Caesars’ Online Business Could Be Worth More Than Parent Company

A new evaluation from David Bain, an analyst at Texas Capital, suggests that the digital branch of Caesars Entertainment might now have a higher value than the entire company.

Caesars’ Online Division May Be Worth Up to $9.6B

Caesars Entertainment has a current market value of about $5.3 billion. However, Bain’s forecasts indicate that Caesars Digital alone could be worth more than this amount. He outlined various scenarios based on enterprise value-to-EBITDA ratios. Even with the most careful estimate of 12.5 times the expected 2026 earnings, the digital division would have a value of around $6.25 billion. At the high end, where it is compared to companies like DraftKings, Flutter Entertainment, and Rush Street Interactive, this number goes up to about $9.6 billion.

Bain claimed that Caesars’ board might act to showcase the real worth of its digital operations by next year if the company’s stock price does not reflect these factors. He pointed out that activist investors, including Carl Icahn, also think the market undervalues the digital division.

Recent results back up this opinion. Caesars Digital saw its revenue grow by 24% to $343 million in the second quarter, with EBITDA reaching $80 million. This progress has sparked new talk about spinning off the business, a step that could also help reduce Caesars’ $11.3 billion debt burden.

Caesars Could Unlock Billions in Savings Through Digital Division Sale

Selling a portion of the interactive division could have a revolutionary impact on Caesars. Bain’s calculations show that if Caesars sold 80% of its digital business at the lowest valuation, the company might slash its debt by $5 billion. This action, he pointed out, would reduce leverage ratios and boost yearly free cash flow by about $350 million. It would also create extra savings by cutting down the capital tied to complete ownership of the online segment.

While Caesars trails DraftKings and FanDuel in sports betting, it is making headway in the more profitable iGaming arena. Upgrades to its Caesars Palace app, which scored the third spot in industry tests, and the launch of the Horseshoe brand have played a big role.

The company has also made better use of its casino hosts to blend online and offline offerings. Bain stuck with a “buy” rating for Caesars, setting a $59 price target, which is more than twice the current trading price. He pointed out that Caesars’ future growth might not just depend on its casinos, but on how it decides to tap into the value of its digital business.