Key Moments:
- Caesars Entertainment was removed from the S&P 500 index due to declining market capitalization.
- Caesars Digital recorded second quarter revenue of $343 million and EBITDA of $80 million.
- Bain & Company continues to recommend a “buy” for Caesars, citing $59 per share as its target price.
Index Downgrade Reflects Shifting Market Capitalization
Caesars Entertainment, headquartered in Nevada, has been taken out of the S&P 500 index following a decrease in its market capitalization below the index’s required threshold. S&P Dow Jones announced this change last week, highlighting a significant development for one of America’s most renowned casino operators.
As of 10 September 2025, Caesars’ stock started trading at $25.25 per share, representing a drop of over 22 percent since the year’s beginning. The company currently has a market capitalization of approximately $5.4 billion, which is far beneath the $22.7 billion level necessary for S&P 500 inclusion. Consequently, Caesars will now join the S&P SmallCap 600 index, which hosts companies with market capitalizations of up to $8 billion.
Digital Segment Emerges as a Key Asset
Industry analysts underscore the increasing importance of Caesars’ digital operation as a foundation for growth. Caesars Digital, which manages the company’s online gaming and sports betting businesses, saw its revenue climb by 24 percent, achieving $343 million in the second quarter. The digital division also reported EBITDA of $80 million for the same period.
According to Bain & Company analysts, applying a conservative enterprise value-to-EBITDA multiple of 12.5 to Caesars Digital’s projected 2026 performance would suggest a valuation near $6.25 billion. If higher multiples—comparable to peers like DraftKings, Flutter Entertainment, and Rush Street Interactive—are used, this valuation could increase to about $9.6 billion.
Some activist investors, including Carl Icahn, have expressed concerns regarding the possible undervaluation of Caesars Digital. These investors believe the board could move next year to ensure the division’s market value is better reflected.
People talk about S&P 500 additions… but what about the removals?
❌ Caesars Entertainment $CZR → ✅ Robinhood $HOOD
❌ MarketAxess $MKTX → ✅ AppLovin $APP
❌ Enphase Energy $ENPH → ✅ Emcor $EME
These removed companies move to the S&P SmallCap 600, showing where the…
— TheMrPercent (@themrpercent) September 6, 2025
Potential Divestment and Financial Impact
The favorable performance of Caesars’ digital arm has renewed discussions about a potential spin-off. Analysts indicate that partially divesting the digital unit could serve two primary objectives: lowering Caesars’ $11.3 billion debt burden and boosting its cash flow position. Selling up to 80 percent of the digital segment could reduce debt by roughly $5 billion and create an additional $350 million in annual free cash flow, contributing to a more robust financial structure.
The company continues to strengthen its profile in the iGaming vertical, utilizing app upgrades and leveraging its Horseshoe brand to attract online users. While Caesars remains behind market leaders such as DraftKings and FanDuel in the sports betting space, expanding its digital footprint is widely regarded as a top priority.
Analyst Perspective and Future Prospects
Bain & Company maintains a “buy” rating for Caesars, projecting a share price target of $59. The firm highlights that future performance will hinge on Caesars’ capacity to maximize the opportunities present in digital operations while supporting its established casino business.
The move out of the S&P 500 underscores the fluctuations inherent in market capitalization and investor outlook. However, this adjustment does not overshadow the growth potential of Caesars’ digital initiatives. With sustained investment in online innovation, Caesars is positioned to expand its influence in the burgeoning digital gaming and sports wagering arenas, all while retaining its brick-and-mortar casino presence.
Table: Caesars Recent Financial and Market Data
| Metric | Value | Period / Context |
|---|---|---|
| Stock Opening Price | $25.25 | 10 September 2025 |
| Market Capitalization | $5.4 billion | Current |
| S&P 500 Inclusion Threshold | $22.7 billion | Required for membership |
| Caesars Digital Q2 Revenue | $343 million | Second Quarter |
| Caesars Digital Q2 EBITDA | $80 million | Second Quarter |
| Bain Target Share Price | $59 | Maintained recommendation |
| Company Debt | $11.3 billion | Current |
| Potential Digital Segment Sale Proceeds | Up to $5 billion debt reduction, $350 million free cash flow increase | With up to 80% divestment |
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- Author
Daniel Williams
