UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period to
Commission File No. 001-36629
CAESARS ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
46-3656781
(I.R.S. Employer
Identification No.)
100 West Liberty Street, 12th Floor
Reno, Nevada 89501
(Address of principal executive offices)
Telephone: (775) 328-0100
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $.00001, par value
Trading symbol
CZR
Name of each exchange on which registered
NASDAQ Stock Market
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange
Act.
Large accelerated filer
Smaller reporting company
☒
☐
Accelerated filer
Emerging growth company
☐
☐
Non-accelerated filer
☐
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that require a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to Section §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the common stock held by non-affiliates of the Registrant was $7.8 billion at June 30, 2022 based upon the closing price for the shares of
CZR’s common stock as reported by The Nasdaq Stock Market.
As of February 16, 2023, there were 215,180,664 outstanding shares of the Registrant’s Common Stock, net of treasury shares.
Portions of the Registrant’s definitive proxy statement to be filed with the Commission pursuant to Regulation 14A in connection with the Registrant’s Annual Meeting of
Stockholders (the “Proxy Statement”) are incorporated by reference into Part III of this report. Such Proxy Statement will be filed with the Commission not later than 120
days after the conclusion of the Registrant’s fiscal year ended December 31, 2022.
Documents Incorporated by Reference
CAESARS ENTERTAINMENT, INC.
ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2022
TABLE OF CONTENTS
Part I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Part II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Part III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Part IV
Item 15.
Item 16.
Signatures
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrants’ Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Exhibits and Financial Statement Schedules - Schedule I
Form 10-K Summary
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PART I
In this filing, Caesars Entertainment, Inc., a Delaware corporation, and its subsidiaries may be referred to as the “Company,” “CEI,” “Caesars,” “we,”
“us” or “our” or the “Registrant.”
We also refer to (i) our Consolidated Financial Statements as our “Financial Statements,” (ii) our Consolidated Statements of Operations and
Consolidated Statements of Comprehensive Income (Loss) as our “Statements of Operations,” (iii) our Consolidated Balance Sheets as our “Balance
Sheets,” and (iv) our Consolidated Statements of Cash Flows as our “Statements of Cash Flows,” which are prepared in accordance with accounting
principles generally accepted in the United States (“GAAP”). References to numbered “Notes” refer to Notes to our Consolidated Financial Statements
included in Item 8.
Item 1. Business
Overview
We are a geographically diversified gaming and hospitality company that was founded in 1973 by the Carano family with the opening of the Eldorado
Hotel Casino in Reno, Nevada. Beginning in 2005, we grew through a series of acquisitions, including the acquisition of MTR Gaming Group, Inc. in
2014, Isle of Capri Casinos, Inc. in 2017 and Tropicana Entertainment, Inc. in 2018 and a merger with Caesars Entertainment Corporation (“Former
Caesars”) on July 20, 2020, pursuant to which Former Caesars became our wholly-owned subsidiary (the “Merger”) and our ticker symbol on the
NASDAQ Stock Market changed from “ERI” to “CZR”. In addition, on April 22, 2021, we completed the acquisition of William Hill PLC (the “William
Hill Acquisition”).
Our primary source of revenue is generated by casino properties’ gaming operations, including retail and online sports betting, as well as online gaming,
and we utilize our hotels, restaurants, bars, entertainment, racing, retail shops and other services to attract customers to our properties.
As of December 31, 2022, we own, lease or manage an aggregate of 51 domestic properties in 16 states with approximately 52,800 slot machines, video
lottery terminals and e-tables, approximately 2,800 table games and approximately 47,200 hotel rooms. We also operate and conduct sports wagering
across 28 jurisdictions in North America, 20 of which are mobile for sports betting, and operate regulated online real money gaming in six jurisdictions in
North America. We continue to expand into additional markets as jurisdictions legalize forms of retail and online gaming and sports betting. In addition, we
have other domestic and international properties that are authorized to use the brands and marks of Caesars Entertainment, Inc., as well as other non-
gaming properties. We lease certain real property assets from third parties, including GLP Capital, L.P., the operating partnership of Gaming and Leisure
Properties, Inc. (“GLPI”) and VICI Properties L.P., a Delaware limited partnership (“VICI”). See Item 2, “Properties,” for more information about our
properties.
Significant Transactions in 2022
On April 22, 2021, we completed the acquisition of William Hill PLC for £2.9 billion, or approximately $3.9 billion with the intent to divest William Hill
PLC’s non-U.S. operations, which included the United Kingdom and international online divisions and the retail betting shops (collectively, “William Hill
International”). We entered into an agreement to sell William Hill International to 888 Holdings Plc for approximately £2.2 billion which, on April 7, 2022,
we amended for a revised enterprise value of approximately £2.0 billion. The amended agreement reflected a £250 million reduction in consideration
payable at closing and up to £100 million of deferred consideration to be paid to Caesars, subject to 888 Holdings Plc meeting certain 2023 financial
targets. During the year ended December 31, 2022, we recorded impairments to assets held for sale of $503 million within discontinued operations based
on the revised and final sales prices.
On July 1, 2022, we completed the sale of William Hill International to 888 Holdings Plc and outstanding borrowings under the Bridge Credit Agreement,
between the Company and certain lenders party thereto and Deutsche Bank AG, London Branch as administrative agent and collateral agent, were
immediately repaid. After the repayment of the Bridge Credit Agreement, other permitted leakage, and the settlement of related forward contracts, we
received net proceeds of $730 million. Including open market repurchases and repayments, we utilized all $730 million to reduce our outstanding debt.
On May 5, 2022, we consummated the sale of the equity interests of Belle of Baton Rouge Casino & Hotel (“Baton Rouge”) to CQ Holding Company, Inc.,
subject to customary closing conditions, resulting in a loss of $3 million. Baton Rouge was within the Regional segment.
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Developments related to COVID-19
Despite the resurgence of the COVID-19 Omicron variant at the beginning of the year, operations at many of our properties experienced positive trends
during much of the year ended December 31, 2022, including higher hotel occupancy, particularly in Las Vegas, and increased gaming and food and
beverage volumes. The reduction in mandates and restrictions, combined with pent up consumer demand and supplemental discretionary spend from
governmental stimulus, resulted in strong results across our properties during 2021. Future variants, mandates or restrictions imposed by various regulatory
bodies are uncertain and could have a significant impact on our future operations.
Business Operations
Our consolidated business is composed of complementary businesses that reinforce, cross-promote, and build upon each other: casino, which includes our
online sports betting and iGaming, food and beverage, hotel, casino management services, entertainment, retail and other business operations.
Casino Operations
Our casino operations generate revenues from approximately 52,800 slot machines, 2,800 table games, including poker, sports betting from our retail and
online sportsbooks, iGaming and other games such as keno, all of which comprised approximately 55% of our total net revenues in 2022. Slot revenues
generate the majority of our casino revenues.
Online Sports Betting and iGaming
As a result of our acquisition of William Hill PLC on April 22, 2021, we significantly expanded our online sports betting and iGaming presence. We
operate and conduct sports wagering across 28 jurisdictions in North America as of December 31, 2022. Additionally, we operate regulated online real
money gaming businesses in six jurisdictions in North America and continue to leverage the World Series of Poker (“WSOP”) brand, and license the
WSOP trademarks for a variety of products and services. We offer hundreds of online casino games including slots, table games, live dealer and video
poker and we expect to increase our product offerings as iGaming is legalized in additional states.
Extensive usage of digital platforms, continued legalization in additional jurisdictions, and growing bettor demand are driving the market for online sports
betting platforms in the United States and the William Hill Acquisition positioned us to address this growing market.
On August 2, 2021, we launched our Caesars Sportsbook app on our owned and integrated technology platform we have labeled Liberty (“Liberty”). We
launched a significant marketing campaign with distinguished actors, athletes and media personalities promoting the launch of the Caesars Sportsbook app.
The app offers extensive pre-match and live markets, extensive odds and flexible limits, player props, and same-game parlays. Caesars Sportsbook has
partnerships with the NFL, NBA, NHL, MLB, and several individual teams, while being the exclusive odds provider for ESPN and CBS Sports. We have
continued to create new partnerships among professional sports teams and, in 2021, entered into a 20-year exclusive naming-rights partnership branding the
Caesars Superdome in New Orleans. In addition to the Caesars Sportsbook app, the Company and NYRABets LLC, the official online wagering platform
of the New York Racing Association, Inc., launched the Caesars Racebook app. The Caesars Racebook app operates in eight states and provides access for
pari-mutuel wagering at over 300 racetracks around the world as well as livestreaming of races. Wagers placed can earn credits towards the Caesars
Rewards loyalty program or points which can be redeemed for free wagering credits. Growth in the Caesars Digital segment continues to be realized with
the strategic expansion into new states as jurisdictions legalize retail and online sports betting and online horse race wagering.
Sports Brand Partnerships — Our strategy includes developing local and national partnerships that align our sportsbooks, casinos, resorts and brands with
sports fans. We have high-profile exclusive sports entertainment partnerships with the NFL, making Caesars the first-ever “Official Casino Sponsor” in the
history of the league. This historic partnership combines the NFL’s legendary events with our properties to bring unique experiences to Caesars’ patrons.
This includes exclusive rights to use NFL trademarks to promote our properties and enabling Caesars to host exclusive special events and experiences.
Caesars expects to continue to host brand activations at prominent, high-profile NFL events, including the NFL Draft, NFL playoffs, and the Super Bowl
during this multi-year partnership.
Food and Beverage Operations
Our food and beverage operations generate revenues from our dining venues, bars, nightclubs, and lounges located throughout our casinos and represented
approximately 15% of our total net revenues in 2022. Many of our properties include several dining options, ranging from upscale dining experiences to
moderately-priced restaurants, some of which offer pickup or in-room delivery options.
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Hotel Operations
Hotel operations generate revenues from hotel stays at our properties in our approximately 47,200 guest rooms and suites worldwide and represented
approximately 18% of our total net revenues in 2022. Our properties operate at various price and service points, allowing us to host a variety of casino
guests, who are visiting our properties for gaming and other casino entertainment options, and non-casino guests who are visiting our properties for other
purposes, such as vacation travel or conventions.
Management and Branding Arrangements
We earn revenue from fees paid for the management of domestic and international hotels and casinos. Managed properties represent Caesars-branded
properties where we provide certain staffing and management services under management agreements. In addition, we authorize the use of certain brands
and marks of Caesars Entertainment, Inc from which we earn revenue from fees received based on the arrangements.
Entertainment and Other Non-Gaming Operations
We provide a variety of retail and entertainment offerings at our properties. We operate various entertainment venues across the United States, including the
Colosseum at Caesars Palace and Zappos Theater at Planet Hollywood. These award-winning entertainment venues host or have announced plans to host,
prominent headliners, such as Garth Brooks, Sting, Keith Urban and Miranda Lambert.
The LINQ Promenade is an open-air dining, entertainment, and retail development located between The LINQ Hotel & Casino and Flamingo Las Vegas,
which features The High Roller, a 550-foot observation wheel, and Fly LINQ, the first and only zipline on the Las Vegas Strip. The retail stores offer guests
a wide range of options from high-end brands and accessories to souvenirs and decorative items.
CAESARS FORUM is a 550,000 square-foot state-of-the-art conference center located at the center of the Las Vegas Strip. CAESARS FORUM can
accommodate more than 10,000 participants and features more than 300,000 square feet of flexible meeting space, the two largest pillarless ballrooms in
the world, a LEED silver-rated FORUM Plaza, and the first 100,000 square-foot outdoor meeting and event space in Las Vegas.
Market Activities
Trends
Economic Factors Impacting Discretionary Spending — Gaming and other leisure activities we offer represent discretionary expenditures which may be
sensitive to economic downturns. The resurgence of the Omicron variant of COVID-19 continued to impact the beginning of the year, however, many of
our properties experienced positive trends during much of the year ended December 31, 2022 including higher hotel occupancy and rates, particularly in
Las Vegas, and increased gaming and food and beverage volumes coupled with improved product mix. During 2021, mandates and restrictions on
maximum capacities and amenities available were eased, discretionary consumer spending was supplemented via governmental stimulus, and pent-up
consumer demand from the prolonged impact of COVID-19 resulted in strong results across our properties.
We continue to monitor the effects of recent inflation and the possible implications on certain customers most affected by lower discretionary income.
Although we have seen periods of reduced visitation from those customers, visitation from customers who are not as affected by inflation remains steady or
has slightly improved. In addition, our leases with VICI are impacted by inflation as they are subject to annual escalators based on the Consumer Price
Index (“CPI”).
We are also continuing to monitor rising interest rates which have a direct impact on certain of our debt instruments, in addition to an effect on consumer
spending. We evaluate projected changes in interest rates when entering into borrowing arrangements and manage our mix of fixed versus variable debt.
We continue to manage the prolonged impact of COVID-19 on the economy, our industry and our Company, with challenges arising at times from labor
shortages, supply chain disruptions, increased costs of goods and services, among other impacts. Further discussion of the effects of these trends are
described throughout this Form 10-K. The extent and duration of these trends is uncertain and may intensify.
Online Betting and Gaming — Online betting and gaming is a rapidly developing sector of the e-commerce industry and we believe the digital segment of
the global betting and gaming industry will continue to grow in popularity and consumer confidence. The market for online betting platforms is being
driven by the increased use of digital processes and global, growing bettor demand. We anticipate that the United States market will begin to have a strong
and steady uptake in active
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wagers as state-by-state legislation in the United States continues to evolve resulting in new opportunities in the United States sports betting market. The
extent and future effects of online betting and gaming on our casino properties is uncertain but we expect that our online betting and gaming offering will
be complementary to our brick-and-mortar casino business.
Competition
The casino entertainment business is highly competitive. The industry is comprised of a diverse group of competitors that vary considerably in size and
geographic diversity, quality of facilities and amenities available, marketing and growth strategies, and financial condition. In most regions, we compete
directly with other casino facilities operating in the immediate and surrounding areas. In Las Vegas, our largest jurisdiction, competition is expected to
increase in the coming years. In response to changing trends, Las Vegas operators have been focused on expanding their non-gaming offerings, including
upgrades to hotel rooms, new food and beverage offerings, and new entertainment offerings. There have also been proposals for other large scale gaming
and non-gaming development projects in Las Vegas by various other developers. Our Las Vegas Strip hotels and casinos also compete, in part, with each
other.
In recent years, many casino operators, including us, have been reinvesting in existing facilities, developing or rebranding new casinos or complementary
facilities, and acquiring established facilities. These reinvestment and expansion efforts combined with aggressive marketing strategies by us and many of
our competitors have resulted in increased competition in many regions. As companies have completed new expansion projects, supply has grown at a
faster pace than demand in some areas. The expansion of properties and entertainment venues into new jurisdictions also presents competitive issues.
Our properties also compete with legalized gaming from casinos located on Native American tribal lands. While the competitive impact on operations in
Las Vegas from the continued growth of Native American gaming establishments in California remains uncertain, the proliferation of gaming in California
and other areas located in the same regions as our properties could have an adverse effect on our results of operations. In some instances, particularly in the
case of Native American casinos, our competitors pay lower taxes or no taxes. In addition, certain states have legalized, and others may legalize, casino
gaming in specific areas, including metropolitan areas from which we traditionally attract customers. These factors create additional challenges for us in
competing for customers and accessing cash flow or financing to fund improvements for our casino and entertainment products that enable us to remain
competitive.
We also compete with other non-gaming resorts and vacation areas, various other entertainment businesses, and other forms of gaming, such as state
lotteries, on-track and off-track wagering, video lottery terminals, and card parlors. Our non-gaming offerings also compete with other retail facilities,
amusement attractions, food and beverage offerings, and entertainment venues. Internet gaming and sports betting also create additional competition for our
brick-and-mortar operations.
We face significant competition in our online sports betting, online horse racing wagering and iGaming businesses in jurisdictions where we currently
operate and those jurisdictions in which we wish to expand. Although we have experienced recent success in obtaining approval for sports betting and
iGaming licenses in new jurisdictions, new state launches may require significant upfront investment and may not be successful.
Resources Material to Business
Rewards Programs
We believe Caesars Rewards, with a network of more than 60 million people, enables us to compete more effectively and capture a larger share of our
customers’ entertainment spending when they travel among regions or engage in online wagering and gaming versus that of a standalone property, which is
core to our cross-market strategy.
Caesars Rewards members earn Reward Credits for qualifying gaming activities, including sports betting, online gaming and wagering in the Caesars
Sportsbook and Caesars Racebook apps. Members also earn Reward Credits for qualifying hotel, dining and retail spending at all Caesars Entertainment
destinations in the United States and Canada. Additionally, Reward Credits are earned when members use their Caesars Rewards VISA credit card or make
a purchase through a Caesars Rewards partner. Members can redeem their earned Reward Credits for those same experiences.
Caesars Rewards is a tier based loyalty program (designated as Gold, Platinum, Diamond, Diamond Plus, Diamond Elite or Seven Stars), each with
increasing benefits and privileges. Members are provided promotional offers based on their tier level, their retail and gaming engagement at Caesars
Entertainment destinations, and their preferred spending choices outside of gaming. Member information is also used in connection with various marketing
promotions, including campaigns involving direct mail, email, our websites, mobile devices, social media, and interactive slot machines.
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Intellectual Property and Resources
We use a variety of trade names, service marks, trademarks, patents and copyrights in our operations and believe that we have the rights necessary to
conduct our continuing operations. The development of intellectual property is part of our overall business strategy. We regard our intellectual property to
be an important element of our success. We file applications for and obtain patents, trademarks and copyrights in the United States and foreign countries
where we believe filing for such protection is appropriate. While our business as a whole is not substantially dependent on any one patent, trademark, or
copyright, we seek to establish and maintain our proprietary rights in our business operations and technology through the use of patents, trademarks,
copyrights, and trade secret laws. We also seek to maintain our trade secrets and confidential information by nondisclosure policies and through the use of
appropriate confidentiality agreements. Our United States patents have varying expiration dates.
We have not applied for the registration of all of our trademarks, copyrights, proprietary technology, or other intellectual property rights, as the case may
be, and may not be successful in obtaining all intellectual property rights for which we have applied. Despite our efforts to protect our proprietary rights,
parties may infringe upon our intellectual property and use information that we regard as proprietary, and our rights may be invalidated or unenforceable.
The laws of some foreign countries do not protect proprietary rights or intellectual property to as great of an extent as do the laws of the United States. In
addition, others may independently develop substantially equivalent intellectual property.
We own or have the right to use proprietary rights to a number of trademarks that we consider, along with the associated name recognition, to be valuable
to our business, including Eldorado, Silver Legacy, Isle, Lady Luck, Tropicana, Circus Circus, Caesars, Flamingo, Harrah’s, Horseshoe, Paris, Planet
Hollywood, Caesars Rewards, Caesars Sportsbook, William Hill and WSOP.
As of December 31, 2022, our Caesars Sportsbook app is powered by our Liberty platform in 20 mobile sports betting jurisdictions. The Liberty platform
resulted in a significant upgrade to our user interface and significant product upgrades including numerous pre-match and live markets, extensive odds and
flexible limits, player props, and same-game parlays. Our Liberty platform also integrates customers with the Caesars Rewards loyalty program. We
continue to use legacy sportsbook and iGaming platforms in certain states. In addition to the Caesars Sportsbook app, we and NYRABets LLC, the official
online wagering platform of the New York Racing Association, Inc., launched the Caesars Racebook app. The Caesars Racebook app provides access for
pari-mutuel wagering at over 300 racetracks around the world. Wagers placed can earn credits towards the Caesars Rewards loyalty program.
Industry Overview
See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” See also Exhibit 99.1, “Gaming Overview,” to this
Annual Report on Form 10-K, which is incorporated herein by reference.
Seasonality
We believe that business at our regional properties outside of Las Vegas is subject to seasonality, including seasonality based on the weather in the region in
which they operate and the travel habits of visitors. Business in our properties can also fluctuate due to specific holidays or other significant events,
particularly when a holiday falls in a different quarter than the prior year, the timing of the WSOP tournament (with respect to our Las Vegas properties),
city-wide conventions, large sporting events or concerts, or visits by our premium players. We also believe that any seasonality, holiday, or other significant
event may affect our various properties or regions differently. We may also experience seasonality with retail and online sports betting which coincides
with certain sporting events, as well as seasons of professional sports teams.
Gaming Licenses and Governmental Regulations
The gaming and racing industries are highly regulated, and we must maintain our licenses and pay gaming taxes to continue our operations. We are subject
to extensive regulation under laws, rules and supervisory procedures. These laws, rules and regulations generally concern the responsibility, financial
stability and characters of the owners, managers, and persons with financial interests in the gaming operations. If additional gaming regulations are adopted
in a jurisdiction in which we operate, such regulations could impose restrictions or costs that could have a significant adverse effect on us. From time to
time, various proposals have been introduced in legislatures of jurisdictions in which we have operations that, if enacted, could adversely affect the tax,
regulatory, operational or other aspects of the gaming industry and us. We do not know whether or when such legislation will be enacted. Gaming
companies are currently subject to significant state and local taxes and fees in addition to normal federal and state corporate income taxes, and such taxes
and fees are subject to increase at any time. Any material increase in these taxes or fees could adversely affect us.
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Some jurisdictions, including those in which we are licensed, empower their regulators to investigate participation by licensees in gaming outside their
jurisdiction and require access to periodic reports respecting those gaming activities. Violations of laws in one jurisdiction could result in disciplinary
action in other jurisdictions.
Under provisions of gaming laws in jurisdictions in which we have operations, and under our organizational documents, certain of our securities are subject
to restriction on ownership which may be imposed by specified governmental authorities. The restrictions may require a holder of our securities to dispose
of the securities or, if the holder refuses, or is unable to dispose of the securities, we may be required to repurchase the securities.
A more detailed description of the regulations to which we are subject is contained in Exhibit 99.1 to this Annual Report on Form 10-K, which is
incorporated herein by reference.
Internal Revenue Service Regulations
The Internal Revenue Service requires operators of casinos and online sports betting apps located in the United States to file information returns for U.S.
citizens, including names and addresses of winners for certain table games, keno, bingo, slot machine and retail and online sports betting winnings in
excess of stipulated amounts. The Internal Revenue Service also requires operators to withhold taxes on some table games, keno, bingo, slot machine and
retail and online sports betting winnings of nonresident aliens. We are unable to predict the extent to which these requirements, if extended, might impede
or otherwise adversely affect operations of, and/or income from, other games.
Regulations adopted by the Financial Crimes Enforcement Network of the Treasury Department (“FINCEN”) requires the reporting of currency
transactions in excess of $10,000 occurring within a gaming day, including identification of the patron by name and social security number. This reporting
obligation began in May 1985 and may have resulted in the loss of gaming revenues to jurisdictions outside the United States which are exempt from the
ambit of these regulations. In addition to currency transaction reporting requirements, suspicious financial activity is also required to be reported to
FINCEN.
Other Laws and Regulations
Our businesses are subject to various federal, state and local laws and regulations in addition to gaming regulations. These laws and regulations include, but
are not limited to, restrictions and conditions concerning alcoholic beverages, food service, smoking, environmental matters, employees and employment
practices, currency transactions, taxation, zoning and building codes, and marketing and advertising. Such laws and regulations could change or could be
interpreted differently in the future, or new laws and regulations could be enacted. Material changes, new laws or regulations, or material differences in
interpretations by courts or governmental authorities could adversely affect our operating results.
The sale of alcoholic beverages is subject to licensing, control and regulation by applicable local regulatory agencies. All licenses are revocable and are not
transferable. The agencies involved have full power to limit, condition, suspend or revoke any license, and any disciplinary action could, and revocation
would, have a material adverse effect upon our operations.
We also deal with significant amounts of cash in our operations and are subject to various reporting and anti-money laundering regulations. Such laws and
regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. Material changes, new laws or
regulations, or material differences in interpretations by courts or governmental authorities could adversely affect our operating results. See Item 1A, “Risk
Factors,” for additional discussion.
Taxation
Gaming companies are typically subject to significant taxes and fees in addition to normal federal, state and local income taxes, and such taxes and fees are
subject to increase at any time. We pay substantial taxes and fees with respect to our operations. From time to time, federal, state, local and provincial
legislators and officials have proposed changes in tax laws, or in the administration of such laws, affecting the gaming industry. It is not possible to
determine with certainty the likelihood of changes in tax laws or in the administration of such laws.
