Prior to Tuesday’s 2023 fourth-quarter earnings call, Caesars Entertainment telegraphed the most consequential parts of the results in last month’s pre-earnings release, which provided a harbinger for a strong period at Caesars Digital, the division that runs the company’s online sports betting operations.

At the time, Caesars projected net revenues of around $300 million for the quarter, an amount that equated to an annual increase of about 28% from the previous year. Caesars slightly topped internal estimates with revenues of $304 million from the digital segment, the company announced Tuesday.

More importantly, Caesars Digital reported Adjusted EBITDA of $29 million, compared with negative-$5 million over the same quarter in 2022. Caesars Digital produced new quarterly records in both categories, said Eric Hession, president of Caesars Sports and Online Gaming.

Had Caesars not experienced a slew of unfavorable sports outcomes in late November, the total would have been closer to $60 million, Hession noted. The patterns negatively impacted practically every major sportsbook in the fourth quarter, as NFL favorites covered at a high clip over the final two weeks of November.

In the second half of 2023, Caesars launched a feature dubbed “FireBets” — a product the sportsbook modeled after the NFL’s RedZone channel. It contains an automated feature that places games that are about to end at the top of the queue for bettors.

For example, the feature will place a close third-period contest between the New York Rangers and New York Islanders at the top of the queue. At the same time, another NHL game still in the first period will likely appear at the bottom of the list through FireBets. The feature is designated to alert bettors to periods of a game that draw high excitement.

Also last September, Caesars joined two other sportsbooks as initial partners with Genius Sports for an immersive sports wagering experience. At the early stages of the 2023-24 NFL season, Genius began to offer a live streaming platform in combination with integrated bet slips and statistical insights through a single interactive player. After spending the last two years honing a cost-discipline strategy in digital, Caesars will focus on continued product innovation in 2024.

As with its top competitors, Caesars has capitalized from the explosion in same-game parlays (SGPs) across the industry. Last year, customers at Caesars Digital responded favorably to improved SGP product enhancements, in-game wagering improvements, and streaming technology, Hession noted. Caesars has also seen improvements in the percentage of customers wagering on parlays, along with the number of legs placed per parlay offering, he added.

During the fourth quarter, sports betting volumes jumped 12%, Hession indicated, leading to a hold rate of 6.4%. The improved parlay mix gives him confidence that hold rates will improve throughout 2024.

In terms of market share, Caesars continues to trail FanDuel and DraftKings, the two market leaders, by a wide margin. Nevertheless, 2024 represents an “inflection point” for digital profitability, Macquarie analyst Chad Beynon wrote in a research note. On a long-term basis, Caesars Digital projects Adjusted EBITDA of $500 million per year.

On the iCasino side, Caesars announced an agreement with Wynn Resorts to acquire WynnBET’s iGaming business in Michigan. At Wednesday’s high, Caesars Entertainment topped $43 a share, up approximately 3%. Caesars still trades around its 52-week low of $38 a share.