Tom Reeg
Chief Executive Officer at Caesars Entertainment
Thanks, Bret. We're not in the habit of delivering quarters that look like this. So I want to go through detail on how we got there and want to talk about whether anything fundamental has changed in the business. This is the kind of kind of answer the questions I would have if I was in your seat. If you look at the biggest buckets that this was kind of a kitchen sink type quarter for us, everything that could go wrong did for us. The biggest pieces are hold in Las Vegas, weather across the country that was well understood and you've seen with others and then losses around the launch of North Carolina in Digital. There's others that I'll touch on that are more minor, but there's well over $75 million of what's clearly one-time negatives for us in the quarter. So if I look at kind of the -- where we came out of the quarter and the way the business was operating fundamentally during the quarter, it looks more in my estimation like a flattish quarter, notwithstanding the EBITDA that we posted.
Starting in Vegas, our typical hold is range of 20% to 23% tables in Vegas. We were 15% for the quarter. So 500 basis points to 800 basis points below normal range. Midpoint of that is 650 basis points, and that's on $850 million of drop. So you can see that's in a very, very large piece of what -- of the shortfall in the quarter. This is -- table hold is a typical bell curve, we were certainly in the second standard deviation to the negative. We are completely comfortable that this reverses over time. You'll have quarters that -- are the reverse. I'm sure you -- as you're listening, you can think of some in recent history that were two standard deviations to the positive, unfortunately not for us, but our time will come. This was not an instance of a few players beating us. This was kind of repeated butt kicking broadly based throughout the quarter.
If you look at our volumes, slots were about flat. As Anthony said, Hotel and F&B hit set first quarter records and both Hotel and F&B -- the revenue overcame the increases in union costs to deliver more profitability to us. So volumes were great. People are still here. We just didn't hold. And if you think about running these properties at over 97% occupancy, you're fully staffed. There is no opportunity to make uphold. So it's particularly negative on the operating leverage side when you don't hold. We have the additional impact of Adele and Colosseum shifted dates from March into the fourth quarter that impacts this quarter, but that's revenue and EBITDA that we will pick up in the fourth quarter with the rescheduled dates, so largely a nonevent other than in this quarter's numbers. If we look at forward, as we sit here today, I'm looking at April, May, June, each month is forecast at 98% occupancy in the market. Our cash rates are depending on the month, up 8% to 14%. So Vegas remains very, very strong. And I'm not a guy who likes to talk about hold. So I'm hoping this is the last time I talk about it this year. But if you presume normal hold and what we see in front of us on a forward basis, I would expect Vegas to grow for each of the last three quarters of the year. We're in about a $70 million -- a little over $70 million hold out of the first quarter. I don't know that we'll make up that entire $70 million, that probably needs hold benefit on the right side of the range, but I'd expect we're eating at that throughout each quarter the rest of the year.
Moving to Regionals. We were down 3%. As I said, weather was a significant impact that everybody knows about. Absent weather, Regionals would have been up year-over-year for us. We are particularly optimistic about the rest of the year, particularly the second half, continue to believe that Regionals will grow on a full year basis for us. Anthony talked about New Orleans and Danville coming online to give you an addition to Columbus, Nebraska, which will start cash flowing in the next couple of weeks. So that's dollars we've spent that has no EBITDA attached to it until it opens two weeks from now. But if you start in Danville, that's a property that's operating in a temporary structure at the highest win per unit numbers in our entire system, which reflects unmet demand. We almost double our capacity when we opened the permanent facility at the end of the year. That's -- that will be dilutive to margins because the permanent facilities -- I'm sorry, the temporary facility is operating in excess of 60% margins, but it's accretive to overall EBITDA. And then if you think about New Orleans, as that opens Labor Day and you think about returns, recall that the way New Orleans runs its gaming tax regime in the City of New Orleans, there's a flat tax until you reach a certain level of gaming revenue.
As we sit here today on an LTM basis, we're about $75 million below where that property moves to a variable rate versus a flat tax. So if you think about it in terms of returns on the project, the first $75 million of incremental gaming revenue generated has no incremental gaming tax to us. So obviously, is extraordinarily high flow-through. So that's Regionals in Vegas. One more thing on Regionals. If you think about trajectory, Regional EBITDA in January for us was down more than 20%, in February was down about 4% and in March was up about 10%. And if you look at this quarter, it's hard to talk much about April in terms of predictive effect since April is the least important month of the second quarter, but we feel good about the quarter and the rest of the year.
