Good day, and thank you for standing by. Welcome to the Caesars Entertainment, Inc. 2022 Fourth Quarter and Full Year Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Brian Agnew, Senior Vice President of Corporate Finance Treasury and Investor Relations.

Thanks, Josh, and good afternoon to everyone on the call. Welcome to our conference call to discuss our fourth quarter and full year 2022 earnings. This afternoon, we issued a press release announcing our financial results for the period ended December 31, 2022. A copy of that 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; Bret Yunker, our CFO; and Eric Hession, our President of Caesars Sports & Online Gaming. 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 releases 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 our call today. 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 clicking on the press release regarding today's fourth quarter financial results. I'd like to turn the call over to Anthony.

Thank you, Brian, and good afternoon to everyone on the call. We generated fourth quarter EBITDA records in both our Las Vegas and Regional segments during the quarter, and our Digital results continue to show impressive quarterly sequential improvement all year leading to our best performance during Q4. Trends in Las Vegas remained strong during Q4, delivering both 11% revenue and EBITDA growth versus last year. Excluding real rent payments, Las Vegas generated $549 million of adjusted EBITDA with a margin of 48%, up 1,000 basis points versus 2019. Occupancy during Q4 was 95.5%, up to pre-COVID levels for the first time since the pandemic. Strong occupancy in ADRs led to records in cash hotel revenues and food and beverage results. Group demand strengthened during Q4 and represented 16% of occupied room nights during the quarter. Our group and convention segment in Las Vegas generated a new EBITDA record in both Q4 and the full year 2022. For the full year, Las Vegas segment generated over 25% growth in both revenues and EBITDA, leading to annual records of approximately $4.3 billion in revenue and $2 billion in adjusted EBITDA. While we clearly had a strong year in Las Vegas, we remain optimistic for '23 and beyond. Forward occupancy remains strong and rates are trending ahead of '19. Group and convention paid for 2023 is up to 2019, driven by strong ADRs, higher room nights and higher banquet revenues. The event calendar in Las Vegas continues to strengthen with several high-profile new events entering the market in '23. In our Regional segment in Q4, we delivered $443 million of EBITDA, up 3% versus last year despite the impact of negative weather in December. Adjusted EBITDA during the quarter, excluding Lake Charles, grew 21% versus 2019, with margins expanding approximately 700 basis points. For the full year, our Regional segment delivered $5.7 billion in revenues and $2 billion in adjusted EBITDA, delivering 34.8% margins. On a same-store basis versus 2019, excluding Lake Charles, our Regional segment delivered 24% EBITDA growth and margins expanded 700 basis points. As we have stated on prior earnings calls, we expect to benefit from several capital investment projects in 2023. Our new land-based Horseshoe Lake Charles property opened late in Q4 2022 to strong demand with initial results exceeding expectations. Temporary casinos in both Danville, Virginia and Columbus, Nebraska remain on track to open by midyear. Renovations in Atlantic City are nearing completion and should be essentially complete ahead of the peak summer season this year. We also expect to benefit from expanded casino offerings in Pompano and Harrah's Hoosier Park this year. I want to thank all of our team members for their hard work in 2022. Our record results are a reflection of their dedication to delivering exceptional guest service. And with that, I will now turn the call over to Eric Hession for some insights on the fourth quarter and full year performance in our Digital segment.

Thanks, Anthony. I'm very pleased with the progress that we made in our Digital business during 2022. If you recall, our objective is to drive a solid return on investment for our shareholders as our business grows and matures over time. Our thesis was grounded on a reasonable TAM and early estimate and effort to build our brand awareness and harvesting the benefits of a very scalable business with a high portion of fixed costs. The key to taking advantage of scale in a mostly fixed cost business is to drive improvements in net revenue. Net revenues for sports and online are primarily determined by a combination of volume, hold and offset by the cost of promotions. I'm pleased that in Q4 year-over-year, our volume was up 7%, hold up 100 basis points and promotional expense down 43%. The combination of these three metrics resulted in us reporting the highest quarterly net revenue results to date growing by over 100% year-over-year and the smallest adjusted EBITDA loss since rebranding to Caesars Sportsbook in August of 2001. On the sports betting side, we continued to focus our product and technology improvements on the overall experience for our customers. They responded very favorably to the improved in-game parlay product enhancements, the in-game wagering improvements, streaming technology and the introduction of live scores. During the quarter, we also started to see the results of our segmented marketing campaigns that allow us to reward customers more directly for their loyalty and play. As referenced earlier, these efforts were direct contributors towards our net revenue growth as they allowed us to improve our promotional spending efficiency. We anticipate continued enhancements in this critical area over the course of 2023. On the Isle Casino side, work is well underway toward creating a significantly improved product experience for our customers that will be rolled out in the second half of 2023. The new product experience will also include enhanced marketing capabilities, such as segmented and life cycle triggered offers, which we currently do not have for iGaming. In the meantime, we continue to add new content, which has been well received. iGaming remains a critical component of our digital growth strategy for 2023 and beyond. From an expansion standpoint, in Q4, we opened retail locations in Puerto Rico and Kansas and launched online sports betting in Maryland. In addition, on January 1, we launched sports betting online in Ohio and retail. We now offer sports betting in 29 North American jurisdictions, 21 of which offer mobile wagering. We plan to launch our mobile sports app in Massachusetts later this week to accept registrations and deposits. And pending final regulatory approvals, we anticipate accepting wagers starting in mid-March. I'll now pass the call to Bret for some additional comments on Q4 and the full year.

