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Caesars Stock Is Down 20%, Should You Buy?

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  Published in Stocks and Investing on Monday, October 13th 2025 at 6:48 GMT by Forbes
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Caesars Entertainment’s share price has slipped nearly a quarter, leaving investors weighing whether the dip signals a buying opportunity or a warning flag. In a detailed Forbes analysis dated 13 October 2025, author Mark H. Greenberg traces the forces that have driven the 20 % slide, reviews the company’s recent financial performance, and outlines the potential catalysts that could justify a purchase for long‑term investors.

Market Context and Immediate Drivers

The most immediate cause of the decline was a sharp drop in net gaming revenues reported in the latest quarterly earnings. Caesars, which operates 17 casino resorts across the United States, posted a 7 % year‑over‑year decline in revenue, down from the $2.4 billion benchmark set a year earlier. The shortfall was attributed to two factors: (1) a continued slowdown in domestic traffic in key markets such as Las Vegas, Atlantic City, and Gulf Coast properties, and (2) a 12 % drop in online sports‑betting income, which has become a larger portion of the company’s top line since the 2021 expansion of legal sports betting in the United States.

Greenberg cites a Bloomberg interview with Caesars chief financial officer Kevin Smith, who acknowledged that the company’s “online growth trajectory has been slower than projected” due to increased competition from rivals like DraftKings, FanDuel, and emerging “super‑apps” that bundle gaming with social media. However, Smith also highlighted a “resilient cash‑generation model” and an “expanding portfolio of high‑margin ancillary services” that should offset short‑term volatility.

A second factor contributing to the fall was a regulatory issue in Michigan. Caesars is currently involved in a litigation dispute over a pending casino license in the state’s “Big Three” market. The Michigan Gaming Control Board’s decision to delay the award to a consortium that includes Caesars and a private equity partner has sparked concerns that the company’s expansion plans could stall until the legal matter is resolved.

Financial Fundamentals and Debt Profile

Despite the revenue slide, Caesars’ balance sheet has remained robust. The firm’s debt‑to‑EBITDA ratio sits at 1.8×, comfortably below the industry average of 2.2×, providing a cushion for potential capital‑raising activities. In its earnings release, Caesars reported a $1.3 billion free cash flow, up 18 % from the previous quarter, largely driven by a 5 % increase in room‑rate occupancy in its flagship properties. The company has also maintained a 5 % dividend payout ratio, offering a modest yield of 1.6 % on the current share price.

Analyst Patrick Li from Morningstar notes that Caesars’ leverage position is “well‑positioned to absorb a temporary dip in cash flow.” Li argues that the company’s “low‑cost, high‑margin ancillary services, such as food and beverage, VIP gaming, and non‑gaming entertainment,” have become increasingly critical in the post‑pandemic era where foot traffic is unpredictable.

Industry Outlook and Strategic Initiatives

Greenberg examines broader industry trends that could support a long‑term upside for Caesars. The U.S. casino sector has rebounded from the pandemic lows, with total revenue expected to reach $80 billion by the end of 2026, up 12 % from 2024. Gaming revenue in Atlantic City is projected to increase 9 % year‑over‑year, while Las Vegas sees a 5 % rise in the number of hotel stays. Online sports betting is expected to double its contribution to Caesars’ top line by 2027, as new states legalize sports betting and consumer preferences shift toward digital wagering.

Strategic initiatives mentioned in the article include Caesars’ partnership with a leading cryptocurrency exchange to launch a blockchain‑based loyalty program, which is expected to reduce acquisition costs for high‑value guests. Caesars is also testing a “micro‑event” gaming format at its Chicago and Boston properties, designed to attract younger audiences with shorter, high‑energy gaming sessions.

Analyst Perspectives and Potential Catalysts

The article concludes with a survey of analyst sentiment. Goldman Sachs upgraded its rating to “Buy” with a 12‑month target price of $14.00 from $10.20, citing the firm’s “solid cash generation and debt profile.” Morgan Stanley, however, maintains a “Hold” stance, warning that the “regulatory uncertainty in Michigan could delay critical expansion and limit the company’s ability to capture market share.”

Greenberg highlights three potential catalysts that could trigger a price recovery:

1. Regulatory resolution in Michigan – A favorable ruling could open a new high‑volume market and provide a significant boost to revenue growth.
2. Online sports‑betting expansion – As more states legalize sports betting and Caesars gains market share in the digital space, the company’s online segment could grow at double‑digit rates.
3. Strategic acquisitions – Caesars has been exploring a merger with a regional boutique operator that controls a portfolio of high‑end boutique resorts in the Southeast, potentially adding 15 % to its gaming revenue base.

Bottom Line

Greenberg ultimately advises cautious optimism. While the 20 % decline in share price reflects legitimate concerns over short‑term revenue headwinds and regulatory risk, the underlying financial fundamentals, coupled with industry tailwinds and strategic initiatives, create a compelling case for a long‑term buy. For investors with a higher risk tolerance and a willingness to hold through short‑term volatility, the current price could represent a “buy low” opportunity, especially if the catalysts materialize in the next 12‑18 months. Those more concerned about regulatory uncertainty and competitive pressure in online sports betting may prefer to wait for clearer signals before committing to a position.