Environmental Matters
We are subject to various federal, state and local environmental, health and safety laws and regulations, including but not limited to air quality, indoor air
quality, water quality, bulk storage of regulated materials, and disposal of waste, including hazardous waste. Such laws and regulations can impose liability
on potentially responsible parties (owner/operators of real property) to clean up, or contribute to the cost of cleaning up, sites at which regulated materials
were disposed of or released. In addition to investigation and remediation liabilities that could arise under such laws and regulations, we could face
personal injury, property damage, fines or other claims by third parties concerning environmental compliance, contamination or exposure to hazardous
conditions. Environmental regulatory violations also include monetary penalties assessed by the
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jurisdictional regulatory agency and civil or criminal penalties for intentional negligence. Occasionally and under certain circumstances, we have
investigated and remediated (or contributed to remediation costs) contamination located at or near our facilities. Examples included contamination related
to underground storage tanks and groundwater contamination arising from prior uses of land on which certain facilities are located. In addition, we have
and continue to contain, manage, and dispose of manure and wastewater generated by concentrated animal feeding operations due to our racetrack
operations; manage, abate, or remove indoor air quality concerns such as mold, lead, or asbestos-containing materials; and manage operations within
applicable environmental permitting requirements. Although we have incurred and expect to incur costs related to various environmental matters such as
investigations, remediation, and management of hazardous materials or conditions known or discovered to exist at our properties, those costs have not had,
and are not expected to have, a material adverse effect on our financial condition, results of operations or cash flow. However, such matters in the future
could have a material adverse effect on our business.
Climate Change
There has been an increasing focus of international, national, state, regional and local regulatory bodies on greenhouse gas (“GHG”), including carbon
emissions, and climate change issues. The United States is a member of the Paris Agreement, a climate accord reached at the Conference of the Parties
(“COP 21”) in Paris, that set many new goals, and many related policies are still emerging. The Paris Agreement requires set GHG emission reduction
goals every five years beginning in 2020. Stronger GHG emission targets were set at COP 26 in Glasgow in November 2021.
Future regulation could impose stringent standards to substantially reduce GHG emissions. Legislation to regulate GHG emissions has periodically been
introduced in the U.S. Congress. The current Administration has taken steps to further regulate GHG emissions. Those reductions could be costly and
difficult to implement or estimate.
Beyond financial and regulatory effects, the projected severe effects of climate change – such as property damage or supply chain issues stemming from
extreme weather events – has already and may continue to directly affect our facilities and operations. Caesars recognizes the impacts of climate change
and is engaged in long-term initiatives to identify, assess, and manage the risks and opportunities associated with climate change (see “Environmental
Stewardship” below).
Reporting and Record-Keeping Requirements
We are required periodically to submit detailed financial and operating reports and furnish any other information about us and our subsidiaries that gaming
authorities may require. We are required to maintain a current stock ledger that may be examined by gaming authorities at any time. If any securities are
held in trust by an agent or by a nominee, the record holder may be required to disclose the identity of the beneficial owner to gaming authorities. A failure
to make such disclosure may be grounds for finding the record holder unsuitable. Gaming authorities may, and in certain jurisdictions do, require
certificates for our securities to bear a legend indicating that the securities are subject to specified gaming laws.
Human Capital Management
We aim to provide a workplace that is engaging, empowering, inclusive and respectful for all employees (our “Team Members”), embracing a culture of
openness, passion for service and recognition. Our ongoing investment in professional training and development, safety, health and wellbeing, and Team
Member recognition linked to guest satisfaction are all important drivers of our success in delivering strong financial results and creating value for our
communities. We have approximately 49,000 employees at our domestic properties throughout our organization.
Labor Relations
Approximately 21,000 of our employees are covered by collective bargaining agreements with certain of our subsidiaries. The majority of these employees
in various job positions are covered by the following agreements:
Employee Group
Las Vegas Culinary Employees
Atlantic City Food & Beverage and Hotel
Employees
Las Vegas Dealers
Las Vegas Teamsters
Las Vegas Bartenders
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Approximate Number of Active
Employees Represented
10,000
Union
Culinary Workers Union, Local 226
Date on which Collective Bargaining
Agreement Becomes Amendable
May 31, 2023
2,700
2,000
1,200
1,100
UNITE HERE, Local 54
United Auto Workers
Teamsters, Local 986
Bartenders Union, Local 165
May 31, 2026
September 30, 2023
March 31, 2024
May 31, 2023
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Hiring and Development
We aim to support Team Members throughout their career with Caesars. We’re committed to providing opportunities to help Team Members achieve their
professional goals. We maintain a wide range of channels for diverse recruiting, including outreach to academic institutions and nonprofits that help us
source diverse candidates. Our leadership receives training on our inclusive and equitable talent management recruitment and retention processes.
Additionally, to support hiring initiatives across the enterprise, we maintain a recruiting website that includes information describing our culture, benefits
and diversity initiatives. The website highlights our commitment to corporate social responsibility (“CSR”) diversity, equity and inclusion (“DEI”), and we
welcome candidates from all backgrounds.
We strive to inspire our Team Members through our mission, vision and values, and our Code of Commitment (described below). To evaluate our Team
Member experience and our retention efforts, we monitor a number of Team Member measures, such as turnover rates and Team Member satisfaction. In
2021, we implemented new Team Member experience surveys to help us further understand the drivers of engagement and areas where we can improve.
These surveys are completed on a regular basis alongside additional surveys targeted at specific events within a Team Member cycle, including new hires,
anniversary milestones and exit inquiries.
Our compensation and benefits programs are designed to attract, retain and motivate our Team Members. In addition to competitive salaries and wages, we
provide a variety of short-term, long-term and incentive-based compensation programs to reward performance relative to key metrics relevant to our
business. We offer comprehensive benefit options including, but not limited to, retirement savings plans, health insurance coverage (including medical,
mental health, dental, vision and pharmacy), parental leave, educational assistance, training opportunities, company-paid life insurance and an employee
assistance program.
We place utmost importance on creating a safe workplace for our Team Members, embedding procedures so that all our Team Members have the
awareness, knowledge and tools to make safe working a habit.
We also maintain a wellness program to help our Team Members improve their health and wellbeing. This program has demonstrated improved health
metrics for participating Team Members and their covered family members helping reduce the cost of healthcare for Team Members and for the Company.
Effective in 2022, we consolidated our group health plans and made significant enhancements to our offerings and wellness program including a wide
range of affordable options, mental health initiatives and expanded onsite and virtual primary care clinics across the US.
Diversity, Equity and Inclusion
We embrace diversity and aim to create an inclusive working environment that celebrates all our Team Members as individuals. Our diversity, equity and
inclusion framework identifies five pillars of activity: advocacy, Team Members, suppliers, communities and guests for a holistic approach to embedding
DEI in everything we do. We publish our DEI data in our annual CSR report (described below).
We set targets to increase the representation of women and people of color in leadership roles (supervisory and above). Our 2025 goals outlined 50% of
management roles to be held by women in both the mid-level and senior leadership populations, and 50% of leadership roles to be held by people of color.
We also committed to increase the representation of people of color in senior leadership roles by 50%. As of year-end, 45% of mid-level roles and 30% of
senior leadership roles in the Company are held by women. Additionally, 43% of leadership roles are held by people of color and the representation of
people of color in senior leadership positions has increased by 106%.
Corporate Social Responsibility
Caesars’ Board of Directors (the “Board”) and senior executives view CSR as an integral element in the way we do business, with the belief that being a
good corporate citizen helps protect the Company against risk, contributes to improved performance and helps foster positive relationships with all those
with whom we connect. The Board and our executive management are committed to being an industry leader in CSR (which includes diversity, equity and
inclusion, social impact, and environmental sustainability). In 2022, the Board and our leadership continued to engage with our CEO-level external CSR
Advisory Board comprised of experts representing DEI, business strategy, academia and investors, and used their guidance to confirm our CSR priorities.
These priorities are reflected in our 13th annual CSR report, published in 2022 in accordance with Global Reporting Initiative Standards.
CSR Committee of the Board
Caesars’ Board has a CSR committee that defines the duties and responsibilities of the Board in supporting delivery of our corporate purpose and CSR
strategy as well as CSR-related aspects of corporate governance such as Board diversity.
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Code of Commitment
Caesars is committed to being a responsible corporate citizen and environmental steward through our CSR strategy, PEOPLE PLANET PLAY. This is
reflected in our Code of Commitment which is our public pledge to our guests, Team Members, communities, business partners and all those we reach that
we will honor the trust they have placed in us through ethical conduct and integrity. We commit to:
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PEOPLE: Supporting the wellbeing of our Team Members, guests and local communities.
PLANET: Taking care of the world we all call home.
PLAY: Creating memorable experiences for our guests and leading responsible gaming practices in the industry.
PEOPLE PLANET PLAY Strategy
Our PEOPLE PLANET PLAY strategy defines how we meet the obligations of our Code of Commitment and is aligned with global priorities articulated by
the United Nations as the Sustainable Development Goals. PEOPLE PLANET PLAY establishes multi-year targets in key areas of impact, including
science-based greenhouse gas emissions-reduction, formally approved by the Science Based Targets Initiative (“SBTi”), aligning with global best practices
on climate change action. In early 2022, we conducted a comprehensive CSR assessment to evaluate our assumptions. We also used the assessment period
to review our business transformations following the COVID-19 pandemic, along with expectations related to social justice and CSR. With the help of an
external specialist, our assessment gathered input from internal and external stakeholders, reviewed multiple industry and environmental, social and
governance (“ESG”) disclosures, standards and frameworks and yielded 21 material topics. This process allowed us to reassess the role our business plays
in society, the way we impact people and the environment and the needs of our stakeholders. Our materiality assessment is available on our website at
www.investor.caesars.com within the ESG resource hub on our Corporate Social Responsibility page.
Responsible Gaming
For more than thirty years, Caesars has maintained its Responsible Gaming (“RG”) program. We train tens of thousands of Team Members each year and a
cadre of RG Ambassadors throughout our properties to identify guests in need of assistance and provide support. In recent years, Caesars has contributed to
the National Center for Responsible Gaming, the National Council on Problem Gaming and other state programs to help advance responsible practices in
the gaming industry. Caesars Digital also maintains responsible gaming programs tailored to each state in which it operates and offers users in-application
RG tools such as time on device restrictions and wagering limits.
Caesars maintains a comprehensive risk-based Bank Secrecy Act (“BSA”) and Anti-Money Laundering (“AML”) program. It includes strong governance
and effective internal controls and procedures to comply with applicable BSA requirements, regulatory guidance, and any related laws, and to take
measures to prevent its affiliated casinos from being used for money laundering or other criminal activity. Execution of the program is governed with
reference to FINCEN’s guidance on the Culture of Compliance. Caesars’ internal AML Policy, Know Your Customer Policy and BSA Identification Policy
outline the Caesars AML Program and set the minimum standards for the related procedures and internal controls of the Caesars casino affiliates.
Employees are required to complete annual trainings related company policies, including AML.
Caesars also maintains a Code of Ethics and Business Conduct (the “Code”) that includes standards designed to deter wrongdoing and to promote, amongst
other standards, honest and ethical conduct and full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files
with the Securities and Exchange Commission. Caesars’ Chief Legal Officer serves as the compliance officer of the Code and Caesars provides periodic
training regarding the contents and importance of the Code.
Caesars also maintains an Amended and Restated Gaming Compliance Plan (the “Plan”), which is approved by various gaming regulators. The Plan is
designed to implement procedures to enhance the likelihood that no activities of the Company or any affiliate of the Company will impugn the reputation
and integrity of Caesars. The Plan also establishes a Compliance Committee that assists the Company in implementing its strict policy that its business be
conducted with honesty and integrity, and in accordance with high moral, legal and ethical standards. Caesars’ Senior Vice President & Assistant General
Counsel – Regulatory & Compliance serves as the Compliance Officer as defined by the Plan.
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Environmental Stewardship
We take a proactive approach to environmental sustainability through our CodeGreen strategy established in 2007, striving to improve our performance
across energy and GHG emissions efficiencies, reduction of water consumption and increasing diversion of waste from landfills. Caesars recognizes the
impact climate change can play both on our business and the guests we serve. Identifying, assessing, and managing the risks and opportunities therefore
plays a vital role in our long-term strategic thinking on climate and water, and how we approach our CSR goals. We adopted Science Based Targets
(“SBTs”) as part of our strategy to reduce our environmental impact. These targets, approved to be in line with well below 2 degrees Celsius per SBTi, are
(i) reducing absolute Scope 1 and 2 GHG emissions by 35% by 2025, and 100% by 2050, from a 2011 base-year and (ii) having 60% of suppliers by spend
institute science-based GHG reduction targets for their operations by 2023. In 2023, we expect to establish a new baseline to reaffirm GHG emission
reduction goals as a combined company, while increasing our ambition to meet a 1.5-degree reduction target. We modeled our GHG emissions data to
create an estimate for 2018 and prior years back to 2011. This enabled us to compare our progress against our SBTs using actual data against a modeled
2011 base year. Between 2011 and 2021, Caesars estimated a reduction in absolute Scopes 1 and 2 GHG emissions of 33.9%. Caesars is pursuing
renewable energy sources and low-carbon options, including on site solar developments. Our long-term goals include a continued focus on energy
efficiency and conservation as well as evaluating renewable energy supply opportunities for each of our properties in pursuit of our forthcoming SBTs.
We voluntarily participate in the CDP (formerly the Carbon Disclosure Project), an international nonprofit that runs a global disclosure system for
investors, companies, and regions to manage their environmental impacts. In 2022, Caesars achieved A-List status for both climate change and water
security and in 2021 earned a spot on the Supplier Engagement Leaderboard from CDP. Less than 3% of companies assessed by CDP in 2022 made the A
List for either climate change or water security.
We are engaged in extensive waste reduction efforts across our facilities, including recycling, food donation, and manure composting. In 2021, we diverted
40% of our total waste from landfills.
Community Investment
Caesars contributes to our local communities to help them develop and prosper, through funding community projects, Team Member volunteering and cash
donations from the Caesars Foundation, a private foundation funded from our operating income. In 2022, the Caesars Foundation contributed $3.3 million
to communities across the United States. The Caesars Foundation also continued to support significant national relationships that support diversity, equity
and inclusion. During 2022, our Team Members volunteered over 75,000 hours through the HERO program.
Many of our community partners are long-term collaborations. For example, in 2022 we celebrated the 20 anniversary of our partnership with Meal on
Wheels America working together to combat the issues of senior hunger and isolation. We also implemented an expanded partnership with Boys and Girls
Club of America supported by a $500,000 grant from the Caesars Foundation to support the mission of enabling young people to reach their full potential
as productive, caring, responsible citizens.
th
We seek to encourage DEI dialogue in our communities as part of our advocacy approach to raise awareness. In 2022, we hosted a DEI Summit bringing
together corporate and nonprofit partners and suppliers in supporting and promoting efforts to advance DEI initiatives. The Summit included several
educational sessions, keynotes and panel discussions led by notable DEI leaders and practitioners, as well as a panel discussion involving diverse suppliers.
Available Information
We are required to file annual, quarterly and other current reports and information with the Securities and Exchange Commission (“SEC”). Because we
submit filings to the SEC electronically, access to this information is available at the SEC’s website (www.sec.gov). This site contains reports and other
information regarding issuers that file electronically with the SEC.
We make our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K, and all amendments to these reports,
available free of charge on our corporate website (www.caesars.com/corporate) as soon as reasonably practicable after such reports are filed with, or
furnished to, the SEC. In addition, our Code of Ethics and Business Conduct and charters of the Audit Committee, Compensation Committee, Corporate
Social Responsibility Committee, and the Nominating and Corporate Governance Committee are available on our website. We will provide reasonable
quantities of electronic or paper copies of filings free of charge upon request. In addition, we will provide a copy of the above referenced charters to
stockholders upon request.
References in this document to our website address do not incorporate by reference the information contained on the website into this Annual Report on
Form 10-K.
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Cautionary Statement Regarding Forward-Looking Information
This Annual Report on Form 10-K includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements regarding our strategies, objectives
and plans for future development or acquisitions of properties or operations, as well as expectations, future operating results, trends and other information
that is not historical information. When used in this report, the terms or phrases such as “anticipates,” “believes,” “projects,” “plans,” “intends,” “expects,”
“might,” “may,” “estimates,” “could,” “should,” “would,” “will likely continue,” and variations of such words or similar expressions are intended to
identify forward-looking statements. Specifically, forward-looking statements may include, among others, statements concerning:
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projections of future results of operations or financial condition;
expectations regarding our business and results of operations of our existing casino properties and online betting and gaming activities and
prospects for future development;
expectations regarding trends that will affect our markets and the gaming industry generally, including expansion of internet betting and gaming,
and the impact of those trends on our business and results of operations;
our ability to comply with the covenants in the agreements governing our outstanding indebtedness and leases;
our ability to meet our projected debt service obligations, operating expenses, and maintenance capital expenditures;
expectations regarding availability of capital resources;
our intention to pursue development opportunities and additional acquisitions and divestitures, and;
the impact of regulation on our business and our ability to receive and maintain necessary approvals for our existing properties and future projects
and operation of online sportsbook, poker and gaming.
Any forward-looking statements are based upon underlying assumptions, including any assumptions mentioned with the specific statements, as of the date
such statements were made. Such assumptions are in turn based upon internal estimates and analyses of market conditions and trends, management plans
and strategies, economic conditions and other factors. Such forward-looking statements are only predictions and involve known and unknown risks and
uncertainties, many of which are beyond our control, and are subject to change. By their nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend upon future circumstances that may not occur. Actual results and trends may differ materially from any future
results, trends, performance or achievements expressed or implied by such statements. Forward-looking statements speak only as of the date they are made,
and we assume no duty to update forward-looking statements. Forward-looking statements should not be regarded as a representation by us or any other
person that the forward-looking statements will be achieved. Undue reliance should not be placed on any forward-looking statements. Some of the
contingencies and uncertainties to which any forward-looking statement contained herein are subject include, but are not limited to, the following:
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our ability to adapt to the very competitive environments in which we operate, including the online market;
the impact of economic downturns and other factors that impact consumer spending;
the impact of win rates and liability management risks on our results of operations;
our reliance on third parties for strategic relationships and essential services;
costs associated with investments in our online offerings and technological and strategic initiatives;
risk relating to fraud, theft and cheating;
our ability to collect gaming receivables from our credit customers;
the impact of our substantial indebtedness and significant financial commitments, including our obligations under our lease arrangements;
restrictions and limitations in agreements governing our debt and leased properties could significantly affect our ability to operate our business and
our liquidity;
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financial, operational, regulatory or other potential challenges that may arise as a result of leasing of a number of our properties;
the effect of disruptions or corruption to our information technology and other systems and infrastructure;
the ability to identify suitable acquisition opportunities and realize growth and cost synergies from any future acquisitions;
the impact of governmental regulation on our business and the cost of complying or the impact of failing to comply with such regulations;
changes in gaming taxes and fees in jurisdictions in which we operate;
risks relating to pending claims or future claims that may be brought against us;
changes in interest rates and capital and credit markets;
the effect of seasonal fluctuations;
our particular sensitivity to energy prices;
deterioration in our reputation or the reputation of our brands;
potential compromises of our information systems or unauthorized access to confidential information and customer data;
our reliance on information technology, particularly for our digital business;
our ability to protect our intellectual property rights;
the extent and duration of the impact of COVID-19, inflation, supply chain challenges and labor shortages on the Company’s business, financial
results and liquidity;
the effect of war, terrorist activity, acts of violence, natural disasters, public health emergencies and other catastrophic events;
our reliance on key personnel and the intense competition to attract and retain management and key employees in the gaming industry; and
other factors described in Part II, Item 1A. “Risk Factors” contained herein and our reports on Form 10-Q and Form 8-K filed with the SEC.
In light of these and other risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur. These forward-looking
statements speak only as of the date on which this statement is made, even if subsequently made available on our website or otherwise, and we do not
intend to update publicly any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made, except
as may be required by law.
You should also be aware that while we from time to time communicate with securities analysts, we do not disclose to them any material non-public
information, internal forecasts or other confidential business information. Therefore, you should not assume that we agree with any statement or report
issued by any analyst, irrespective of the content of the statement or report. To the extent that reports issued by securities analysts contain projections,
forecasts or opinions, those reports are not our responsibility and are not endorsed by us.
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Item 1A. Risk Factors
Risks Relating to Operating Our Business
We face substantial competition and expect that such competition will continue.
The gaming industry is highly competitive and competition is intense in most of the markets in which we operate. We compete with a variety of gaming
operations, including land-based casinos, dockside casinos, riverboat casinos, casinos located on racing tracks and casinos located on Native American
reservations and other forms of legalized gaming such as video gaming terminals at bars, restaurants and truck stops and online gambling and sports
betting. We also compete, to a lesser extent, with other forms of legalized gaming and entertainment such as bingo, pull tab games, card parlors,
sportsbooks, fantasy sports websites, “cruise-to-nowhere” operations, pari-mutuel or telephonic betting on horse racing and dog racing, state-sponsored
lotteries, jai-alai and, in the future, may compete with gaming at other venues. In addition, we compete more generally with other forms of entertainment
for the discretionary spending of our customers. In some instances, particularly in the case of Native American casinos, our competitors pay lower taxes or
no taxes.
In recent years, many casino and online gaming operators, including us, have reinvested in existing jurisdictions to attract new customers or to gain market
share, thereby increasing competition in those jurisdictions. In particular, we and other online betting and gaming operators have undertaken extensive
marketing campaigns and made significant investments in customer acquisition through pricing and promotional policies. In addition, in response to
changing trends, Las Vegas operators have focused on expanding their non-gaming offerings, including upgrades to hotel rooms, new food and beverage
offerings, and new entertainment offerings. The expansion of online betting and gaming in new jurisdictions and the growth of the number of competitors
in the online betting and gaming market, the expansion of existing casino entertainment properties, the increase in the number of properties, and the
aggressive marketing strategies of many of our competitors have increased competition in many markets in which we operate, and this intense competition
is expected to continue. These competitive pressures have and are expected to continue to adversely affect our financial performance.
Our brick-and-mortar operations face increasing competition as a result of the expansion of legalized online gaming and betting, including our own online
betting and gaming operations, in a number of the jurisdictions in which we operate. While we believe that we are well positioned to compete with new
entrants to the betting and gaming market through our online betting and gaming offerings, the competitive dynamic is evolving and we cannot assure you
that our results of operations will not be adversely impacted by the expansion of legalized online gaming and betting.
States that already have legalized casino gaming may further expand gaming, and other states that have not yet legalized gaming may do so in the future.
We also compete with Native American gaming operations in California and other jurisdictions where Native American tribes operate large-scale gaming
facilities or otherwise conduct gaming activities on Native American lands, which we expect will continue to expand. Further expansion of legalized casino
gaming in jurisdictions in or near our markets or changes to gaming laws in states in which we have operations and in states near our operations could
increase competition and could adversely affect our operations.
Increased competition may require us to make substantial expenditures in marketing, customer development and capital projects to maintain and enhance
the competitive positions of our online and brick and mortar operations to increase the attractiveness and add to the appeal of our facilities and product
offerings. Because a significant portion of our cash flow is required to pay obligations under our outstanding indebtedness and our lease obligations, there
can be no assurance that we will have sufficient funds to undertake, or that we will be able to obtain sufficient financing to fund, such expenditures. If we
are unable to make such expenditures, our competitive position could be negatively affected.
Our business is sensitive to reductions in discretionary consumer spending as a result of downturns in the economy and other factors outside our
control.
Consumer demand for casino hotel and racetrack properties and online betting and gaming is particularly sensitive to downturns in the economy and the
associated impact on discretionary spending on leisure activities. Changes in discretionary consumer spending or consumer preferences brought about by
factors such as perceived or actual general economic conditions, effects of declines in consumer confidence in the economy, the impact of high energy and
food costs, rising interest rates, the increased cost of travel, decreased disposable consumer income and wealth, fears of war and future acts of terrorism, or
widespread illnesses or epidemics, including COVID-19, can have a material adverse effect on leisure and business travel, discretionary spending and other
areas of economic behavior that directly impact the gaming and entertainment industries in general and could further reduce customer demand for the
amenities and products that we offer. In addition, increases in gasoline prices, including increases prompted by global political and economic instabilities,
can adversely affect our casino operations because most of our patrons travel to our properties by car or on airlines that may pass on increases in fuel costs
to passengers in the form of higher ticket prices.
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Win rates (hold rates) for our casino operations depend on a variety of factors, some of which are beyond our control, and participation in the sports
betting industry exposes us to trading, liability management and pricing risks. We may experience lower than expected profitability and potentially
significant losses as a result of factors beyond our control or a failure to accurately determine odds.
The gaming industry is characterized by an element of chance. Accordingly, we employ theoretical win rates to estimate what a certain type of game, on
average, will win or lose in the long run. In addition to the element of chance, win rates (hold percentages) are also affected by the spread of table limits
and factors that are beyond our control, such as a player’s skill, experience, and behavior, the mix of games played, the financial resources of players, the
volume of bets placed, and the amount of time players spend gambling. As a result of the variability in these factors, the actual win rates at our casinos may
differ from the theoretical win rates we have estimated and could result in the winnings of our gaming customers exceeding those anticipated. The
variability of win rates (hold rates) also have the potential to negatively impact our financial condition, results of operations, and cash flows.