Thanks, Eric. Consistent with our historical track record, we continued to aggressively reduce debt in the fourth quarter by paying down over $200 million from free cash flow, bringing our full year debt reduction to $1.2 billion. Our leverage also came down significantly during 2022 and now stands at just under 4.5x on a traditional debt-to-EBITDA basis or mid 5x rent adjusted. Alongside a one-notch rating upgrade from Moody's in January, we refinanced $4.5 billion of debt at highly attractive rates, roughly half of which came in the form of 7% fixed rate notes, further decreasing our exposure to short-term rate hikes from the Fed. Our next debt maturity is over 2.5 years away. 2022 CapEx spend, excluding AC, came in at just under $800 million, which remains our expectation for 2023. Our plan includes $300 million of maintenance CapEx and $500 million of growth capital. As of December 31, we had Federal net operating loss carryforwards of $1.9 billion, which will continue to shield operating income in 2023 and well beyond. We averaged just over $1 billion of annual debt reduction over the past two years, which sets a nice target for us to achieve yet again in 2023. I'll turn it over to Tom.

Thanks, Bret. And on the financing piece, I know these calls end up skewing to the equity markets, I want to thank our banks and our credit investors. We've been at this for about nine years now as a public entity and have gone through a series of acquisitions, a series of financings. And every time we ask the debt markets to step up for us, you step up and strengthen numbers well beyond expectations; in this case, allowed us to upsize by $1 billion and start dealing with '25 maturities. In advance of when we expected, know that, that's not taken for granted that we really do appreciate you believing in us each time we come to market. You should expect that we'll be back to deal with the remaining '25 maturities at some point after the call steps -- the calls step down in the middle of this year. In terms of operating results for the quarter since we already pre-released, I'll make a few comments on last quarter, but I'll focus on what's going -- what's going on in January and February so far. In Digital, as you saw in our results, we were nearly breakeven. Our well-publicized MLB exposure around the World Series was about a $30 million swing. So on a hold-adjusted basis, we are well into the positive in the fourth quarter. First quarter, we launched Ohio. Given the launch cost there, you should expect a modest loss in the first quarter. But we're anticipating that Digital on a full year basis will be an EBITDA contributor for us this year. And when I say that, I'm talking about overall and both verticals, I expect sports betting and iGaming to be EBITDA positive this year for us. When we started this Digital launch about…

[Operator Instructions] Our first question comes from Joe Greff with JPMorgan.

Tom, just wanted to dig a little deeper into your Las Vegas Strip group and convention commentary. Based on pace and/or what is booked presently, can you talk about room nights by quarter for this year and how it compares to each of the quarters in 2022, really kind of focusing more on the second quarter and the second half of this year, so I could understand the first quarter strength?

So I don't know that I want to get into that level of granularity in terms of quarter-by-quarter, I'd tell you that right now, we are high single-digit percentage points above 2019 levels. Recall that we never reached 2019 levels in '22. Obviously, the back half of the year from a calendar basis, citywide sets up very strong. So we feel very good about group business in '23.

Great. And can you talk a little bit about F1 later this year in November and how much you think that can be in terms of incremental EBITDA and maybe what it can generate in the 4Q? There seems to be the expectations all over the place, but is it something that could contribute say, relative to what you just reported in the fourth quarter in Las Vegas, an incremental 5% of EBITDA, all other -- all things being equal?

