Caesars Entertainment Corp (CZR) Q3 2021 Earnings Call Transcript

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Caesars Entertainment Corp (CZR 0.58%)
Q3 2021 Earnings Call
Nov 2, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to Caesars Entertainment, Inc. 2021 Third Quarter Earnings Conference Call. [Operator Instructions].

I would now like to turn the call over to your moderator today, Brian Agnew, Senior Vice President of Finance, Treasury, and Investor Relations. Sir, you may begin.

Brian Agnew -- Senior Vice President of Finance, Treasury, and Investor Relations

Thank you, Ren, and good afternoon to everyone on the call. Welcome to our conference call to discuss our third quarter 2021 earnings. This afternoon, we issued a press release announcing our financial results for the period ended September 30, 2021. A copy of the press release is available on the investor relations section of our website at investor.caesars.com.

As usual, joining me on the call today are Tom Reeg, our Chief Executive Officer, Anthony Carano, our President and Chief Operating Officer, and Bret Yunker, our Chief Financial Officer. 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 about the Company's performance.

Such forward-looking statements are not guarantees of future performance, and therefore, one should not place undue reliance on them. Forward-looking statements are also subject to the inherent risks and uncertainties that could cause actual results to differ materially from those expressed. For additional information concerning factors that could cause actual results to differ from those discussed in our forward-looking statements, you should refer to the cautionary statements contained in our press release, as well as the risk factors contained in the Company's filings with the Securities and Exchange Commission.

Caesars Entertainment undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances that occur after today's call. Also during today's call, the Company may discuss certain non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measures most directly comparable to each non-GAAP financial measure discussed and the reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found on the Company's website at investor.caesars.com by selecting the press release regarding the Company's 2021 third quarter financial results.

I will now turn the call over to Anthony.

Anthony Carano -- President and Chief Operating Officer

Thank you, Brian, and good afternoon to everyone on the call. The third quarter of '21 was another strong quarter. We delivered $1.4 billion of adjusted EBITDA on the quarter, excluding Caesars Digital, which represented a quarterly record for our Brick and Mortar properties. 31 of our 51 properties set a record for the highest third quarter EBITDA, while 32 set a record for the highest Q3 EBITDA margin. Starting with Las Vegas, demand trends remained exceptionally strong through the quarter, leading to an all-time quarterly record of 500 million in adjusted EBITDA in our Las Vegas segment. Excluding Rio rent payments, EBITDA improved 44% versus the third quarter of 2019, and margins improved 1400 basis points to 50%.

Total occupancy for Q3 was 89%, with weekend occupancy at 97% and mid-week occupancy 86%. Looking ahead, we remain encouraged by booking trends into 2022 and beyond. While group attrition remains higher than normal, we began to see conventions returned to Las Vegas in the third quarter, and the segment represented approximately 10% of occupied room nights, a dramatic improvement versus the first half of 2021. We continue to expect to see a gradual recovery in the segment leading into next year, and we are encouraged as group and convention revenues on the books for '22 continue to pace nicely ahead of '19.

Demand for CAESARS FORUM is exceeding the original underwriting expectations with over 175 events booked currently, representing 1.8 million room nights and over $650 million of revenues for all future periods. 76% of this business is new to Caesars. Turning to our regional markets, operating results remained strong especially in markets not impacted by severe natural disaster events. Adjusted EBITDA, excluding New Orleans, Lake Tahoe, and Lake Charles, increased 35% versus 2019. With margins improving by 860 bits to 38%.

On a same-store sales basis, we achieved the highest third quarter EBITDA and EBITDA margin in the regional segment in the history of the Company. In our Caesars Digital segment, we generated over 3 billion of volume, 96 million of net revenue and an adjusted EBITDA loss of a 164 million. Sports betting and iCasino handle a split roughly 55%/45%. 90% of our handle was from mobile sports betting and iCasino. We're laser-focused on scaling our digital business through aggressive customer acquisition during our first fall sports season, post-launch of our seasons branded apps in nine states.

While customer acquisition and handle exceeded our internal expectations, net revenues were negatively impacted by directed promotional investment in odds and profit boost, competitive pricing strategies, and lower than historical hold in certain markets. We are pleased that our sports betting handle share in the eight states operating on Liberty platform has increased to 12% through September. Arizona has not reported and therefore not included in these stats. Our national market share through September, including all legalized sports betting states, sits at 17%.

Following the exciting launch of retail sports betting in Louisiana on Sunday, we now offer sports betting in 20 jurisdictions, 14 of which are mobile. Importantly, we expect to complete the migration of our legacy up to Washington, D.C., Nevada, Pennsylvania, and Illinois to our Liberty platform in 2022. We're also excited to be rolling out enhanced iCasino offerings in the fourth quarter, following anticipated regulatory approvals related to the release of new gains in New Jersey, Michigan, and West Virginia. Our expanded game portfolio will be accompanied by significant improvements to our in-app merging technologies.