Our fixed-odds betting products involve betting where winnings are paid on the basis of the amounts wagered and the odds quoted. Odds are determined
with the objective of providing an average return to the bookmaker over a large number of events. However, there can be significant variation in gross win
percentage event-by-event and day-by-day. We have systems and controls that seek to reduce the risk of daily losses occurring on a gross-win basis, but
there can be no assurance that these will be effective in reducing our exposure to this risk. As a result we may experience (and we have from time to time
experienced) significant losses with respect to individual events or betting outcomes, in particular if large individual bets are placed on an event or betting
outcome or series of events or betting outcomes. Any significant losses on a gross-win basis could have a material adverse effect on our business, financial
condition and results of operations.
In addition, the odds that we offer in our sportsbook operations may occasionally contain an obvious error. Examples of such errors are inverted lines
between teams, or odds that are significantly different from the true odds of the outcome in a way that all reasonable persons would agree is an error. If
regulatory restrictions do not permit us to void or re-set odds to correct odds on bets associated with large obvious errors in odds making, we could be
subject to covering significant liabilities.
We rely on third parties to provide services that are essential to the operation of our online betting and gaming business, including, player account
management, geolocation and identity verification, payment processing and sports data.
We rely on third parties to provide services that are essential to the operation of our online betting and gaming business, including player account
management, geolocation and identity verification systems to ensure we comply with laws and regulations, processing deposits and withdrawals made by
our online users and providing information regarding schedules, results, performance and outcomes of sporting events to determine when and how bets are
settled. The software, systems and services provided by our third-party providers may not meet our expectations, contain errors or weaknesses, be
compromised or experience outages. A failure of such third-party systems to perform effectively, or any service interruption to those systems, could
adversely affect our business by preventing users from accessing our online platform, delaying payment or resulting in errors in settling bets, which could
give rise to regulatory issues relating to the operation of our business. By way of example, incorrect or misleading geolocation and identity verification data
with respect to current or potential users received from third-party service providers may result in us inadvertently allowing access to our offerings to
individuals who are not permitted to access them or otherwise inadvertently denying access to individuals who are permitted to access them, and errors or
failures by our payment processors and sports data providers could result in a failure in timely and accurately process payments to and from users or errors
in settling bets. Any such errors or failures could result in violations of applicable regulatory requirements and adversely affect our reputation and our
ability to attract and retain our online users. Furthermore, negative publicity related to any of our third-party partners could adversely affect our reputation
and brand, and could potentially lead to increased regulatory or litigation exposure.
In addition, if any of our third-party services providers terminates its relationship with us, is unable to maintain necessary regulatory approvals, or refuses
to renew its agreement with us on commercially reasonable terms, we would have to find alternate service providers. We cannot be certain that we would
be able to secure favorable terms from alternative service providers that are critical to the operation of our business or enter into alternative arrangements in
a timely manner. Our digital business, results of operations and prospects would be adversely impacted by our inability or delay in securing replacement
services that are sufficient to support our online business or are on comparable terms.
The growth of our digital business will depend, in part, on the success of our strategic relationships with third parties.
We rely on relationships with sports leagues and teams, media companies and other third parties in order to attract users to our offerings. In 2019 we
entered into an exclusive sports entertainment partnership with the NFL, making us the first ever “Official Casino Sponsor” in the history of the league and
in 2020, we partnered with ESPN to integrate their digital platforms with our sportsbooks. These relationships, along with providers of online services,
search engines, social media, directories and
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other websites and e-commerce businesses direct consumers to our offerings. While we believe there are other third parties that could drive users to our
online offerings, adding or transitioning to them may disrupt our business and increase our costs, and may require us to modify, limit or discontinue certain
offerings. Furthermore, sports leagues, teams and venues may enter into exclusive partnerships with our competitors which could adversely affect our
ability to offer certain types of wagers. In the event that any of our existing relationships or our future relationships fail to provide services to us in
accordance with the terms of our arrangement, or at all, and we are not able to find suitable alternatives, our ability to cost effectively attract consumers
could be impacted and our online betting and gaming business, financial condition, results of operations and prospects could be adversely affected.
The growth of our digital business will require investments in our online offerings, technology and strategic marketing initiatives, which could be costly
and negatively impact the economics of our online business.
The online betting and gaming industry is subject to rapid and frequent changes in standards, technologies, products and service offerings, as well as in
customer demands and preferences and regulations, which will require us to continually introduce and successfully implement new and innovative
technologies, marketing strategies, product offerings and enhancements to remain competitive and effectively stimulate customer demand, acceptance and
engagement. The process of developing new online offerings and systems is inherently complex and uncertain, and new offerings may not be well received
by users, even if they are well-reviewed and of high quality. Developing new offerings and marketing strategies can also divert our management’s attention
from other business issues and opportunities. New online offerings that attain market acceptance and aggressive marketing strategies implemented in the
competitive online market environment could impact the mix of our existing business, including our casino business, or the share of our patron’s wallets in
a manner that could negatively impact our results of operations. In addition, online betting and gaming operates in a competitive environment that requires
significant investment in marketing initiatives, including free play and use of a variety of free and paid marketing channels, including television, radio,
social media platforms, such as Facebook, Instagram, Twitter, and other digital channels. We cannot be sure that our investments in technology, products,
service offerings and marketing initiatives will be successful or generate the return on investment that we expect. If new or existing competitors offer more
attractive offerings or engage in marketing initiatives that are better received by customers, we may lose users or users may decrease their spending on our
offerings. Further, new customer demands, superior competitive offerings, new industry standards or changes in the regulatory environment could render
our offerings unattractive, unmarketable or obsolete and require us to make substantial unanticipated changes to our technology or business model. Failure
to adapt to a rapidly changing market or evolving customer demands, and costs required to be incurred to react to dynamic market conditions, could harm
our business, financial condition, results of operations and prospects.
We face the risk of fraud, theft, and cheating.
We face the risk that gaming customers may attempt or commit fraud or theft or cheat in order to increase winnings. Such acts of fraud, theft, or cheating
could involve the use of counterfeit chips or other tactics, possibly in collusion with our employees. Internal acts of cheating could also be conducted by
employees through collusion with dealers, surveillance staff, floor managers, or other casino or gaming area staff. Additionally, we also face the risk that
customers may attempt or commit fraud or theft with respect to our non-gaming offerings or against other customers. Such risks include stolen credit or
charge cards or cash, falsified checks, theft of retail inventory and purchased goods, and unpaid or counterfeit receipts. Failure to discover such acts or
schemes in a timely manner could result in losses in our operations. Negative publicity related to such acts or schemes could have an adverse effect on our
reputation, potentially causing a material adverse effect on our business, financial condition, results of operations, and cash flows.
We extend credit to a portion of our customers, and we may not be able to collect gaming receivables from our credit customers.
We conduct our gaming activities on a credit and cash basis. Any such credit we extend is unsecured. High-stakes players typically are extended more
credit than customers who tend to wager lower amounts. High-end gaming is more volatile than other forms of gaming, and variances in win-loss results
attributable to high-end gaming may have a significant positive or negative impact on cash flow and earnings in a particular period. We extend credit to
those customers whose level of play and financial resources warrant, in the opinion of management, an extension of credit. These large receivables could
have a significant impact on our results of operations if deemed uncollectible. Gaming debts evidenced by a credit instrument, including what is commonly
referred to as a “marker,” and judgments on gaming debts are enforceable under the current laws of the jurisdictions in which we allow play on a credit
basis, and judgments on gaming debts in such jurisdictions are enforceable in all U.S. states under the Full Faith and Credit Clause of the U.S. Constitution;
however, other jurisdictions may determine that enforcement of gaming debts is against public policy. Although courts of some foreign nations will enforce
gaming debts directly and the assets in the U.S. of foreign debtors may be reached to satisfy a judgment, judgments on gaming debts from U.S. courts are
not binding on the courts of many foreign nations.
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In addition, the Chinese government has taken steps to prohibit the transfer of cash for the payment of gaming debts. These developments may have the
effect of reducing the collectability of gaming debts of players from China. It is unclear whether these and other measures will continue to be in effect or
become more restrictive in the future. These and any future foreign currency control policy developments that may be implemented by foreign jurisdictions
could significantly impact our business, financial condition and results of operations.
The outbreak of COVID-19 and COVID-19 related impacts have had, and are expected to continue to have, a significant impact on our operations and
results of operations.
COVID-19 and mitigation measures recommended or required by public health officials to slow the spread of COVID-19 had a material adverse effect on
our operations. All of our casino properties were temporarily closed for several weeks during 2020 due to orders issued by various government agencies
and tribal bodies. Following re-opening of our properties, our operations were affected by social distancing measures, including reduced gaming
operations, limitations on number of customers present in our facilities, restrictions on hotel, food and beverage outlets and limits on events that would
otherwise attract customers to our properties. While restrictions on our operations were eased in 2021 and we experienced positive operating trends, we
continue to see prolonged impacts of COVID-19 on the economy, our industry and the Company, with increased challenges arising from labor shortages,
supply chain challenges, increasing costs of goods and services, inflation and rising interest rates, among other impacts. The extent and duration of the
impacts of COVID-19 on our business is difficult to predict and such impacts may intensify.
Acts of terrorism, war, natural disasters, severe weather, and political, economic and military conditions may impede our ability to operate or may
negatively impact our financial results.
Terrorist attacks and other acts of war or hostility have created many economic and political uncertainties. For example, a substantial number of the
customers of our properties in Las Vegas use air travel. As a result of terrorist acts that occurred on September 11, 2001, domestic and international travel
was severely disrupted, which resulted in a decrease in customer visits to our properties in Las Vegas. Visitation to Las Vegas also declined for a period of
time following the mass shooting tragedy on October 1, 2017. We cannot predict the extent to which disruptions in air or other forms of travel as a result of
any further terrorist act, security alerts or war, uprisings, or hostilities in places such as Iraq, Afghanistan, Ukraine, and/or Syria or other countries
throughout the world, and governmental responses to those acts or hostilities, will directly or indirectly impact our business and operating results. For
example, a third party that is responsible for our player account management has employees in Ukraine and negative developments in Ukraine could
negatively impact our digital business. As a consequence of the threat of terrorist attacks and other acts of war or hostility in the future, premiums for a
variety of insurance products have increased, and some types of insurance are no longer available. If any such event were to affect our properties, we would
likely be adversely affected.
In addition, natural and man-made disasters such as major fires, floods, severe snowstorms, hurricanes, earthquakes, and oil spills could also adversely
impact our business and operating results. Such events could lead to the loss of use of one or more of our properties for an extended period of time and
disrupt our ability to attract customers to certain of our gaming facilities. For example, our property in Lake Charles, Louisiana was closed in August 2020
until December 2022 due to damage resulting from Hurricane Laura. Inadequate insurance or lack of available insurance for these and other certain types or
levels of risk could expose us to significant losses in the event that a catastrophe occurred for which we are underinsured. In most cases, we have insurance
that covers portions of any losses from a natural disaster, but it is subject to deductibles and maximum payouts in many cases. Although we may be covered
by insurance from a natural disaster, the timing of our receipt of insurance proceeds, if any, may be out of our control. In some cases, however, we may
receive no proceeds from insurance. Further, if properties subject to our leases with VICI and GLPI are impacted by a casualty event, such leases require us
to repair or restore the affected properties even if the cost of such repair or restoration exceeds the insurance proceeds that we receive. Under such
circumstances, the rent under such leases is required to be paid during the period of repair or restoration even if all or a portion of the affected property is
not operating. In addition to the damage caused to our properties by a casualty loss, we may suffer business disruption as a result of the casualty event or be
subject to claims by third parties that may be injured or harmed. While we carry general liability insurance and business interruption insurance, there can be
no assurance that insurance will be available or adequate to cover all loss and damage to which our business or our assets might be subjected and the timing
and receipt of insurance proceeds, if any, may be out of our control.
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Increased scrutiny and changing expectations from investors, consumers, employees, regulators, and others regarding our environmental, social and
governance practices and reporting could cause us to incur additional costs, devote additional resources and expose us to additional risks, which could
adversely impact our reputation, customer attraction and retention, access to capital and employee recruitment and retention. Increased scrutiny and
changing expectations from investors, consumers, employees, regulators, and others regarding our environmental, social and governance practices and
reporting could cause us to incur additional costs, devote additional resources and expose us to additional risks, which could adversely impact our
reputation, customer attraction and retention, access to capital and employee recruitment and retention.
Increased scrutiny and changing expectations from investors, consumers, employees, regulators, and others regarding our environmental, social and
governance practices and reporting could cause us to incur additional costs, devote additional resources and expose us to additional risks, which could
adversely impact our reputation, customer attraction and retention, access to capital and employee recruitment and retention.
Companies across all industries are facing increasing scrutiny related to their environmental, social and governance (“ESG”) practices and reporting.
Investors, consumers, employees and other stakeholders have focused increasingly on ESG practices and placed increasing importance on the implications
and social cost of their investments, purchases and other interactions with companies. With this increased focus, public reporting regarding ESG practices
is becoming more broadly expected. If our ESG practices and reporting do not meet investor, consumer or employee expectations, which continue to
evolve, our brand, reputation and customer retention may be negatively impacted.
Our ability to achieve any ESG objective is subject to numerous risks, many of which are outside of our control. Examples of such risks include:
● the availability and cost of low- or non-carbon-based energy sources;
● the evolving regulatory requirements affecting ESG standards or disclosures;
● the availability of suppliers that can meet sustainability, diversity and other ESG standards that we may set;
● our ability to recruit, develop and retain diverse talent in our labor markets; and
● the success of our organic growth and acquisitions or dispositions of businesses or operations.
If we fail, or are perceived to be failing, to meet the standards included in any sustainability disclosure or the expectations of our various stakeholders, it
could negatively impact our reputation, customer attraction and retention, access to capital and employee retention. In addition, new sustainability rules and
regulations have been adopted and may continue to be introduced. Our failure to comply with any applicable rules or regulations could lead to penalties and
adversely impact our reputation, customer attraction and retention, access to capital and employee retention.
Our business may be subject to fluctuations due to seasonality and other factors that could result in volatility and have an adverse effect on our
operating results.
Our business may fluctuate due to seasonality and other factors. Our casino business is impacted by weather conditions that may deter or prevent customers
from reaching the facilities or undertaking trips, which would particularly affect customers who are traveling longer distances to visit our properties. Our
casino business can also fluctuate due to specific holidays or other significant events, particularly when the holiday falls in a different quarter than the prior
year, the World Series of Poker tournament (with respect to our Las Vegas properties), city-wide conventions, a large sporting event or a concert, or visits
by our premium players. Our sportsbook business may also be impacted by availability or scheduling of major sporting events or the cancellation or
postponement of sporting events or races, including lockouts, strikes or similar disruptions. Seasonality, holiday, or other significant events may affect our
digital operations, properties or regions differently. These factors, among other things, could adversely affect our business, financial condition, and
operating results, cause volatility in the trading price of our stock and impact our cash flow from quarter to quarter.
Our business is particularly sensitive to energy or water prices and a rise in energy prices could harm our operating results.
We are a large consumer of electricity and other energy and, therefore, higher energy prices may have an adverse effect on our results of operations.
Accordingly, increases in energy costs may have a negative impact on our operating results. Additionally, higher electricity and gasoline prices that affect
our customers may result in reduced visitation to our resorts and a reduction in our revenues. Further, our operations or the operations of our critical
supplies could be negatively impacted by the duration of drought conditions, or other cause of water stress or shortages, such as those experienced in the
southwest United States, or other areas in which we operate. We may be indirectly impacted by regulatory requirements aimed at reducing the impacts of
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climate change directed at up-stream utility providers, as we could experience potentially higher utility, fuel, and transportation costs.
Any deterioration in our reputation or the reputation of our brands could adversely impact our business, financial condition, or results of operations.
Our business is dependent on the quality and reputation of our Company and brands. Events beyond our control could affect the reputation of one or more
of our properties, including our digital operations, or more generally impact our corporate or brand image. Other factors that could influence our reputation
include the quality of the services we offer and our actions with regard to social issues such as diversity, human rights and support for local communities.
Broad access to social media makes it easy for anyone to provide public feedback that can influence perceptions of us, our brands or our properties. It may
be difficult to control or effectively manage negative publicity, regardless of whether it is accurate. Negative events and publicity could quickly and
materially damage perceptions of us, our brands or our properties, which, in turn, could adversely impact our business, financial condition or results of
operations through loss of customers, loss of business opportunities, lack of acceptance of our company to operate in host communities, employee retention
or recruiting difficulties or other difficulties.
Risks Relating to Information Systems and Technology
Compromises of our information systems or unauthorized access to confidential information or our customers’ personal information could materially
harm our reputation and business.
We collect and store confidential, personal information relating to our customers for various business purposes, including marketing and financial purposes,
and credit card information for processing payments. For example, we handle, collect and store personal information in connection with our customers
staying at our hotels and enrolling in Caesars Rewards. We may share this personal and confidential information with vendors or other third parties in
connection with processing of transactions, operating certain aspects of our business, or for marketing purposes. Our collection and use of personal data are
governed by state and federal privacy laws and regulations as well as the applicable laws and regulations in other countries in which we operate. Privacy
law is subject to frequent changes and varies significantly by jurisdiction. We may incur significant costs in order to ensure compliance with the various
applicable privacy requirements. In addition, privacy laws and regulations may limit our ability to market to our customers.
We assess and monitor the security of collection, storage, and transmission of customer information on an ongoing basis. We utilize commercially available
software and technologies to monitor, assess and secure our network. Further, some of the systems currently used for transmission and approval of payment
card transactions and the technology utilized in payment cards themselves, all of which can put payment card data at risk, are determined and controlled by
the payment card industry, and other such systems are determined and controlled by us. Although we have taken steps designed to safeguard our customers’
confidential personal information and important internal company data, our network and other systems and those of third parties, such as service providers,
could be compromised, damaged, or disrupted by a third-party breach of our system security or that of a third-party provider or as a result of purposeful or
accidental actions of third parties, our employees, or those employees of a third party, power outages, computer viruses, system failures, natural disasters,
or other catastrophic events. Our third-party information system service providers face risks relating to cybersecurity similar to ours, and we do not directly
control any of such parties’ information security operations. Advances in computer and software capabilities, encryption technology, new tools, and other
developments may increase the risk of a security breach. As a result of any security breach, customer information or other proprietary data may be accessed
or transmitted by or to a third party. Despite the measures we have implemented to safeguard our information, there can be no assurance that we are
adequately protecting our information.
Any loss, disclosure of, misappropriation of, or access to customers’ or other proprietary information or other breach of our information security could
result in legal claims or legal proceedings, including regulatory investigations and actions, or liability for failure to comply with privacy and information
security laws, including for failure to protect personal information or for misusing personal information, which could disrupt our operations, damage our
reputation, and expose us to claims from customers, financial institutions, regulators, payment card associations, employees, and other persons, any of
which could have an adverse effect on our financial condition, results of operations, and cash flow.
We have cybersecurity insurance to respond to a breach which is designed to cover expenses around notification, credit monitoring, investigation, crisis
management, public relations and legal advice. We also carry other insurance which may cover ancillary aspects of the event; however, damage and claims
arising from a breach may not be completely covered or may exceed the amount of any insurance available.
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Our operations, and particularly our digital betting and gaming operations, are reliant on information technology and other systems and services, and
any failures, errors, defects or disruptions in our systems or services could adversely affect our operations.
Our technology infrastructure is critical to the performance of our digital betting and gaming operations and to user satisfaction and we rely significantly on
our computer systems and software to receive and properly process internal and external data, including data related to Caesars Rewards. We devote
significant resources to our technology infrastructure, but our systems may not be adequate to avoid performance delays or outages that could be harmful to
our online business. In addition, we cannot assure you that the measures we take to prevent cyber-attacks and protect our systems, data and user
information and to prevent outages, data or information loss, fraud and to prevent or detect security breaches will be sufficient to ensure uninterrupted
operation of our digital platform and provide absolute security. We have experienced, and we may in the future experience, website disruptions, outages
and other performance problems due to a variety of factors, including infrastructure changes, human or software errors and capacity constraints.
Disruptions from unauthorized access to, fraudulent manipulation of, or tampering with our computer systems and technological infrastructure, or those of
third parties that provide support to our operations, could result in a wide range of negative outcomes, each of which could materially adversely affect the
operation of our online business and our financial condition, results of operations and prospects.
Additionally, our computer systems and software may fail or may contain errors, bugs, flaws or corrupted data, and these defects may only become
apparent after the launch of our online products. These types of issues could disrupt our operations or render a product unavailable when users attempt to
access it or cause access to our offerings to be slower than our users expect. Inaccessibility or slow access to our products could make users less likely to
return to our digital platform as often, if at all, or to recommend our offerings to other potential users, which could harm our brand perception, cause our
users to stop utilizing our online offerings, divert our resources and delay market acceptance of our online offerings.
We expect that we will continue to expand our online betting and gaming offerings as our user base grows and we enter into new markets, which will
require an enhancement of our technical infrastructure, including network capacity and computing power, to support the growth of our digital business and
to satisfy our users’ needs. Such infrastructure expansion may be complex and costly, and unanticipated delays in completing these projects or availability
of components may lead to increased project costs, operational inefficiencies, or interruptions in the delivery or degradation of the quality of our offerings.
In addition, there may be issues related to our online infrastructure that are not identified during the testing phases of design and implementation and
become evident after we have started to fully use the underlying equipment or software, which could impact the user experience or increase our costs. An
inability to effectively scale our technical infrastructure to accommodate increased demands could adversely impact our ability to grow our digital betting
and gaming business.
Our online business is dependent on the Internet and we rely on Amazon Web Services and other third-party technology, platforms and services to
deliver our offerings to users.
A substantial portion of the infrastructure that is required to enable users to access our digital betting and gaming offerings is provided by third parties,
including Internet service providers and other technology-based service providers. In particular, we currently host our online betting and gaming offerings
and support our operations using Amazon Web Services (“AWS”) and other third-party technology, platforms and services. Our third-party providers may
experience service interruptions, delays, outages or damage, including due to capacity constraints, an event causing an unusually high volume of Internet
use (such as a pandemic or public health emergency), infrastructure changes or upgrades (such as 5G or 6G services), human or software errors, website
hosting disruptions, natural disasters, cybersecurity attacks, terrorist attacks, power outages and similar events or acts of misconduct. We exercise little
control over our third-party providers and any difficulties that these providers experience, including the potential of certain network traffic receiving
priority over other traffic (i.e., lack of net neutrality), may adversely affect our business. Because our ability to provide our users with continuing and
uninterrupted access to our platform is critical to the success of our digital business, we use our best efforts to ensure that our facilities and infrastructure
and the facilities and infrastructure of our third-party providers support our current and expected operations and are designed to mitigate the impacts of
system malfunctions. Nevertheless, there can be no guarantee that such systems will be able to meet the demand of our current and future digital business,
the overall online betting and gaming industry and the growth of the Internet. Furthermore, if we do not maintain business relationships with our third-party
providers, and in particular, AWS, we may not be able to secure required third-party services on terms that are acceptable to us or on an acceptable time
frame. Any of these risks could result in a loss of revenue and cause us to incur unexpected costs that could be significant, which could have a material
adverse effect on our online business, financial condition, results of operations and prospects.
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Our online business model depends upon the continued compatibility between our apps and the major mobile operating systems and upon third-party
platforms for the distribution of our product offerings, which depend on factors beyond our control such as the design of third-party operating systems
and continued access to our apps on third-party distribution platforms like the Apple App Store.
Our digital business is dependent on the interoperability of our technology with popular mobile operating systems, technologies, networks and standards as
our users access our online betting and gaming product offerings primarily on mobile devices. As a result, our business model depends upon the continued
compatibility between our app and the major mobile operating systems, such as the Android and iOS operating systems, and we rely upon third-party
platforms for distribution of our product offerings. We do not have formal or informal relationships with parties that control design of mobile devices and
operating systems and there is no guarantee that popular mobile devices will start or continue to support or feature our product offerings. Any changes,
bugs, technical or regulatory issues in such operating systems, our relationships with mobile manufacturers and carriers, or in their terms of service or
policies that degrade our offerings’ functionality, reduce or eliminate our ability to distribute our offerings, give preferential treatment to competitive
products, limit our ability to deliver high quality offerings, or impose fees or other charges related to delivering our offerings, could adversely affect our
product usage and monetization on mobile devices. In addition, if any of the third-party platforms used for distribution of our product offerings were to
limit or disable the availability of our app or advertising on their platforms, our ability to generate revenue could be harmed. These changes could
materially impact the way we do business, and if we are unable to adjust to those changes quickly and effectively, there could be an adverse effect on our
business, financial condition, results of operations and prospects.
