Caesars Entertainment, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the CSARS Entertainment Inc. 2021 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. I would like to turn the call over to your moderator today, Brian Agnew. Senior Vice President of Finance, Treasury, and Investor Relations. Sir, you may begin.

Thank you, Wren, and good afternoon to everyone on the call. Welcome to our conference call to discuss our third quarter 2021 earnings. This afternoon, we issued a press release announcing our financial results for the period ended September 30, 2021. A copy of the press release is available in the Investor Relations section of our website at investor.caesars.com. As usual, joining me on the call today are Tom Rigg, our Chief Executive Officer, Anthony Carano, our President and Chief Operating Officer, and Brett Yunker, our Chief Financial Officer. Before I turn the call over to Anthony, I would like to remind you that during today's conference call, we may make certain forward-looking statements about the company's performance. Such forward-looking statements are not guarantees of future performance, and therefore, one should not place undue reliance on them. Forward-looking statements are also subject to the inherent risks and uncertainties that could cause actual results to differ materially from those expressed. For additional information concerning factors that could cause actual results to differ from those discussed in our forward-looking statements, you should refer to the cautionary statements contained in our press release, as well as the risk factors contained in the company's filings with the Securities and Exchange Commission. Caesars Entertainment undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances that occur after today's call. Also, during today's call, the company may discuss certain non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measure is most directly comparable to each non-GAAP financial measure discussed, and the reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found on the company's website at investor.caesars.com by selecting the press release regarding the company's 2021 third quarter financial results. I will now turn the call over to Anthony.

Thank you, Brian, and good afternoon to everyone on the call. The third quarter of 21 was another strong quarter. We delivered $1.04 billion of adjusted EBITDA in the quarter, excluding Caesars Digital, which represented a quarterly record for our brick-and-mortar properties. 31 of our 51 properties set a record for the highest third quarter EBITDA, while 32 set a record for the highest Q3 EBITDA margin. Starting with Las Vegas, demand trends remained exceptionally strong through the quarter, leading to an all-time quarterly record of $500 million in adjusted EBITDA in our Las Vegas segment. Excluding real rent payments, EBITDA improved 44% versus the third quarter of 2019, and margins improved 1,400 basis points to 50%. Total occupancy for Q3 was 89%, with weekend occupancy at 97% and midweek occupancy 86%. Looking ahead, we remain encouraged by booking trends into 2022 and beyond. While group attrition remains higher than normal, we began to see conventions return to Las Vegas in the third quarter, and the segment represented approximately 10% of occupied room nights, a dramatic improvement versus the first half of 2021. We continue to expect to see a gradual recovery in the segment leading into next year, and we are encouraged as group and convention revenues on the books for 2022 continue to pace nicely ahead of 2019. Demand for the Caesars Forum is exceeding the original underwriting expectations with over 175 events booked currently representing 1.8 million room nights and over 650 million of revenues for all future periods. 76% of this business is new to Caesars. Turning to our regional markets, operating results remain strong, especially in markets not impacted by severe natural disaster events. Adjusted EBITDA excluded New Orleans, Lake Tahoe, and Lake Charles increased 35% versus 2019, with margins improving by 860 bits to 38%. On a same-store sales basis, we achieved the highest third-quarter EBITDA and EBITDA margin in the regional segment in the history of the company. In our Caesars digital segment, we generated over $3 billion of volume, $96 million of net revenue, and an adjusted EBITDA loss of $164 million. Sports betting and iCasino handle was split roughly 55-45. 90% of our handle was from mobile sports betting and iCasino. We're laser-focused on scaling our digital business through aggressive customer acquisition during our first fall sports season, post-launch of our Caesars-branded apps in nine states. While customer acquisition and handle exceeded our internal expectations, net revenues were negatively impacted by directed promotional investment in odds and profit boosts, competitive pricing strategies, and lower than historical hold in certain markets. We are pleased that our sports betting handle share in the eight states operating on Liberty platform has increased to 12% through September. Arizona has not reported and is therefore not included in these stats. Our national market share through September, including all legalized sports betting states, sits at 17%. Following the exciting launch of retail sports betting in Louisiana on Sunday, we now offer sports betting in 20 jurisdictions, 14 of which are mobile. Importantly, we expect to complete the migration of our legacy apps in Washington, D.C., Nevada, Pennsylvania, and Illinois to our Liberty platform in 2022. We are also excited to be rolling out enhanced iCasino offerings in the fourth quarter following anticipated regulatory approvals related to the release of new games in New Jersey, Michigan, and West Virginia. Our expanded game portfolio will be accompanied by significant improvements to our in-app marketing technologies. On the development front, we are making great progress on our new land-based facility in Lake Charles. This significantly upgraded property should be completed and ready for business in the fourth quarter of 22. In New Orleans, construction work has started on our new hotel tower and property upgrades. In Las Vegas, the remodeling of the entrance to Caesar's Palace is making great progress, and we look forward to a dramatically improved arrival experience sometime in Q1 of 22. In Indiana, we are well underway with our casino expansion at Indiana Grand, which should be finished by January of 22. And finally, in Atlantic City, our $400 million capital plan is actively moving forward with remodeling room towers and setting the stage for exciting new food and beverage and entertainment options. As we look to 2022, we see several tailwinds in our business, and we remain optimistic about further visitation gains as consumers return to our property once COVID fears have fully subsided. We remain confident in the eventual return of the convention customer to Las Vegas and our destination markets. Lastly, we are excited to rebrand a handful of our properties in 2022 using flagship brands from the Caesars portfolio to even further elevate the customer experience. I am extremely proud of our operating teams, their execution, and their exceptional guest service during this third quarter. With that, I will now turn the call over to Tom for some additional insights on the quarter.

