Caesars Entertainment Inc (CZR) — Q1 2026 Earnings Call Transcript

Well, thank you, Daniel, and good afternoon to everyone on the call. Welcome to our conference call to discuss our first quarter 2026 earnings. This afternoon, we issued a press release announcing our financial results for the period ended March 31, 2026. A copy of the press release and our investor presentation are available in the Investor Relations section of our website at investor.caesars.com. As usual, joining me on the call today are Tom Reeg, our CEO; and Anthony Carano, our President and Chief Operating Officer; Bret Yunker, our Chief Financial Officer; Eric Hession, President Caesars Sports & Online; and Charise Crumbley, Investor Relations. 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 under safe harbor federal securities laws, and these statements may or may not come true. Also, during today's call, the company may discuss certain non-GAAP financial measures as defined by SEC Regulation G. Please visit our Investor Relations website for a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure. And finally, Caesars Entertainment as a matter of policy does not comment on market rumors or speculation. We will not be answering any questions during Q&A today on this topic. Over to Anthony.

Thank you, Brian, and good afternoon to everyone on the call. Caesars delivered solid results for the first quarter of 2026 as consolidated net revenues of $2.9 billion increased $77 million or 3% year-over-year. Adjusted EBITDAR of $887 million improved by $3 million over the prior year. Highlights for the quarter include continued sequential improvements in operating trends in Las Vegas, revenue and EBITDAR growth in the regional segment after excluding the impact of the Super Bowl in New Orleans last year and record Q1 revenues and EBITDA in our Digital segment. Starting in Las Vegas, the company delivered adjusted EBITDAR of $426 million versus $433 million last year on flat revenues. We experienced a significant sequential improvement in the hospitality vertical in Q1 with occupancy of 95.3% in the quarter and year-over-year ADR growth of 1%. This marks a dramatic improvement versus the second half of 2025. Occupancy and rate trends benefited from a strong group and convention lineup with group-occupied rooms during the quarter. While leisure trends were still down on a year-over-year basis versus the second half of 2025, we remain focused on elevating our product offerings in Las Vegas. Our newly renovated villas at Caesars Palace guest room product and casino floor remodels continue to generate excellent feedback from our guests. Looking ahead, I'm excited for the opening of the Omnia day club at Talisman on May 15, the full remodel of the Augustus Tower at Caesars Palace for completion by early 2027 and the opening of Category 10 by Luke Combs later this year. For the remainder of 2026, we continue to forecast sequential improvement in Las Vegas operating trends driven by group and convention mix and stabilizing leisure trends. Moving to our regional segment, the company reported net revenues of $1.4 billion, a 3% increase year-over-year and adjusted EBITDAR of $435 million, down $5 million from the prior year. The regional segment delivered improved EBITDAR results versus last year after excluding the benefit of the Super Bowl in New Orleans last year. Our targeted marketing reinvestment strategy within our regional segment continues to deliver positive results, driving increases in rate play in Q1. On March 3, we closed on the acquisition of Caesars Windsor. Results of Caesars Windsor are now included in our regional segment. Additionally, on April 9, we opened our newest managed property, Harrah's Oklahoma, which expands Caesars Rewards to a new market. As we look ahead to 2026 in our regional segment, we expect to benefit from a group mix in arena, the inclusion of Caesars Windsor, the completion of our $200 million Tahoe Master Plan renovation this month, hosting of select property events around the World Cup and continued return on investment on recent strategic marketing reinvestment. With the completion of our Tahoe Master Plan scheduled in June 2026, we will have successfully completed all major large planned regional CapEx projects since the completion of the merger back in 2020. In total, we have invested over $3 billion in CapEx into our regional portfolio over the last five years. Our regional portfolio is positioned to benefit from these investments moving forward. I want to thank all of our team members for their hard work this quarter. Their dedication to exceptional guest service continues to be the driving force behind our company's achievements. With that, I will now turn the call over to Eric for some insights into the first quarter performance of our Digital segment.