Risks Related to Human Capital
We rely on our key personnel and we may face difficulties in attracting and retaining qualified employees for our casinos and race tracks.
Our future success will depend upon, among other things, our ability to keep our senior executives and highly qualified employees. The operation of our
business requires, qualified executives, managers and skilled employees with gaming and horse racing industry experience and qualifications who are able
to obtain the requisite licenses and approval from the applicable gaming authorities. We compete with other potential employers for employees, and we
may not succeed in hiring or retaining the executives and other employees that we need. A sudden loss of or inability to replace key employees could have
a material adverse effect on our business, financial condition and results of operations. Moreover, there has from time to time been a shortage of skilled
labor in our markets and the continued expansion of gaming near our facilities, including the expansion of Native American gaming and internet betting
and gaming, may make it more difficult for us to attract qualified candidates. While we believe that we will continue to be able to attract and retain
qualified employees, shortages of skilled labor will make it increasingly difficult and expensive to attract and retain the services of a satisfactory number of
qualified employees, and we may incur higher costs than expected as a result.
Work stoppages and other labor problems could negatively impact our future profits.
As of December 31, 2022, we had collective bargaining agreements covering approximately 21,000 employees. A lengthy strike or other work stoppages at
any of our casino properties could have an adverse effect on our business and results of operations.
From time to time, we have also experienced attempts by labor organizations to organize certain of our non-union employees. These efforts have achieved
some success to date. We cannot provide any assurance that we will not experience additional and successful union activity in the future. The impact of this
union activity is undetermined and could negatively impact our results of operations.
We cannot assure you that we will be able to retain our performers and other entertainment offerings on acceptable terms or at all.
Historically, our performers have drawn customers to our properties and have been a significant source of our revenue. We cannot assure you that we will
be able to retain our performers or other shows on acceptable terms or at all. In addition, the third parties that we depend on for our properties’
entertainment offerings may become incapable or unwilling to provide their services at the level agreed upon or at all. Disruptions in the performance
schedule can leave us without entertainment offerings, which could negatively impact our business.
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Risks Relating to Our Capital Structure
Our substantial indebtedness and the fact that a significant portion of our cash flow is used to make interest payments and rent payments under our
debt and lease agreements could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the
economy or our industry and prevent us from making debt service payments and rent payments.
As of December 31, 2022 we had $13.1 billion of outstanding indebtedness, in addition to leases with VICI and GLPI that require an annual rent payment
of $1.3 billion in 2023 and are subject to annual escalation, including annual escalations based on the CPI. See Note 10 for a description of our obligations
under our leases with VICI and GLPI and Note 12 for details regarding our debt outstanding and related restrictive covenants. As a result, a significant
portion of our cash flow is applied to make interest payments with respect to our outstanding debt and payments under our leases. These financial
obligations may have important negative consequences for us, including:
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limiting our ability to use operating cash flow in other areas of our business because we must dedicate a significant portion of these funds to make
payments on our debt and lease obligations;
limiting our flexibility in planning for, or reacting to, changes in our businesses and the markets in which we operate;
placing us at a competitive disadvantage compared to competitors with debt and rent obligations that are less than ours;
increasing our vulnerability to, and limiting our ability to react to, changing market conditions, COVID-19 and other public health emergencies,
changes in our industry and economic downturns;
limiting our ability to obtain additional financing to fund working capital requirements, capital expenditures, debt service, acquisitions, general
corporate or other obligations;
subjecting us to a number of restrictive covenants that, among other things, require us to make capital expenditures and limit our ability to pay
dividends and distributions, make acquisitions and dispositions, borrow additional funds and make other investments;
exposing us to interest rate risk due to the variable interest rate on borrowings under our credit facilities; and
affecting our ability to renew gaming and other licenses necessary to conduct our business.
Our ability to service our current and future levels of indebtedness will depend upon, among other things, our future financial and operating performance,
which will be affected by prevailing economic conditions, including the interest rate environment and financial, business, regulatory and other factors,
some of which are beyond our control.
There is no assurance that we will generate cash flow from operations or that future debt or equity financings will be available to us to enable us to pay our
indebtedness or to fund other needs and we may be forced to take actions such as reducing or delaying business activities, acquisitions, investments or
capital expenditures, selling assets, restructuring or refinancing debt, reducing or discontinuing dividends we may pay in the future, or seeking additional
equity capital. These actions may not be effected on satisfactory terms, or at all. Any inability to generate sufficient cash flow or refinance our indebtedness
on favorable terms could have a material adverse effect on our business, results of operations and financial condition. While we expect to refinance or
replace our debt facilities when they mature, we cannot be sure that we will be able to obtain financing on commercially reasonable terms.
Despite our current indebtedness levels, we and our subsidiaries may still incur significant additional indebtedness. Incurring more indebtedness could
increase the risks associated with our substantial indebtedness.
We and our subsidiaries may be able to incur substantial additional indebtedness, including additional secured indebtedness, and may enter into financing
obligations similar to our leases with VICI and GLPI in the future. As of December 31, 2022, we had $2.2 billion of borrowing capacity under our
revolving credit facility, before consideration of $82 million in outstanding letters of credit and $48 million committed for regulatory purposes under our
CEI Revolving Credit Facility. Further, our existing debt agreements currently permit, and we expect that agreements governing debt that we incur in the
future will permit, us to incur certain other additional secured and unsecured debt. Further, we may incur other liabilities that do not constitute
indebtedness. The risks that we face based on our outstanding indebtedness may intensify if we incur additional indebtedness or financing obligations in the
future.
Our variable rate indebtedness exposes us to interest rate volatility, which could cause our debt service obligations to increase significantly.
Borrowings under certain of our facilities are at variable rates of interest and expose us to interest rate volatility. If interest rates increase, our debt service
obligations on certain of our variable rate indebtedness will increase even though the amount borrowed remains the same. In addition, at the end of 2021,
the administrator for London Interbank Offered Rate (“LIBOR”) ceased publishing one-week and two-month U.S. dollar LIBOR and will cease publishing
all remaining U.S. dollar LIBOR
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tenors in mid-2023. Concurrently, the United Kingdom’s Financial Conduct Authority announced the cessation or loss of representativeness of the U.S.
dollar LIBOR tenors from those dates. While we continue to monitor market developments to assess replacement rate options, the consequences of these
developments with respect to LIBOR cannot be entirely predicted and may result in the level of interest payments on the portion of our indebtedness that
bears interest at variable rates to be affected, which may adversely impact the amount of our interest payments under such debt.
A significant portion of our casinos are located on leased property. If we default on one or more leases, the applicable lessors could terminate the
affected leases and we could lose possession of the affected casino.
We currently lease certain parcels of land on which a significant portion of our properties are located. As a ground lessee, we have the right to use the
leased land; however, we do not hold fee ownership of the underlying land. Accordingly, we have no interest in the leased land or improvements thereon at
the expiration of the ground leases. If our use of the land underlying our casino properties is disrupted permanently or for a significant period of time, then
the value of our assets could be impaired and our business and operations could be adversely affected. Our leases provide that they may be terminated for a
number of reasons, including failure to pay rent, taxes or other payment obligations or the breach of other covenants contained in the leases. In particular,
our leases with VICI and GLPI require annual rent payments of $1.3 billion in 2023, which is subject to escalation annually, and obligate us to make
specified minimum capital expenditures with respect to the leased properties. If our business and properties fail to generate sufficient earnings, the
payments required to service the rent obligations under our leases with VICI and GLPI could materially and adversely limit our ability to react to changes
in our business and make acquisitions and investments in our properties. If we were to default on any one or more of these leases, the applicable lessors
could terminate the affected leases and we could lose possession of the affected land and any improvements on the land, including the hotels and casinos. A
termination of our ground leases or our leases with GLPI or VICI could result in a default under our debt agreements and could have a material adverse
effect on our business, financial condition and results of operations. Further, in the event that any lessor of our leased properties, including GLPI or VICI,
encounters financial, operational, regulatory or other challenges, there can be no assurance that such lessor will be able to comply with its obligations under
the applicable lease.
Certain of our leases, including our leases with VICI and GLPI, are “triple-net” leases. Accordingly, in addition to rent, we are required to pay, among other
things, the following: (1) lease payments to the underlying ground lessor for properties that are subject to ground leases; (2) facility maintenance costs; (3)
all insurance premiums for insurance with respect to the leased properties and the business conducted on the leased properties; (4) taxes levied on or with
respect to the leased properties (other than taxes on the income of the lessor); and (5) all utilities and other services necessary or appropriate for the leased
properties and the business conducted on the leased properties. We are responsible for incurring the costs described in the preceding sentence
notwithstanding the fact that many of the benefits received in exchange for such costs shall in part accrue to the lessor as the owner of the associated
facilities. In addition, we remain obligated for lease payments and other obligations under our leases with VICI and GLPI and other ground leases even if
one or more of such leased facilities is unprofitable or if we decide to withdraw from those locations. We could incur special charges relating to the closing
of such facilities including lease termination costs, impairment charges and other special charges that would reduce our net income and could have a
material adverse effect on our business, financial condition and results of operations.
Legal and Regulatory Risks
We are subject to extensive governmental regulation, taxation policies and licensing, and gaming authorities have significant control over our
operations, which could have an adverse effect on our business.
Licensing Requirements. The ownership and operation of casino gaming, online betting and gaming, riverboat and horse racing facilities are subject to
extensive federal, state and local regulation, and regulatory authorities at local, state and national levels have broad powers with respect to the licensing of
gaming businesses. We currently hold all state and local licenses and related approvals necessary to conduct our present gaming operations, but we must
periodically apply to renew many of our licenses and registrations. We cannot assure you that we will be able to obtain such renewals. Any failure to
maintain or renew our existing licenses, registrations, permits or approvals would have a material adverse effect on us. In addition, we are required to
provide information relating to our operations to various gaming regulatory agencies. A failure to provide accurate information could result in the
imposition of fines or other penalties by the relevant regulatory authority. Furthermore, if additional laws or regulations are adopted or existing laws or
regulations are amended or interpreted differently, these regulations could impose additional restrictions or costs that could have a significant adverse effect
on us.
Gaming authorities with jurisdiction over our operations may, in their discretion, require the holder of any securities issued by us to file applications, be
investigated, and be found suitable to own our securities, and, if a holder is found unsuitable, we can be sanctioned, including the loss of approvals that are
required for us to continue our gaming operations in the relevant jurisdictions, if such unsuitable person does not timely sell our securities. Our officers,
directors and key employees are also
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25
subject to similar findings of unsuitability and the gaming authorities may require us to terminate the employment of any person who refuses to file
appropriate applications. See “Item 1 - Gaming Licenses and Governmental Regulations” and Exhibit 99.1 for further description of the regulations to
which we are subject. We may be required under applicable gaming laws and regulations to obtain approval of applicable gaming authorities to issue
securities, incur debt and undertake other financing activities and our financing counterparties, including lenders, might be subject to various licensing and
related approval procedures in the various jurisdictions in which we operate gaming facilities.
Compliance with Other Laws. We are also subject to a variety of other federal, state and local laws, rules, regulations and ordinances that apply to non-
gaming businesses, including restrictions enacted in response to COVD-19, zoning, environmental, construction and land-use laws and regulations
governing smoking and the serving of alcoholic beverages. Our operations have been adversely impacted by regulations enacted to limit the spread of
COVID-19. In addition, legislation in various forms to ban indoor tobacco smoking has been enacted or introduced in many states and local jurisdictions,
including several of the jurisdictions in which we operate. If additional restrictions are enacted in our jurisdictions, we could experience a significant
decrease in gaming revenue and operating results at our properties and, particularly if such restrictions are not applicable to all competitive facilities in that
gaming market, our business could be materially adversely affected. The likelihood or outcome of similar legislation in other jurisdictions and referendums
in the future cannot be predicted, though any additional limitations on our operations would be expected to negatively impact our financial performance.
Regulations adopted by FINCEN require us to report currency transactions in excess of $10,000 occurring within a gaming day. U.S. Treasury Department
regulations also require us to report certain suspicious activity, including any transaction that exceeds $5,000, if we know, suspect or have reason to believe
that the transaction involves funds from illegal activity or is designed to evade federal regulations or reporting requirements. Substantial penalties can be
imposed if we fail to comply with these regulations. FINCEN has recently increased its focus on gaming companies.
We are required to report certain customer’s gambling winnings via form W-2G to comply with current Internal Revenue Service regulations. Should these
regulations change, we would expect to incur additional costs to comply with the revised reporting requirements.
Taxation and Fees. In addition, gaming companies are generally subject to significant revenue-based taxes and fees in addition to normal federal, state and
local income taxes, and such taxes and fees are subject to increase at any time. We pay substantial taxes and fees with respect to our operations. Tax laws
are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied, affecting the gaming industry. The large
number of state and local governments with significant current or projected budget deficits makes it more likely that those governments that currently
permit gaming will seek to fund such deficits with new or increased gaming taxes and/or property taxes and worsening economic conditions could intensify
those efforts. Any material increase, or the adoption of additional taxes or fees, could have a material adverse effect on our future financial results.
The growth of our online betting and gaming business will depend on expansion of online betting and gaming into new jurisdictions and our ability to
obtain required licenses.
Our ability to achieve growth in our online betting and gaming business will depend, in large part, upon expansion of online betting and gaming into new
jurisdictions, the terms of regulations relating to online betting and gaming and our ability to obtain required licenses. Following the 2018 decision of the
U.S. Supreme Court to overturn the federal ban on sports betting, a number of jurisdictions have legalized sports betting and online gaming and we expect
that additional jurisdictions may do so in the future. Our ability to further expand our sports betting and online operations is dependent on the adoption of
regulations permitting such activities. However, the expansion of betting and online gaming in new jurisdictions is dependent on a number of factors that
are beyond our control and there can be no assurances of when, or if, such regulations will be adopted or the terms of such regulations, including
restrictions, tax rates and license fees and availability of such licenses to casino owners exclusively or at all.
We may not be able to protect the intellectual property rights we own or may be prevented from using intellectual property necessary for our business.
The development of intellectual property is part of our overall business strategy, and we regard our intellectual property to be an important element of our
success. We rely primarily on trade secret, trademark, domain name, copyright, and contract law to protect the intellectual property and proprietary
technology we own. We also actively pursue business opportunities in the United States and in international jurisdictions involving the licensing of our
trademarks to third parties. It is possible that third parties may copy or otherwise obtain and use our intellectual property or proprietary technology without
authorization or otherwise infringe on our rights. For example, while we have a policy of entering into confidentiality, intellectual property invention
assignment, and/or non-competition and non-solicitation agreements or restrictions with our employees, independent contractors, and business partners,
such agreements may not provide adequate protection or may be breached, or our proprietary
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26
technology may otherwise become available to or be independently developed by our competitors. In addition, the laws of some foreign countries may not
protect proprietary rights or intellectual property to as great an extent as do the laws of the United States. Despite our efforts to protect our proprietary
rights, the unauthorized use or reproduction of our trademarks could diminish the value of our trademarks and our market acceptance, competitive
advantages, or goodwill, which could adversely affect our business.
Our technology contains software modules licensed to us by third-party authors under “open source” licenses. Use and distribution of open source software
may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide support, warranties, indemnification
or other contractual protections regarding infringement claims or the quality of the code. In addition, the public availability of such software may make it
easier for others to compromise our technology and, under certain open source licenses, we could be required to release the source code of our proprietary
software to the public. This would allow our competitors to create similar offerings with lower development effort and time and ultimately could result in a
loss of our competitive advantages.
Third parties have alleged and may in the future allege that we are infringing, misappropriating, or otherwise violating their intellectual property rights.
Third parties may initiate litigation against us without warning or may send us letters or other communications that make allegations without initiating
litigation. We may elect not to respond to these letters or other communications if we believe they are without merit, or we may attempt to resolve these
disputes out of court by negotiating a license, but in either case it is possible that such disputes will ultimately result in litigation. Any such claims could
interfere with our ability to use technology or intellectual property that is material to the operation of our business. Such claims may be made by
competitors seeking to obtain a competitive advantage or by other parties, such as entities that purchase intellectual property assets for the purpose of
bringing infringement claims. We also periodically employ individuals who were previously employed by our competitors or potential competitors, and we
may therefore be subject to claims that such employees have used or disclosed the alleged trade secrets or other proprietary information of their former
employers.
We may have to rely on litigation to enforce our intellectual property rights, protect our trade secrets, determine the validity and scope of the proprietary
rights of others, or defend against claims of infringement or invalidity, including with respect to technology that we believe to be “open source”. Any such
litigation could result in substantial costs and the diversion of resources and the attention of management. If unsuccessful, such litigation could result in the
loss of important intellectual property rights, require us to pay substantial damages, subject us to injunctions that prevent us from using certain intellectual
property, require us to make admissions that affect our reputation in the marketplace, or require us to enter into license agreements that may not be
available on favorable terms, re-engineer our technology or discontinue or delay the provision of our offerings. Finally, even if we prevail in any litigation,
the remedy may not be commercially meaningful or fully compensate us for the harm we suffer or the costs we incur. Any of the foregoing could have a
material adverse effect on our business, financial condition and results of operations.
We rely on licenses to use the intellectual property rights of third parties which are incorporated into our products and services. Failure to renew or
expand existing licenses may require us to modify, limit or discontinue certain offerings.
We rely on products, technologies and intellectual property that we license from third parties, for use in our business-to-business and business-to-
consumers offerings. Certain of our offerings and services use intellectual property licensed from third parties and we expect that our future products will
require the use of third-party intellectual property. The future success of our business may depend, in part, on our ability to obtain, retain and/or expand
licenses for popular technologies and games in a competitive market. We cannot assure that third-party licenses that may be necessary or desirable for the
operation of our products, or support for such licensed products and technologies, will be available to us on commercially reasonable terms, if at all. If we
are unable to renew and/or expand existing licenses or obtain new licenses, including as a result of reluctance of third parties to subject themselves to
regulatory review that may be required to operate as our supplier, we may be required to discontinue or limit our use of the products that include or
incorporate the licensed intellectual property, which could adversely impact our business, results of operations and prospects.
We are or may become involved in legal proceedings that, if adversely adjudicated or settled, could impact our business and financial condition.
From time to time, we are named in lawsuits or other legal proceedings relating to our respective businesses. Some of these matters involve commercial or
contractual disputes, intellectual property claims, legal compliance, personal injury claims, and employment claims. As with all legal proceedings, no
assurances can be given as to the outcome of these matters. Moreover, legal proceedings can be expensive and time consuming, and we may not be
successful in defending or prosecuting these lawsuits, which could result in settlements or damages that could significantly impact our business, financial
condition and results of operations.
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27
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
As of December 31, 2022, the following are our properties, including a domestic property that was sold during the year. All amounts are approximations.
Property
Location
Casino
Space–
Sq. Ft.
Slot
Machines
Table
Games
Hotel
Rooms and
Suites
(a)
Las Vegas Segment
Owned-Domestic
The Cromwell
Flamingo Las Vegas
Horseshoe Las Vegas
The LINQ Hotel & Casino
Paris Las Vegas
Planet Hollywood Resort & Casino
Leased
Caesars Palace Las Vegas
Harrah’s Las Vegas
Rio All-Suite Hotel & Casino
(a)
(a)
(b)
(a)
Regional Segment
Owned-Domestic
Circus Circus Reno
Eldorado Gaming Scioto Downs
Eldorado Resort Casino Reno
Grand Victoria Casino
Harrah’s Hoosier Park Racing & Casino
Horseshoe Baltimore
Horseshoe Black Hawk
Horseshoe Indianapolis
Horseshoe Lake Charles
Isle of Capri Casino Boonville
Isle of Capri Casino Lula
Harrah’s Pompano Beach
Lady Luck Casino - Black Hawk
Silver Legacy Resort Casino
Leased
Belle of Baton Rouge Casino & Hotel
Caesars Atlantic City
Harrah’s Atlantic City
Harrah’s Council Bluffs
Harrah’s Gulf Coast
Harrah’s Joliet
Harrah’s Lake Tahoe
Harrah’s Laughlin
Harrah’s Metropolis
Harrah’s New Orleans
Harrah’s North Kansas City
Harrah’s Philadelphia
Harveys Lake Tahoe
Horseshoe Bossier City
Horseshoe Council Bluffs
(c)
Las Vegas, NV
Las Vegas, NV
Las Vegas, NV
Las Vegas, NV
Las Vegas, NV
Las Vegas, NV
Las Vegas, NV
Las Vegas, NV
Las Vegas, NV
Reno, NV
Columbus, OH
Reno, NV
Elgin, IL
Anderson, IN
Baltimore, MD
Black Hawk, CO
Shelbyville, IN
Westlake, LA
Boonville, MO
Lula, MS
Pompano Beach, FL
Black Hawk, CO
Reno, NV
Baton Rouge, LA
Atlantic City, NJ
Atlantic City, NJ
Council Bluffs, IA
Biloxi, MS
Joliet, IL
Lake Tahoe, NV
Laughlin, NV
Metropolis, IL
New Orleans, LA
N. Kansas City, MO
Chester, PA
Lake Tahoe, NV
Bossier City, LA
Council Bluffs, IA
41,600
72,300
61,100
39,800
96,700
63,800
124,200
88,800
117,300
65,500
108,400
70,000
42,400
55,300
133,300
26,900
99,300
63,000
28,000
59,300
54,800
11,200
90,100
28,500
114,800
150,100
23,100
31,900
39,000
54,000
58,200
23,500
83,200
57,500
99,500
51,100
34,000
55,100
340
810
690
610
780
850
1,300
950
910
450
2,050
820
750
1,270
1,600
720
1,550
860
830
880
1,080
340
860
570
1,730
1,850
500
640
790
730
730
640
1,210
930
1,700
610
990
1,260
30
50
50
40
80
70
160
60
40
10
—
40
50
30
190
30
90
50
20
10
40
—
60
—
110
130
20
30
20
60
30
20
110
60
80
40
60
50
190
3,450
2,810
2,240
2,920
2,500
3,980
2,540
2,520
1,570
—
810
—
—
—
400
—
170
140
170
—
—
1,680
290
1,140
2,590
250
540
200
510
1,510
210
450
390
—
740
600
150
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28
Property
Horseshoe Hammond
(a)
Horseshoe St. Louis
Horseshoe Tunica
Isle Casino Bettendorf
Isle Casino Waterloo
Trop Casino Greenville
Tropicana Atlantic City
Tropicana Laughlin Hotel & Casino
Managed and Branded Segment
Managed
Harrah’s Ak-Chin
Harrah’s Cherokee
Harrah’s Cherokee Valley River
Harrah’s Resort Southern California
Caesars Windsor
Caesars Dubai
Branded
Caesars Southern Indiana
Harrah’s Northern California
Location
Hammond, IN
St. Louis, MO
Tunica, MS
Bettendorf, IA
Waterloo, IA
Greenville, MS
Atlantic City, NJ
Laughlin, NV
Phoenix, AZ
Cherokee, NC
Murphy, NC
Funner, CA
Canada
United Arab Emirates
Elizabeth, IN
Ione, CA
Casino
Space–
Sq. Ft.
Slot
Machines
Table
Games
Hotel
Rooms and
Suites
116,500
75,000
63,000
41,200
39,200
22,800
121,100
43,200
65,200
222,600
66,000
72,900
100,000
—
74,400
30,100
1,730
1,070
920
890
840
460
1,780
630
1,140
3,470
1,000
1,490
1,930
—
1,060
750
80
30
100
20
20
—
120
10
30
160
60
50
90
—
90
10
—
490
510
510
190
—
2,360
1,490
530
1,830
300
1,090
760
580
500
—
____________________
(a)
During the year ended December 31, 2022, Bally’s Las Vegas was rebranded as Horseshoe Las Vegas, Isle Casino Hotel - Black Hawk was rebranded as Horseshoe Black Hawk, Indiana
Grand was rebranded as Horseshoe Indianapolis, Isle Casino Racing Pompano Park was rebranded as Harrah’s Pompano Beach, and Lumière Place Casino was rebranded as Horseshoe
St. Louis.
(b)
(c)
Isle of Capri Casino Hotel Lake Charles (“Lake Charles”) temporarily closed at the end of August 2020 due to damage from Hurricane Laura and reopened in December 2022 as
Horseshoe Lake Charles, the new land-based casino.
During the year ended December 31, 2022, this property was sold.
