Tom Reeg
Chief Executive Officer at Caesars Entertainment
Thanks, Bret. The group has detailed, it was an extremely strong quarter for us, all-time record for the company. Those of you who've been on calls, going back for quite some time. This should be a familiar story for you. Vegas remains quite strong in terms of headwinds in Vegas in the quarter. Know that we are accruing for the anticipated expenses that will come with the new union contract, which I will touch on a little bit more momentarily. We had Rio left the system on October 2. So kind of -- went out the door, in terms of how it was performing in the third quarter
We had more significant disruption in the Versailles Tower than we anticipated. We thought we were going to keep a fair amount of it active. But as you open the walls of a building that is as dated as that particular building, you find all sorts of surprises. We took the whole tower out of service, so fewer rooms, labor cost headwinds, Rio as a drag. We still beat year-over-year. The margin -- the slight margin reaction you see is related to labor costs, as Rio comes offline October 2, you should expect us to recover that margin percentage, if not more going forward. I know there will be questions on the union contract. We are in active dialogue with the unions. I'm involved with the union. I'm involved personally in the discussions. I'm optimistic we will reach a solution.
You've heard me say before, we have done quite well as a company post-merger, post-pandemic. Our employees should and will participate in that. So you should expect that when we reach agreement on a contract, it's going to be the largest increase that our employees have seen in the four decades since we started interacting with the culinary Union. So that's well deserved. It's anticipated in our business model. And as I said, everybody should be participating in the results that we've been delivering. In terms of regional, I know that a lot of you are expecting fairly dramatic moves in terms of what's happening with the customer. have been for many, many months, if not quarters, by this point. That's not what we're seeing. We're seeing stability in the customer. We're seeing weakness in properties that have competitive openings that we've named before, Tunica, Chicago market being chief among them.
If you want to hang your hat on something that feels soft, Atlantic City feels soft, but that's not particularly news at this point. The returns from our projects that have come online like Charles, Virginia, Horseshoe Indianapolis have been quite strong and have offset the weakness in the properties that are competitively impacted. And as you saw, we set an all-time quarterly record for EBITDA and margin was stable. So we feel very good about regional, I would point to -- moving forward New Orleans is in the midst of the significant construction project that we've got going on there. It's particularly disruptive now and for the next quarter or two, basically one-third of the floor, the casino floor is tore up on any given day as we run -- as we do the heavy work at that level, we topped off the hotel tower.
We're on target to open that expansion completely, well in advance of Super Bowl of '25. And we also have, obviously, F1 coming to Vegas, feel very, very good and no change in what we're expecting in terms of lift in the quarter in the neighborhood of 5%, which is what I told you a year ago, we'd expect to deliver that. At the high end, the amount of credit play that we have in the market, that week will exceed New Year's Eve. So it's an extraordinary event from a high-end perspective, Super Bowl and Vegas is filling in the same way, extremely strong high end as well. So we feel very good about those events. Digital, Eric touched on, our hold continues to grow in excess of 30%. You know that, that's based on the way we've been operating. That's not promotional-driven. That's actual handle growth. We got dinged on hold in the quarter but still delivered a positive EBITDA quarter. We're particularly pleased with the way the fourth quarter has begun in digital. Excited about the momentum that we've got in online casino now that we've launched Caesars Palace Online and what we'll be able to deliver in the coming quarters.
As we have discussed, we are nearing the end of a significant capital cycle. So as New Orleans winds down, you should expect our project capex budget to come down. Our EBITDA is growing in both brick-and-mortar and digital. So our free cash flow is growing. We continue to use our free cash flow to pay down debt and reduce leverage. That's what you should expect until we see leverage in the 4 times or below lease-adjusted area. So we feel very, very good about how the business is performing how it's coming together, looking forward, we feel very good about what we see in front of us. We see, of course, the volatility that you see in share prices in the space, not just us. It's not reflective of what's going on in the business. And we're just going to keep delivering numbers until that volatility subsides. And we expect the market to recognize the value in our equity.
And with that, I'll open it up for questions.