Thanks, Anthony. Good afternoon, everybody. We pre-released for our bond deal earlier in the quarter, so you had two months of brick-and-mortar operations effectively, so I'm going to be lighter on Tom and Son. brick-and-mortar and go a little deeper into digital. On the brick-and-mortar side, if Ida didn't hit New Orleans and we didn't have the Kaldor fire in Tahoe, we would have done a billion one of brick-and-mortar EBITDA in the quarter. We had an extremely strong quarter. Demand remains particularly robust. In regards to New Orleans and Tahoe, Tahoe has pretty quickly recovered back to above 2019 levels, not quite as strong as it was pre-fire, but continuing to build. In New Orleans, recall that we have Significant operating leverage there that works in both directions. You've got a minimum guaranteed tax payment to the state and the city in Louisiana. So New Orleans EBITDA continues to trail 19, although it is continuing to recover as well. Going into the storm, we were doing $11, $12 million a month in EBITDA out of New Orleans, and now we're more like five or six in buildings. Vegas had a record quarter beating the record of the second quarter, so 424 went to 500 of EBITDA, 511 adding back the real rent payment. As Anthony said, we were 50% margin again. That was in spite of us imposing occupancy caps midweek so that we could calibrate supply with our housekeeping services. We are struggling across the country to hire guest room attendants. Vegas is no exception. So even with the operating caps, we set a quarterly EBITDA record. In October, Vegas had the strongest EBITDA month in the history of Caesars. So the strength has continued into October, regionals as well. We're still pacing up in the neighborhood of 40% over 19%. So feel very good about the setup going into 22%. Customer demand remains strong. Obviously, the virus numbers have subsided considerably over the past six to eight weeks, and we're seeing some pickup in demand as that rolls through. For digital, I spoke to digital in the second quarter call in terms of what you should expect from us. We anticipated investing in the terms of cumulative EBITDA losses north of a billion dollars into the digital segment and generating cash-on-cash EBITDA returns at maturity north of 50%. And what we saw in terms of opportunity for us was the ability to activate our 50-plus properties, our 50,000-plus employees, and most importantly, our 65 million strong Caesars Rewards database. And that's what we set out to do. So as I go through these numbers, I'm going to talk about how I look at this business in terms of measuring what we're doing versus expectations. I would, even though we're extremely encouraged, the numbers that I'm going to be talking about are ahead of our internal expectations as we launch this. It's very early, and this is a long game, so we expect it to not be a straight line. But what we anticipated was in states where we offered our Liberty technology, where we were starting on equal footing, and where we had existing strong database, that those would be our most effective markets. And that describes Arizona to a T, which launched during the quarter, has not published results yet, but we think that the results will show us in excess of the handle numbers, percentage numbers that Anthony described earlier. In the Liberty States in total, and I'm looking at handle because in the current customer acquisition environment, hold is volatile not just because of the results of the sporting events but because of the boosts and the promotions that you offer. So when I talk about share, I'm talking about handle share. So in our Liberty States, Handle share has almost doubled since launch. That's in the sixes to about 12% mobile market share. That's without Arizona. As I said, I'd expect that to exceed the average and bring it higher. Arizona is our third strongest state behind Arizona. Nevada, and Iowa, where we have incumbent advantages, and that reflects exactly what we expected. States where we launched but we were late to the game but did have liberty, we're seeing continued build in market share on the order of 200 to 500 basis points depending on the market since we launched. Importantly, if you're looking at analysis that looks at market share across the entire U.S. market, realize that we are not competing for the time being in Pennsylvania and Illinois, which are two of the biggest markets out there. When we launched, the Liberty platform was not approved in either state. It will be approved in the first half of 2022 is our expectation. But we didn't want to spend money guiding customers to an experience that would not be what we wanted to offer them. And so you see our share in those markets sucks, for lack of a better term. If you look at where our customers are coming from, when you're spending like we're spending on advertising and promotion, you're going to get lots and lots of customers that show up at your door. A lot of them are not going to be worth a lot of value. If you look at our customer by count, Caesars Rewards customers are are somewhere around a third of our total new deposits since we relaunched. By handle, Caesars Rewards customers are about half of our handle since relaunch. So validating that we think Caesars built a system over two decades that identified the valuable customers that everyone is out there searching for, we're seeing that in our experience, and that's extremely encouraging as we look to the future. The performance in Arizona also encouraging as we look to states like Louisiana, which just launched retail. Sunday will launch mobile in the near future. Maryland will come online soon as well. These are states where we're in a similar position to where we were in Arizona, so we'd expect to perform well. When we give you Our 17% total market share, that's everything. That's the states we're not doing well in, like Pennsylvania and Illinois, that are not Liberty States, but also includes Nevada, which is not a Liberty State, where we have tremendous market share. We're not adding fantasy numbers in there. We're not adding a horse racing business in there. We're showing you pure sports betting handle. And if you think about what we're doing, what we did in sports in the quarter, our handle for the third quarter was a little over $1.7 billion for the full quarter. In October alone, we did over $1.3 billion of handle. So we think we're continuing to generate momentum. And when I talked about the return on investment, obviously we had a model that showed where we expected to get in market share and the pace at which we expected to get there. So you can see from the EBITDA loss that it's relatively in line with what we were telling people to expect, but our ramp in market share has exceeded our expectations in terms of its pace. Now, the question to that is, does that mean there's a bigger market share number down the road? And the candid answer is we don't know right now, but what we do know is we're gaining share – at a pace stronger than we expected given the investment that we've made. So encouraging results from sports. In iCasino, if you want to think about somewhere where we have tracked a little bit below plan, we inherited a platform in iCasino that was noncompetitive from a game offering standpoint. Again, we've not spent money advertising and promoting our iCasino business until we get the approvals we need to offer a broader array of games that's competitive with our peers that are out there. We expect that will take place. before the end of this year. And so then we can talk with, frankly, more relevance as to what's happening in iCasino. We continue to perform strongly in New Jersey and iCasino, but we have not pushed a launch in iCasino beyond New Jersey today. So in summary, we're extremely encouraged, both brick and mortar. And one thing I should say about wrapping this digital business into the physical enterprise, the employees that have leaned, just done an outstanding job of leaning into this launch for us, and Caesars Rewards activating the database, This is not something where you just flip a switch. This is going to continue to build momentum as the quarters pile up. I think we've done a good job of getting our message out there, getting our brand out there, and we're encouraged to see the customers respond. And with that, I'll flip to Brent.