Yes, Joe, I think that's certainly possible. The important thing is when it happens. So I would be -- I'm expecting Super Bowl level activity, if not stronger. But if you lost the Super Bowl in February, you're still going to have a strong weekend. There's obviously incremental lift from the Super Bowl. But when you're talking about in November, that's our softest period of the year. So the lift is far more dramatic on a year-over-year basis. So yes, I'd be looking at for us something along those lines, 5% or better in terms of EBITDA lift for the quarter that's driven by that weekend.

Our next question comes from Carlo Santarelli with Deutsche Bank.

Bret, could you talk a little bit about how you're thinking about leverage right now? And when -- what the time line kind of looks like until you believe you could more or less achieve kind of where you want to be on a static basis going forward?

Yes. And again, the Digital losses are coming out. We got upgraded by Moody's. So we're mid-5x rent adjusted. With Digital and collecting positive, but that will come down. So we expect to be below the 4x gross rent adjusted target by the end of '24.

And is that where you guys will comfortably kind of run the business going forward?

Yes. I'd expect that we're going to -- will be a significant free cash flow generator still. So I don't think that ends the deleveraging. But yes, we want to be sub-4x levered that's been consistent since we closed the Caesars transaction.

Great. And then, Tom, if I can follow up on the more or less kind of 550 target EBITDA from the Digital business. To the extent you're willing to share, how do you kind of think about the split between the OSB side and the iCasino side? And obviously, I imagine that estimate assumes the second half of this year with a lot of the rollouts that you're doing on the iCasino side, that business provides a pretty healthy growth in the '24 and beyond?

Yes, that's true, Carlo. I prefer not to get super granular I'd say, the mix in that 550-plus number will lean towards sports betting, but is on a per state basis, obviously, iGaming is overrepresented.

Our next question comes from Barry Jonas with Truist.

Tom, are you surprised at how resilient the consumer has been? Anything you think could explain it? And then just as a follow-up, as you think about digital versus land-based players, where do you expect to see more recession or macro resistance?

Yes. I mean, I don't -- I'm no economist. So I don't know that I'm surprised by what's happening. I think we lock people up in their homes to for some period of time throughout the country. And then we're comparing periods of time that are not apples-to-apples because that's never happened before. So I don't know if you think about how lives have been reordered in terms of time as an example. There's less working from an office, there's more working remotely. We've always viewed these businesses as the limiting factor was cash. If your customer didn't have -- your customer your business is going to fluctuate based on how much cash your customer has. Obviously, that's going to have significant correlation. I don't know if time was a limiting factor as well, that people can now spend time doing things that they enjoy longer than they could before because they're not commuting to a city center, and they're not spending the money to do that. But all I can tell you is what we see in the business is continued strength and where you know we're up against strong comps going back for a few quarters now, and we're still growing. So with all the handing over what will happen, I expect when we do get a turn in the cycle, I'm expecting a normal business cycle recession where you get a substitution effect two regional properties out of destination, but we certainly don't see anything in our destination business today that suggests that, that's on the horizon.

That's great. And then just a follow-up was I'm curious to get your thoughts on the digital versus the land-based player. Obviously, there's some overlap. But as you think about a recession or some macro hits which player do you think would be more resistant?

I mean that's another -- that's more uncharted territory. The answer is we don't know, suspect that the digital player is more just money if you're looking at money versus time constrained, I suspect the digital player is more -- leans toward money as they achieve constraint and brick-and-mortar is a mix. But how will they behave in a downturn? I don't know that there's enough difference between the two to say you're going to see a significant divergence.

Our next question comes from Steven Wieczynski with Stifel.

Tom, I don't think you mentioned in your prepared remarks -- and I know you said besides weather, there's nothing you can really point to in terms of consumer weakness. But maybe can you provide us any comments around what you've seen from unrated play and maybe how that's fared recently? And have there been any material changes in your -- the spend patterns across your database peers, meaning that low tier rated player? Has there been any softness there? I would assume the answer is probably no, though.

Yes. Your last question, there is -- no. In terms of unrated, you saw -- we saw a material step down in unrated as we anniversaried stimulus, but that's behind us now. And you've seen the results, including the fourth quarter and into the first quarter. So unrated kind of peaked when stimulus checks were going out. rated continues to behave strongly and on rate still is holding in after that initial stepped up.

Okay. Got you. Second question, and look, I'm not even sure this is even relevant, but we've gotten this question a couple of times from investors. And is there any way to help us understand if there's any impact we need to think about around the William Hill malfunctioned in Nevada around the Super Bowl? Or is that kind of over and done with at this point?