Thanks, Anthony. Caesars Digital delivered record first quarter net revenue and adjusted EBITDA of $374 million and $69 million, respectively. Flow-through during the quarter was strong at just over 66% and EBITDA margins expanded 566 basis points to 18.4%. Our results were driven by the following underlying KPIs during the quarter. On the sports side, net revenue was up 9%. Total volume declined 3% with mobile sports volume declining 1% with the declines more than offset by hold, which increased 100 basis points to 8.3%. In addition, parlay mix, average ticket per parlay and cash-out mix all increased versus the prior year period. In iCasino, we delivered 18% net revenue growth driven by strength in volume and average monthly active users. We continue to elevate our product offering during the quarter to include new in-house games, improved bonusing capability and incented cross-play with brick-and-mortar through our remote exclusive product launches and customer events. Overall, in Q1, our total monthly unique players increased approximately 2% to 512,000 and average revenue per monthly player was up 15% to $219. From a tech perspective, we continue to convert new jurisdictions to our universal wallet and proprietary player account management system, which is now live in 27 jurisdictions and should be live in all jurisdictions by the end of April this year. As we look ahead, I'm pleased with the significant progress on the technology side of the business is driving net revenue growth in both sports and iCasino. The continuous progress we're making is showing up in our consolidated digital top-line results. The revenue growth, combined with our efficient customer acquisition spend and our focus on operational excellence drive solid flow-through to EBITDA. We continue to see a business capable of achieving 20% top-line revenue growth with 50% flow-through to EBITDA, which keeps us on track to achieve our long-term financial goals. I'll now pass the call over to Bret for some comments on the balance sheet.

Thanks, Eric. As Anthony mentioned, on March 3, we acquired the operations of Caesars Windsor for USD 54 million and entered into a 20-year operating agreement with the Ontario Lottery and Gaming Corporation. We are excited to add Caesars Windsor to our regional portfolio. Our first quarter consolidated results demonstrated the stability of our Las Vegas and regional segments and the continued growth in digital. We expect to deliver strong free cash flow in 2026 during the balance of the year as a result of continued operating momentum, lower cash interest expense and lower CapEx. Over to Tom.

Thanks, Brett, and thanks, everybody, for joining. I'm happy with the start to the year — a strong quarter for us. Vegas is obviously in a much healthier spot than it was in the middle of last year. Heading into the summer, it's still a tale of a very, very strong market when big events and groups are in town and softness when they aren't. ConAg week here was spectacular across the market; I spoke with peers who saw the same. Those types of groups let the entire city participate, so we love those weeks and want to find more of them. We're working with the LVCVA to identify more prospects that look like that. As I said when we met on our last earnings call, I expected the second quarter to be up slightly year-over-year. April was a little softer than we anticipated, largely because we didn't hold the way we did last year, so we'll likely be just short of last year but again much healthier than we've been. Then we cycle into comparisons against last summer, which everyone remembers was a tough summer in Vegas. Vegas FIT business continues to improve, our bookings look good, and it just feels like a healthier market than it did 10 months ago for us. On the regionals, last year we had the Super Bowl in New Orleans, which drove a little over $10 million of incremental EBITDA that did not repeat this year. Absent that, regionals had a growing quarter and are off to a very strong start in April, so we feel good about regionals for the rest of the year. As Anthony said, our Tahoe redevelopment will be complete by the beginning of the third quarter and it's less disruptive now than it was last year. We have the largest group of bowlers this cycle—recall that's a three-year cycle with this year being the largest—so group business sets up well in the region. We feel very good about regionals. Eric covered digital highlights and we were pleased with that quarter. Some have pointed to prediction markets as an impact on customer acquisition costs, but the bulk of our customer acquisition comes from our Caesars Rewards database, which is a particular advantage now. We're not competing in those same pools where prediction markets are driving acquisition costs higher. You can see in our numbers we had a very strong quarter and we're off to a good start in the second quarter as well. Also keep in mind that we have significant partnership expenses that roll off in 2026; the bulk of those benefits will flow to us in the third and fourth quarters of this year and into the first quarter of 2027. So digital looks very strong. We're still on the path we laid out a long time ago toward $500 million or more of EBITDA. With the completion of our capital cycle, we're in a free cash flow harvesting stage now. CapEx has come down, and we've been balanced between buying back stock and paying down debt. You saw that in the first quarter we didn't buy back stock — the first quarter is a heavy cash outflow quarter for us with bonus payments, interest payments, and this year we also spent more than $50 million to buy out the Windsor contract. As we move through the year and enter free cash flow quarters in Q2 through Q4, we expect to resume a balance between debt paydown and stock repurchases. With that, I'll open up the floor to questions.