Certain of our properties operate off-track betting locations, including Harrah’s Hoosier Park Racing & Casino, which operates Winner’s Circle
Indianapolis and Winner’s Circle New Haven, and Horseshoe Indianapolis, which operates Winner’s Circle Clarksville. Other properties of ours include
The LINQ Promenade, next to The LINQ Hotel & Casino (the “LINQ”) and the CAESARS FORUM conference center in our Las Vegas segment. The
LINQ Promenade is an open-air dining, entertainment, and retail promenade located on the east side of the Las Vegas Strip that features the High Roller, a
550-foot observation wheel, and the Fly LINQ Zipline attraction. The CAESARS FORUM is a 550,000 square feet conference center with 300,000 square
feet of flexible meeting space, two of the largest pillarless ballrooms in the world and direct access to the LINQ.
Item 3. Legal Proceedings
For a discussion of our “Legal Proceedings,” refer to Note 11 to our Financial Statements located elsewhere in this Annual Report on Form 10-K.
Item 4. Mine Safety Disclosures
Not applicable.
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29
PART II
Item 5. Market for Registrants’ Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Our Common Stock is quoted on the NASDAQ Stock Market under the symbol “CZR”. As of February 16, 2023, there were approximately 310 holders of
record of our common stock.
We have not paid any cash dividends on our common stock. We intend to retain all of our earnings to finance the development of our business, and thus, do
not anticipate paying cash dividends on our common stock for the foreseeable future. Payment of any cash dividends in the future will be at the discretion
of our Board and will depend upon, among other things, our future earnings, operations and capital requirements, our general financial condition, general
business conditions and restrictions that may be in place under our borrowing arrangements or existing lease agreements.
Equity Compensation Plan Information
We maintain long-term incentive plans which allow for granting stock-based compensation awards for directors, employees, officers, and consultants or
advisers who render services to the Company or its subsidiaries, based on Company Common Stock, including stock options, restricted stock, restricted
stock units (“RSUs”), performance stock units (“PSUs”), market-based performance stock units (“MSUs”), stock appreciation rights, and other stock-based
awards or dividend equivalents. Forfeitures are recorded in the period in which they occur. See Note 15 for a description of our stock-based compensation
plans.
The following table sets forth information as of December 31, 2022, with respect to compensation plans under which equity securities that we have
authorized for issuance.
Plan Category
Number of securities to be
issued
upon exercise of
outstanding options,
(1)
warrants and rights
(a)
Weighted average
exercise price
of outstanding options,
(2)
warrants and rights
(b)
Number of securities
remaining
available for future
issuance under
equity compensation plans
(excluding
securities reflected in
column (a))
(c)
Equity compensation plans approved by security holders
2,988,529 $
30.63
5,200,673
___________________
(1)
Includes (i) 88 shares of common stock issuable upon exercise of outstanding options with a weighted-average exercise price of $30.63 and (ii) 2,988,441 unvested RSUs, PSUs, and MSUs.
(2)
RSUs, PSUs, and MSUs do not have an exercise price and therefore are not included in the calculation of the weighted-average exercise price.
Changes to the Authorized Shares
On June 17, 2021, following receipt of required shareholder approvals, the Company amended its Certificate of Incorporation to increase the number of
authorized shares of common stock from 300 million to 500 million, and authorize the issuance of up to 150 million shares of preferred stock. As of
December 31, 2022, no shares of preferred stock have been issued.
Share Repurchase Program
In November 2018, our Board authorized a common stock repurchase program of up to $150 million of stock (the “Share Repurchase Program”) pursuant
to which we may, from time to time, repurchase shares of common stock on the open market (either with or without a 10b5-1 plan) or through privately
negotiated transactions. The Share Repurchase Program has no time limit and may be suspended or discontinued at any time without notice. There is no
minimum number of shares of common stock that we are required to repurchase under the Share Repurchase Program.
As of December 31, 2022, we have acquired 223,823 shares of common stock under this program since 2018 at an aggregate value of $9 million and an
average of $40.80 per share. No shares were repurchased during the years ended December 31, 2022 or 2021.
Recent Sales of Unregistered Securities
None.
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30
Stock Performance Graph
The graph depicted below compares the cumulative total stockholder return on our common stock with the cumulative total return on the Standard & Poor's
500 Stock Index (“S&P 500”) and the Dow Jones U.S. Gambling Total Stock Market Index (“Dow Jones U.S. Gambling”) for the period beginning on
December 31, 2017 and ending on December 31, 2022. NASDAQ OMX furnished the data. The performance graph assumes a $100 investment in our
stock and each of the two indices, respectively, on December 31, 2017, and that all dividends were reinvested. Stock price performance, presented for the
period from December 31, 2017 to December 31, 2022, is not necessarily indicative of future results.
The performance graph should not be deemed filed or incorporated by reference into any other of our filings under the Securities Act or the Exchange Act,
unless we specifically incorporate the performance graph by reference therein.
Item 6. [Reserved]
Not used.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with, and is qualified in its entirety by, the audited consolidated financial statements and the notes
thereto and other financial information included elsewhere in this Annual Report on Form 10-K.
Caesars Entertainment, Inc., a Delaware corporation, and its subsidiaries, may be referred to as the “Company,” “CEI,” “Caesars,” “we,” “our,” “us,”
or the “Registrant.”
We also refer to (i) our Consolidated Financial Statements as our “Financial Statements,” (ii) our Consolidated Statements of Operations and
Consolidated Statements of Comprehensive Income (Loss) as our “Statements of Operations,” (iii) our Consolidated Balance Sheets as our “Balance
Sheets,” and (iv) our Consolidated Statements of Cash Flows as our “Statements of Cash Flows.” References to numbered “Notes” refer to Notes to our
Consolidated Financial Statements included in Item 8.
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31
The statements in this discussion regarding our expectations of our future performance, liquidity and capital resources, and other non-historical statements
are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties. Our actual results may differ materially
from those contained in or implied by any forward-looking statements. See Item 1A, “Risk Factors—CAUTIONARY STATEMENTS REGARDING
FORWARD-LOOKING STATEMENTS,” of this report.
Objective
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to be a narrative explanation of the
financial statements and other statistical data that should be read in conjunction with the accompanying financial statements to enhance an investor’s
understanding of our financial condition, changes in financial condition and results of operations. Our objectives are: (i) to provide a narrative explanation
of our financial statements that will enable investors to see the Company through the eyes of management; (ii) to enhance the overall financial disclosure
and provide the context within which financial information should be analyzed; and (iii) to provide information about the quality of, and potential
variability of, our earnings and cash flows so that investors can ascertain the likelihood of whether past performance is indicative of future performance.
Overview
We are a geographically diversified gaming and hospitality company that was founded in 1973 by the Carano family with the opening of the Eldorado
Hotel Casino in Reno, Nevada. Beginning in 2005, we grew through a series of acquisitions, including the acquisition of MTR Gaming Group, Inc. in
2014, Isle of Capri Casinos, Inc. (“Isle” or “Isle of Capri”) in 2017 and Tropicana Entertainment, Inc. in 2018 and a merger with Caesars Entertainment
Corporation (“Former Caesars”) on July 20, 2020, pursuant to which Former Caesars became our wholly-owned subsidiary (the “Merger”) and our ticker
symbol on the NASDAQ Stock Market changed from “ERI” to “CZR.” In addition, on April 22, 2021, we completed the acquisition of William Hill PLC
(the “William Hill Acquisition”).
We currently own, lease or manage an aggregate of 51 domestic properties in 16 states with approximately 52,800 slot machines, video lottery terminals
and e-tables, approximately 2,800 table games and approximately 47,200 hotel rooms as of December 31, 2022. In addition, we have other domestic and
international properties that are authorized to use the brands and marks of Caesars Entertainment, Inc., as well as other non-gaming properties. Our primary
source of revenue is generated by our casino properties’ gaming operations, including our retail and online sports betting, as well as our online gaming, and
we utilize our hotels, restaurants, bars, entertainment, racing, retail shops and other services to attract customers to our properties.
As of December 31, 2022, we owned 20 of our casinos and leased 25 casinos in the U.S. We lease 18 casinos from VICI Properties L.P., a Delaware limited
partnership (“VICI”) pursuant to a regional lease, a Las Vegas lease and a Joliet lease (collectively, “VICI Leases”). We also lease six casinos from GLP
Capital, L.P., the operating partnership of Gaming and Leisure Properties, Inc. (“GLPI”), pursuant to a Master Lease (as amended, the “GLPI Master
Lease”) and a Lumière lease (together with the GLPI Master Lease, the “GLPI Leases”). Additionally, we lease the Rio All-Suite Hotel & Casino from a
separate third party. See descriptions under the “GLPI Leases” and “VICI Leases.”
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32
We also operate and conduct sports wagering across 28 jurisdictions in North America, 20 of which are mobile for sports betting, and operate regulated
online real money gaming in six jurisdictions in North America. Our Caesars Sportsbook app operates on the Liberty platform, which we acquired in the
William Hill Acquisition along with other technology platforms that we intend to migrate to the Liberty platform in the future, subject to required
approvals. The map below illustrates Caesars Digital’s presence as of December 31, 2022:
On January 1, 2023, we launched mobile sports betting on our Liberty platform in Ohio and Caesars Sportsbook is now accepting in-person sports wagers
and mobile account cash deposits at certain destinations including Eldorado Gaming Scioto Downs.
In addition to the Caesars Sportsbook app, we partnered with NYRABets LLC, the official online wagering platform of the New York Racing Association,
Inc., and launched the Caesars Racebook app within eight states as of December 31, 2022. The Caesars Racebook app provides access for pari-mutuel
wagering at over 300 race tracks around the world as well as livestreaming of races. Wagers placed can earn credits towards our Caesars Rewards loyalty
program or points which can be redeemed for free wagering credits.
We are also in the process of continuing the expansion of our Caesars Digital footprint in the near term with our Caesars Sportsbook and Caesars Racebook
apps as jurisdictions legalize or provide necessary approvals.
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33
We periodically divest of assets in order to raise capital or as a result of a determination that the assets are not core to our business. We also divested certain
assets in connection with obtaining regulatory approvals related to closing of the Merger. A summary of recently completed divestitures of our properties as
of December 31, 2022 is as follows:
Segment
Property
Isle of Capri Casino Kansas City (“Kansas City”)
Lady Luck Casino Vicksburg (“Vicksburg”)
MontBleu Casino Resort & Spa (“MontBleu”)
Tropicana Evansville (“Evansville”)
Belle of Baton Rouge Casino & Hotel (“Baton Rouge”)
Regional
Regional
Regional
Regional
Regional
Regional
Eldorado Resort Casino Shreveport (“Eldorado Shreveport”)
December 23, 2020
Date Sold
July 1, 2020
July 1, 2020
April 6, 2021
June 3, 2021
May 5, 2022
September 30, 2020
November 18, 2020
November 1, 2021
September 3, 2021
July 16, 2021
July 16, 2021
July 1, 2022
Sales Price
(a)
(a)
$140 million
$15 million
$480 million
*
$42 million (b)
$25 million (b)
$22 million (b)
$250 million
*
*
£2.0 billion
Discontinued operations:
Regional
Regional
Regional
Harrah’s Reno
Bally’s Atlantic City
Harrah’s Louisiana Downs
Regional
N/A
N/A
N/A
Caesars Southern Indiana
Emerald Resort & Casino
Caesars Entertainment UK
William Hill International
____________________
*
Not meaningful.
(a)
(b)
Kansas City and Vicksburg were sold for aggregate consideration of $230 million.
The proceeds of this sale were split between the Company and VICI.
See Item 8. Financial Statements and Supplementary Data — Note 4 for further discussion on these key transactions and any applicable gain (loss) or
impairment charges recorded.
Merger and Acquisitions Related Activities
William Hill Acquisition
On September 30, 2020, we announced that we had reached an agreement with William Hill PLC on the terms of a recommended cash acquisition pursuant
to which we would acquire the entire issued and to be issued share capital (other than shares owned by us or held in treasury) of William Hill PLC, in an
all-cash transaction. On the acquisition date, our intent was to divest William Hill PLC’s non-U.S. operations, including the United Kingdom and
international online divisions and the retail betting shops (collectively, “William Hill International”), which were held for sale as of the date of the closing
of the William Hill Acquisition with such operations reflected within discontinued operations. On April 22, 2021, we completed the acquisition of William
Hill PLC for £2.9 billion, or approximately $3.9 billion.
On September 8, 2021, we entered into an agreement to sell William Hill International to 888 Holdings Plc for approximately £2.2 billion. On April 7,
2022, we amended the agreement to sell William Hill International to 888 Holdings Plc for a revised enterprise value of approximately £2.0 billion. The
amended agreement reflected a £250 million reduction in consideration payable at closing and up to £100 million as deferred consideration to be paid to us,
subject to 888 Holdings Plc meeting certain 2023 financial targets. During the year ended December 31, 2022, the Company recorded impairments to assets
held for sale of $503 million within discontinued operations based on the revised and final sales prices.
On July 1, 2022, we completed the sale of William Hill International to 888 Holdings Plc and outstanding borrowings under the Bridge Credit Agreement
between the Company and certain lenders party thereto and Deutsche Bank AG, London Branch as administrative agent and collateral agent were
immediately repaid. After the repayment of the Bridge Credit Agreement, other permitted leakage, and the settlement of related forward contracts, we
received net proceeds of $730 million. Including open market repurchases and repayments, we utilized all $730 million to reduce our outstanding debt.
We recognized acquisition-related transaction costs of $21 million, $68 million and $8 million for the years ended December 31, 2022, 2021 and 2020,
respectively, excluding additional transaction cost associated with sale of William Hill International. These costs were associated with legal, professional
services and certain severance and retention costs and were primarily recorded in Transaction and other costs in our Statements of Operations.
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34
Consolidation of Horseshoe Baltimore
On August 26, 2021, we increased our ownership interest in CBAC Borrower, LLC (“Horseshoe Baltimore”), a property which we also manage, to
approximately 75.8% for cash consideration of $55 million. As a result of the increase in our ownership interest, our previously held investment was
remeasured and we recognized a gain of $40 million for the year ended December 31, 2021. Subsequent to the change in ownership, we determined that we
have a controlling financial interest and began to consolidate the operations of Horseshoe Baltimore.
Merger with Caesars Entertainment Corporation
On July 20, 2020, the Merger was consummated and Former Caesars became a wholly-owned subsidiary of ours. The strategic rationale for the Merger
includes, but is not limited to, the following:
Creation of the largest owner, operator and manager of domestic gaming assets
•
• Diversification of the Company’s domestic footprint
• Access to iconic brands, rewards programs and new gaming opportunities expected to enhance customer experience
•
Realization of significant identified synergies
The total purchase consideration for Former Caesars was $10.9 billion. The estimated purchase consideration in the acquisition was determined with
reference to its acquisition date fair value.
We recognized acquisition-related transaction costs in connection with the Merger of $30 million and $160 million for the years ended December 31, 2021
and 2020, respectively.
Investments and Partnerships
NeoGames
The acquired net assets of William Hill included an investment in NeoGames S.A. (“NeoGames”), a global leader of iLottery solutions and services to
national and state-regulated lotteries, and other investments. On September 16, 2021, we sold a portion of our shares of NeoGames common stock for
$136 million which decreased our ownership interest from 24.5% to approximately 8.4%. Additionally, on March 14, 2022 we sold our remaining 2 million
shares at fair value for $26 million. During the years ended December 31, 2022 and 2021, we recorded losses related to the investment in NeoGames of
$34 million and $54 million, respectively, which is included within Other income (loss) on the Statements of Operations.
Pompano Joint Venture
In April 2018, we entered into a joint venture with Cordish Companies (“Cordish”) to plan and develop a mixed-use entertainment and hospitality
destination expected to be located on unused land adjacent to the casino and racetrack at our Pompano property. As the managing member, Cordish will
operate the business and manage the development, construction, financing, marketing, leasing, maintenance and day-to-day operation of the various phases
of the project. Additionally, Cordish is responsible for the development of the master plan for the project with our input and will submit it for our review
and approval. In June 2021, the joint venture issued a capital call and we contributed $3 million, for a total of $4 million in cash contributions since
inception of the joint venture. On February 12, 2021, we contributed 186 acres to the joint venture with a fair value of $61 million. Total contributions of
approximately 206 acres of land have been made with a fair value of approximately $69 million, and we have no further obligation to contribute additional
real estate or cash.
While we hold a 50% variable interest in the joint venture, we are not the primary beneficiary; as such the investment in the joint venture is accounted for
using the equity method. We participate evenly with Cordish in the profits and losses of the joint venture, which are included in Transaction and other costs
on our Statements of Operations. As of December 31, 2022 and 2021, the Company’s investment in the joint venture is recorded in Investment in and
advances to unconsolidated affiliates on our Balance Sheets.
Reportable Segments
Segment results in this MD&A are presented consistent with the way our management reviews operating results, assesses performance and makes decisions
on a “significant market” basis. Management views each of the Company’s casinos as an operating segment. Operating segments are aggregated based on
their similar economic characteristics, types of customers, types of services and products provided, and their management and reporting structure. Our
principal operating activities occur in four reportable segments: (1) Las Vegas, (2) Regional, (3) Caesars Digital, and (4) Managed and Branded, in addition
to Corporate and Other. See Item 2. “Properties” for listing of properties by segment.
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35
Presentation of Financial Information
The financial information included in this Item 7 for the periods after our acquisitions of Former Caesars on July 20, 2020, William Hill on April 22, 2021
and of the increase in our ownership percentage and subsequent consolidation of Horseshoe Baltimore on August 26, 2021, is not fully comparable to the
periods prior to the acquisitions. In addition, the presentation of financial information herein for the periods after the Company’s sales of various properties,
described above, is not fully comparable to the periods prior to their respective sale dates.
This MD&A is intended to provide information to assist in better understanding and evaluating our financial condition and results of operations. Our
historical operating results may not be indicative of our future results of operations because of the factors described in the preceding paragraph and the
changing competitive landscape in each of our markets, including changes in market and societal trends, increased competition, as well as by factors or
trends discussed elsewhere herein. We recommend that you read this MD&A in conjunction with our audited consolidated financial statements and the
notes to those statements included in this Annual Report on Form 10-K.
Key Performance Metrics
Our primary source of revenue is generated by our gaming operations, including retail and online sports betting, as well as online gaming. Additionally we
utilize our hotels, restaurants, bars, entertainment venues, retail shops, racing and other services to attract customers to our properties. Our operating results
are highly dependent on the volume and quality of customers visiting and staying at our properties and using our sports betting and iGaming applications.
Key performance metrics include volume indicators such as drop or handle, which refer to amounts wagered by our customers. The amount of volume we
retain, which is not fully controllable by us, is recognized as casino revenues and is referred to as our win or hold. Slot win percentage is typically in the
range of approximately 9% to 11% of slot handle for both the Las Vegas and Regional segments. Table game hold percentage is typically in the range of
approximately 16% to 23% of table game drop in both the Las Vegas and Regional segments. Sports betting hold is typically in the range of 5% to 9% and
iGaming hold typically ranges from 3% to 4%. In addition, hotel occupancy, which is the average percentage of available hotel rooms occupied during a
period, is a key indicator for our hotel business in the Las Vegas segment. See “Results of Operations” section below. Complimentary rooms are treated as
occupied rooms in our calculation of hotel occupancy. The key metrics we utilize to measure our profitability and performance are Adjusted EBITDA and
Adjusted EBITDA margin.
Significant Factors Impacting Financial Results
The following summary highlights the significant factors impacting our financial results during the years ended December 31, 2022, 2021 and 2020.
Acquisitions and Transaction Costs
• William Hill Acquisition – On April 22, 2021, we consummated the acquisition of the entire issued and to be issued share capital (other than shares
owned by the Company or held in treasury) of William Hill PLC, in an all-cash transaction of £2.9 billion, or approximately $3.9 billion. We
recognized acquisition-related transaction costs of $21 million, $68 million and $8 million for the years ended December 31, 2022, 2021 and
2020, respectively, excluding additional transaction costs associated with sale of William Hill International.
•
Consolidation of Horseshoe Baltimore – On August 26, 2021, we increased our ownership interest in Horseshoe Baltimore to approximately
75.8%. Prior to the purchase, we held an interest in Horseshoe Baltimore of approximately 44.3% which was accounted for as an equity method
investment. Subsequent to the change in ownership, we determined we have a controlling financial interest and have consolidate the operations of
Horseshoe Baltimore. As a result of the consolidation, we recognized a gain of $40 million during the year ended December 31, 2021.
• Merger with Caesars Entertainment Corporation – The Merger closed on July 20, 2020 and we have recognized acquisition-related transaction
costs in connection with the Merger of $30 million and $160 million for the years ended December 31, 2021 and 2020, respectively.
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36
Divestitures and Discontinued Operations
• Divestitures and Discontinued Operations – See “Overview” section above for detail of properties divested, including related discontinued
operations.
Financing Transactions
• Debt Transactions - We continue to utilize free cash flow to reduce our leverage and extend the maturity of our outstanding debt. The following
are the key financing transactions and their effects on our operations, from the use of free cash flow, unless otherwise noted:
◦
◦
◦
◦
◦
◦
Utilized proceeds from the sale of William Hill International and cash on hand to make partial prepayments of $755 million of the
outstanding principal of the CRC Incremental Term Loan.
Repaid $300 million of the outstanding principal of the CRC Term Loan, excluding the prepayment resulting from the proceeds of the
CEI Term Loan A described below.
Purchased a total of $11 million in principal amount of the CRC Senior Secured Notes and $89 million in principal amount of CEI Senior
Notes due 2027.
Amended the CEI Credit Agreement and utilized the entire proceeds of a new $750 million CEI Term Loan A to make a partial
prepayment of the outstanding principal of the CRC Term Loan, terminate the CRC Revolving Credit Facility and increase the aggregate
principal amount of the CEI Revolving Credit Facility to $2.25 billion.
For the years ended December 31, 2022, 2021 and 2020, we recorded loss on extinguishment of debt of $85 million, $236 million and
$197 million respectively, which is recorded within Loss on extinguishment of debt on the Statement of Operations due to the
aforementioned activity.
Refer to the Liquidity and Capital Resources section below for a further discussion of our recent debt transactions, including our
financing transactions in 2023 in which we issued new CEI Senior Secured Notes due 2030, a new CEI Term Loan B, and fully repaid the
CRC Term Loan and CRC Incremental Term Loan.
Other Significant Factors
•
Economic Factors Impacting Discretionary Spending – Gaming and other leisure activities we offer represent discretionary expenditures which
may be sensitive to economic downturns. The resurgence of the Omicron variant of COVID-19 impacted the beginning of the year, however,
many of our properties experienced positive trends during much of the year ended December 31, 2022, including higher hotel occupancy and
rates, particularly in Las Vegas, and increased gaming and food and beverage volumes coupled with improved product mix. The reduction in
mandates and restrictions, combined with pent up consumer demand and supplemental discretionary spend from governmental stimulus, resulted
in strong results across our properties during 2021.
In addition to the loss of government stimulus programs from prior year that increased consumer discretionary spend, we are monitoring the trend
of higher inflation in the current year and the possible implications to our customers. Although we have seen some periods of reduced visitation
from those customers that are most affected by inflation, visitation from those customers not as sensitive to inflation remains steady or has slightly
improved.
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37
•
Impairment Charges – As a result of our finalized and approved capital and operating plans and the completion of our 2022 annual impairment
testing, we recognized impairment charges during the year ended December 31, 2022 in our Regional segment primarily due to an increase in the
related discount rates, which represents the higher required cost of capital as a result of the macroeconomic environment and projected outlook.
We identified one property, where the estimated fair value of the associated gaming rights was less than the carrying value and we recorded an
impairment of $30 million. In addition, we identified two properties, where the estimated fair value of the enterprise was less than the carrying
value and recorded an impairment to goodwill of $78 million.
In December 2021, we approved a capital plan which included the planned rebranding of certain of our properties. We utilized an income
approach to determine the fair value of the trademarks subject to rebranding based on their expected future cash flows, which resulted in an
impairment charge of $102 million during the year ended December 31, 2021.
During the year ended December 31, 2020, we recognized impairment charges in our Regional segment related to goodwill and trade names
totaling $100 million and $16 million, respectively, due to the effects of COVID-19. In addition, as a result of entering agreements to sell
properties in our Regional segment, impairment charges totaling $99 million were recorded during the year ended December 31, 2020 due to the
carrying value exceeding the net sales proceeds.
• Weather Disruption – In late August 2020, our Regional segment was negatively impacted by Hurricane Laura, causing severe damage to Isle of
Capri Casino Hotel Lake Charles. As a result of the damage, the property remained closed during the construction of a new land-based location,
Horseshoe Lake Charles, which opened in December 2022. During the year ended December 31, 2022, we reached a final settlement agreement
with the insurance carriers for the damage and disruption for a total amount of $128 million, before our insurance deductible of $25 million. We
have received a total of $103 million related to damaged fixed assets, remediation costs and business interruption.