That's over and done with. That's a technology issue. We're running Nevada on old technology, not Liberty. Liberty needs approval. It's actually the PAM provider that needs approval. We expect that relatively soon, and so we expect Nevada to be on Liberty for next football season. So that's certainly not something that we were -- that we enjoyed while it was going on, but it's in the rearview mirror at this point.

Our next question comes from David Bain with B. Riley.

Great. First, I was hoping we can get a little bit more granular on the potential iCasino ramp in the back half. Just trying to get an idea of major tech improvements like sufficient slot content for churn when that kicks in, how important that is? Maybe any other major catalysts that move the needle in terms of share there because certainly doesn't look like with the EBITDA guidance -- and thank you for that by the way, it doesn't seem like that includes a lot of big cash promotional push.

Yes. Maybe I'll jump in and take this one, David. So the big change that we're going to make is to have a standalone casino app. So right now, if you want to play on the casino, you have to go download the sports betting app and then find the casino icon, click on it and go through the casino. We'll also be offering a casino app that then you can do the same thing and go back to the sports betting side, but it will be much easier to use from a customer perspective who's looking just for the casino side. We'll also be creating some branded live table games in the various states more so than we have right now. We'll also be introducing the ability to do segmented and triggered marketing. So much like if you recall, a year ago, we were unable to do that on the sports betting side. We're now able to do segmentation on the sports betting side, but we're not on the casino side. And so we're unable to use the learnings from the years' and years' experience we have on the brick-and-mortar side on the iCasino side. And so we'll be having that come along as well. From a games content perspective, that's something we can address now. And so what you'll see is over the next say two to three months, we'll be making steady releases, adding more games, particularly on the iOS side where we don't have as many as on the Android side. So the game content will be coming along. We'll be adding custom table games that are branded as Caesars, but the big changes will be the segmented marketing the ability to do triggered life cycle journeys and then the stand-alone app that you'll see in the second half.

Okay. Awesome. And then just kind of -- I think this will bleed into Eric, your comments just now, but Tom, in the past, you've given us data points on land-based contributions from online, I believe, sometime last year around this time, it was $150 million of high-margin revenue. Could we get an update on how that's trending now? And in terms of the omnichannel marketing approach, are there some specific plans you can share to sort of ramp that for more valuable customer acquisition and loyalty?

Yes, Dave. So I want to get out of updating that number. You should assume that it continues to grow. It's our rewards database that we're leaning on in this business more and more as time goes on. States open and every customer is up for grabs we're in there. But as states mature, what you see us doing is leaning into our rewards database and bringing those new customers into our database and we're seeing a lot of cross-market play. I get -- anecdotally, I get a report of big winners and losers in both sports and iGaming every day. And a year ago, there was -- the report will show their brick-and-mortar history, and this is particularly true in iCasino. You didn't see a lot of correlation between big iGaming players and brick-and-mortar players. And now you're seeing -- if it's 25 people on the sheet every day, 20 of them have significant brick-and-mortar history. So you can see it continuing to build through the reward system, which is exactly what we were hoping would happen.

Our next question comes from Daniel Politzer with Wells Fargo.

First, on Las Vegas. I was hoping to learn a little bit more about the room night mix in 2023 versus 2022. I know you mentioned that you'd have record group and convention mix. But I guess -- what's kind of the cohort that this is coming out of? And how should we think about the relative profitability of the group versus casino versus the lead customer as it kind of shifts versus year last year?

Yes. You're seeing group come in increase over '22 at the expense of OTA and lower-end FIT business. So you're getting a dramatic lift in rate. That customer is going to skew more toward non-gaming offerings. So you'll have some impact on casino revenue. But overall, your -- in some cases, particularly in -- early in this quarter, you're filling a room that was unfilled last year. As you move through the year, you're basically trading up to a more valuable customer. And while their mix of spend may be a little different, their profitability is significantly higher than what they're replacing.

Got it. And then for Digital, is there any way you could help us bridge a little bit. We're going from 2023 kind of modestly positive, a big jump into 2024 and then an even more significant jump in 2025. Is that some of these larger longer tiered deals kind of coming out of the business? Or is it just a ramp or new states? Or any way to help us better understanding moving pieces there?

Sure. Yes, it's all of the above. So it's continued momentum from what we're doing here. You've got a business that's growing organically and has added a bunch of states, some more recently than others. We're -- there doesn't appear to be a huge new state pipeline coming on. Obviously, we've got a significant ramp expected in iGaming as we get into back half of '23. And then you do have all of that, the original partnerships that were stuck in that should be rolling off starting in '24, '25 on and some of the chunkier ones that flow directly to EBITDA as they run off.