First, I wanted to talk about Las Vegas a bit. Tom, you said the market feels a bit stronger than maybe 10 months ago. Can you maybe talk about what specifically you're seeing? Is there signs of stabilization in that leisure category, mid-week, high and low end, just kind of parse out the market a bit in more detail?

Yes, I'd say leisure market has continued to get healthier from the lows of last summer. We'd expect to see typical back-to-typical Vegas seasonality as we get into the hot months. But that leisure customer does feel a little bit firmer than it did each quarter since third quarter of last year. As I said, it's a tale of weekends, weeks when the market has significant group events, significant sporting events, significant attractions — those are exceedingly strong, and we still do have weeks that are softer weeks in April that were soft, where we just didn't have a great calendar in the market. But group business this year should be another record for us on top of last year's record. We're excited in May, the State Farm Conference comes back. For us, that will be a nice lift for us. And we feel better each quarter about how Vegas is performing. And I think the quarters if there's a downdraft that we're trying to catch up to are in the rearview mirror. I think it should be pretty stable going forward. And in terms of high-end versus low-end, I think — as I've said before — Center Strip in general has held up the best. Either end of the Strip has held up less well. High-end has held up better than low-end but Center Strip has kind of trumped high-end versus low and we don't have a big bifurcation between, say, Caesars Palace and Harrah's in terms of performance, it's all fairly uniform for us.

Got it. And then more of a kind of high-level one. Certainly you said you're going to be back in the market on share repurchases in the coming quarters. As you guys think high-level philosophically about the value of the equity, can you just remind me or remind us of how you think about the proposition there? What do you think public equity investors are missing or overlooking as it comes to the stock valuation as you think about going back into the open market?

I mean we're looking at the returns we can get through buying our stock. There's obviously a free cash flow yield associated with that. Paying down debt, we are still more levered than would be our preference. So there's continuing an active desire to delever. And then we have returns on growth capital projects. And as free cash flow comes in, we decide which is the most attractive use of that cash flow. And as has been the case in the last year or so, the answer has typically been some mix of share repurchase and debt repayment, and that's what we'd expect going forward.

Hello, everybody. Maybe starting with regional, Tom, I was wondering if you could give us some comments on that customer and how they're sort of faring in this environment with slightly higher gas prices. Obviously, we have stimulus that started coming in better. But the March data industry-wide did seem to slow and now there are some calendar issues just sort of how do those sorts of puts and takes sort of net out for you guys and what you're seeing on the ground?

I would say the consumer in general, but particularly the regional consumer has been remarkably resilient through the noise that we've seen in the last couple of months. Regional business in general feels firm, we feel very good about what we're seeing there and what we see going forward. We do have some idiosyncratic stuff in Northern Nevada, in particular. That's a tailwind for us. But across the board, regionals feel pretty good for us.

Okay. Great. And then maybe for Eric, you said that the digital is still capable of doing 20% top line. You guys reported top line in the low teens in the first quarter, but you gain share and sort of beat the industry on the iGaming side. So how do you get back to that 20% overall net revenue in the current environment?

Yes. I think the first quarter, our sports volumes being down 1% was lower than we would expect for the long term. I think it's just annualizing some of the effects from last year with the Super Bowl being in New Orleans, and the teams may be not as exciting for people for the Super Bowl caused some of that. And then in addition, the high hold increases offset some of the handle growth. But I think if you have mid-single-digit handle growth and then the iCasino side continuing to grow like it is, that's how we can get to that 20% range. As you saw, we grew much faster than the 50% from a flow-through perspective. So some months and quarters will have a flow-through that's going to be higher like we did this quarter. And we don't need to get that 20% revenue growth to get the bottom line growth that we're targeting.

Just going back to Vegas for a second. There was a lot of talk last year about bringing value back to Vegas, and we've seen one of your peers bring out these all-inclusive packages and whatnot to kind of stimulate that leisure consumer. I'm curious where you are in that kind of process of any kind of pricing changes or how you think about that in terms of bringing back the leisure consumer more in the remainder of the year?

Yes. The team is doing a great job here in Vegas looking at all of our properties and welcoming guests at every price point. We've got the all-you-can-eat and drink at a number of our properties on the east side. We've taken a look at pricing up and down all of our properties. And I think we're in a pretty good spot to attract every guest to Las Vegas.