Thanks, Tom. We had an active third quarter of M&A and capital markets activity. On September 9th, we announced an agreement to sell the non-U.S. assets of William Hill to 888 Holdings for 2.2 billion pounds. Following repayment of debt, we will receive net proceeds of approximately 1.2 billion U.S. dollars. We expect this transaction will close during the first quarter of 2022. On September 10th, we priced 1.2 billion of new unsecured notes at a 4.58% coupon. and we repriced $1.8 billion of CRC Term Loan B at LIBOR plus $350, a decrease of 100 bps. Proceeds from the new notes, alongside $500 million of cash on hand, were used to fully retire $1.7 billion of existing CRC notes. In late September and October, we continued to use excess cash on hand to permanently repay debt through $100 million of open market purchases of our existing 8 and an 8th notes. Aggregate year-to-date debt reduction is approaching $1 billion, which has resulted in approximately $75 million of annualized interest expense savings. Net proceeds from the sale of William Hill's non-US business will be applied to debt reduction in the first half of 2022, yielding further interest expense savings and enhanced free cash flow. Our 2021 calendar year CapEx spend excluding Atlantic City, is now 350 to 400 million, which includes approximately 75 million for Caesars Digital. This is simply a shift in timing of planned CapEx from 2021 to 2022, driven in part by the hurricane that impacted our New Orleans expansion and COVID-related supply shortage. With that, I'll turn it back to Tom.