On the development front, we are making great progress on our new land-based facility in Lake Charles. This significantly upgraded property should be completed and ready for business in the fourth quarter of '22. In New Orleans, construction work has started on our new hotel tower and property upgrades. In Las Vegas, the remodeling of the entries to Caesars Palace is making great progress, and we look forward to a dramatically improved arrival experience some time in Q1 of '22.

In Indiana, we are well underway with our casino expansion at Indiana Grand, which should be finished by January of '22. And finally, in Atlantic City, our $400 million capital plan is actively moving forward with remodeling room towers and setting the stage for exciting new food and beverage, and entertainment options. As we look to 2022, we see several tailwinds in our business, and we remain optimistic about further visitation gains as consumers returned to our property once COVID fears have fully subsided. We remain confident in the eventual return the convention customer to Las Vegas and our destination markets.

Lastly, we are excited to rebrand a handful of our properties in 2022, using flagship brands from the Caesars portfolio to even further elevate the customer experience. I am extremely proud of our operating teams, their execution and exceptional guest service during the third quarter.

With that, I will now turn the call over to Tom for some additional insights on the quarter.

Tom Reeg -- Chief Executive Officer

Thanks, Anthony. Good afternoon, everybody. We pre -released for our bond deal in -- earlier in the quarter, so you had two months of brick-and-mortar operations, effectively, so I am going to be lighter on comments on brick-and-mortar and go a little deeper into digital. On the brick-and-mortar side, it either didn't hit New Orleans and we didn't have the caldor fire in Tahoe. We had had done a billion one of brick-and-mortar EBITDA in the quarter.

We had an extremely strong quarter. Demand remains particularly robust. In regards to New Orleans and Tahoe, Tahoe has pretty quickly recovered back to above 2019 levels. Not quite as strong as it was pre -fire, but continuing to build. And New Orleans, recall that we have significant operating leverage there that works in both directions. You've got a minimum guaranteed tax payment to the state and the city in Louisiana. So New Orleans EBITDA continues to trail '19, although it is continuing to recover as well. Going into the storm we were doing $11 million, $12 million a month in EBITDA at New Orleans, and now we're more like five or six in building.

Vegas had a record quarter, beating the record of the second quarter. So $424 went to $500 of EBITDA, $511 adding back the real ramp payment. As Anthony said, we were 50% margin again, that was in spite of us imposing occupancy caps mid-week, so that we could calibrate supply with our housekeeping services. We are struggling across the country to hire guest room attendants, Vegas is no exception. So even with the operating caps, we set a quarterly EBITDA record. In October, Vegas had the strongest EBITDA month in the history of Caesars. So the strength has continued into October regionals as well. We're still pacing up in the neighborhood of 40% over '19. So feel very good about the setup going into '22.

Customer demand remains strong. Obviously, the virus numbers have subsided considerably over the past six weeks to eight weeks, and we're seeing some pickup in demand as that rolls through. For digital, I spoke to digital in the second quarter call in terms of what you should expect from us. We are anticipating investing in the terms of a cumulative EBITDA losses north of a billion dollars into the digital segment, and generating cash-on-cash EBITDA returns at maturity north of 50%. And what we saw in terms of opportunity for us was the ability to activate our 50 plus properties, our 50,000 plus employees, and most importantly, our $65 million strong Caesars Rewards database, and that's what we set out to do.

As I go through these numbers, I'm going to talk about how I look at this business in terms of measuring what we're doing versus expectations. I would -- even though we're extremely encouraged that the numbers that I'm going to be talking about are ahead of our internal expectations as we launch this, it's very early and this is a long game, so we expect it to not be a straight line. What we anticipated was in states where we offered our Liberty technology, where we were starting on equal footing, and where we had existing strong database, that those would be our most effective markets.

And that describes Arizona to a T, which launched during the quarter, has not published results yet, but we think that the results will show us in excess of the handle numbers -- percentage numbers that Anthony described earlier. In the Liberty states in total, and I'm looking at handle because in the current customer acquisition environment, hold is volatile, not just because of the results of the sporting events, but because of the boost in the promotions that you offer. So I'm -- when I talk about share, I'm talking about handle share.

So in our Liberty states, handle share has almost doubled since launch. That's in the 6s to about 12% mobile market share. That's without Arizona. As I said, I'd expect that to exceed the average and bring it higher. Arizona is our second -- our third strongest state behind Nevada and Iowa where we have incumbent advantages and that reflects exactly what we expected.