Our next question comes from Shaun Kelley with Bank of America.

I just want to follow up on that last question around online. Could you help us just give us any thoughts on kind of the underlying margin structure there? A number of people who have given some formal targets that talked about a 30% overall style contribution margin, what would be underlying the targets that you kind of laid out as you start to get out into '24 and '25? Would it be to that? Can you do even better given some of your own in-house capabilities? Just kind of how would you think about the puts and takes relative to some of the margin goals that have been put out there by others?

Yes. So without giving a target, we've got an advantage against some others in terms of we own all of our licenses, we think we've got a customer acquisition cost advantage tying into our database against all, to some degree, but some significant advantage there. We think that sports will be lower margin than iGaming, but that both will be material margin, and we have a long history of performing well on a margin basis, on a relative basis, and we would expect that to be the same in Digital as it's been in the brick and mortar.

Got it. And then sort of just wanted to pivot on the land-based side, too, maybe just the cost environment a little bit. We're starting to hear a number of operators on the hotel side, talk a little bit more about sort of cumulative inflation over the last three and four years. A little bit of a different animal in Vegas. I know Caesars has a decent amount of union contract as well, which probably provides some visibility. But can you just discuss about the overall labor and hiring environment and then specifically maybe drill in on any upcoming union contracts and how that might -- how any negotiation there might impact the operating expense?

Yes. So I'd say we have been dealing with labor cost inflation since the reopening. We've got the -- or the Nevada union contracts are up in the middle of this year. We've begun discussions with the unions and to put it plainly, we're doing well. We've been doing well. Our employees should do well. So we've built into our analysis. We expect labor cost inflation through this new union contract in the back half, starting in the back half of '23. And with what we've got going on in the business, we think we'll be able to navigate that just fine.

Our next question comes from Brandt Montour with Barclays.

Just starting out with Las Vegas on the pace that you gave, Tom, I was wondering if you be kind enough to break that out into volume versus rate? I know you said rates were up. And what I'm getting at is the broader hotel world in the U.S. is still seeing a lot of in the year for the year volumes being booked. And so I'm curious how much upside do you think there is on that front in Vegas this year?

Yes. So Brandt, we've seen a significant lift in demand as we measure it in terms of forward bookings in the last few weeks. As I said, March is setting up for one of the strongest months we've had certainly from a rate and occupancy standpoint. As you get toward the back half of the year, you're comping against quarters where we were full, so you're going to see more of a rate lift. It's really the first half of the year that has benefited in filling in occupancy that wasn't there in '22, primarily midweek.

That's great. And then a question about iGaming. And Tom, I'm curious, when you think about that market, and you think about your company's aspirations for growing that -- your business there in the second half. Do you think that you can do that by growing the overall market by engaging in your -- with your database and things that you can do there? Or is there a significant amount of your lift going to come from gaining share from other operators in your mind?

I think it will be a mix of both that will tap into our own network, but that also there will be some market share gain as well. You've seen even in this environment where we've not been aggressive at all from a promotional perspective. I'd go back and look at what's happened in Illinois market share for us. You see us continuing to class share. We're certainly still nothing to write home about. But when you give the customers a better product, we've got a lot of customers that are that lean towards doing business with us if we've got the right product. And we think that we're going to be there shortly, and we'd expect similar experience.

Our next question comes from Chad Beynon with Macquarie.

Eric, you mentioned hold was up, I believe, 100 basis points in the fourth quarter. And I'm guessing that was a combination of game outcomes, but probably more importantly, game mix with single game parlays and the like. Can you kind of help us think about structurally what's happening with withhold, kind of where your single game parlay and maybe in-play product is against where you want to be and maybe your peers, and if you think this will have a positive outcome for 2023, particularly as we get deeper into the year?

Yes, sure. You're right. It was, I would say, mostly structural changes that we made, there was definitely a favorable outcome on some key sporting events. But one of the things we measure is multi wager tickets. So like it could be same game parlays or multi-game parlays or however that you -- the customer wants to bet. And those -- the percentage of those as a function of our overall bets is steadily rising. This is kind of the third year that we have good data on it. And we're continuing to see improvements. And as you know, the hold in those products are much higher. We've also done a better job merchandising it. So if you go on our app now, you'll see we have pre-canned parlays, so they're effectively prebuilt. Right now, they're the same for everybody. But in the future, we'll be able to use some segmented marketing to display different pre-canned parlays, which I think will be really -- customers will be really receptive to that. We also have boosts that we offer on the tiles across the top and the boosts are well received by the customers. And those also help improve the hold overall for the product. In addition, we've made a number of changes on our trading team. We now have the trading team organized by sport. We fully separated from the William Hill team, and we also have the modeling being done for the most part now in-house. So our analytics team has built a lot of the models that we use for in-play trading, which also helps have more customization for our position with the book, but it also just over time, will help our whole percentages.