Thanks, Brett. And to talk a little bit about 22, when we closed the Caesars transaction in Obviously, we closed into an uncertain environment with a highly leveraged capital structure, and we needed to bridge. to the point where we'd be generating a lot of free cash flow to pay down that debt. You heard Brett talk about the beginnings of that in 21. 22 is going to be a massive cash flow generation, cash generation and deployment year for the company. As Brett said, we've got the William Hill asset sale settling. Between the William Hill non-U.S. business, the Neo Games sale, we've got about a billion and a half of proceeds to deploy, the bulk of which will be coming in 22. We're generating in the brick-and-mortar business. something in the neighborhood of $2 billion a year of free cash flow right now. And so if you're looking from now until from end of third quarter to end of 22, you're well over $2 billion of cash there. We also think this is an opportune time to execute on our strategy of a strip asset sale. So you should expect us to put that in motion. in the early part of 22. And if you look at all of that, and as Brett said, you should expect us to be aggressive on the refinancing front in 22 as well, which should dramatically lower our cost of debt. And so if you add all of those up, we should have well in excess of $5 billion of cash to deploy in 22. Some of that will be spent in the digital business. Some of that will be spent on capital projects that drive ROI in the portfolio. But the vast majority of that cash is going to go to pay down debt, where we can be in a position to be pushing almost half of our conventional debt off the balance sheet and ultimately reducing our cash interest expense by the end of 22, to $300 million or $400 million a year less than it was when we closed the transaction. So we are extraordinarily excited for what's to come in 22, very happy with the results that we're reporting to you today, and happy to answer any questions that you have. Operator, can we open the line for questions?

Ladies and gentlemen, if you have a question at this time, please press star, then the number one on your touchstone telephone. If you wish to remove yourself from the queue, you may press the pound key. Your first question comes from the line of Carlos Santorelli from DB. Your line is open.

Hey, guys. Thank you. Tom, and I know it hasn't been a long time since you kind of started, but given the few months of the ramp and relative to your expectations on the sports side, and keeping aside the iCasino side for a second, when do you believe you could start to see that business turn positive in terms of EBITDA contribution? Is it as soon as 2023, or are we looking kind of beyond that and out into 2024, 2025?

I'm expecting football season of 23, Carlo.

Okay, great. And then, you know, you talked a little bit about the Las Vegas sale and clearly the comps have been, you know, your patience has seemingly paid off with what you've seen in terms of comps. Is there anything special about the first half of next year or early next year that you guys will get aggressive in terms of looking to make that transaction happen?