States where we launched but we were late to the game but did have Liberty, we're seeing continuing -- continued build in market share on the order of the two to 500 basis points depending on the market since we launched. Importantly, if you're looking at analysis that looks at market share across the entire U.S. market, realize that we are not competing, for the time being, in Pennsylvania and Illinois which are two of the biggest markets out there.

When we launched, the Liberty platform was not approved in either state. It will be approved in the first half of 2022 is our expectation, but we didn't want to spend money guiding customers to an experience that would not be what we wanted to offer them. And so you see our share in those markets sucks, for lack of better term. If you look at where our customers are coming from. When you're spending like we're spending on advertising and promotion, you're going to get lots and lots of customers that show up at your door. A lot of them are not going to be worth a lot of value. If you look at our customer by count, Caesars Rewards customers are somewhere around 1/3 of our total new deposits since we relaunched.

By handle, Caesars Rewards customers are about half of our handle since relaunch. So validating that we think Caesars built a system over two decades that identified the valuable customers that everyone is out there searching for, we're seeing that in our experience and that's extremely encouraging as we look to the future. The performance in the Arizona also encouraging as we look to states like Louisiana, which just launched retail on Sunday, will launch mobile in the near future. Maryland will come online soon as well.

These are states where we are in a similar position to where we were in Arizona, so we'd expect to perform well. When we show -- when we give you our 17% total market share, that's everything. That's the states we're not doing well in like Pennsylvania and Illinois, that are not Liberty states, but also includes Nevada, which is not a Liberty state but where we have tremendous market share. We're not adding fantasy numbers in there, we're not adding a horse racing business in there, we're showing you pure sports betting handle. And if you think about what we're doing -- what we did in sports in the quarter, our handle for the third quarter was a little under $1.7 billion -- I'm sorry, a little over $1.7 billion for the full quarter.

In October alone, we did over $1.3 billion of handle. So we think we're continuing to generate momentum. And when I talked about the return on investment, obviously we had a model that showed where we expect it to get in market share and the pace at which we expect it to get there. So you can see from EBITDA loss that it's relatively in line with what we were telling people to expect.

But our ramp in market share has exceeded our expectations in terms of its pace. Now, the question to that is, does that mean there's a broader market -- a bigger market share number down the road? And the candid answer is we don't know right now, but what we do know is we are gaining share at a pace stronger than we expected given the investment that we've made. So encouraging results from sports.

In iCasino, if you want to -- if you want to think about somewhere where we have tracked a little bit below plan, we inherited a platform in iCasino that was non-competitive from a game-offering standpoint. And so again, we've not spent money advertising and promoting our iCasino business until we get the approvals we need to offer a broader array of games that's competitive with our peers that are out there. We expect that will take place before the end of this year. And so then we can talk with more relevance as to what's happening in iCasino.

We continue to perform strongly in New Jersey and iCasino, but we have not pushed our launch in iCasino beyond New Jersey today. So in summary, we're extremely encouraged bulk brick-and-mortar, and one thing I should say about wrapping this digital business into the physical enterprise, the employees that have leaned, just done an outstanding job of leaning into this launch for us. And Caesars Rewards, activating the database, this is not something where you just flip a switch. This is going to continue to build momentum as the quarters pile up. We -- I think we've done a good job of getting our message out there, getting our brand out there, and we're encouraged to see the customers respond.

And with that, I'll flip to Bret.

Bret Yunker -- Chief Financial Officer

Thanks, Tom. We had an active third quarter of M&A and Capital markets activity. On September 9th, we announced an agreement to sell the non-U.S. assets of William Hill to 888 Holdings for PS2.2 billion. Following repayment of debt, we will receive net proceeds of approximately $1.2 billion. We expect this transaction will close during the first quarter of 2022.

On September 10th, we priced $1.2 billion of new unsecured notes at a 4% and 5%, 8% coupon. And we repriced $1.8 billion of CRC Term Loan B at Libor plus 350, a decrease of a 100 bps. Proceeds from the new notes alongside $500 million of cash on hand were used to fully retire $1.7 billion of existing CRC notes. In late September and October, we continued to use excess cash on hand to permanently repay debt through a $100 million of open market purchases of our existing Aggregate year-to-date debt reduction is approaching $1 billion, which has resulted in approximately $75 million of annualized interest expense savings.

Net proceeds from the sale of William Hill's non-U.S. business will be applied to debt reduction in the first half of 2022, yielding further interest expense savings and enhance free cash flow. Our 2021 calendar year capex spend, excluding Atlantic City, is now $350 million to $400 million, which includes approximately $75 million for Caesars Digital. This is simply a shift in timing of planned capex from 2021 to 2022, driven in part by the hurricane that impacted our New Orleans expansion and COVID-related supply shortages.