We recorded gains of $38 million and $21 million during the years ended December 31, 2022 and 2021, respectively, which are included in
Transaction and other costs in our Statements of Operations, as proceeds received for the cost to replace damaged property were in excess of
respective carrying value of the assets.
•
Caesars Sportsbook and Caesars Racebook – In connection with the launch and rebranding of the Caesars Sportsbook app, our Caesars Digital
segment launched a significant marketing campaign in the second half of 2021 with distinguished actors, former athletes and other media
personalities. As new states and jurisdictions have legalized sports betting, we have made significant upfront investments which have been
executed through marketing campaigns and promotional incentives to acquire new customers and establish ourselves as an industry leader. For
example, in connection with the launch of our Caesars Sportsbook app in the state of New York on January 8, 2022 and Louisiana on January 28,
2022, we experienced negative net revenue at the beginning of 2022 resulting from a substantial amount of bonus cash and matched deposits
issued to customers as sign-on incentives, which exceeded our gaming win. Our level of investment and types of incentives provided are
discretionary and are not expected to continue at elevated levels subsequent to the initial launch period. In addition, as our Caesars Racebook
launches in new states and jurisdictions, we may offer deposit matching incentives to new users. A significant portion of our marketing and
promotional costs are variable and we continue to monitor and adjust our level of investment based on jurisdiction specific conditions, customer
behaviors, and results observed from prior state launches.
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38
Results of Operations
The following table highlights the results of our operations:
(Dollars in millions)
Net revenues:
Las Vegas
Regional
Caesars Digital
Managed and Branded
Corporate and Other
(a)
Total
Net loss
Adjusted EBITDA
(b)
:
Las Vegas
Regional
Caesars Digital
Managed and Branded
Corporate and Other
(a)
Total Segment Adjusted EBITDA
Net loss margin
Adjusted EBITDA margin
Years Ended December 31,
2022
2021
2020
$
$
$
$
$
$
$
$
$
4,287
5,704
548
282
—
10,821
(910)
1,964
1,985
(666)
84
(124)
$
$
$
$
3,409
5,537
337
278
9
9,570
(1,016)
1,568
1,979
(476)
87
(168)
3,243
$
2,990
$
751
2,660
95
107
15
3,628
(1,758)
133
711
26
25
(101)
794
(8.4)%
30.0 %
(10.6)%
31.2 %
(48.5)%
21.9 %
___________________
(a)
Corporate and Other includes revenues related to certain licensing arrangements and various revenue sharing agreements. Corporate and Other Adjusted EBITDA includes corporate
overhead costs, which consist of certain expenses, such as: payroll, professional fees and other general and administrative expenses.
(b)
See the “Supplemental Unaudited Presentation of Consolidated Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”)” discussion later in this
MD&A for a description of Adjusted EBITDA and a reconciliation of net income (loss) to Adjusted EBITDA.
Consolidated comparison for the years ended December 31, 2022, 2021 and 2020
The following table highlights the results of our operations: Comparisons between 2022 and 2021 are described below. A discussion of changes in our
results of operations between year ended December 31, 2021 compared to 2020 has been omitted from this Annual Report on Form 10-K and can be found
in “Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Year Ended December 31, 2021 Compared to the
Year Ended December 31, 2020” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Net Revenues
Net revenues were as follows:
(Dollars in millions)
Casino
Food and beverage
Hotel
Other
Net Revenues
___________________
* Not meaningful.
Table of Contents
Years Ended December 31,
Variance
Percent
Change
Variance
Percent
Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
$
5,997 $
1,596
1,957
1,271
5,827 $
1,140
1,551
1,052
2,482 $
342
450
354
$
10,821 $
9,570 $
3,628 $
170
456
406
219
1,251
2.9 % $
40.0 %
26.2 %
20.8 %
13.1 % $
3,345
798
1,101
698
5,942
134.8 %
*
*
197.2 %
163.8 %
39
Despite the resurgence of the Omicron variant during the beginning of 2022, consolidated net revenues increased for the year ended December 31, 2022.
The Company’s net revenues have benefited from steady gaming volumes at our properties, increased hotel occupancy and room rates, and improved food
and beverage offerings. Banquets and conventions have improved during the current year, in addition to a strengthening of international visitation. The
Company continues to remain strategic with new food and beverage offerings with a focus on operating margins and product mix. Restaurant covers have
increased during the year, driven by our Las Vegas segment. Live entertainment events have also increased year over year following the prolonged impacts
from COVID-19. Additionally, the consolidation of Horseshoe Baltimore on August 26, 2021 contributed to the increase in net revenues for the year ended
December 31, 2022. These increases were offset slightly by negative gaming revenue in our Caesars Digital segment in the first quarter of 2022 and
construction disruption experienced at certain properties.
Operating Expenses
Operating expenses were as follows:
(Dollars in millions)
Casino
Food and beverage
Hotel
Other
General and administrative
Corporate
Impairment charges
Depreciation and amortization
Transaction and other costs
Total operating expenses
Years Ended December 31,
Variance
Percent
Change
Variance
Percent
Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
$
3,526 $
935
529
411
2,068
286
108
1,205
14
3,129 $
707
438
373
1,782
309
102
1,126
144
1,271 $
265
170
140
902
195
215
583
270
$
9,082 $
8,110 $
4,011 $
397
228
91
38
286
(23)
6
79
(130)
972
12.7 % $
32.2 %
20.8 %
10.2 %
16.0 %
(7.4)%
5.9 %
7.0 %
(90.3)%
12.0 % $
1,858
442
268
233
880
114
(113)
543
(126)
4,099
146.2 %
166.8 %
157.6 %
166.4 %
97.6 %
58.5 %
(52.6)%
93.1 %
(46.7)%
102.2 %
Casino expenses consist primarily of salaries and wages associated with our gaming operations, gaming taxes and marketing and promotions attributable to
our Caesars Digital segment. Food and beverage expenses consist principally of salaries and wages and costs of goods sold associated with our food and
beverage operations. Hotel expenses consist principally of salaries and wages, supplies and costs of services associated with our hotel operations. Other
expenses consist principally of salaries and wages and costs of goods sold associated with our retail, entertainment and other operations.
Casino, food and beverage, hotel, and other expenses for the year ended December 31, 2022 increased year over year following the revenue increases noted
above, in addition to the impacts of the William Hill Acquisition and the consolidation of Horseshoe Baltimore. Advertising costs consisting of television,
radio and internet marketing campaigns directly attributable to our Caesars Sportsbook app also contributed to the increase, particularly during the launch
of the app in New York and Louisiana during the first quarter. These increases were partially offset as we scaled back our advertising efforts subsequent to
the first quarter of 2022 and continue to identify more efficient methods to manage marketing and promotional spend and reduce gaming expenses within
our Las Vegas and Regional segments. Further, we have managed increases in food costs by focusing on efficiencies within food and beverage venues and
menu options.
General and administrative expenses include items such as information technology, facility maintenance, utilities, property and liability insurance, expenses
for administrative departments such as accounting, compliance, purchasing, human resources, legal, internal audit, and property taxes. General and
administrative expenses also include other marketing expenses indirectly related to our gaming and non-gaming operations.
General and administrative expenses and depreciation and amortization expense increased for the year ended December 31, 2022 as compared to the same
prior year period, mainly due to the William Hill Acquisition and the consolidation of Horseshoe Baltimore. Property information technology costs, other
marketing expenses and utility expenses also increased compared to the prior year.
Corporate expenses include unallocated expenses such as payroll, inclusive of the annual bonus, stock-based compensation, professional fees, and other
various expenses not directly related to the Company’s operations.
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40
Transaction and other costs for the year ended December 31, 2022 decreased year over year due to a gain of approximately $38 million as proceeds
received for the Isle of Capri Casino Hotel Lake Charles property damage were in excess of the respective carrying value of the assets. Additionally, no
significant acquisition related transaction costs were incurred during the year as compared to the William Hill Acquisition in the prior year.
Other Expense
Other expense was as follows:
(Dollars in millions)
Interest expense, net
Loss on extinguishment of debt
Other income (loss)
Benefit (provision) for income taxes
___________________
* Not meaningful.
Years Ended December 31,
Variance
Percent
Change
Variance
Percent
Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
$
(2,265) $
(85)
46
41
(2,295) $
(236)
(198)
283
(1,202) $
(197)
176
(132)
30
151
244
(242)
1.3 % $
64.0 %
*
(85.5)%
(1,093)
(39)
(374)
415
(90.9)%
(19.8)%
*
*
For the year ended December 31, 2022, interest expense, remained consistent year over year as a result of decreased interest expense associated with our
debt instruments, offset by increases in interest expense associated with the financing obligations related to our leases with VICI and GLPI which contain
annual escalators which have resulted in increased interest expense year over year. Repayments and early extinguishments during the prior year, which
continued into the current year, and favorable interest rates from new debt have resulted in lower interest expense associated with our debt.
Loss on extinguishment of debt for the year ended December 31, 2022 was attributable to the extinguishment of deferred financing costs and discounts
associated with early partial repayments of the CRC Term Loan and the CRC Incremental Term Loan. Loss on extinguishment of debt for the year ended
December 31, 2021 was related to early repayment premiums, and extinguishment of deferred financing costs and discounts associated with the
prepayments of the CRC Notes and CEI Senior Notes, the repricing of the CRC Incremental Term Loan, and the early extinguishment of the 5%
Convertible Notes.
For the year ended December 31, 2022, other income (loss) primarily consisted of a gain related to the resolution of a portion of disputed claims liability
related to Former Caesars’ bankruptcy and a change in the fair value of foreign exchange forward contracts, offset by the change in fair value of
investments. For the year ended December 31, 2021, other income (loss) primarily consisted of a loss on the change in fair value of investments and a loss
on the change in fair value of the derivative liability related to the 5% Convertible Notes.
The effective tax rate was 7.2% for 2022, 22.3% for 2021, and (8.2)% for 2020. The effective tax rate in 2022 differed from the statutory rate of 21%
primarily due to an increase in tax expense due to state rate changes and a deferred tax adjustment related to the tax impact of the settlement of preexisting
relationships upon the William Hill Acquisition in 2021 that was partially offset by changes to the valuation allowance. The effective tax rate in 2020
differed from the statutory rate of 21% primarily due to an increase in valuation allowance against the deferred tax assets due to the series of transactions
with VICI during the year. Such transactions did not occur in 2021. Refer to Item 8. - Note 17 for the effective income tax rate reconciliation.
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41
Segment comparison for the years ended December 31, 2022, 2021 and 2020
Las Vegas Segment
(Dollars in millions)
Revenues:
Casino
Food and beverage
Hotel
Other
Net revenues
Table game drop
Table game hold %
Slot handle
Hotel occupancy
Adjusted EBITDA
Adjusted EBITDA margin
Net income (loss) attributable to Caesars
___________________
* Not meaningful.
Years Ended December 31,
Variance
Percent
Change
Variance
Percent
Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
$
$
$
$
$
$
1,247
1,063
1,341
636
4,287
3,464
22.0 %
10,718
92.2 %
1,964
45.8 %
1,021
$
$
$
$
$
$
1,226
702
968
513
3,409
3,088
20.2 %
10,309
82.1 %
1,568
46.0 %
641
$
$
$
$
$
$
319
130
186
116
751
1,082
16.6 %
3,498
47.2 %
133
17.7 %
(287)
$
$
$
$
$
$
21
361
373
123
878
376
409
396
907
572
782
397
2,658
2,006
6,811
1.7 % $
51.4 %
38.5 %
24.0 %
25.8 % $
12.2 % $
1.8 pts
4.0 % $
10.1 pts
25.3 % $
(0.2) pts
1,435
*
*
*
*
*
185.4 %
3.6 pts
194.7 %
34.9 pts
*
28.3 pts
380
59.3 % $
928
*
Las Vegas segment’s net revenues and net income (loss) and Adjusted EBITDA increased year over year. Visitation to Las Vegas has continued to trend
toward levels experienced prior to the COVID-19 pandemic. Table game drop and slot handle have increased with slight increases in hold. Increased casino
revenues were slightly offset by gaming capacity disruption at Caesars Palace caused by the renovation to the front entrance during the third quarter of
2022. Restaurant covers have increased during the year and we continue to expand food and beverage offerings, including Bobby’s Burgers, Nobu, and The
Bedford by Martha Stewart at Paris, among others, with additional venues scheduled to open in 2023. Banquets and conventions have contributed to the
positive results during the year helping continued growth in hotel occupancy and room rates.
Slot win percentage in Las Vegas during the year ended December 31, 2022 was within our typical range.
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42
Regional Segment
(Dollars in millions)
Revenues:
Casino
Food and beverage
Hotel
Other
Net revenues
Table game drop
Table game hold %
Slot handle
Adjusted EBITDA
Adjusted EBITDA margin
Net income (loss) attributable to Caesars
___________________
* Not meaningful.
Years Ended December 31,
Variance
Percent
Change
Variance
Percent
Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
$
$
$
$
$
$
4,291
533
616
264
5,704
4,270
22.0 %
42,853
1,985
34.8 %
463
$
$
$
$
$
$
4,305
438
583
211
5,537
4,163
21.0 %
42,873
1,979
35.7 %
637
$
$
$
$
$
$
2,079
211
264
106
2,660
2,386
20.6 %
24,441
711
26.7 %
(349)
$
$
$
$
$
$
(14)
95
33
53
167
107
(20)
6
(0.3)% $
21.7 %
5.7 %
25.1 %
3.0 % $
2.6 % $
1 pts
— % $
2,226
227
319
105
2,877
1,777
18,432
0.3 % $
1,268
(0.9) pts
107.1 %
107.6 %
120.8 %
99.1 %
108.2 %
74.5 %
0.4 pts
75.4 %
178.3 %
9 pts
(174)
(27.3)% $
986
*
Regional segment’s net income (loss) decreased during the year ended December 31, 2022 primarily due to impairments of $108 million recognized during
the period, and a non-recurring prior year gain of $40 million related to our investment in Horseshoe Baltimore. Net revenues and Adjusted EBITDA
increased slightly for the year ended December 31, 2022 compared to the same prior year period, in part from the consolidation of Horseshoe Baltimore.
Table game volume for the year ended December 31, 2022 remained comparable, however slot volume decreased slightly from strong results during 2021
due to the reduction in supplemental discretionary spend from governmental stimulus. Performance among our Regional properties was affected by a
resurgence of the Omicron variant of COVID-19 in the beginning of 2022; however, the Regional segment trended positively due to improved food and
beverage offerings, increased hotel revenues and an increase in banquets. We continue to monitor trends observed during the current year of periods of
reduced visitation from certain customers most affected by current inflationary pressures whereas visitation from customers not as affected by such
pressures remains steady or has slightly improved. Further, renovations and capital projects at Harrah’s New Orleans and Atlantic City properties have led
to slight disruptions in operations. Despite these headwinds, and the impact of our recent divestitures described above, our results of operations remain
strong as compared to pre-pandemic years.
Slot win percentage in the Regional segment during the year ended December 31, 2022 was within our typical range.
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43
Caesars Digital Segment
(Dollars in millions)
Revenues:
Casino
Other
(a)
Net revenues
Sports betting handle
Sports betting hold %
(b)
iGaming handle
iGaming hold %
Adjusted EBITDA
Adjusted EBITDA margin
Net income (loss) attributable to Caesars
Years Ended December 31,
Variance
Percent
Change
Variance
Percent
Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
$
$
$
$
$
$
462
86
548
12,801
5.4 %
8,073
3.2 %
(666)
(121.5)%
(790)
$
$
$
$
$
$
296
41
337
6,046
4.3 %
5,621
3.3 %
(476)
(141.2)%
(580)
$
$
$
$
$
$
84
11
95
30
3.3 %
2,448
3.5 %
26
27.4 %
26
$
$
$
$
$
$
166
45
211
6,755
2,452
(190)
56.1 % $
109.8 %
62.6 % $
111.7 % $
1.1 pts
43.6 % $
(0.1) pts
(39.9)% $
19.7 pts
212
30
242
6,016
3,173
(502)
(210)
(36.2)% $
(606)
*
*
*
*
1 pts
129.6 %
(0.2) pts
*
*
*
___________________
* Not meaningful.
(a)
Includes total promotional and complimentary incentives related to sports betting, iGaming, and poker of $542 million, $187 million and $28 million for the year ended December 31, 2022,
2021, and 2020, respectively. Promotional and complimentary incentives for poker were $21 million, $18 million and $6 million for the year ended December 31, 2022, 2021, and 2020,
respectively.
(b)
Caesars Digital generated an additional $1,223 million and $706 million of sports betting handle for the year ended December 31, 2022 and 2021, respectively, which is not included in this
table, for select wholly-owned and third-party operations for which Caesars Digital provides services and we receive all, or a share of, the net profits. Hold related to these operations was
11.0% and 9.7%, for the year ended December 31, 2022 and 2021, respectively. Sports betting handle includes $50 million and $40 million for the year ended December 31, 2022 and 2021,
respectively, related to horse racing and pari-mutuel wagers.
Caesars Digital includes the operations for our retail and mobile sports betting, online casino, poker and horse racing, which includes our Caesars
Sportsbook and Caesars Racebook apps. Caesars Digital’s sports betting handle, iGaming handle, and net revenues increased significantly for the year
ended December 31, 2022 compared to the same prior year period due to the William Hill Acquisition, the launch of our Caesars Sportsbook app in 2021,
and the expansion of sports betting into additional states and jurisdictions subsequent to the acquisition. Net Revenues increased overall during the year
ended December 31, 2022 due to higher handle and improved sports betting hold. Net revenues during the first quarter of 2022 were negatively impacted
by costs associated with significant promotions offered with the launch of our Caesars Sportsbook, particularly in New York and Louisiana, which included
cash bonuses and matched deposits to new customers as sign-on incentives. Following the first quarter, Caesars digital’s operations continued to improve
for the remainder of 2022, nearly reaching positive net income and adjusted EBITDA during the fourth quarter.
Sports betting and iGaming hold percentages for the year ended December 31, 2022 were within our typical range.
We expect to continue to expand into new jurisdictions with our apps, our Caesars branded retail sportsbooks, and our iGaming applications, to the extent
such jurisdictions allow. Historically we have deployed a significant level of marketing spend to build brand awareness and acquire and retain customers
when entering new jurisdictions. As a result of our established market presence, we expect to remain strategic with our level of investment in new and
existing markets.
As sports betting and online casinos expand through increased state legalization and customer adoption, growth in marketing and promotional costs in
highly competitive markets negatively impacts Caesars Digital Adjusted EBITDA and Adjusted EBITDA margins in comparison to prior periods. These
periods are not expected to be long in duration as we use our discretion to determine the ongoing level of investment for a particular jurisdiction.
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44
Managed and Branded Segment
(Dollars in millions)
Revenues:
Food and beverage
Other
Net revenues
Adjusted EBITDA
Adjusted EBITDA margin
Net income (loss) attributable to Caesars
___________________
* Not meaningful.
Years Ended December 31,
Variance
Percent
Change
Variance
Percent
Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
$
$
$
$
—
282
282
84
29.8 %
(301)
$
$
$
$
—
278
278
87
31.3 %
68
$
$
$
$
1
106
107
25
23.4 %
29
$
$
$
$
—
4
4
(3)
* $
1.4 %
1.4 % $
(3.4)% $
(1.5) pts
(369)
* $
(1)
172
171
62
39
(100.0)%
162.3 %
159.8 %
*
7.9 pts
134.5 %
We manage several properties and license rights to the use of our brands. These revenue agreements typically include reimbursement of certain costs that
we incur directly. Such costs are primarily related to payroll costs incurred on behalf of the properties under management. The revenue related to these
reimbursable management costs has a direct impact on our evaluation of Adjusted EBITDA margin which, when excluded, reflects margins typically
realized from such agreements. The table below presents the amount included in net revenues and total operating expenses related to these reimbursable
costs.
(Dollars in millions)
Reimbursable management revenue
Reimbursable management cost
2022
2021
2020
2022 vs 2021
2021 vs 2020
$
198 $
198
191 $
191
73 $
73
7
7
3.7 % $
3.7 %
118
118
161.6 %
161.6 %
Years Ended December 31,
Variance
Percent
Change
Variance
Percent
Change
Corporate & Other
(Dollars in millions)
Revenues:
Casino
Other
Net revenues
Adjusted EBITDA
___________________
* Not meaningful.
Years Ended December 31,
Variance
Percent
Change
Variance
Percent
Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
$
$
$
(3) $
3
— $
— $
9
9 $
— $
15
15 $
(124) $
(168) $
(101) $
(3)
(6)
(9)
44
* $
(66.7)%
(100.0)% $
—
(6)
(6)
*
(40.0)%
(40.0)%
26.2 % $
(67)
(66.3)%
Supplemental Unaudited Presentation of Consolidated Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted
EBITDA”) for the Years Ended December 31, 2022, 2021 and 2020
Adjusted EBITDA (described below), a non-GAAP financial measure, has been presented as a supplemental disclosure because it is a widely used measure
of performance and basis for valuation of companies in our industry and we believe that this non-GAAP supplemental information will be helpful in
understanding our ongoing operating results. Management has historically used Adjusted EBITDA when evaluating operating performance because we
believe that the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide a full understanding of our core operating results
and as a means to evaluate period-to-period results. Adjusted EBITDA represents net income (loss) before interest income or interest expense net of
interest capitalized, (benefit) provision for income taxes, unrealized (gain) loss on investments and marketable securities, depreciation and amortization,
stock-based compensation, impairment charges, equity in (income) loss of unconsolidated affiliates, (gain) loss on the sale or disposal of property and
equipment, (gain) loss related to divestitures, changes in the fair value of certain derivatives and transaction costs associated with our acquisitions and
divestitures such as (gain) loss on sale, sign-on and retention bonuses, severance expense, business integration and optimization costs, contract exit or
termination costs, certain litigation awards and settlements, losses on inventory associated with properties temporarily closed as a result of
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45
the COVID-19 public health emergency, and certain regulatory settlements. Adjusted EBITDA also excludes the expense associated with certain of our
leases as these transactions were accounted for as financing obligations and the associated expense is included in interest expense. Adjusted EBITDA is not
a measure of performance or liquidity calculated in accordance with GAAP. Adjusted EBITDA is unaudited and should not be considered an alternative to,
or more meaningful than, net income (loss) as an indicator of our operating performance. Uses of cash flows that are not reflected in Adjusted EBITDA
include capital expenditures, interest payments, income taxes, debt principal repayments, payments under our leases with affiliates of VICI Properties Inc.
and GLPI and certain regulatory gaming assessments, which can be significant. As a result, Adjusted EBITDA should not be considered as a measure of
our liquidity. Other companies that provide EBITDA information may calculate Adjusted EBITDA differently than we do. The definition of Adjusted
EBITDA may not be the same as the definitions used in any of our debt agreements.
The following table summarizes our Adjusted EBITDA for the years ended December 31, 2022, 2021 and 2020, respectively, in addition to reconciling net
income (loss) to Adjusted EBITDA in accordance with GAAP (unaudited):
(In millions)
(a)
Net loss attributable to Caesars
Net income (loss) attributable to noncontrolling interests
Discontinued operations, net of income taxes
(Benefit) provision for income taxes
Other (income) loss
Loss on extinguishment of debt
Interest expense, net
Impairment charges
Depreciation and amortization
(b)
Transaction costs and other
Stock-based compensation expense
Adjusted EBITDA
Pre-consolidation, pre-acquisition, and pre-disposition EBITDA, net
(c)
Total Adjusted EBITDA
Years Ended December 31,
2021
2020
2022
(899) $
(11)
386
(41)
(46)
85
2,265
108
1,205
90
101
3,243
—
3,243 $
(1,019) $
3
30
(283)
198
236
2,295
102
1,126
220
82
2,990
3
2,993 $
(1,757)
(1)
20
132
(176)
197
1,202
215
583
300
79
794
261
1,055
$
$
____________________
(a)
Other (income) loss primarily includes the net changes in fair value of (i) investments held by the Company (ii) foreign exchange forward contracts (iii) the disputed claims liability related
to Former Caesars’ bankruptcy prior to the Merger, and (iv) the derivative liability related to the 5% Convertible Notes, which were fully converted during the year ended December 31,
2021, and the change in the foreign exchange rate associated with restricted cash held in GBP associated with our acquisition of William Hill.
(b)
(c)
Transaction costs and other primarily includes costs related to the William Hill Acquisition, the Merger, various contract or license termination exit costs, professional services for
integration activities and non-cash changes in equity method investments partially offset by gains resulting from insurance proceeds received in excess of the respective carrying value of the
assets damaged at Lake Charles by Hurricane Laura.