No, it's really a matter of, as we discussed, we wanted to be marketing off... EBITDA number that we're generating from the property, not trying to bridge to some number that we've not done before. So now we've got a track record that we can point to in terms of what the property can generate. And the deck has, the playing field has kind of been cleared with the Cosmo and ARIA trades to where we should have a pretty robust We should encounter pretty robust demand for a center strip asset that, frankly, may be one of the last ones to trade for quite some time.

Great. And then, if I could, Tom, just one follow-up as it pertains to kind of Las Vegas trends from 2Q to 3Q, more or less. Clearly, business volumes are higher. Revenues were up nicely sequentially. OPEX was also up. Do you guys kind of think the current OpEx run rate is something that's sustainable on these business volumes? I know you talked about staffing and keeping occupancy kind of in check during midweek to adjust to labor levels, but is kind of the current OpEx environment that you had in the 3Q in Las Vegas specifically, is that a place where you think you can kind of maintain going forward?

I do, but frankly, I'd like to see OPEX come up some as we fill our particularly guest room attendant positions so that we can unlock the caps on the midweek, and I'd expect that to happen at some point in 22.

Appreciate it, Tom. Thank you.

Your next question comes from the line of Joe Greff from J.P. Morgan. Your line is open.

Good morning, everybody. Tom, maybe we can dovetail into what Carlo was talking about, sort of on the sustainability of margins. Was there a big difference between the margin exit rate in Las Vegas and the regional, you know, versus what, say, going into the beginning of the 3Q, excluding weather-impacted areas? What margin exit rate?

No. I mean, we were pretty stable throughout the quarter, Joe, and into October. we're still running 40% consolidated EBITDA margins.

Okay, great. And then you mentioned by the end of this year you would have a larger quantum of competitive iCasino games launched, which you've talked about before. Can you talk about what you sort of think the incremental investment is in that part of the billion dollars of cumulative losses and how you think of that as you move sequentially from September and October to the end of the year in digital more broadly in terms of what that incremental investment might be.

So that was built into the guidance, the framework I gave for build of the entire business. As you know, to the extent those are, the bulk of those are third-party games. They're participation from a revenue standpoint, so that was all built in. It's just a question of timing of getting them through the approvals in the various states.

Great. Thank you. Thanks, Joe.

Your next question comes from the line of Steve Wyshynski from Stifel. Your line is open.

Yeah, hey, guys. Good afternoon. So, Tom, you called out that, you know, the billion-dollar investment or spend level on digital on your last call, and that would last, let's say, eight to ten quarters. I think that's what you talked about. I guess the question is, with what you've seen so far and the progress you've made with market share, are you still comfortable with that all-in investment, and will that be sufficient? Or I guess another way I could ask that is, let's say two years down the road, your market share doesn't pan out where you think it's going to be. Could that $1 billion investment eventually turn into a much higher number, or at this point you just don't see that being the case?

No, I'd say it's the opposite of what you described, Steve. It's post-launch, the bulk of our spending now is success-based. It's tied to customer acquisition. So if we do worse than we're expecting from a share perspective, I'd expect that the ultimate investment will be less. If we do better... than we expected from a share perspective. I expect the ultimate investment to be more, but obviously the return will fall in both directions.

Okay, understood. And then second question, I think, Tom, you called out a $5 billion number of cash to deploy next year, and that assumes a Vegas asset sale. I guess the question there is, you know, you've talked about potentially letting go more than one asset in Las Vegas. And at this point, is that still the case, or is it kind of one in 22 and then go from there? Or is there the possibility that you could eventually do more than one in 22?

Well, with the caveat that as a public company – Every asset's for sale every day. There's some confusion. There were two rovers in the Vici agreements at the close. We have never said we expect to sell a second property, nor do we expect to at this point. We'd expect to sell a single property and be done, but we'll assess where we are in the market, what our balance sheet looks like afterward, and how we feel about future prospects, but I think it will be limited to one asset and also just to go back to when I talk about deploying capital in 22, I think it's going to be well in excess of $5 billion, not $5 billion on the nose.

Okay. Perfect. Thanks, Tom. Appreciate it.

Your next question comes from the line of Thomas Allen from Morgan Stanley, your line is open.