With that, I'll turn back to Tom.

Tom Reeg -- Chief Executive Officer

Thanks, Bret. And to talk a little bit about '22, when we closed the Caesars transaction, obviously, we closed into an uncertain environment with a highly leveraged capital structure, and we needed to bridge to the point where we'd be generating a lot of free cash flow to pay down that debt. You heard Bret talked about the beginnings of that in '21. '22 is going to be a massive cash flow generation -- cash generation and deployment year for the Company.

As Bret said, we've got the William Hill asset sale settling between the William Hill non-U.S. business, The Neo games sale, we've got about a $1.5 billion of proceeds to deploy, the bulk of which will be coming in '22. We're generating in the brick-and-mortar business something in the neighborhood of $2 billion a year of free cash flow right now. And so if you're looking from now till -- from end of third quarter to end of '22, you're well over $2 billion of cash there. We also think this is an opportune time to execute on our strategy of a strip asset sale. So you should expect us to put that in motion in the early part of '22.

And if you look at all of -- and as Bret said, you should expect it to be aggressive on the refinancing front in 2022 as well, which should dramatically lower our cost of debt. And so if you add all of those up, we should have well in excess of $5 billion of cash to deploy in 2022. Some of that will be spent in the digital business. Some of that will be spent on capital projects that drive ROI in the portfolio.

But the vast majority of that cash is going to go to pay down debt, where we can be in a position to be pushing almost half of our conventional debt off the Balance sheet and ultimately reducing our cash interest expense by the end of '22 to $300 million or $400 million a year less than it was when we closed the transaction. So we are extraordinarily excited for what's to come in '22, very happy with the results that we're reporting to you today, and happy to answer any questions that you have.

Operator, can we open the line for questions?

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from the line of Carlo Santarelli from DB. Your line is open.

Carlo Santarelli -- DB -- Analyst

Hey, guys, thank you. Tom, I know it hasn't been a long time since you started, but given the few months, so the ramp and relative to your expectations on the sports side, and keeping aside the iCasino side for a second, when do you believe you could start to see that business turn positive in terms of EBITDA contribution? Is it as soon as 2023 or are we looking beyond that and out into '24, '25?

Tom Reeg -- Chief Executive Officer

I am expecting football season of '23.

Carlo Santarelli -- DB -- Analyst

Okay. Great. And then you talked a little bit about the Las Vegas sale and clearly the comps have been -- your patience has seemingly paid off with what you've seen in terms of comps. Is there anything special about the first half of next year or early next year that you guys will get aggressive in terms of looking to make that transaction happen?

Tom Reeg -- Chief Executive Officer

No, it's really a matter of as we discussed, we wanted to be marketing off an EBITDA number that we're generating from the property, not trying to bridge to some number that we've not done before. Now we've got a track record that we can point to in terms of what the property can generate, and the deck has -- the playing field has been cleared with the Cosmo and Aria trades to where we should have a pretty robust -- we should encounter pretty robust demands for a center strip asset that, frankly, may be one of the last ones to trade for quite some time.

Carlo Santarelli -- DB -- Analyst

Great. And then if I could, Tom, just one follow-up as it pertains to Las Vegas trends from 2Q to 3Q, more or less. Clearly, business volumes are higher; revenues were up nicely, sequentially. opex was also up. Do you guys think the current opex run rate is something that's sustainable on these business volumes or -- I know you talked about staffing and keeping occupancy in check during mid-week to adjust to labor levels, but is the current opex environment that you had in the 3Q in Las Vegas specifically, is that a place where you think you can maintain going forward?

Tom Reeg -- Chief Executive Officer

I do, but frankly, I'd like to see opex come up some as we fill our, particularly, guestroom attendant positions so that we can unlock the caps on the midweek, and I'd expect that to happen at some point in '22.

Carlo Santarelli -- DB -- Analyst

Appreciate it, Tom. Thank you.

Operator

Your next question comes from the line of Joe Greff from JPMorgan. Your line is open.

Joe Greff -- JPMorgan -- Analyst

Good morning, everybody. Tom, maybe we can dovetail into what Carlo was talking about on the sustainability of margins. Was there a big difference between the margin exit rate in Las Vegas in the regional versus what say going into the beginning of the 3Q, excluding weather-impacted areas?

Tom Reeg -- Chief Executive Officer

Can you margin what?

Joe Greff -- JPMorgan -- Analyst

Margin exit rate.

