Caesars Weighs Spinning Off Online Gaming Division

Caesars Entertainment, the hospitality and gaming giant behind iconic names like Caesars Palace and Horseshoe casinos, is contemplating a significant shift in its business strategy. During the company’s fourth-quarter earnings presentation for 2024, CEO Tom Reeg revealed that the company is evaluating the possibility of spinning off its digital gaming division into a separate publicly traded company. This could mean a new chapter for the company’s rapidly growing online casino operations, which are benefitting from a boom in U.S. online gaming.

The shift in focus comes as legal online gaming in the U.S. is seeing unprecedented growth, including a record-breaking $8.4 billion in revenue in 2024 from regulated online casinos, according to the American Gaming Association. Caesars is a major player in this trend, having seen a 16.4% year-over-year increase in revenue from its digital division, which includes online casinos, sports betting, and online horse race wagering. Combined, these platforms generated nearly $1.2 billion in 2024.

 

Spinning Off for Growth

While Caesars Entertainment’s diversified portfolio has seen success, Reeg noted that the online gaming division might need more resources to continue its growth trajectory. The prospect of a separate publicly traded entity for Caesars Digital would provide a potential influx of capital to fund expansion, product development, and marketing efforts, all of which could be crucial as the company seeks to compete with other industry heavyweights.

“There are a number of options available, and we’re evaluating them all,” Reeg stated during the earnings call on February 25. “If the market dynamics remain the same, and the business continues to grow as it has, you should expect that we would look at any and all avenues in terms of how we can drive the most value.”

Reeg’s comments are timely. The online gaming market in the U.S. has seen explosive growth, with a 26.2% increase in revenue from 2023 to 2024. Caesars is part of this expansion, but it faces significant competition, as its brands have yet to secure a spot among the top three revenue-generating platforms in any of the states where it operates. Currently, Caesars offers iGaming products in four U.S. states—each with its own competitive landscape.

A potential public offering would give Caesars Digital the financial flexibility it needs to improve its platforms and increase its market share. While the move could come with considerable upfront costs, including the time and resources required to separate the division from its parent company, it could be a strategic move to enhance the division’s standing in a rapidly expanding industry.

 

Gaming Stocks at an All-Time High

The timing for such a decision appears ripe, according to industry analysts. U.S. gaming stocks are currently enjoying high valuations, driven by the industry’s remarkable growth in recent years. The global online gaming market is expected to continue expanding, and a separate entity focused solely on Caesars’ digital operations could attract investors looking to capitalize on the surging demand for online gambling.

The IPO would allow the new company to tap into that investor interest, funding the development of its platforms, improving its marketing efforts, and possibly expanding into additional states. In doing so, Caesars could ensure its digital business remains competitive in a crowded marketplace while continuing to support its legacy land-based casino operations under the Caesars Entertainment banner.

 

If the market dynamics remain the same, and the business continues to grow as it has, you should expect that we would look at any and all avenues in terms of how we can drive the most value.

 

A Turning Point for Caesars Entertainment?

For now, there is no definitive timeline for when Caesars might announce a public offering, or whether it will ultimately move forward with spinning off its digital division. Reeg was clear that the company is only in the evaluation stages. However, given the continued success of online gaming and the increasing need for capital to fuel future growth, this might be a pivotal moment for the company.

If Caesars Entertainment decides to spin off its digital business, it would mark a significant shift for the company, which has long been synonymous with brick-and-mortar casinos. The decision could help the company unlock the full potential of its online operations, allowing it to focus on growth while preserving its traditional business interests.

As the online gaming sector evolves and more states move toward legalizing iGaming, the separation of Caesars Digital could prove to be the strategic move the company needs to maintain its competitive edge in the digital age. Whether this turns out to be the right path will depend on how the market evolves in the coming months—and how Caesars Entertainment chooses to navigate this transformative moment in the gaming industry.