Thanks. I think I heard correctly that you said you did over $1.7 billion of sports betting handle in the third quarter and then over $1.3 billion of handle in October, which based on my numbers implies you had about 15% U.S. market share in the third quarter and close to 20% in October. Can you just parse that a little bit? You relaunched your sportsbook August 2nd. So how was the trajectory in the third quarter? And then any color of Nevada versus the rest of the states, just to kind of give a view on kind of what the legacy business did versus the newer businesses? Thank you.

Yeah, so in terms of handle, as you would expect, the quarter built August was considerably bigger than July. and September dwarfed August because of the calendar. October is considerably more than September. In terms of the states I've talked about, the Liberty states, we went from in the sixes to about 12 in terms of handle market share as we're measuring it. In total, we're about 17%. Nevada share was flat over that time frame. We obviously have very large share in Nevada, but didn't have any significant move in share. Keep in mind, Nevada is not a Liberty State yet either.

Perfect. Thanks, Tom. And then just as my follow-up, can you just talk a little bit, I mean, you gave some color about what's been going well in the cross-sell with the Seasons Rewards customers, but Can you talk about some of the other things, your $5,000 risk-free bets, the commercials, all of that, how you think they're doing?

It's hard to parse all of that. From a commercial standpoint, they measure unaided brand awareness, and that's through the roof since we started. The commercials basically ask a question of, List companies that you know offer sportsbooks. The percentage of people that would name Caesars today is dramatically higher than it was on August 1st. The individual promotions, we're constantly tweaking those. I don't really want to, for competitive reasons, get into what's worked the best and what hasn't worked, but you should expect... to see that continue. We've rolled out single-game parlays, which in NFL action has been growing substantially as a percentage of our bets, and that's very high-hold business, so that's good to see.

And the app, I'm sure you track this, Thomas, has seen a significant improvement on the sports category rank on iOS. I mean, we were trailing, we were roughly 150 ranked, and now we're, you know, making great progress between 15 and 20 on the iOS app. So just a tremendous improvement there.

All helpful, Colin. Thank you very much.

Your next question comes from the line of Barry Jonas from Truist. Your line is open.

Hi, Tom and team. This is Matt. I think Barry might be having technical difficulty. Go ahead there.

Hey, guys. How do you think about ROI in digital markets with higher tax rates like New York?

Obviously, that's going to influence your reinvestment rate. You're looking for ultimately what's my return on capital. But you can, in larger population states, high velocity, high participation rates, you can conceivably make money at higher tax rates than in lower volume states. But obviously, we prefer the lower tax jurisdictions as an operator.

Got it. And once you reach a point when you can pare back promos for digital, how do you think about the size and profitability of any business loss And I guess with that, any updated thoughts on a mature market share goal?

We've not been out there with a market share goal and don't want to start that today other than to make the point again that the target that we had in mind when we put out the metrics last quarter was we're gaining share much, much quicker than we anticipated as we started out.

What was the other piece of that? The question was, when you reach a point you can start paring back promos, how do you think about what business stays and what remains?

So as you deposit in our app, you're signing up for Caesars awards in the vast majority of cases if you're not already a customer. So we're bringing new customers into the system. Our expectation is our history has been that customer becomes sticky to the brand over time as they realize the benefits of what the rewards program brings them. So we're looking at it from the standpoint of we think if you're thinking of lifetime value of a customer, we think our lifetime value of a customer is going to compare favorably with our peers. both because of the profile of the average Caesars reward customer that is starting to dominate our handle and the length of time that they're going to stick with the app because of the relationship with the rewards program. But we do know that we're going to lose some of these guys that are shopping from site to site for what's the best promo I can get tonight.

Great. Thanks so much.

Your next question comes from the line of Sean Kelly from Bank of America. Your line is open.

Hey, good afternoon, everyone. Tom, just thinking about the ramp up in some of the, let's call it the non-fair fight states where you were a little bit later, can you just talk maybe at a higher level? I think you tried to give us some direction in a couple different ways, but can you just talk a little bit about how you expect... you know, us to be able to monitor what you would expect to see about the ramp up in some of those, you know, really competitive existing states, the New Jersey's, the Pennsylvania's, the Michigan's of the world. Just how should those trend as we see that data coming in every month and what KPI are you looking for to kind of continue to show success in those markets?