Tom Reeg -- Chief Executive Officer

No. I mean, we were pretty stable throughout the quarter, Joe, and into October. We're still around in 40% consolidated EBITDA margins.

Joe Greff -- JPMorgan -- Analyst

Okay. Great. And then you mentioned by the end of this year, you would have a larger quantum of competitive iCasino games launched, which you've talked about before. Can you talk about what you think the incremental investment is in that part of the billion dollars of cumulative losses and how you think of that as you move sequentially from September and October to the end of the year in digital, more broadly in terms of what that incremental investment might be?

Tom Reeg -- Chief Executive Officer

That was built into the guidance I -- the framework I gave for build of the entire business. As you know, to the extent those are -- the bulk of those, they're third-party games. They're participation from a revenue standpoint, so that was all built in. It's just a question of timing of getting them through the approvals in the various states.

Joe Greff -- JPMorgan -- Analyst

Great. Thank you.

Tom Reeg -- Chief Executive Officer

Thanks, Joe.

Operator

Your next question comes from the line of Steve Wieczynski from Stifel. Your line is open.

Steve Wieczynski -- Stifel -- Analyst

Hey, guys. Good afternoon. So, Tom, you called out that the billion-dollar investment or spend level on digital on your last call and that would last, let's say, eight quarters to 10 quarters, I think that's what you talked about. I guess the question is, with what you've seen so far in the progress, you've made with market share, are you still comfortable with that all in investment and will that be sufficient?

Or I guess another way I could ask that is, if let's say two years down the road, your market share doesn't pan out where you think it's going to be. Could that $1 billion investment eventually turn into a much higher number or at this point, you just don't see that being the case?

Tom Reeg -- Chief Executive Officer

No, I'd say it's the opposite of what you described, Steve. It's -- post launch, the bulk of our spending now is success-based. It's tied to customer acquisition. So if we do worse than we're expecting from a share perspective, I'd expect that the ultimate investment will be less. If we do better than we expected from a share perspective, I'd expect the ultimate investment to be more, but, obviously, the return will fall in both directions.

Steve Wieczynski -- Stifel -- Analyst

Okay. Understood. And then second question, I think you, Tom, you called out a $5 billion number of cash to deploy next year, and that assumes a Vegas asset sale. I guess the question there is, you've talked about potentially letting go more than one asset in Las Vegas. And at this point, is that still the case or is it kind of one in 2022 and then go from there, or is there the possibility that you could eventually do more than one in 2022?

Tom Reeg -- Chief Executive Officer

Well, with the caveat that as a public Company, every asset is for sale every day, there is some confusion. There were two offers in the VT agreements at the clubs. We have never said we expect to sell a second property, nor do we expect to, at this point. We'd expect to sell a single property and be done, but we'll assess where we are in the market, what our Balance Sheet looks like afterward, and how we feel about our future prospects. But I think it will be limited to one asset. And also just to go back to when I talk about deploying Capital in '22, I think it's going to be well in excess of $5 billion, not $5 billion on the nose.

Steve Wieczynski -- Stifel -- Analyst

Okay. Perfect. Thanks, Tom. Appreciate it.

Operator

Your next question comes from the line of Thomas Allen from Morgan Stanley. Your line is open.

Thomas Allen -- Morgan Stanley -- Analyst

Thanks. I think I heard correctly that you said you did over a billion 7 of sports betting handle the third quarter and then over a billion 3 of handle in October, which based on my numbers implies you've had about 15% U.S. market share in September -- sorry, in the third quarter, and closed at 20% in October. Can you just parse that a little bit? You relaunched your Sportsbook August 2nd, so how was the trajectory in the third quarter? And then any color of Nevada versus the rest of the states just to kind of get give a view on kind of what the legacy business did versus the newer business? Thank you.

Tom Reeg -- Chief Executive Officer

Yeah. So the -- in terms of handle as you would expect, the quarter built August was considerably bigger than July and September doors to August. Because of the calendar, October is considerably more than September. In terms of the states, I've talked about, the Liberty states. We went from, in the 6s to about 12, in terms of, handle market share as we are measuring it in total, we're about 17%. Nevada share was flat over that time frame. We obviously have very large share in Nevada, but didn't have any significant move in share. Keep in mind, Nevada is not a Liberty state yet either.

Thomas Allen -- Morgan Stanley -- Analyst

Perfect. Thanks, Tom. And then just as my follow-up. Can you just talk a little bit -- you gave some color about what's been going well in the cross-sell with the Caesars Rewards customers. But, can you talk about some of the other things, you're $5,000 risk-free bad, the commercials, all of that? How do you think they are doing? Thanks.

