iGaming, not Casinos, Powering Industry Growth, Says Analyst
Posted on: August 4, 2025, 03:19h.
Last updated on: August 4, 2025, 03:19h.
- For gaming industry, internet casinos are where the growth is at
- Recent updates from BetMGM, Caesars Digital confirm as much
Second-quarter earnings reports from Caesars Entertainment (NASDAQ: CZR) and MGM Resorts International (NYSE: MGM), as expected, confirmed softness on the Las Vegas while signaling more of the same for the current quarter. The picture is significantly brighter for iGaming.
However, operators face a conundrum when appeasing the investment community via digital growth: market participants aren’t assigning much adulation to interactive improvements unless the entire business is performing well, according to Jefferies analyst David Katz.
Near-term concerns about Las Vegas Strip weakness and, in the case of CZR, regional negative productivity, are offsetting digital acceleration,” wrote the analyst in a Monday note to clients. “If estimates are finally low enough in land-based ops, digital can capture credit, in our view.”
For MGM and Caesars, compelling investors to devote more attention to digital growth could be a tall order over the near-term because the duo are the two largest operators on the Las Vegas Strip — a gaming segment that’s currently struggling amid downbeat visitation data.
Mounting Signs of iGaming Acceleration
There’s no denying there’s positive writing on the wall when it comes to iGaming. Just last week, BetMGM and Rush Street Interactive (NYSE: RSI) lifted 2025 guidance while Caesars said its interactive unit posted one of its best quarters to date.
Of that trio, only Rush Street Interactive is a pure play on internet casinos and online sports betting, confirming the thesis that investors may not be giving enough credit to Caesars’ an MGM’s digital operations because land-based casinos remain those companies’ bread-and-butter.
The situation is arguably amplified with MGM because that company only controls half of BetMGM with UK-based Entain owning the other 50%. With Caesars, executives and some investors have long opined that the strength of the online business isn’t adequately reflected in the share price — so much so that there’s lingering speculation the operator could spin off that unit to boost shareholder value.
Katz noted that while BetMGM and MGM China results impressed in the second quarter, those factors weren’t enough to offset Las Vegas weakness because the parent company doesn’t own all of those entities. It controls nearly 56% of the Macau unit.
Caesars Digital Trending in Right Direction
Caesars Digital is trending in the right direction, approaching a $500 million annual earnings before interest, taxes, depreciation, and amortization (EBITDA) run-rate, according to Katz. However, the operator almost certainly needs to post better land-based results to compel investors to place more emphasis on the internet side of the business.
That was on display in the second quarter when softness in the operator’s Las Vegas and regional unit overshadowed strength in the digital segment.
“CZR has the assets to lead, but needs to execute better. We agree with the consensus view that near-term estimates are finally low enough and management is investing in market share,” observes Katz.
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