And Lizzie, keep in mind, I know that narrative has been out there quite a while. We were over 95% occupancy this quarter. So we feel very good about where we are in terms of price value.

Got it. Got it. And then just on the regional side, you're kind of lapping some one-timers in 2Q and you've got some of these renovations you mentioned, Tahoe and whatnot kind of coming online. Any way to think about that, at least sizing some of these impacts from these renovations that you've been doing and how much that can benefit the remainder of the year?

Yes, I'd rather not get that granular on a per property basis, but I would say I'd expect regional to be a healthy grower through the year and second quarter is off to a good start.

I just wanted to dig into that all-inclusive package a little bit more. You recently started out at some of your lower-end properties, I guess what are your expectations there? Should we think of it as sort of a breakeven proposition, but hopefully, you'll get upside from gaming? Just curious to dig in on that a little more.

Yes. We're not pricing anything to break even, Barry. We're looking to be profitable in everything that we do. We know what each room in the portfolio, all 20,000 of them, we would expect when you're filled, how much that generates in revenue regardless of what they paid to get in the door. So you should think of this as when you're in your softer periods where there's not significant group lift that this is a way to bring in people profitably, you shouldn't view them as a loss leader or even a breakeven proposition for us.

Great. That's helpful. And then just for a follow-up. Curious if there's been any progress made in looking for some sort of solution to the VICI lease coverage issues you've talked about in the past?

Yes. I appreciate the question. As I said last quarter, I don't want to be providing a blow-by-blow every 90 days about talks that may or may not be happening between us and VICI. Everybody is well aware of where that lease sits. And when the two of us have something to report, I'll come back to you. I'm not going to keep updating every quarter, but I understand and appreciate the question, Barry.

Sorry, just got myself unmuted. You've talked about this a little bit, but I wanted to just go out in a slightly different angle. Within the regional gaming, it's obvious the opportunities you have, where you deployed some capital. There have been a handful of properties that have seen some competition. How have you evolved and deployed your strategies to compete specifically in those markets where there's been some head-on competition?

Yes. We start with service, David, providing the best service in the industry. We've got Caesars Rewards, which we think is our largest acquisition and retention tool. And then as we've spoken to over the past few quarters, we've tweaked our marketing reinvestment, especially at competitive properties to become more competitive. We've ramped that down quarter-by-quarter over the past four quarters and to get more efficient. But the teams have done a fantastic job in our competitive markets, retaining our customers, delivering excellent service and giving them reasons to come visit a Caesars property versus one of the new competitors.

Understood. I know the mantra is sort of ramping down capital. But are there any singles and doubles type projects that may be out there in the regions to think about in the future? And how might we reflect those?

Yes, David, we're over $3 billion of capital in the last five years into the regional markets, the bulk of that into the properties that generate 80%-plus of our regional EBITDA. So if there's a thought that there's deferred capital out there in our portfolio that doesn't reflect what you see on the ground and what you see in the investments that we've made in the last five years, there is no big group of projects around the corner. This is normal capital cycle stuff. As you come off a large capital expenditure program that's as broad-based as ours was, it's natural that you then spend some time harvesting that cash flow and then deciding what your next wave would be, but that's a couple of years away at a minimum at this point.

I wanted to ask a question about Caesars Rewards. I think earlier in the call, you mentioned it's one of your primary customer acquisition channels for your online business. I think it was relative to sports, but I assume the same for iCasino. Tom or Eric, can you tell us kind of where you are in terms of the penetration of that database as we think about the growth targets going forward? Is there a lot more customer activation headroom? Is it more about just getting greater monetization from customers in the database, if you could elaborate, that would be helpful.