Tom Reeg -- Chief Executive Officer

It's hard to parse all of that from a commercial standpoint, they measure unaided brand awareness, and that's through the roof since we started the commercials, basically, ask a question of list sports -- well, list a Company that you know offer sports books. The amount of people -- percentage of people that would name Caesars today is dramatically higher than it was on August 1st. The individual promotions we're constantly tweaking those.

I don't really want to, for competitive getting reasons -- get into what's worked the best and what hasn't worked. But you should expect to see that continue. We've rolled out single-game parlay, which in NFL action has been growing substantially as a percentage of our debts. And that's very high whole business. So that's good to see.

Bret Yunker -- Chief Financial Officer

And in the app, I'm sure you track this, Tom, it's just seen a significant improvement on the sports category rank on iOS. I mean, we were trailing -- we were roughly 150 ranked and now we're making great progress between 15 and 20 on the iOS apps, so just a tremendous improvement there.

Thomas Allen -- Morgan Stanley -- Analyst

All helpful color. Thank you very much.

Operator

Your next question comes from the line of Barry Jonas from Truist. Your line is open.

Barry Jonas -- Truist -- Analyst

Tom and team.

Operator

Sir Barry Jonas.

Brian Agnew -- Senior Vice President of Finance, Treasury, and Investor Relations

I think Barry might be having technical difficulty.

Barry Jonas -- Truist -- Analyst

Hey. Hey, sorry.

Brian Agnew -- Senior Vice President of Finance, Treasury, and Investor Relations

Go ahead, Barry.

Barry Jonas -- Truist -- Analyst

Hey guys, how do you think about ROI in digital markets with higher tax rates like New York?

Tom Reeg -- Chief Executive Officer

Obviously, that's going to influence your reinvestment rate. You're looking for ultimately, what's my return on Capital. But you can enlarge your population states high velocity, high participation. You can conceivably make money at higher tax rates than in lower volume states. But obviously, we prefer the lower tax jurisdictions as an operator.

Barry Jonas -- Truist -- Analyst

Got it. And once you reach a point when you compare back promos for digital, how do you think about the size and profitability of any business loss? And I guess with that, any updated thoughts on a mature market share goal?

Tom Reeg -- Chief Executive Officer

We've not been out there with a market share goal and don't want to start that today other than to make the point again that, the target that we had in mind when we put out the metrics last quarter, we're gaining share much, much quicker than we anticipated as we started out. What was the other piece of that?

Brian Agnew -- Senior Vice President of Finance, Treasury, and Investor Relations

Barry, repeat first --

Barry Jonas -- Truist -- Analyst

The question was, when you reach a point you can start paring back promos, how do you think about what business stays and what remains?

Tom Reeg -- Chief Executive Officer

As you deposit in our app, you're signing up for Caesars Rewards in the vast majority of cases, if you're not already a customer. So we're bringing new customers into the system. Our expectation is -- our history has been that customer becomes sticky to the brand over time as they realize the benefits of what the rewards program brings them.

So we're looking at it from the standpoint of we think if you're thinking of lifetime value of a customer, We think our lifetime value of a customer is going to compare favorably with our peers, both because of the profile of the average Caesars reward customer that is starting to dominate our handle. And the length of time that they are going to stick with the app because the relationship with the rewards program. But we do know that we're going to lose some of these guys, whether it's shopping from site to site for what's the best promo I can get tonight.

Barry Jonas -- Truist -- Analyst

Great. Thanks so much.

Operator

Your next question comes from the line of Shaun Kelley from Bank of America. Your line is open.

Shaun Kelley -- Bank of America -- Analyst

Hey, good afternoon, everyone. Tom, just thinking about the ramp up in some of the -- let's call it the non-fair fight states. So where you were a little bit later. Can you talk at a higher level, I need try to give us some direction in a couple of different ways, but could you talk a little bit about how you expect us to be able to monitor -- what you expect to see about the ramp up in some of those really competitive existing states, the New Jersey s, the Pennsylvania's, the Michigan's of the world? Just how should those trends as we see that data coming in every month? And what KPR are you looking for to continue to show success in those markets?

Tom Reeg -- Chief Executive Officer

We're looking at handle share for the time being. And if you want, Michigan went from three to over six. Tennessee went from two to almost eight. Virginia went from six to 10. So you're seeing it in the states where we jumped in late, that we're gaining share, materially, early on and expect that to -- we'd expect to continue to claw share over time. So there's really no state I can point to where I'd say we haven't seen the experience since launch that we're building share from where we were. It's just in the case of the states we talked about where we were late, we're starting from a low base, and the claw is going to take more time.

