Caesars Eyes Digital Spin-Off as Stock Lags, Reeg Hints

A Digital Star, But No Stock Pop

Caesars Entertainment’s digital arm, Caesars Digital, is killing it, but you wouldn’t know it from the company’s stock price, which has tanked to pandemic-era lows.

CEO Tom Reeg is openly weighing options, including a potential spin-off, to cash in on the unit’s success. “We’ve hit our goals, and we’re moving through them, and we’re just not seeing it in the equity,” Reeg said.

“We will look at any and all options to create value for shareholders.” The disconnect between Digital’s hot streak and the market’s cold shoulder has the board thinking hard about how to unlock value.

In Q1 2025, Caesars Digital posted a 19% revenue jump to $335 million, with adjusted EBITDA soaring to $48 million from just $5 million a year ago.

The unit’s been the company’s growth engine for quarters, outpacing its brick-and-mortar casinos. Reeg’s clear: the plan since 2021 was to build Digital into a powerhouse, and they’re on track. But if the stock keeps ignoring these wins, a spin-off or other moves are on the table.

Sports and iGaming Shine

Caesars Digital’s growth splits across two big areas: sports betting and iGaming. Sports betting revenues climbed 9% in Q1, even with player-friendly Super Bowl and NCAA tournament results.

Management’s aiming for a 10% hold rate by late 2026, projecting “hundreds of millions” in sports betting EBITDA within 18 months. iGaming, covering online slots and table games, stole the show with a 53% revenue spike in Q1, followed by a nearly 70% year-over-year leap in April.

The new Horseshoe app, a fresh iGaming player, already chips in 7% of those revenues.

This digital surge stands out against Caesars’ traditional business, especially in a shaky economy. Unlike past downturns, Reeg noted, “we have a strong digital component that’s growing, which is a new situation.”

That strength’s fueling talk of spinning off Digital to let it shine on its own, potentially drawing investors who’ve overlooked it within Caesars’ broader portfolio.

Icahn’s Push and Market Buzz

Investor Carl Icahn, back as a Caesars shareholder, is fanning the spin-off flames. “He’d like to work with the management team to explore alternatives for Caesars Digital, which he described as ‘underappreciated,’” Icahn said, echoing Reeg’s frustration.

After placing two allies on the board, Icahn added he’s eager to explore “strategic alternatives for the Company’s underappreciated digital business.”

His involvement’s sparking buzz, as his track record of pushing for breakups or sales signals serious intent to boost Caesars’ stock.

A spin-off could let Caesars Digital trade as a standalone entity, likely commanding a higher valuation given its growth. Other options, like selling a stake or partnering with a private equity firm, are also in play, though Reeg’s focused on hitting financial targets first. “Our job is to deliver the numbers we laid out,” he stressed, noting they’ll reassess once goals are fully met.