Results of operations for Horseshoe Baltimore for periods prior to the consolidation resulting from the Company’s increase in its ownership interest on August 26, 2021, William Hill prior
to its acquisition on April 22, 2021, and Former Caesars prior to the Merger on July 20,2020 are added to Adjusted EBITDA. The results of operations for certain properties divested prior
to divestiture are subtracted from Adjusted EBITDA. See Item 7 - Overview above. Such figures are based on unaudited internal financial statements and have not been reviewed by the
Company’s auditors for the periods presented. The additional financial information is included to enable the comparison of current results with results of prior periods.
Liquidity and Capital Resources
We are a holding company and our only significant assets are ownership interests in our subsidiaries. Our ability to fund our obligations depends on
existing cash on hand, contracted asset sales, cash flows from our subsidiaries and our ability to raise capital. Our primary sources of liquidity and capital
resources are existing cash on hand, cash flows from operations, availability of borrowings under our revolving credit facilities, proceeds from the issuance
of debt and equity securities and proceeds from completed asset sales. Our cash requirements may fluctuate significantly depending on our decisions with
respect to business acquisitions or divestitures and strategic capital and marketing investments.
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46
As of December 31, 2022, our cash on hand and revolving borrowing capacity were as follows:
(In millions)
Cash and cash equivalents
Revolver capacity
Revolver capacity committed to letters of credit
Revolver capacity committed as regulatory requirement
(a)
Total
December 31, 2022
1,038
2,220
(82)
(48)
3,128
$
$
___________________
(a)
Revolver capacity includes $2.25 billion under our CEI Revolving Credit Facility, as amended, maturing in January 2028, less $40 million reserved for specific purposes, and $10 million
under our Baltimore Revolving Credit Facility, as amended maturing in July 2023.
During the year ended December 31, 2022, our operating activities generated operating cash inflows of $1.0 billion, as compared to operating cash inflows
of $1.2 billion during the year ended December 31, 2021 due to the results of operations described above.
On September 30, 2020, we announced that we had reached an agreement with William Hill PLC on the terms of a recommended cash acquisition pursuant
to which we would acquire the entire issued and to be issued share capital (other than shares owned by us or held in treasury) of William Hill PLC, in an
all-cash transaction. On the acquisition date, our intent was to divest William Hill International, which was held for sale as of the date of the closing of the
William Hill Acquisition with such operations reflected within discontinued operations. On April 22, 2021, we completed the acquisition of William Hill
PLC for £2.9 billion, or approximately $3.9 billion.
On September 8, 2021, we entered into an agreement to sell William Hill International to 888 Holdings Plc for approximately £2.2 billion. In order to
manage the risk of changes in the GBP denominated sales price and expected proceeds, the Company entered into foreign exchange forward contracts. On
April 7, 2022, we amended the agreement to sell William Hill International to 888 Holdings Plc for a revised enterprise value of approximately £2.0 billion.
The amended agreement reflected a £250 million reduction in consideration payable at closing and up to £100 million as deferred consideration to be paid
to us, subject to 888 Holdings Plc meeting certain 2023 financial targets. During the year ended December 31, 2022, the Company recorded impairments to
assets held for sale of $503 million within discontinued operations based on the revised and final sales prices.
On July 1, 2022, we completed the sale of William Hill International to 888 Holdings Plc and outstanding borrowings under the Bridge Credit Agreement
were immediately repaid. After the repayment of the Bridge Credit Agreement, other permitted leakage, and the settlement of related forward contracts, we
received net proceeds of $730 million. Including open market repurchases and repayments, we utilized all $730 million to reduce our outstanding debt.
On October 5, 2022, we entered into a third amendment to the CEI Credit Agreement (the “Third Amendment”) which provided for an aggregate principal
amount of $750 million senior secured term loan (the “CEI Term Loan A” and together with the CEI Revolving Credit Facility, as so amended, the
“Amended CEI Revolving Credit Facility,” the “Senior Credit Facilities”) as a new term loan under the credit agreement, increased the aggregate principal
amount of the CEI Revolving Credit Facility to $2.25 billion and made certain other amendments to the credit agreement. Both the Amended CEI
Revolving Credit Facility and the CEI Term Loan A mature on January 31, 2028, subject to a springing maturity in the event our certain other long-term
debt is not extended or repaid. The Amended CEI Revolving Credit Facility includes a letter of credit sub-facility of $388 million. Concurrently with the
closing of the Senior Credit Facilities, we terminated the CRC Revolving Credit Facility and utilized the entire proceeds of the CEI Term Loan A of
$750 million to make a partial prepayment of the outstanding principal balance of the CRC Term Loan.
On February 6, 2023, the Company issued $2.0 billion in aggregate principal amount of 7.00% senior secured notes (the “CEI Senior Secured Notes due
2030”) pursuant to an indenture by and among the Company, the subsidiary guarantors party thereto from time to time, U.S. Bank Trust Company, National
Association, as trustee, and U.S. Bank National Association, as collateral agent. The CEI Senior Secured Notes due 2030 rank equally with all existing and
future first-priority lien obligations of the Company and the subsidiary guarantors. The CEI Senior Secured Notes due 2030 will mature in February 2030,
with interest paid semi-annually on February 15 and August 15 of each year, commencing August 15, 2023.
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47
Additionally, on February 6, 2023, Caesars entered into an Incremental Assumption Agreement No. 2 pursuant to which the Company incurred a new
senior secured term loan facility in an aggregate principal amount of $2.5 billion (the “CEI Term Loan B”) as a new term loan under the CEI Credit
Agreement. The Term Loan B requires scheduled quarterly amortization payments in amounts equal to 0.25% of the original aggregate principal amount of
the CEI Term Loan B, with the balance payable at maturity. Borrowings under the CEI Term Loan B bear interest at a rate equal to, at the Company’s
option, either (a) a forward-looking term rate based on the secured overnight financing rate for the applicable interest period plus an adjustment of 0.10%
per annum (“Adjusted Term SOFR”), subject to a floor of 0.50% or (b) a base rate (the “Base Rate”) determined by reference to the highest of (i) the rate of
interest per annum last quoted by The Wall Street Journal as the “Prime Rate” in the United States, (ii) the federal funds rate plus 0.50% per annum and (iii)
the one-month Adjusted Term SOFR plus 1.00% per annum, in each case, plus an applicable margin. Such applicable margin is 3.25% per annum in the
case of any Adjusted Term SOFR loan and 2.25% per annum in the case of any Base Rate loan, subject to one 0.25% step-down based on the Company’s
net total leverage ratio. The CEI Term Loan B was issued at a price of 99.0% of the principal amount and will mature in February 2030.
The net proceeds from the issuance of the CEI Senior Secured Notes due 2030 and the net proceeds from the CEI Term Loan B were used to repay the
outstanding principal balance, including accrued and unpaid interest, of both the CRC Term Loan and the CRC Incremental Term Loan. The remaining net
proceeds were to be used to pay related fees, or for general corporate use. Upon the termination of the CRC Term Loan and the CRC Incremental Term
Loan, the Company recorded a loss on extinguishment of debt of approximately $200 million.
We expect that our primary capital requirements going forward will relate to the expansion and maintenance of our properties, taxes, servicing our
outstanding indebtedness, and rent payments under our GLPI Master Lease, the VICI Leases and other leases. We make capital expenditures and perform
continuing refurbishment and maintenance at our properties to maintain our quality standards. Our capital expenditure requirements for 2023 include
expansion projects, the rebranding of certain properties, implementation and migration of states to our Liberty platform and continued investment into new
markets with our Caesars Sportsbook and iGaming applications in our Caesars Digital segment. In addition, we may, from time to time, seek to repurchase
our outstanding indebtedness. Any such purchases may be funded by existing cash balances or the incurrence of debt. The amount and timing of any
repurchase will be based on business and market conditions, capital availability, compliance with debt covenants and other considerations.
We continue to expand into new markets with projects such as our partnership with the Eastern Band of Cherokee Indians to build and develop Caesars
Virginia which is estimated to open in late 2024. The development has a budget of $650 million and is expected to include a premier destination resort
casino along with a 500-room hotel and world-class casino floor including 1,300 slot machines, 85 live table games, a WSOP Poker Room, a Caesars
Sportsbook, a live entertainment theater and 40,000 square feet of meeting and convention space. Additionally, Caesars announced plans to expand into
Nebraska with the development of a Harrah’s casino and racetrack. The casino development is expected to feature a new one-mile horse racing surface, a
40,000-square-foot-casino and sportsbook with more than 400 slot machines and 20 table games, as well as a restaurant and retail space. During the
construction of Caesars Virginia and Harrah’s in Nebraska, we anticipate opening and operating temporary facilities during 2023 while the permanent
facilities are completed.
In 2020, we funded $400 million to escrow as of the closing of the Merger and have begun to utilize those funds in accordance with a three year capital
expenditure plan in the state of New Jersey. This amount is currently included in restricted cash in Other assets, net. As of December 31, 2022, our
restricted cash balance in the escrow account was $118 million for future capital expenditures in New Jersey.
As a condition of the extension of the casino operating contract and ground lease for Harrah’s New Orleans, we are also required to make a capital
investment of $325 million in Harrah’s New Orleans by July 15, 2024. The capital investment is expected to include a renovation and full interior and
exterior redesign, updated casino floor, new culinary experiences and a new 340-room hotel tower as we are also in the process of rebranding the property
as Caesars New Orleans. The project has a current capital plan of approximately $430 million as of December 31, 2022. Total capital expenditures have
been $112 million since the project began.
On August 27, 2020, Hurricane Laura made landfall on Lake Charles as a Category 4 storm, severely damaged the Isle of Capri Casino Hotel Lake Charles.
During the year ended December 31, 2022, we reached a final settlement agreement with the insurance carriers for a total amount of $128 million, before
our insurance deductible of $25 million. We have received a total of $103 million related to damaged fixed assets, remediation costs and business
interruption. The construction of our new land-based casino Horseshoe Lake Charles was completed and reopened in December 2022.
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48
Cash spent for capital expenditures totaled $952 million, $520 million, $164 million for the years ended December 31, 2022, 2021 and 2020, respectively,
related to our growth, renovation, maintenance, and other capital projects. The following table summarizes our estimates for 2023 capital expenditures:
(In millions)
Atlantic City
Indiana racing operations
Total estimated capital expenditures from restricted cash
Growth and renovation projects
Caesars Digital
Maintenance projects
Total estimated capital expenditures from unrestricted cash
Caesars Virginia
(a)
Total
$
$
Low
High
118 $
—
118
445
105
250
800
200
118
10
128
465
115
310
890
285
1,118 $
1,303
___________________
(a)
We expect to receive approximately $200 million from the combination of our temporary casino operations and contributions from our joint venture partners to support the development of
Caesars Virginia.
A significant portion of our liquidity needs are for debt service and payments associated with our leases. Our estimated debt service (including principal
and interest) is approximately $1.0 billion for 2023. We also lease certain real property assets from third parties, including VICI and GLPI. Our leases with
VICI are subject to annual escalations based on the Consumer Price Index (“CPI”). The increase in the CPI over the prior year resulted in an increase in our
annual lease payments to VICI, which took effect in November 2022. We estimate our lease payments to VICI and GLPI to be approximately $1.3 billion
for 2023.
We have periodically divested assets to raise capital or, in previous cases, to comply with conditions, terms, obligations or restrictions imposed by antitrust,
gaming and other regulatory entities. In addition to the divestiture of William Hill International, as described above, on May 5, 2022, we consummated the
sale of the equity interests of Baton Rouge to CQ Holding Company, Inc.
On April 6, 2021, the Company consummated the sale of the equity interests of MontBleu for $15 million. The purchase price was collected in April 2022.
If the agreed upon selling price for future divestitures does not exceed the carrying value of the assets, we may be required to record additional impairment
charges in future periods which may be material.
We expect that our current liquidity, cash flows from operations, availability of borrowings under committed credit facilities and proceeds from the
announced asset sales will be sufficient to fund our operations, capital requirements and service our outstanding indebtedness for the next twelve months.
Debt and Master Lease Covenant Compliance
The Senior Credit Facilities, the Baltimore Term Loan, the Baltimore Revolving Credit Facility and the indentures related to the CEI Senior Secured Notes,
the CEI Senior Notes due 2027, the CRC Senior Secured Notes and the CEI Senior Notes due 2029 contain covenants which are standard and customary
for these types of agreements. These include negative covenants, which, subject to certain exceptions and baskets, limit our ability to (among other items)
incur additional indebtedness, make investments, make restricted payments, including dividends, grant liens, sell assets and make acquisitions.
The Amended CEI Revolving Credit Facility and the CEI Term Loan A include a maximum net total leverage ratio financial covenant of 7.25:1 until
December 31, 2024 and 6.50:1 from and after December 31, 2024. In addition, the Amended CEI Revolving Credit Facility and the CEI Term Loan A
include a minimum fixed charge coverage ratio financial covenant of 1.75:1 until December 31, 2024 and 2.00:1 from and after December 31, 2024. From
and after the repayment of the CEI Term Loan A, the financial covenants applicable to the Amended CEI Revolving Credit Facility will be tested solely to
the extent that certain testing conditions are satisfied. The Baltimore Revolving Credit Facility includes a net senior secured leverage ratio financial
covenant of 5.0:1. Failure to comply with such covenants could result in an acceleration of the maturity of indebtedness outstanding under the relevant debt
document.
The GLPI Leases and VICI Leases contain certain covenants requiring minimum capital expenditures based on a percentage of net revenues along with
maintaining certain financial ratios.
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As of December 31, 2022, we were in compliance with all of the applicable financial covenants described above.
Share Repurchase Program
On November 8, 2018, our Board of Directors authorized a $150 million common stock repurchase program (the “Share Repurchase Program”) pursuant to
which we may, from time to time, repurchase shares of common stock on the open market (either with or without a 10b5-1 plan) or through privately
negotiated transactions. The Share Repurchase Program has no time limit and may be suspended or discontinued at any time without notice. There is no
minimum number of shares of common stock that we are required to repurchase under the Share Repurchase Program.
As of December 31, 2022, we have acquired 223,823 shares of common stock under the program at an aggregate value of $9 million and an average of
$40.80 per share. No shares were repurchased during the years ended December 31, 2022 or 2021.
Debt Obligations and Leases
Baltimore Term Loan and Baltimore Revolving Credit Facility
As a result of our increased ownership interest in Horseshoe Baltimore, we began to consolidate the aggregate principal amount of Horseshoe Baltimore’s
senior secured term loan facility (the “Baltimore Term Loan”) and amount outstanding, if any, under Horseshoe Baltimore’s senior secured revolving credit
facility (the “Baltimore Revolving Credit Facility”). The Baltimore Term Loan matures in July 2024 and is subject to a variable rate of interest calculated
as LIBOR plus 4.00%. The Baltimore Revolving Credit Facility has borrowing capacity of up to $10 million, subject to a variable rate of interest calculated
as Term SOFR plus 4.00% subject to one 0.25% step-down based on senior secured leverage ratio, the ratio of first lien senior secured net debt to Adjusted
EBITDA. On June 24, 2022, we entered into an amendment related to the Baltimore Revolving Credit Facility to extend the maturity date to July 7, 2023.
As of December 31, 2022, there was $10 million of available borrowing capacity under the Baltimore Revolving Credit Facility. On November 14, 2022,
we made partial prepayment of $10 million of the outstanding principal balance of the Baltimore Term Loan.
CRC Term Loans and CRC Revolving Credit Facility
The CRC Term Loan, the CRC Incremental Term Loan and the CRC Revolving Credit Facility were subject to the terms described below prior to
termination or repayment. The CRC Revolving Credit Facility was terminated in October 2022 and on February 6, 2023, the Company repaid the CRC
Term Loan and the CRC Incremental Term Loan with proceeds from a new CEI Term Loan B and new CEI Senior Secured Notes, both due 2030. See
“Subsequent Amendment to the CEI Credit Agreement and issuance of New Senior Secured Notes” below.
CRC was party to a credit agreement, dated as of December 22, 2017 (as amended, the “CRC Credit Agreement”), which provided for a $1.0 billion five-
year revolving credit facility (the “CRC Revolving Credit Facility”) an initial $4.7 billion seven-year senior secured term loan (the “CRC Term Loan”), and
an incremental $1.8 billion five-year senior secured term loan that was incurred in connection with the Merger (the “CRC Incremental Term Loan”).
The CRC Term Loan had a maturity date in December 2024 and the CRC Incremental Term Loan had a maturity date in July 2025. The CRC Term Loan
and the CRC Incremental Term Loan required scheduled quarterly principal payments in amounts equal to 0.25% of the original aggregate principal
amount, with the balances due at maturity. The CRC Credit Agreement also included customary voluntary and mandatory prepayment provisions, subject
to certain exceptions.
The CRC Revolving Credit Facility contained a maturity date in December 2022 and included a $400 million letter of credit sub-facility.
Borrowings under the CRC Credit Agreement were subject to interest at a rate equal to either (a) LIBOR adjusted for certain additional costs, subject to a
floor of 0% or (b) a base rate determined by reference to the highest of (i) the federal funds rate plus 0.50%, (ii) the prime rate as determined by Credit
Suisse AG, Cayman Islands Branch, as administrative agent under the CRC Credit Agreement and (iii) the one-month adjusted LIBOR rate plus 1.00%, in
each case plus an applicable margin. Such applicable margin shall be (a) with respect to the CRC Term Loan, 2.75% per annum in the case of any LIBOR
loan or 1.75% per annum in the case of any base rate loan, and (b) with respect to the CRC Incremental Term Loan, 3.50% per annum in the case of any
LIBOR loan or 2.50% in the case of any base rate loan. The CRC Term Loan and the CRC Incremental Term Loan were LIBOR based loans as of
December 31, 2022.
During the year ended December 31, 2022, the Company utilized and fully repaid borrowings on the CRC Revolving Credit Facility, prior to its
termination. Additionally, the Company made several partial prepayments of outstanding principal of the CRC Term Loan utilizing operating cash flows
totaling $300 million, excluding the prepayments resulting from the proceeds of
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the CEI Term Loan A described below, and recognized a related $16 million loss on the early extinguishment of debt during the year ended December 31,
2022.
Following the closing of the sale of William Hill International, we utilized the proceeds from the sale, as well as cash on hand to make partial prepayments
totaling $755 million of the outstanding principal of the CRC Incremental Term Loan and recognized a $27 million loss on the early extinguishment of debt
during the year ended December 31, 2022.
On October 5, 2022, in connection with the Third Amendment (as defined below) to the CEI Credit Agreement, we utilized the entire proceeds of a new
$750 million CEI Term Loan A (as defined below) to make a partial prepayment of the outstanding principal of the CRC Term Loan, as well as terminate
the CRC Revolving Credit Facility. As a result of the partial prepayment, we recognized a $41 million loss on the early extinguishment of debt. See below.
CEI Term Loan A and CEI Revolving Credit Facility
CEI is party to a credit agreement, dated as of July 20, 2020, with JPMorgan Chase Bank, N.A., as administrative agent, U.S. Bank National Association,
as collateral agent, and certain banks and other financial institutions and lenders party thereto (the “CEI Credit Agreement”) which provided for a five-year
CEI Revolving Credit Facility in an aggregate principal amount of $1.2 billion (the “CEI Revolving Credit Facility”). The CEI Revolving Credit Facility
contained reserves of $190 million which are available only for certain permitted uses. On May 23, 2022, the Company obtained approval for a reduction
of $150 million in required reserves. Prior to the amendment described below, the CEI Revolving Credit Facility was scheduled to mature in July 2025 and
included a letter of credit sub-facility of $250 million.
Prior to the Third Amendment (as defined below) of the CEI Credit Agreement on October 5, 2022, the interest rate per annum applicable under the CEI
Revolving Credit Facility, at the Company’s option is either (a) LIBOR adjusted for certain additional costs, subject to a floor of 0% or (b) a base rate
determined by reference to the highest of (i) the federal funds rate plus 0.50%, (ii) rate of interest per annum last quoted by The Wall Street Journal as the
“Prime Rate” in the United States and (iii) the one-month adjusted LIBOR rate plus 1.00%, in each case plus an applicable margin. Such applicable margin
was 3.25% per annum in the case of any LIBOR loan and 2.25% per annum in the case of any base rate loan, subject to three 0.25% step-downs based on
the Company’s net total leverage ratio.
Additionally, prior to the Third Amendment (as defined below) of the CEI Credit Agreement, we were required to pay a commitment fee in respect of any
unused commitments under the CEI Revolving Credit Facility in the amount of 0.50% per annum, subject to a step-down to 0.375% per annum based upon
the Company’s net total leverage ratio. We were also required to pay customary agency fees as well as letter of credit participation fees computed at a rate
per annum equal to the applicable margin for LIBOR borrowings on the dollar equivalent of the daily stated amount of outstanding letters of credit, plus
such letter of credit issuer’s customary documentary and processing fees and charges and a fronting fee in an amount equal to 0.125% per annum of the
daily stated amount of such letter of credit.
On October 5, 2022, Caesars entered into a Third Amendment to the CEI Credit Agreement pursuant to which the Company (a) incurred a senior secured
term loan in an aggregate principal amount of $750 million (the “CEI Term Loan A”) as a new term loan under the credit agreement, (b) amended and
extended the CEI Revolving Credit Facility under the CEI Credit Agreement (the CEI Revolving Credit Facility, as so amended, the “Amended CEI
Revolving Credit Facility” and, together with the CEI Term Loan A, the “Senior Credit Facilities”), (c) increased the aggregate principal amount of the CEI
Revolving Credit Facility to $2.25 billion, and (d) made certain other amendments to the CEI Credit Agreement. Both the Amended CEI Revolving Credit
Facility and the new CEI Term Loan A mature on January 31, 2028, subject to a springing maturity in the event certain other long-term debt of Caesars is
not extended or repaid. The Amended CEI Revolving Credit Facility includes a letter of credit sub-facility of $388 million. The CEI Term Loan A requires
scheduled quarterly payments in amounts equal to 1.25% of the original aggregate principal amount of the CEI Term Loan A, with the balance payable at
maturity. The Company may make voluntary prepayments of the CEI Term Loan A at any time prior to maturity at par.
Borrowings under the Senior Credit Facilities bear interest at a rate equal to, at the Company’s option, either (a) a forward-looking term rate based on the
secured overnight financing rate (“SOFR”) for the applicable interest period plus an adjustment of 0.10% per annum (“Adjusted Term SOFR”), subject to a
floor of 0% or (b) a base rate (the “Base Rate”) determined by reference to the highest of (i) the rate of interest per annum last quoted by The Wall Street
Journal as the “Prime Rate” in the United States, (ii) the federal funds rate plus 0.50% per annum and (iii) the one-month Adjusted Term SOFR plus 1.00%
per annum, in each case, plus an applicable margin. Such applicable margin is 2.25% per annum in the case of any Adjusted Term SOFR loan and 1.25%
per annum in the case of any Base Rate loan, subject to three 0.25% step-downs based on the Company’s net total leverage ratio. In addition, on a quarterly
basis, the Company is required to pay each lender under the Amended CEI Revolving Credit Facility a commitment fee in respect of any unused
commitments under the Amended CEI Revolving Credit Facility in the amount of 0.35% per annum of the principal amount of the unused commitments of
such lender, subject to three 0.05% step-downs based on the Company’s net total leverage ratio.
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As a December 31, 2022, we had $2.1 billion of available borrowing capacity under the Amended CEI Revolving Credit Facility, after consideration of $82
million in outstanding letters of credit, $48 million committed for regulatory purposes and the reserves described above.
Subsequent Amendment to the CEI Credit Agreement and issuance of New Senior Secured Notes
On February 6, 2023, the Company issued new $2.0 billion in aggregate principal amount of 7.00% senior secured notes (the “CEI Senior Secured Notes
due 2030”) pursuant to an indenture by and among the Company, the subsidiary guarantors party thereto from time to time, U.S. Bank Trust Company,
National Association, as trustee, and U.S. Bank National Association, as collateral agent. The CEI Senior Secured Notes due 2030 rank equally with all
existing and future first-priority lien obligations of the Company and the subsidiary guarantors. The CEI Senior Secured Notes due 2030 will mature in
February 2030, with interest paid semi-annually on February 15 and August 15 of each year, commencing August 15, 2023.
Additionally, on February 6, 2023, Caesars entered into an Incremental Assumption Agreement No. 2 pursuant to which the Company incurred a new
senior secured term loan facility in an aggregate principal amount of $2.5 billion (the “CEI Term Loan B”) as a new term loan under the CEI Credit
Agreement. The CEI Term Loan B was issued at a price of 99.0% of the principal amount and will mature in February 2030. Interest under the CEI Term
Loan B is based on the forward looking SOFR plus an adjustment of 0.10%, subject to a floor of 0.50%, plus an applicable margin of 3.25% which is
subject to one 0.25% step-down based on the Company’s net total leverage ratio.
