Digital Growth Fuels Spin-Off
Caesars Entertainment may soon take a significant step toward reshaping its business model. On Tuesday's Q2 earnings call, CEO Tom Reeg hinted at the possibility of a digital spin-off in 2026—if internal performance targets are met. The announcement comes as the company’s digital division continues to outpace its traditional business units by a growing margin. While Caesars’ Las Vegas and regional operations delivered flat or declining year-on-year results, its online business once again broke records in both revenue and profitability.
Digital Division Drives Growth
Year-to-date figures reinforce the widening gap. In the first half of 2025, Caesars has posted $5.7 billion in revenue—up 2.5% from the same point in 2024. The digital segment alone grew 21.5%, contributing $123 million in adjusted EBITDA, a 173% increase. In contrast, Las Vegas and regional earnings declined 4.7% and 2.5%, respectively.
Reeg highlighted the division’s rapid expansion in Tuesday’s call: “The momentum in digital is extraordinary, both from a volume and an EBITDA perspective,” he said, noting Caesars is outperforming competitors in iGaming growth and increasing its sports betting handle year-on-year. In 2021, Caesars set a target of $500 million in annual digital EBITDA by 2026. That figure now appears within reach. Reeg declined to set a new long-term goal but suggested earnings could “substantially” exceed $500 million within a few years.
Spin-Off Speculation Intensifies
Reeg’s comments added fuel to speculation that Caesars is preparing to spin off its digital unit. While no decision has been finalized, he acknowledged the company is laying groundwork internally. “There is internal plumbing that needs to happen to be in position to separate,” Reeg said. “We would absolutely pursue a separation if we believed it would drive significant value to our shareholders.”
The idea of a spin-off is not new. Industry observers have raised the possibility for several quarters amid growing performance gaps. The approach could unlock shareholder value and follow a broader trend in the gaming sector, where operators are reevaluating digital strategies. Boyd Gaming recently sold its stake in FanDuel, while Wynn Resorts shut down its digital operations in 2023.
Caesars, by contrast, is quickly becoming an outlier—with activist investor Carl Icahn once again playing a quiet but potentially pivotal role. Icahn increased his stake in the company earlier this year and placed two allies on the board. Reeg previously confirmed that Icahn views the digital unit as undervalued, though no activist push has been made public.
While digital soared, Caesars’ traditional assets underperformed. The company described results in Las Vegas and regional markets as “soft,” a theme Reeg repeated several times. He cited year-on-year comparisons and seasonal patterns—particularly during summer—as contributing factors, and forecast continued softness into Q3. However, he suggested the worst may be over. “It’s as if your tire had a leak and you patched it,” Reeg said, noting that downward trends from the spring have since stabilized. Still, external risks remain. Analysts have pointed to international resistance to U.S. tariffs and growing economic pressure on consumers, which could affect travel and discretionary spending into late 2025.
We remain on track to deliver half-a-billion-plus of EBITDA in [2026]. The momentum in digital is extraordinary, both from a volume and an EBITDA perspective.
What Comes Next
With one eye on a shifting macroeconomic climate and the other on digital momentum, Caesars appears to be at a turning point. If the company hits its $500 million digital EBITDA goal in 2026 as expected, a spin-off may no longer be hypothetical. “We’ll take a look at what we think of value at that point,” Reeg said. “We would absolutely pursue a separation if we believed it would drive significant value to our shareholders.” For now, Caesars’ strategy remains wait-and-see. But if trends hold, the company’s digital arm could soon stand on its own.
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