Digital is an exciting story for us. I may be repeating some of Eric's numbers, but if you look at Digital, North Carolina for us was a much more successful launch in terms of customer acquisition than we were anticipating. And then what we have seen in recent states, we didn't make any change to how we promoted into it. It's really a comment on the strength of our database in North Carolina. But our first month market share was almost 9% of the market, which is about three-times what we've been doing in other new launch states. So as a result, North Carolina was negative 11% of net revenue in the quarter and negative $20 million of EBITDA. So if you strip out that launch, we were $25 million of EBITDA. OSB revenue was up 33% and iCasino, as Eric said, which was not impacted by North Carolina was up 54%. So tremendous momentum in Digital for us in the quarter, and that was despite, as others have talked about March Madness, Super Bowl were not great from a hold perspective, our hold was up. Our Parley percentage was up over 20% versus in the same quarter last year. So our efforts to increase our hold are bearing fruit as you can see we are almost 100 basis points better in the queue despite poor sports outcomes.
On the Caesars Palaces' online launch, as Eric said, we're now in our seventh month post launch, and that business is already doing more than 50% of our revenue. In iCasino, it's doing exactly what we anticipated in terms of creating an iGaming customer base that looks like our database, looks like our physical floors, SKUs female, SKUs to slots, you should expect us to continue to build on that momentum. We'd anticipate launching a second brand very similar to the first before the end of the year that should allow us to continue that momentum. There's been a lot of talk for a lot of quarters about, "G [Phonetic] can you get to $500 million?" I've talked about the legs of the stool that get us there. If we look at it in a different way, in terms of what I see as I look at how we built this business, we did $1 billion of net revenue in Digital in 2023. We reported $40 million of EBITDA on a hold-adjusted basis, fourth quarter, that'd be $60 million, whether you use $40 million or $60 million, start there. The industry is growing at 30% this year. We're growing -- we should be growing at least at that given our iGaming is growing considerably faster than the market. As Eric said, our flow-through was in excess of 50% in this quarter. So if you take the $1 billion, you have us grow at the market level and you flow that through, it's very easy for you to do that math. If you do that again in 2025, that should get you to something like $1.7 billion of revenue and something over $400 million in EBITDA. That does not include any benefit from the partnerships that roll off in the '24, '25 time frame. That's how I get to the $500 million target in '25 that very few of you believe that I see as really simple math and continuation of what's already happening in this business.
If you want to quibble with me whether $500 million is a full year '25 number or we're run rating at that level in '25 and don't quite get to $500 million, I'm happy to have that discussion. I'd say that's certainly up for debate. But the idea that we're not going to do $500 million to me looks highly unlikely. And as I look at that target now, I look at that as a point in time, and we're going to continue to move past that. We are going to generate more than $500 million of Digital EBITDA. It's just a matter of when we're going to generate that. So we feel very, very, very good about what's going on in Digital and that it really matches the progress against markers that we laid out when there was no one in the space laying out any similar markers. Before we launched in August of '21, we laid out how much we'd spend, what we thought the return could be and we are right on that pace, if not ahead at this point. So feel fantastic about where Digital is today.
In terms of capital, we're spending a lot of capital this year. I've talked about on prior calls, we walked into a lot of capital spend when we did the Caesars merger. Caesars had already agreed to make the New Orleans investment that finishes Labor Day. They had already won the license in Danville. The permanent opens at the end of the year. And New Jersey gently encouraged us to spend the $400 million in CapEx in New Jersey. That's in the rearview mirror at this point. So as we report this quarter, we are one quarter closer to the step-down in CapEx spend and the increase in free cash flow that I've talked about as our opportunity to move to offence, whether offence is buying in stock that in my estimation seems attractive or if we're in a different ZIP code potentially looking outside for growth opportunities. You're really -- as we sit here at the end of April, you're about five months away from that. So we -- you should expect a step down in gross CapEx in '25, that's in excess of $500 million. Bret told you we just closed on our Danville credit facility, so the funding from Danville doesn't come through our balance sheet this year.
So we really feel good about where we're sitting, what the rest of the year looks like. But as I said, we're not in the habit of reporting quarters like this. I wanted to give everyone a sense of where I see the business and where I see what this quarter looked like. You'll all do with that what you will. But we anticipate getting back to quarters like we've been printing for the last ten years, starting with the next one. And with that, I'll open it up to questions.