Shaun Kelley -- Bank of America -- Analyst

And my follow-up would be a little bit on the cost side, see you've obviously been very visible with the national ad buy, but there has been some discussion already, there has been some pullback in the big TV buys. And you've also talked about your performance marketing a little bit. So can you just talk -- I mean, I'm sure you've got your own competitive plan out there, but how do you think about maybe switching some of that spend through channels as your awareness reaches a level that everybody's going to know you're out there, and you really start to focus on effectiveness. Is there a right timeline to think about for that or do you know -- have you thought about those buckets evolving over time?

Tom Reeg -- Chief Executive Officer

You should expect through this football season, we're going to continue to be aggressive. We just filmed another round what we're calling season two of ads that will start rolling out this month. So you're going to -- we're going to be all over the place in terms of media. Where we have kept our powder dry is the advertise -- that media that was targeted toward iCasino until we get the product up to the standard that we want.

Shaun Kelley -- Bank of America -- Analyst

Thank you very much.

Operator

Your next question comes from the line of Ben Pulitzer from Wells Fargo. Your line is open.

Ben Pulitzer -- Wells Fargo -- Analyst

Hey, guys. Good afternoon and thanks for taking my questions. Tom, you mentioned this a little bit in terms of the new sign-ups from the Caesars Rewards. Members -- I mean, can you maybe quantify that or put some numbers there, and have you seen these -- to what extent have you seen the new sign-up -- the new players flow into your properties and create more of an omni -channel benefit?

Tom Reeg -- Chief Executive Officer

As I said, the answer to the first question is no, I'm not going to put raw data on those numbers, but figure Caesars Rewards, first-time depositors or been a quarter to a third of our first time deposits. But as far as handle, I've been about half. Those are broadly where we're at. And as I said, as you sign up for the app and deposit, you're prompted to sign up for Caesars Rewards. And we're seeing an extremely high uptake in terms of people signing up for Caesars Rewards, and we're seeing cross visitation.

One of the areas where we're particularly active is the high end of the market, large batters that are new to our system, where we're willing to take large sports bats, and we're seeing those customers make their way into our -- their high -- our high limit rooms as well. So that's been an encouraging sign and we've seen that all the way down to the low levels of the database as well.

Ben Pulitzer -- Wells Fargo -- Analyst

Got it. And then just for my follow-up, I think for William Hill in Nevada, I think it's historically had around 30% or so market share for sports betting. Since you guys took full ownership, have you seen any changes in terms of your partners there? I know online is certainly growing a lot as well.

Tom Reeg -- Chief Executive Officer

We're about half of Nevada.

Ben Pulitzer -- Wells Fargo -- Analyst

Got it. Thanks so much.

Operator

Your next question comes from the line of David Katz from Jefferies. Your line is open.

David Katz -- Jefferies -- Analyst

Hi, evening, everyone. Thanks for taking my question. I wanted to go back to the commentary, going over a little on iGaming with the offering not being up to what your standard is. And I think early on you indicated the breadth of games was not what you wanted. From a technology and game engine perspective, are those elements that you're still working on or is it really just a content offering issue primarily?

Tom Reeg -- Chief Executive Officer

We are never stopping work on the nuts and bolts behind both OSB and iGaming. But the iGaming piece that we're waiting on is virtually entirely content at this point. And it's just a matter of getting through the bureaucracy in each state, in terms of getting the games approved on our apps. And this iOS a function of -- this is not states dragging their feet.

William Hill, in its former life as a U.K. domiciled and managed Company, didn't provide the resources to the U.S. business to develop both the OSB platform and the iGaming platform to their fullest extent. And so what we're doing is providing the resources and ability to let iGaming catch up with OSB.

David Katz -- Jefferies -- Analyst

Understood. And with respect to iGaming, there is, I believe, a conventional wisdom that with fewer states and perhaps smaller share or smaller total handle, the profitability and the LTVs of those customers, etc., can be equivalent or even better than OSB. Is that what your expectation is as we start to get some of those handle numbers and see some of those share numbers from you?

Tom Reeg -- Chief Executive Officer

Yeah. We are -- iGaming is and has been a material profit generator in New Jersey for us, and we would expect Michigan, Pennsylvania, West Virginia, as we roll out, to follow that same path.

David Katz -- Jefferies -- Analyst

One last one if I may, which is within sports betting and iGaming, the appearance is that you have a fully integrated control over that enterprise. Is that correct or are there B2B participants in there that maybe driving certain aspects of your sports betting enterprise?

Tom Reeg -- Chief Executive Officer

The only piece is the PAM that's provided by NeoGames but that's a unique arrangement given our ownership interest in NeoGames, where we have a dedicated team that works on only the Caesars ' PAM at NeoGames.

David Katz -- Jefferies -- Analyst

Perfect. Thanks a lot.

