO Blake Sartini added that cost control is a major initiative, while Protell noted that labor inflation is expected to moderate to mid-single digits.

Jordan Bender from Citizens JMP questioned the potential for developing the excess land near the STRAT to drive foot traffic and inquired about the company's future dividend policy and potential for increases.

Answer

Blake Sartini, Founder, Chairman and CEO, expressed long-term bullishness on the adjacent Atomic Golf and mentioned active inquiries for the 5.5 acres of developable land across the street. Charles Protell, President and CFO, added they are also developing experiential attractions within the STRAT's mezzanine level. Regarding the dividend, Protell stated it's viewed as a constant piece of cash flow, and the company will re-evaluate it at its one-year anniversary with an eye toward potential increases based on cash flow projections and share buybacks.

Jordan Bender asked if lower gas prices have recently improved drive-in traffic to Laughlin and the STRAT. He also questioned the company's long-term strategy regarding adding scale back to the business after past divestitures.

Answer

President & CFO Charles Protell responded that lower gas prices help discretionary spending but noted that Laughlin's traffic is more driven by its event calendar, where the company has focused on more profitable, smaller events. Regarding scale, Protell explained that while the platform is capable of adding assets, no current opportunities are attractive enough in value to divert focus from share repurchases and internal investment.

Asked for clarification on the Casinos & Resorts margin guidance for 2024, specifically the cadence through the year given the Tropicana closure and Chicago ramp. Also questioned if the company would consider exiting any sports betting-only markets in North America.

Answer

The 2024 guidance incorporates the Tropicana closure and Q1 weather impacts. Margins could also be affected by a cautious outlook on lower-tier database customers. The company has no intention of exiting any North American sports betting markets, viewing them as a crucial funnel for the more profitable iGaming business.