Caesars Digital Worth More Than Entire Company, Says Analyst
Posted on: September 10, 2025, 12:02h.
Last updated on: September 10, 2025, 12:21h.
- Even at low multiples, Caesars Digital is worth significantly more than the entire company, says analyst
- iGaming segment is gaining market share
- Fate of operator’s digital arm has been widely speculated
Caesars Entertainment (NASDAQ: CZR) sports a market capitalization of $5.28 billion, but its digital unit could be worth more than that on a standalone basis, according to an analyst.
In a new report to clients, Texas Capital analyst David Bain outlined five enterprise value/earnings before interest, taxes, depreciation, and amortization (EBITDA) scenarios for Caesars Digital, noting that at the lowest multiple of 12.5x, the operator’s internet betting unit has an implied market value of $6.25 billion. At a multiple of 19.2x — the average for pure-play digital comparables DraftKings (NASDAQ: DKNG), Flutter Entertainment (NYSE: FLUT), and Rush Street Interactive (NYSE: RSI) — Caesars Digital has an implied value of $9.6 billion.
At even 12.5x CZR’s ~$500 million forward digital guidance, CZR’s digital segment would be worth $940 million+ more than CZR’s current market capitalization,” observes Bain. “We continue to believe CZRs management and Board are reviewing certain corporate actions to demonstrate its digital value should its stock price not reflect such by sometime next year.”
Caesars’ management and investors, such as Carl Icahn, concur that the stock price doesn’t reflect strength in the digital segment. In the second quarter, Caesars Digital revenue surged 24% to $343 million on earnings before interest, taxes, depreciation, and amortization (EBITDA) of $80 million.
Caesars Digital Spinoff Could Be Epic Debt Reducer
Improvements in the interactive unit could stoke more calls for the parent company to spin that business off because analysts and investors have long argued the stock price doesn’t properly reflect improvements and rising profitability in the digital business.
Additionally, the debt-laden parent (net debt of $11.29 billion at the end of the second quarter) could realize significant benefits by selling a portion of the internet unit to public investors. Bain acknowledges “there are likely too many omnichannel benefits or complications” for Caesars to divest more than half of the interactive business, but even in that scenario, subsequent proceeds could go a long way toward reducing the parent’s liabilities.
“Using 80% of $6.25 billion in proceeds (before fees), or a $5 billion reduction in 2026E net debt less 80% of potential digital EBITDA, results in a 1.4x reduction in traditional net leverage and over 1 turn of traditional EV/EBITDA valuation,” notes the analyst.
Bain adds that if Caesars eliminates $5 billion of debt at 7% interest rates, the operator’s annual free cash flow would improve by $350 million, and it would realize $56 million in “theoretical” annual savings by not fully owning the online business.
iGaming Could Prime Caesars Digital for a Transaction
In the online sports betting space, everyone, including Caesars Sportsbook, trails DraftKings and Flutter’s FanDuel by wide margins, but the higher-margin iGaming realm is more competitive, with market share more divided compared to sports wagering.
Internet casino is territory in which Caesars has made notable strides, and that progress could bolster the case for spinning off the digital unit.
“Notably, CZR’s iCasino/iGaming market share gains continue, driven by its improved Caesars Palace app (recently ranked third amongst all operators in Eiler’s and Krejcik app testing), Horseshoe brand launch, and better utilization of casino hosts (omnichannel benefit),” concludes Bain.
He rates Caesars a “buy” with a $59 price target, implying the stock can more than double from current levels.
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