Operator

[Operator Instructions]. Your next question comes from the line of Chad Beynon from Macquarie. Your line is open.

Chad Beynon -- Macquarie -- Analyst

Hi. Good afternoon, and thanks for taking my question. I'll add onto the digital questions. Just one on Canada, specifically Ontario, I know the marketing will be a little bit different up there versus what we're seeing in the U.S. Can you give us a sense of how you think the market will shake out in any commentary around your rewards program membership up there just given that the customer acquisition will be different than what we're seeing, stateside? Thanks.

Tom Reeg -- Chief Executive Officer

We're watching as you are, as they go through the mechanics of how it will roll out. We anticipate that we will be among the better positioned operators in Ontario given our long management contract history with Caesars Windsor. So we have a large amount of Ontario customers available to us and known to us through Caesars Rewards.

Chad Beynon -- Macquarie -- Analyst

Okay. Thanks. And Tom, I'm not sure if you or Anthony mentioned this and said in your prepared remarks, but on the regional markets, I know a lot of the recovery has been driven by spend per visit versus visitation. Visitation has certainly been laggard. Can you help us think about if visitation has -- if the recovery has plateaued or if you're still seeing that improve as that 55 and older customer gets comfortable coming back to your properties? Thank you.

Tom Reeg -- Chief Executive Officer

I'd say the story has remained the same that spend per visit continues to be elevated. And I'd expect that to remain the case as long as the U.S. savings rate is about 2 times what it's been historically. We do expect -- if and when you get a full retreat of COVID on the retail side, we do expect that there are significant portions of the database, significant portion of the population that will then be willing to come to the casinos that are not coming today. We also expect that as business travel returns, we'd expect there to be a similar experience of pent up demand for business travel once we've got this behind us.

Chad Beynon -- Macquarie -- Analyst

Thanks Tom, I appreciate it.

Tom Reeg -- Chief Executive Officer

Thanks, Chad.

Operator

Your next question comes from the line of Stephen Grambling from Goldman Sachs. Your line is open.

Stephen Grambling -- Goldman Sachs -- Analyst

Hi. Thanks. These are follow-ups to some of the digital questions earlier. I guess, as you launched iGaming, how are you thinking about who that customer is, and how do we ensure it's truly incremental revenues and profits versus cannibalizing the base?

Tom Reeg -- Chief Executive Officer

Actually, we've got a lot of experience there in New Jersey that's going to be relevant to us in other states. If you think about the states we are going to be rolling out in and we don't have a property in Michigan. We have a single property that's not large in Pennsylvania. We don't have a property in West Virginia, so we don't expect that to be a material factor for us in those days.

Stephen Grambling -- Goldman Sachs -- Analyst

That's helpful. Maybe another follow-up. I know that you gave a little bit of detail about people spending on-device and then in-property. Is there anything else that you can provide in terms of thinking about, how are you there in terms of greater time on device or step-up in frequency of bets as you've been launching? Thanks.

Tom Reeg -- Chief Executive Officer

It's awfully early to be stating anything definitively in terms of that type of behavior, considering we've really been alive for 60 days here. What I would say is things like digital customers value being invited to brick-and-mortar properties. We're doing a lot of that, and the response has been overwhelming. That doesn't happen in apps of our peers, so we think, and this is -- as I said earlier, this isn't you just flip a switch. This is you've got to activate this, you get better at it every day and momentum builds. But some of this stuff that we're seeing that's small and kind of neat right now is going to be significant drivers of value going forward. Anybody else, Operator?

Operator

There's nobody else in the queue, sir, so this concludes our Q&A session. I would now like to turn the conference back to Mr. Tom Reeg.

Tom Reeg -- Chief Executive Officer

Thanks, everybody. Enjoy the holiday season. We'll be back in 2022 with our fourth quarter results.

Operator

[Operator Closing Remarks]

Duration: 54 minutes

Call participants:

Brian Agnew -- Senior Vice President of Finance, Treasury, and Investor Relations

Anthony Carano -- President and Chief Operating Officer

Tom Reeg -- Chief Executive Officer

Bret Yunker -- Chief Financial Officer

Carlo Santarelli -- DB -- Analyst

Joe Greff -- JPMorgan -- Analyst

Steve Wieczynski -- Stifel -- Analyst

Thomas Allen -- Morgan Stanley -- Analyst

Barry Jonas -- Truist -- Analyst

Shaun Kelley -- Bank of America -- Analyst

Ben Pulitzer -- Wells Fargo -- Analyst

David Katz -- Jefferies -- Analyst

Chad Beynon -- Macquarie -- Analyst

Stephen Grambling -- Goldman Sachs -- Analyst

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