Yes, I would say that we continue to get better, but there's still a gigantic opportunity in converting customers in our database that are primarily brick-and-mortar with us, and play digitally elsewhere and bringing them into the fold. When we first launched our app on the sports side and frankly, on the iCasino side before Caesars Palace online, the experience lagged our peers. That's no longer the case. So it's going to those customers to get another look. And what we find is brick-and-mortar customers that show up in digital for us increases their brick-and-mortar spend with us. I don't think that's because they gamble more. I think it's because we're consolidating wallet share. That's true across the Caesars Rewards database. The more places we touch you, whether that's physical and digital, whether that's multiple properties within a market or multiple properties across markets, the more times we touch you, the more valuable you become as a customer for us. So that's a system-wide focus and effort. You'll see us in Vegas starting to talk to customers about the Caesars campus and all the things that you can do, you'll check into our property, and we'll be giving you information that shows all the places you can use your Caesars Rewards outside of the building that you're staying in. So we're leaning into that. We're doing more in digital, and it continues to get better, but that's an enormous opportunity for our digital business as we move forward and certainly as new states come online.

That's helpful. My follow-up would be right down the same path. You've talked about paying down debt, buying back stock, but at least once a year I ask you about M&A. You obviously — I think Windsor was a unique situation, but are there markets where you would expand your reach, Canada, U.S. regionals where it would make sense to grow our rewards database. Is there still enough synergy? Have you contemplated or think about M&A at this point at all in terms of expanding the network?

Yes. And John, as you know, we're always willing to look. I would say that purchasing an asset or a portfolio of assets in the near term for us is unlikely given the yield that we can find in our own stock, where there's far more certainty in that number than what you'd model in an acquisition. So unlikely we'd be a significant buyer going forward. But as you know, that can change depending on the opportunity that's in front of you.

So Tom, as you think about the rest of the year in Vegas, obviously, comps are going to get easier in the back half and your comments that the FIT bookings look solid or I mean, obviously, you're pretty encouraging at this point. But I guess the question is around with the FIT business still probably booking more close-in at this point, how do you weigh those solid bookings now versus, let's say, gas and fuel prices stay relatively elevated for an extended period of time and what that can mean in terms of driving traffic or even wallet spend of folks in Vegas. I guess maybe help us think about the sensitivity that you've seen there in the past?

So I would say correlation between gas prices and spend in our portfolio is not particularly high. For our average customer, typically they are at a level of income and wealth that that doesn't become a significant factor in their decision. Obviously, you can get to a level or an extended period of time where that may change. But really, as long as real estate values and the employment picture are solid, our business has typically performed pretty well, and I'd expect that to continue to be the case.

Okay. Got you. And then sticking with Vegas, Tom, you talked about the 95% occupancy rate in Vegas this past quarter. Is there any way to help us think about how much of that 95% was incentivized, meaning did you guys have to promote more or do any more discounting in order to get that level of occupancy?

No, there was no meaningful shift in casino rooms. The shift you would have seen was more group business first quarter this year than last year, which crowded out some OTA business.

One more on Vegas. Just given all the talk about attracting more big conventions like ConAg, it seemed like there was a window coming out of the pandemic where Vegas was taking share from other markets given The Sphere, Allegiant expanded convention centers. So what are you hearing from meeting planners or the convention community on what the competitive environment for that business looks like? And what really moves the needle to get some of these to come to Vegas?

Yes, there is a lot that goes into that. I'd tell you, for the types of conferences that we're talking about, it's super, super competitive. And that's been the case regardless of the pandemic before or after — we're talking about very lucrative conferences. There's no jurisdiction anymore that's not recovered and competitive the way they were in the past. So we, as a market, provide a very compelling proposition, particularly on the group side. This is what gets lost in that value discussion. On the group side, we provide a very compelling value trade. This is a very easy city to get around for your group. There's an unusually broad spectrum of attractions in the market, entertainment, restaurants, shopping, golf that all feed into that. And then there's political elements that come in in some of these things. There's just a lot of different levers, and it's unique for each group. But for us, what we want and what we want the market to focus on is those events like ConAg that lift all boats and are not necessarily the highest profile — you're not going to be in a magazine because you got a great trade show or a conference versus some of the more high-profile stuff we've done. But the meat and potatoes of that group business is really what drives the whole city. And I'm sure, if you talk to everyone in town, ConAg Week, there was not an unhappy operator in this time. And the more weeks we can fill like that during the year, these are elephant-hunting as a market that you're going after. But if you can find even another one or two or three, it moves the needle for everybody. And so that's what we're hoping we can deliver as time goes by.

Got it. And so just to clarify, it sounds it's less about really changing anything, CapEx or pricing, something like that, it's about telling the story?

That's right.