I mean, we're looking at handle share for the time being. And if you want, you know, Michigan went from three to over six. Tennessee went from two to almost eight. Virginia went from six to ten. So you're seeing it in the states where we jumped in late that we're gaining share of materially early on and we'd expect to continue to claw share over time. There's really no state I can point to where I'd say we haven't seen the experience since launch that we're building share from where we were. It's just in the case of the states we talked about where we're late, we're starting from a low base and the claw is going to take more time.

And my follow-up would be a little bit on the cost side. So you've obviously been very visible with the kind of national ad buy, but there's been some discussion already that there's been some pullback in the big TV buys. And you've also talked about your performance marketing a little bit. So can you just talk, I mean, I'm sure you've got your own competitive plan out there, but how do you think about maybe switching some of that spend through channels as Your awareness reaches a level that everybody's going to know you're out there, and you really start to focus on effectiveness. Is there a right timeline to think about for that, or how have you thought about those buckets evolving over time?

You should expect through this football season we're going to continue to be aggressive. We just filmed yesterday. another round what we're calling Season 2 of ads that will start rolling out this month. So we're going to be all over the place in terms of media. Where we've kept our powder dry is the media that was targeted toward iCasino until we get the product up to the standard that we want.

Thank you very much.

Your next question comes from the line of Dan Politzer from Wells Fargo. Your line is open.

Hey, guys. Good afternoon, and thanks for taking my questions. So, Tom, you mentioned this a little bit in terms of the new sign-offs from the Caesar Awards. Can you maybe quantify that or put some numbers there? And to what extent have you seen the new players flow into your properties and create more of an omni-channel benefit?

As I said, the answer to the first question is no. I'm not going to put raw data on those numbers, but figure... Caesar's Reward first-time depositors have been a quarter to a third of our first-time deposits, but as far as handle have been about half. Those are broadly where we're at. And as I said, as you sign up for the app and deposit, you're prompted to sign up for Caesar's Rewards, and we're seeing an extremely high uptake in terms of people signing up for Caesars rewards, and we're seeing cross-visitation. One of the areas where we're Particularly active is the high end of the market, large bettors that are new to our system where we're willing to take large sports bets, and we're seeing those customers make their way into our high limit rooms as well. So that's been an encouraging sign, and we've seen that all the way down to the low levels of the database as well.

Got it. And then just for my follow-up, I think for William Hill in Nevada, I think it's historically had around, you know, 30% or so market share for sports betting. I mean, since you guys took full ownership, have you seen any changes in terms of your partners there? And, you know, I know online has certainly grown a lot as well.

We're about half of Nevada.

Got it. Thanks so much.

Your next question comes from the line of David Katz from Jefferies. Your line is open.

Hi. Evening, everyone. Thanks for taking my question. I wanted to go back to the commentary you've gone over a little bit on iGaming with the offering not being up to what your standard is. And I think early on you indicated the breadth of games was not what you wanted. From a technology and game engine perspective, Are those elements that you're still working on, or is it really just a content offering issue primarily?

Yeah, well, you're never stopping work on the nuts and bolts behind both OSB and iGaming, but the iGaming piece that we're waiting on is virtually entirely content at this point. And it's just a matter of getting through the bureaucracy in each state and in terms of getting the games approved on our apps. And this is a function of, you know, this is not states dragging their feet. You know, William Hill, in its former life as a UK domiciled and managed company, didn't provide the resources to the U.S. business to develop both the OSB platform and the IT platform to their fullest extent. And so what we're doing is providing the resources and ability to let iGaming catch up with OSB.

Understood. And with respect to iGaming, there is, I believe, a conventional wisdom that with fewer states and perhaps smaller share or smaller total handle, the profitability and the LTVs of those customers, et cetera, can be equivalent or even better than OSB. Is that, you know, what your expectation is as we, you know, start to get some of those handle numbers and see some of those share numbers from you?