And then separately, can you just update us on in terms of the size and scope, I guess, the spend in New York for a land-based casino and maybe the timing for that opportunity when we'll find out the next steps?

Yes. So I'd say spend to date has been modest. We see the same documents that you see that suggests they're looking to award something by the end of the year, but there's a potential cut through the location boards of the various properties that's upcoming in the next quarter or so. We continue to believe we've got the project that will open the quickest. We'll start paying New York, the tax is the quickest. It's in an area that doesn't need zoning approval. Obviously, is already tourist-focused but I can assure you, we are not going to be the one that wins because we built the biggest housing development outside of our casino. We're going to win this on the merits of the property and how quickly we can get open and how well it fits into the local environment. If it becomes an arm's race of who is going to spend the most money, we won't win.

Our next question comes from John DeCree with CBRE Securities.

Maybe two easy ones. Tom, maybe if you could give us a little bit of insight on how we should think about the seasonality in Las Vegas this year? Obviously, the last couple of years have been pretty noisy. 2Q and 4Q in 2022 were your largest quarters. Obviously, I think 2Q has some benefit from 1Q trips being deferred, but curious if you can give some insight for this year.

Yes. I would say you should expect a more normal year of seasonality in Vegas this year where early in the year, your soft ramp up in the kind of right about now in the first quarter, and that goes until it gets really hot here. Third quarter is the seasonal slowest point. Fourth quarter, you've got November is typically your slowest month of the year, but that's when F1 will hit this year. So I think you get that bump that we talked about earlier in Joe's question.

Got it. That's helpful. And then 4Q in Las Vegas, I think maybe Anthony's prepared remarks, you mentioned 16% or 17%, I forget, which group room nights is relatively high for you guys. Is that the right level that you guys think you'll be at on an annualized basis going forward? Or is there more upside? Or what's the right mix as you think about your kind of customer segments?

Yes. I'd expect with full-on group business with FORUM operating, I think you should expect us to continue to creep higher into the high teens in terms of percentage of overall room next year.

Our next question comes from David Katz with Jefferies.

I wanted to go back to the subject of prospective asset sales and where you think the credit markets are in terms of support for that, both within and perhaps outside any pre-existing put calls or ROFRs, et cetera?

We are not active in that market, so I can't speak with first-hand knowledge. I'd tell you today would have been a tough day to try to do something. But we were -- the deal that we did in January by a number of metrics was one of the largest ones that's happened in the credit markets generally and certainly in gaming in quite a while. So I wouldn't describe it as credit markets are wide open. At this point, they have been getting better, but in an environment where the Fed is still raising, it's still a dicey environment where you got to pick your spots.

Understood. So if we can just sort of focus on the potential opportunities that are contractual obligations. Are those factored into your thinking for this year and next? I know Bret talked about getting to a leverage level by the end of next year that I think was sub 4 was suggested, if I heard correctly?

Yes, we're presuming that -- we're presuming that those proceeds would -- they add lease adjusted debt, they'd be used to pay off conventional debt so that that would be -- that wouldn't change the net result materially.

Our next question comes from Stephen Grambling with Morgan Stanley.

As a clarification, I believe I heard Bret mention the $1.2 billion in debt reduction this year could be repeated next year. Is that the rough math to think about free cash flow for 2023? And how should we generally be thinking about ROI investment versus maintenance CapEx in the year ahead?

Yes. That's free cash flow. So no asset sales for '23. And what was the second question about maintenance CapEx ROI?

Yes. Is there just any maintenance -- can you split basically how you're thinking about maintenance CapEx versus ROI investments in 2023 as well?

I said, 300 and 500.

Yes. So 500 growth; 300, maintenance.

Got it. And then as a follow-up on Digital, how are you thinking about new states legalizing in capturing the 50% ROI run rate in 2024?

We don't assume anything beyond what's known to the markets today. So we're not anticipating there's a big state shoe that's going to drop.

All right. Thanks, everyone. We'll talk to you at the end of the quarter.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.