And then maybe one unrelated follow-up on digital regarding the higher customer acquisition costs. It seems like we entered a window where there's not as many new states and handling ups have been slower in OSB. So with that in mind, should we be thinking about the higher customer acquisition cost impact is really more about replacing churn on the existing base? Or are you still finding opportunities to acquire customers?

We find opportunities to acquire customers. The chief opportunity for us, as we talked about, is our database. But as you know, we've been one-third to one-half of the promo intensity of our peers. And our share has been fairly sticky. It's been growing in iCasino. What that tells me is we have lower acquisition cost and lower churn than our peers, and that's been a significant benefit to us, particularly recently, as you've seen others start to talk about customer acquisition costs. Ours have been pretty steady.

Maybe to start while we were talking digital for a minute, going back to Eric. Just curious on a little bit more color around the iGaming trends you're seeing. Obviously, it's an important growth driver for you. The NGR side sounds super encouraging. Just digging in a little bit more, when we looked at some of the market-wide handle growth and then even kind of net of hold a little bit on the GGR side, feel like we saw that slow a bit in Q1. I think a lot of it might have had to do with just slower OSB trends in cross-sell, but just wondering if you could unpack a little bit about what you saw in the market? And specifically, are you seeing some competition pick up in states like Michigan as well?

Yes. I would say there hasn't been a huge change, Shaun, in any direction either way. Our handle was up 20% year-over-year. It might be down a little bit from the prior years, but also we're talking about a much larger scale. So as that happens, you're going to see the percentages decline to some degree, particularly because we haven't had any new states open in recent times here. But in terms of additional competition, there have been a few new entrants just as companies have exited the market and others have taken their place. But again, everything has generally been pretty consistent. We've been keeping our reinvestment levels relatively constant. And to Tom's point, our acquisition costs for the casino side have been kind of flat to down a little bit. So we're kind of happy with how things are going.

Super. And then high level, Tom, earlier on, you made an interesting comment about you're not seeing as much bifurcation between maybe high and low properties in the portfolio as maybe sort of location on the Strip. And just sort of wondering if you could expand on that as it relates to — as we start to see some changes out there, maybe the opening of Hard Rock towards the latter end of next year, how do you expect that to play? Will that shift any of the center of gravity, one way or the other? Just how do you expect it to impact the Caesars portfolio?

Yes. So Shaun, I expect that to be a mixed bag for us. Given what they're building and the level of investment that's going in there, I think it's pretty clear that they're going to target the highest end of the market. And so while you've seen our regional CapEx cycle kind of move into a harvest phase, we've shifted capital toward Vegas and we shifted our Vegas capital towards Caesars Palace and Paris, which are two that get high-end business. Mirage coming offline for us — you can see things like the High Roller, the zip line, the shows on the east side of the Strip have struggled a bit without those 3,000 rooms online. So that will be a benefit to us when you have almost 4,000 rooms feeding, and obviously, we're the closest neighbor on most sides of what Hard Rock is doing. So I think we'll have a benefit there. But we're anticipating that the high end will get even more competitive. The entertainment space will get more competitive, I'd expect the cost of the biggest acts will go up. So we'd expect them to be impactful. But I'd also say, given the location and what they're building, we're a little more optimistic that you'll get some of the — what you and I saw back in the day where a new property opens and expands the market visitation goes up. It's not just cutting up the pie a little smaller. I think they can grow the pie a bit. So we're excited about what they're building and the fact that we're immediately adjacent to it, both on the east side and at Caesars Palace.

Maybe to follow up on the last question. Tom, you kind of just talked about maybe how Hard Rock is going to impact you and the market, but specifically around the playbook into next year, like should we anticipate that you guys adjust pricing or change the promotional strategy in the months leading into that opening?

Yes. We'll have a full strategy to combat their opening. But Vegas is a totally different animal than regional. Vegas is a 95% cash business and you're generating profit from every vertical, whereas regionals are gaming centric and a lot of your nongaming is comp-based business. So keeping your properties full is paramount. We'll have a strategy to combat that opening, but realize this is a two percent increase in capacity in terms of rooms. So this is not a huge seismic event from an occupancy perspective. So it's really just keeping your best customers in your system and minimizing the loss of your most profitable customers.

And continuing to elevate the product as Anthony talked about, full remodel of the Augustus Tower and all the new capital investments that are going into Caesars Palace ahead of the Hard Rock opening, that's really the key strategy going forward as we prepare for their open.