Yeah, we are. iGaming is and has been a material profit generator in New Jersey for us, and we would expect Michigan, Pennsylvania, West Virginia, as we roll out, to follow that same path.

One last one, if I may, which is, you know, within sports betting and iGaming, you know, the appearance is that, you know, you have a fully integrated, you know, control over that enterprise. Is that correct, or are there, you know, B2B participants in there that may be, you know, driving certain aspects of your sports betting enterprise?

The only piece... is the PAM that's provided by NeoGames, but that's a unique arrangement given our ownership interest in NeoGames where we have a dedicated team that works on only the Caesars PAM at NeoGames.

Perfect. Thanks a lot.

Once again, to ask a question, you will need to press star 1 on your touch-tone telephone. Again, that's star 1 on your touch-tone telephone. Your next question comes from the line of Chad Banen from Macquarie. Your line is open.

Hi, good afternoon. Thanks for taking my question. I'll add on to the digital questions. Just one on Canada, specifically Ontario. I know the marketing will be a little bit different up there versus what we're seeing in the United States. Can you give us a sense of how you think the market will shake out and any commentary around your rewards program membership up there, just given that the customer acquisition will be different than what we're seeing stateside?

Thanks. So we're watching as you are, as they go through the mechanics of how it will roll out. We anticipate that we will be among the better positioned operators in in Ontario given our long management contract history with Caesars Windsor. So we have a large amount of Ontario customers available to us and known to us through Caesars Rewards.

Okay, thanks. Tom, I'm not sure if you or Anthony mentioned this in your prepared remarks, but on the regional markets, I know a lot of the recovery has been driven by spend per visit versus visitation. Visitation has certainly been a laggard. Can you help us think about, you know, if visitation has, if the recovery has plateaued or if you're still seeing that improve as that 55 and older customer gets comfortable coming back to your properties? Thank you.

Yeah, I'd say the story has remained the same, that spend per visit continues to be elevated and improved. I'd expect that to remain the case as long as the U.S. savings rate is about 2x what it's been historically. We do expect, if and when you get a full retreat of COVID, on the retail side, we do expect that there's significant portions of the database, significant portions of the population that will then be willing to come to casinos that are not coming today. We also expect that as business travel returns, we'd expect there to be a similar experience of pent-up demand for business travel once we've got this behind us.

Thanks, Tom. Appreciate it. Thanks, Chad.

Your next question comes from the line of Stephen Grambling from Goldman Sachs. Your line is open.

Hi, thanks. These are kind of follow-ups to some of the digital questions earlier. I guess as you launch iGaming, how are you thinking about who that customer is and how to ensure it's truly incremental revenues and profits versus kind of cannibalizing the basement?

Yeah, Steve, we've got a lot of experience there in New Jersey that's going to be relevant to us in other states. If you think about the states we're going to be rolling out in, we don't have a property in Michigan. We have a single property that's not large in Pennsylvania, and we don't have a property in West Virginia, so we don't expect that to be a material factor for us in those states.

That's helpful. Maybe another follow-up. I know that you gave a little bit of detail about people spending on device and then in property. Is there anything else that you can kind of provide in terms of thinking about how in terms of greater time on device or step up in frequency of bets as you've been launching? Thanks.

It's awfully early to be stating anything definitively in terms of that type of behavior, considering we've really been alive for 60 days here. What I would say is things like digital customers... of value being invited to brick-and-mortar properties. We're doing a lot of that, and the response has been overwhelming. That doesn't happen in... apps of our peers. So, you know, we think, and this is, as I said earlier, this isn't you just flip a switch. This is you've got to activate this. You get better at it every day and momentum builds. But some of this stuff that we're seeing that's, you know, small and kind of neat right now is going to be significant drivers of value going forward.

Anybody else, operator?

There's nobody else on the queue, sir, so this concludes our Q&A session. I would now like to turn the conference back to Mr. Tom Rigg.

Thanks, everybody. Enjoy the holiday season. We'll be back in 22 with our fourth quarter results.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.