Great. And then switching more broadly. I think you have two union contracts coming up in the next several months. Anything to call out there in terms of either getting those done or extended and any impact maybe we should expect aside from that?

Nothing to talk about at this point. New Jersey comes up this summer, Vegas is not till '28.

Eric, I wanted to ask about the Alberta launch. Anything that you can share around that? I know it's a smaller population, but some good cities in there with big hockey fans that have probably been come into the market. How heavy are you guys thinking about leaning in there? And anything on a database that you already have ahead of the iGaming launch in July?

Yes. I would agree with everything you said. It's a good opportunity. They actually have a fairly high average wealth per person; it is on the smaller side in terms of the size of the province. But that said, it's both sports and casino. So we're very optimistic that it will be a great market. I would say, in terms of our performance in Ontario, it's kind of middle of the road. Here, when we launch our app it is significantly improved from when we launched Ontario. And so we'll be putting a much more comprehensive launch plan together that will really go after the sports as well as the casino market and we'll launch with the Horseshoe and Caesars Palace brand. So it will be a much more significant plan. In terms of having a database already seeded in the market, it's not all that significant. There's just not a huge amount of travel between the United States and Canada from that province. And then in addition, there are some restrictions in terms of how the data can be transferred because it is out of the country or in the country, depending on which way you're looking.

Got you. And then, Tom or Anthony, going back to the regional markets, revenues have been stable for several quarters, but margins have declined in the first quarter year-over-year. Obviously, the Super Bowl was a major headwind, so maybe you would have been closer to growing margins. But are we at the point where all things considered that we know right now that margins could start to improve if revenues are growing in this low single-digit range that we saw in the first quarter?

Yes.

Just getting back to the kind of use of cash, is there a leverage ratio that you guys target that once you achieve that kind of all the cash flows will be used towards buyback? Or not all, but a significant portion of it.

I would say it's always going to be a decision as the cash flow comes in. There's not a magic number where all of a sudden, it's going to be all share buyback. But we want our leverage to be sub-5x on a lease-adjusted basis.

Okay. And then just on the iGaming side of things. It looked like we were pretty close in Virginia. Any thoughts around just which states out there you guys feel pretty good about that might be coming into the system in the next couple of years?

Very hard to handicap, Trey. I wish it were the case that it were kind of incremental, like a football drive where you get to midfield one year and then field goal the next year and then it's done the year after that; it's more like a car accident that happens in your vicinity. This stuff comes together very quickly as states get under stress budget-wise and are looking for revenue. The Virginia situation went from not really on our radar as a possibility to a week later seemed high probability and then ended up not happening. Illinois, prior to their per-wager tax a couple of days earlier, we were told they're going to legalize iGaming on Saturday night, and it was not even on the radar at the time as a real possibility. So it's very difficult to predict. What's easy to predict is state budgets are tight and getting tighter and states are going to be looking for avenues to raise revenue. Historically, gaming has been a place to do that. And if you look over the last couple of years, that's really only catalyzed in a way that was a headwind for us. It was tax increases or per-bet taxes. And the reality is those don't raise enough versus what they're trying to plug — what really moves the needle is legalizing OSB or iGaming. So I think if you're looking over kind of an intermediate time frame, I'm highly confident there'll be more jurisdictions available to us. I just hesitate to predict which ones those would be.

I know it's a smaller piece of the business, but the other lines, so entertainment and retail performed well versus last year. Was there anything to call out there this quarter? Or is that an area where you can continue to improve on throughout the year?

The only thing I could think of is our entertainment calendar in Vegas is more robust than it was last year, and that will continue throughout '26. We've got more shows both in the Coliseum and in Planet Hollywood.

Okay. Great. And then just as a follow-up, table game drop was down in both segments. Is that just a different mix of customers coming to the casinos? Or is it more tactical on your part with maybe less offerings, higher minimums? Any color there would be helpful.

It's typically timing-based in Vegas. In regionals, it's going to be heavily skewed by Super Bowl. There was a ton of high-end business in New Orleans last first quarter, which didn't repeat since the game wasn't there. There's nothing particularly in our strategy or in consumer behavior other than timing of trips that would explain that.

All right. Thanks, everybody. We'll talk to you after next quarter.