The net proceeds from the issuance of the CEI Senior Secured Notes due 2030 and the net proceeds from the CEI Term Loan B, were used to repay the
outstanding principal balance, including accrued and unpaid interest, of both the CRC Term Loan and the CRC Incremental Term Loan. The remaining net
proceeds were to be used to pay related fees, or for general corporate use. Upon the termination of the CRC Term Loan and the CRC Incremental Term
Loan, the Company recorded a loss on extinguishment of debt of approximately $200 million.
CRC Senior Secured Notes due 2025
On July 6, 2020, Colt Merger Sub, Inc. (the “Escrow Issuer”) issued $1.0 billion in aggregate principal amount of 5.75% Senior Secured Notes due 2025
pursuant to an indenture, dated July 6, 2020 (the “CRC Senior Secured Notes”), by and among the Escrow Issuer, U.S. Bank National Association, as
trustee and Credit Suisse AG, Cayman Islands Branch, as collateral agent. In connection with the consummation of the Merger, CRC assumed the rights
and obligations under the CRC Senior Secured Notes and the indenture governing such notes. The CRC Senior Secured Notes rank equally with all existing
and future first priority lien obligations of CRC, CRC Finco, Inc. and the subsidiary guarantors. The CRC Senior Secured Notes will mature on July 1,
2025 with interest payable semi-annually in cash in arrears on January 1 and July 1 of each year. During the year ended December 31, 2022, we purchased
a total of $11 million in principal amount of the CRC Senior Secured Notes.
CEI Senior Secured Notes due 2025
On July 6, 2020, the Escrow Issuer issued $3.4 billion in aggregate principal amount of 6.25% Senior Secured Notes due 2025 pursuant to an indenture
dated July 6, 2020 (the “CEI Senior Secured Notes”), by and among the Escrow Issuer, U.S. Bank National Association, as trustee, and U.S. Bank National
Association, as collateral agent. The Company assumed the rights and obligations under the CEI Senior Secured Notes and the indenture governing such
notes on July 20, 2020. The CEI Senior Secured Notes rank equally with all existing and future first-priority lien obligations of the Company and the
subsidiary guarantors. The CEI Senior Secured Notes will mature on July 1, 2025 with interest payable semi-annually in cash in arrears on January 1 and
July 1 of each year.
Convention Center Mortgage Loan
On September 18, 2020, we entered into a loan agreement with VICI to borrow a 5-year, $400 million Forum Convention Center mortgage loan (the
“Mortgage Loan”). The Mortgage Loan bears interest at a rate of, initially, 7.7% per annum, which escalates annually on the anniversary of the closing date
to a maximum interest rate of 8.3% per annum.
CEI Senior Notes due 2027
On July 6, 2020, the Escrow Issuer issued $1.8 billion in aggregate principal amount of 8.125% Senior Notes due 2027 pursuant to an indenture, dated July
6, 2020 (the “CEI Senior Notes due 2027”), by and between the Escrow Issuer and U.S. Bank National Association, as trustee. We assumed the rights and
obligations under the CEI Senior Notes due 2027 and the indenture governing such notes on July 20, 2020. The CEI Senior Notes due 2027 rank equally
with all existing and future senior unsecured indebtedness of the Company and the subsidiary guarantors. The CEI Senior Notes due 2027 will mature on
July 1, 2027 with interest payable semi-annually in cash in arrears on January 1 and July 1 of each year. During the year ended December 31, 2022, we
purchased a total of $89 million in principal amount of the CEI Senior Notes due 2027.
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CEI Senior Notes due 2029
On September 24, 2021, we issued $1.2 billion in aggregate principal amount of 4.625% Senior Notes due 2029 (the “CEI Senior Notes due 2029”)
pursuant to an indenture dated as of September 24, 2021 between the Company and U.S. Bank National Association, as Trustee. The CEI Senior Notes due
2029 rank equally with all existing and future senior unsecured indebtedness of the Company and the subsidiary guarantors. The CEI Senior Notes due
2029 will mature on October 15, 2029 with interest payable on April 15 and October 15 of each year, which began on April 15, 2022.
VICI Leases
CEI leases certain real property assets from VICI under the following agreements: (i) for a portfolio of properties located throughout the United States (the
“Regional Lease”), (ii) for Caesars Palace Las Vegas and Harrah’s Las Vegas (the “Las Vegas Lease”), and (iii) for Harrah’s Joliet Hotel & Casino (the
“Joliet Lease”). The lease agreements, inclusive of all amendments, include (i) a 15-year initial term with four five-year renewal options, (ii) annual fixed
rent payments of $1.1 billion, subject to annual escalation provisions based on the CPI and a 2% floor commencing in lease year two of the initial term and
(iii) a variable element based on net revenues of the underlying leased properties, commencing in lease year eight of the initial term.
The Regional Lease includes a put-call option whereby the Company may require VICI to purchase and lease back (as lessor) or whereby VICI may require
the Company to sell to VICI and lease back (as lessee) the real estate components of the gaming and racetrack facilities of Harrah’s Hoosier Park Racing &
Casino and Indiana Grand (“Centaur properties”). Election to exercise the option by either party must be made during the election period beginning January
1, 2022 and ending December 31, 2024. Upon either party exercising their option, the Centaur properties would be sold at a price in accordance with the
agreement and leased back to CEI in accordance to the pre-existing terms of the Regional Lease.
Our VICI Leases are accounted for as a financing obligation and totaled $11.3 billion as of December 31, 2022. See Note 10 to our Financial Statements for
additional information about our VICI Leases and related matters.
GLPI Leases
The GLPI Master Lease, encompassing a portfolio of properties within the United States, provides for the lease of land, buildings, structures and other
improvements on the land (including barges and riverboats), easements and similar appurtenances to the land and improvements relating to the operation of
the leased properties. The GLPI Master Lease, inclusive of all amendments, provides for (i) an initial term of 20 years (through September 2038), with four
five-year renewals at the Company’s option, (ii) annual land and building base rent of $24 million and $63 million, (iii) escalating provisions of building
base rent equal to 101.25% of the rent for the preceding year for lease years five and six, 101.75% for lease years seven and eight and 102% for each lease
year thereafter and (iv) relief from the operating, capital expenditure and financial covenants in the event of involuntary closures.
The Lumière Lease was entered into by the Company and GLPI, whereby the Company sold the real estate underlying Horseshoe St. Louis, formerly
known as Lumière, to GLPI and leased back the property under a long-term financing obligation. The Lumière Lease, inclusive of all amendments,
provides for (i) an initial term commencing on September 29, 2020 and ending on October 31, 2033, (ii) four five-year renewal options, (iii) annual rent
payments of $23 million, (iv) escalation provisions commencing in lease year two equal to 101.25% of the rent for the preceding year for lease years two
through five, 101.75% for lease years six and seven and 102% for each lease year thereafter, (v) maintaining a minimum of 1.20:1 adjusted revenue to rent
ratio and (vi) certain relief under the financial covenant in the event of involuntary closures.
The GLPI Leases are accounted for as financing obligations and totaled $1.2 billion as of December 31, 2022. See Note 10 to our Financial Statements for
additional information about our GLPI Leases and related matters.
Other Liquidity Matters
We are faced with certain contingencies, from time to time, involving litigation, claims, assessments, environmental remediation or compliance. These
commitments and contingencies are discussed in greater detail in “Part I, Item 3. Legal Proceedings” and Note 11 to our Financial Statements, both of
which are included elsewhere in this Annual Report on Form 10-K. In addition, new competition among retail and online operations may have a material
adverse effect on our revenues and could have a similar adverse effect on our liquidity. See “Part I, Item 1A. Risk Factors—Risks Related to Our Business”
which is included elsewhere in this Annual Report on Form 10-K.
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Critical Accounting Policies and Estimates
We prepare our financial statements in conformity with GAAP. In preparing our financial statements, we have made our best estimates and judgments of
the amounts and disclosures included in the financial statements, giving regard to materiality. When more than one accounting principle, or method of its
application, is generally accepted, we select the principle or method that we consider to be the most appropriate under specific circumstances. Application
of these accounting principles requires us to make estimates about the future resolution of existing uncertainties. Certain of our accounting policies,
including those in connection with business combinations, income taxes, goodwill and indefinite lived intangible assets, long-lived assets, allowance for
doubtful accounts related to certain gaming receivables, self-insurance reserves, and litigation, claims and assessments require that we apply significant
judgment in defining the appropriate assumptions for calculating financial estimates.
We consider accounting estimates to be critical accounting policies when:
•
•
the estimates involve matters that are highly uncertain at the time the accounting estimate is made; and
different estimates or changes to estimates could have a material impact on the reported financial position, changes in financial position, or results
of operations.
By their nature, these judgments and estimates are subject to an inherent degree of uncertainty. Our judgments and estimates are based on our historical
experience, terms of existing contracts, observance of trends in the industry, information gathered from customer behavior, and information available from
other outside sources, as appropriate. Due to the inherent uncertainty involving judgments and estimates, actual results may differ from those estimates.
Our most critical accounting estimates and assumptions are in the following areas:
Business Combinations
We applied the provisions of Accounting Standards Codification (“ASC”) Topic 805, “Business Combinations,” in the accounting for our acquisitions of
Former Caesars, William Hill PLC, and our additional interest in Horseshoe Baltimore. It required us to recognize the assets acquired and the liabilities
assumed at their acquisition date fair values, which were determined using market, income, and cost approaches, or a combination. Goodwill as of the
respective acquisition dates was measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired
and the liabilities assumed. Goodwill is generally the result of expected synergies of the combined company or an assembled workforce.
Indefinite-lived intangible assets acquired primarily include trademarks, Caesars Rewards acquired in the Merger and gaming rights. The fair value for
these intangible assets was determined using either the relief from royalty method and excess earnings method under the income approach or a replacement
cost market approach.
Acquired trademarks, developed technology and Caesars Rewards were valued using the relief from royalty method, which presumes that without
ownership of such trademarks, technology, or loyalty program, we would have to make a stream of payments to a third party in return for the right to use
their name, technology, or program. By virtue of this asset, we avoid any such payments and record the related intangible value of the Company’s
ownership of the brand name, technology, or program.
Customer relationships were valued using the cost approach and the incremental cash flow method under the income approach. The incremental cash flow
method compares the prospective cash flows with and without the customer relationships in place to estimate the fair value of the customer relationships,
with the fair value assumed to be equal to the discounted cash flows of the business that would be lost if the customer relationships were not in place and
needed to be replaced.
Gaming rights include our gaming licenses in various jurisdictions and may have indefinite lives or an estimated useful life. The fair value of the gaming
rights was determined using the excess earnings or replacement cost methodology, based on whether the license resides in gaming jurisdictions where
competition is limited to a specified number of licensed gaming operators. The excess earnings methodology is an income approach that estimates the
projected cash flows of the business attributable to the gaming license intangible asset, which is net of charges for the use of other identifiable assets of the
business including working capital, fixed assets and other intangible assets. The replacement cost of the gaming license was used as an indicator of fair
value.
Trade receivables and payables and other current and noncurrent assets and liabilities were valued at the existing carrying values as they represented the
estimated fair value of those items at the acquisition date. Assets and liabilities held for sale were recorded at fair value, less costs to sell, based on the
agreements reached as of the acquisition date, or an income approach.
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The fair value of the financing obligations was calculated as the net present value of both the fixed base rent payments and the forecasted variable
payments plus the expected residual value of the land and building returned at the end of the expected usage period.
Reacquired rights were valued using the excess earnings method that reflects the present value of the future profit William Hill expected to earn over the
remaining term of the contract, adjusted for returns of other assets that contribute to the generation of this profit, such as working capital, fixed assets and
other intangible assets. The forecasted profit used within the valuation was adjusted for the settlement of the preexisting relationship as a component of the
purchase consideration.
Fair value of land was determined using the sales comparable approach. The market data is then adjusted for any significant differences, to the extent
known, between the identified comparable sites and the site being valued. The value of building and site improvements was estimated via the income
approach. Other personal property assets such as furniture, gaming and computer equipment, fixtures, computer software, and restaurant equipment were
valued using the cost approach which is based on replacement or reproduction costs of the asset. The cost approach is an estimation of fair value developed
by computing the current cost of replacing a property and subtracting any depreciation resulting from one or more of the following factors: physical
deterioration, functional obsolescence, and/or economic obsolescence.
Assets and liabilities which are designated as held for sale on an acquisition date are also measured at fair value, utilizing similar market, income and cost
approaches described above, based on the underlying asset class held for sale.
Cash flow estimates are significant to many valuations described above and may include forecasts with assumptions regarding factors such as recent and
budgeted operating performance, future growth rates, and the determination of appropriate discount rates to estimate fair value. These inputs involve
significant assumptions including the future effects of COVID-19 as well as the realization of synergies anticipated from a business combination, which
may not be realized as projected. Certain assumptions may be beyond our control.
Income Taxes
We and our subsidiaries file income tax returns with federal, state and foreign jurisdictions. Our income tax returns are subject to examination by the
Internal Revenue Service (“IRS”) and other tax authorities. Positions taken in tax returns are sometimes subject to uncertainty in the tax laws and may not
ultimately be accepted by the IRS or other tax authorities. See Note 17 in the accompanying consolidated financial statements for a discussion of the status
and impact of examinations by tax authorities.
We record income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the expected future tax
consequences of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and
as attributable to operating loss and tax credit carryforwards. We reduce the carrying amounts of deferred tax assets by a valuation allowance if, based on
the available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred
tax assets is assessed periodically based on the “more likely than not” realization threshold. This assessment considers, among other matters, the nature,
frequency, and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, our experience
with operating loss and tax credit carryforwards not expiring unused, and tax planning alternatives.
When there is a recent history of operating losses and negative normalized earnings and a return to operating profitability has not yet been demonstrated,
we cannot rely on projections of future taxable earnings for purposes of assessing recoverability of our deferred tax assets. In such cases, we use systematic
and logical methods to estimate when deferred tax liabilities will reverse and generate taxable income and when deferred tax assets will reverse and
generate tax deductions. Our most significant deferred tax asset relates to the failed sale-leaseback obligation with VICI and GLPI (see Note 10). The
reversal of this deferred tax asset requires judgment and estimates and has a material impact on the determination of the amount of valuation allowance
required.
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As of December 31, 2022, the Company had federal and state net operating loss carryforwards of $1.9 billion and $9.2 billion, respectively and federal
general business tax credit and research tax credit carryforwards of $129 million, which will expire on various dates as follows:
Year of Expiration
(In millions)
2023-2027
2028-2032
2033-2042
Do not expire
Net Operating Losses
Federal
States
Tax Credits
Federal
—
914
589
437
1,940 $
530
1,376
5,030
2,219
9,155 $
$
—
39
90
—
129
As of December 31, 2022, total federal and state deferred tax assets are $4.2 billion of which we believe it is more likely than not that a portion of the
associated benefit will not be realized and, as a result, we have provided for a valuation allowance of $1.8 billion. However, we have recently observed
positive trends in our operating results and if these trends continue, in the foreseeable future we may determine that we will be able to realize a significant
portion of these deferred tax assets. A future reversal of the valuation allowance on our deferred tax assets could result in an income tax benefit of
$0.9 billion to $1.2 billion.
Under the applicable accounting standards, we may recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax
position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial
statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate
settlement. The accounting standards also provide guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim
periods and disclosure requirements for uncertain tax positions.
Goodwill and Other Indefinite-lived Intangible Assets
Assessing goodwill and indefinite-lived intangible assets for impairment is a process that requires significant judgment and involves detailed qualitative
and quantitative business-specific analysis and many individual assumptions which fluctuate between assessments.
We determine the estimated fair value of each reporting unit based on a combination of EBITDA, valuation multiples, and estimated future cash flows
discounted at rates commensurate with the capital structure and cost of capital of comparable market participants, giving appropriate consideration to the
prevailing borrowing rates within the casino industry in general. We also evaluate the aggregate fair value of all of our reporting units and other non-
operating assets in comparison to our aggregate debt and equity market capitalization at the test date. EBITDA multiples and discounted cash flows are
common measures used to value businesses in our industry.
We determine the fair value of our indefinite-lived intangible assets using either the relief from royalty method or the excess earnings method under the
income approach or replacement cost market approach. The determination of fair value of our reporting units and indefinite-lived intangible assets requires
management to make significant assumptions and estimates around the forecasts as well as the selection of discount rates and valuation multiples. Changes
in these estimates could have a significant impact on the fair value of our reporting units, intangible assets and result in potential impairment.
Forecasts and the determination of appropriate discount rates and valuation multiples used to determine the fair value of our reporting units and indefinite-
lived intangible assets involves significant assumptions and estimates. Assumptions include those used to assess future effects of COVID-19 as well as the
realization of synergies anticipated from acquisitions which may not be realized at the projected rate.
We completed our annual impairment tests as of October 1, 2022. The estimated fair values of certain of our indefinite lived intangible assets and reporting
units decreased primarily due to an increase in the related discount rates, which represents the higher required cost of capital as a result of the
macroeconomic environment and projected outlook. Accordingly, we identified one reporting unit with which the estimated fair value of the associated
gaming rights was less than the carrying value and we recorded an impairment of $30 million. In addition, we identified two reporting units with which the
estimated fair value of the respective reporting unit was below the carrying value and we recorded a total impairment of $78 million to goodwill. These
reporting units are all within the Regional segment.
As of October 1, 2022, one reporting unit in the Las Vegas segment and four reporting units in the Regional segment with goodwill totaling $625 million
and $1.1 billion, respectively, had fair values that did not significantly exceed their respective
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56
carrying values. In addition, we identified trademarks totaling $286 million in the Las Vegas segment, $180 million in the Caesars Digital segment, and
gaming rights totaling $173 million in the Regional segment that do not significantly exceed their respective carrying values. The reporting units and
indefinite lived intangible assets with carrying values that do not significantly exceed their estimated fair values are primarily assets acquired in the Merger
when our discount rate was approximately 9.5%. The discount rate used in our annual impairment testing as of October 1, 2022 was approximately 11.5%.
To the extent gaming volumes deteriorate in the near future, discount rates increase significantly, or we do not meet our projected performance, we may
recognize further impairments, and such impairments could be material. The discount rate represents the most sensitive input in our estimates and an
increase of 1% to the discount rate would result in additional impairments of approximately $125 million on the assets that do not significantly exceed their
carrying values. In addition, $468 million of goodwill within our Regional segment is associated with reporting units with zero or negative carrying value.
See Note 7 for additional information.
Long-Lived Assets
We have significant capital invested in our long-lived assets, and judgments are made in determining the estimated useful lives of assets, salvage values to
be assigned to assets, and if or when an asset has been impaired. The accuracy of these estimates affects the amount of depreciation and amortization
expense recognized in our financial results and whether we have a gain or loss on the disposal of an asset. We assign lives to our assets based on our
standard policy, which is established by management as representative of the useful life of each category of asset. We review the carrying value of our long-
lived assets whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows
expected to result from its use and eventual disposition. The factors considered by management in performing this assessment include current operating
results, trends and prospects, planned construction and renovation projects, as well as the effect of obsolescence, demand, competition, and other economic,
legal, and regulatory factors. In estimating expected future cash flows for determining whether an asset is impaired, assets are grouped at the lowest level of
identifiable cash flows, which, for most of our assets, is the individual property. See Note 6 for additional information.
Allowance for Doubtful Accounts - Gaming
We reserve an estimated amount for gaming receivables that may not be collected to reduce the Company’s receivables to their net carrying amount.
Methodologies for estimating the allowance for doubtful accounts range from specific reserves to various percentages applied to aged receivables.
Historical collection rates and reasonable forecasts are considered, as are customer relationships, in determining specific reserves to reflect current expected
credit loss. As with many estimates, management must make judgments about potential actions by third parties in establishing and evaluating our reserves
for allowance for doubtful accounts. As of December 31, 2022, a 5% increase or decrease to the allowance determined based on a percentage of aged
receivables would change the reserve by approximately $15 million.
Self-Insurance Reserves
We are self-insured for various levels of general liability, employee medical insurance coverage and workers’ compensation coverage. Insurance claims and
reserves include accruals of estimated settlements for known claims, as well as accruals of estimates for claims incurred but not yet reported. We utilize
independent consultants to assist management in its determination of estimated insurance liabilities. While the total cost of claims incurred depends on
future developments, in managements’ opinion, recorded reserves are adequate to cover future claims payments. Self-insurance reserves for employee
medical claims, workers’ compensations and general liability claims are included self-insurance claims and reserves within Accrued other liabilities on the
Balance Sheets.
The assumptions, including those related to the COVID-19 public health emergency, utilized by our actuaries are subject to significant uncertainty and if
outcomes differ from these assumptions or events develop or progress in a negative manner, the Company could experience a material adverse effect and
additional liabilities may be recorded in the future.
Litigation, Claims and Assessments
We utilize estimates for litigation, claims and assessments. These estimates are based on our knowledge and experience regarding current and past events,
as well as assumptions about future events. If our assessment of such a matter should change, we may have to change the estimates, which may have an
adverse effect on our financial position, results of operations or cash flows. Actual results could differ from these estimates.
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57
Recently Issued Accounting Pronouncements
For information with respect to recent accounting pronouncements and the impact of these pronouncements on our Financial Statements, see Note 2,
Summary of Significant Accounting Policies – Recently Issued Accounting Pronouncements, in the Notes.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and
commodity prices. We are exposed to changes in interest rates primarily from variable rate long-term debt arrangements.
Interest Rate Risk
As of December 31, 2022, the face value of our long-term debt was $13.1 billion, including variable-rate long-term borrowings of $5.4 billion. No amounts
were outstanding under our revolving credit facilities.
As a result of the Merger, we assumed interest rate swaps to manage the mix of debt between fixed and variable rate instruments. During the year
ended December 31, 2022, we had four interest rate swap agreements to fix the interest rate on $1.3 billion of variable rate debt related to the CRC Credit
Agreement. The interest rate swaps were designated as cash flow hedging instruments. The difference to be paid or received under the terms of the interest
rate swap agreements was accrued as interest rates changed and recognized as an adjustment to interest expense at settlement. The term of the interest rate
swaps ended on December 31, 2022.
We do not purchase or hold any derivative financial instruments for trading purposes.
The table below provides information as of December 31, 2022 about our fixed rate and variable rate financial instruments that are sensitive to changes in
interest rates, including the cash flows associated with amortization and average interest rates. Principal amounts are used to calculate the payments to be
exchanged under the related agreements and average variable rates are based on implied forward rates in the yield curve as of December 31, 2022 and
should not be considered a predictor of actual future interest rates.
(Dollars in millions)
Liabilities
Long-term debt
Fixed rate
Average interest rate
Variable rate
Average interest rate
2023
2024
(a)
Expected Maturity Date
2025
2026
(a)
2027
Thereafter
Total
Fair Value
$
$
$
$
2
4.3 %
106
7.1 %
2
4.3 %
3,688
7.2 %
$
$
4,792
6.3 %
1,005
7.8 %
$
$
$
$
2
4.3 %
38
6.7 %
1,613
8.1 %
38
6.7 %
$
$
1,238
4.6 %
561
6.7 %
$
$
7,649
6.4 %
5,436
7.3 %
$
$
7,298
5,377
____________________
(a)
Maturities of $3.4 billion in 2024 and $1.0 billion in 2025 of variable rate debt were repaid with the net proceeds of the $2.5 billion CEI Term Loan B and the $2.0 billion CEI Senior
Secured Notes due 2030.
As of December 31, 2022, borrowings outstanding under our credit facilities were variable-rate borrowings. Assuming a 100 basis-point increase in LIBOR
and Term SOFR, our annual interest cost would change by $54 million based on gross amounts outstanding at December 31, 2022.
LIBOR was discontinued by lending institutions for new debt agreements and after June 30, 2023 no additional LIBOR rates are expected to be available.
We have variable rate debt instruments which are subject to LIBOR and Term SOFR interest rates plus a reasonable margin. Our CRC Term Loan and CRC
Incremental Term loan are LIBOR based loans as of December 31, 2022. As previously described, subsequent to December 31, 2022 we repaid both our
CRC Term Loan and CRC Incremental Term Loan and our interest rate swaps matured on December 31, 2022.
Foreign Exchange Rate Risks
We entered into several foreign exchange forward contracts with third parties to hedge the risk of fluctuations in the foreign exchange rates between USD
and GBP. During the years ended December 31, 2022 and 2021, we recorded a gain of $73 million and $23 million, respectively, related to forward
contracts, which was recorded in the Other income (loss) on the Statements of Operations. All forward contracts have been settled as of July 1, 2022.
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58
Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF
CAESARS ENTERTAINMENT, INC.
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income (Loss)
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
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59
Page
60
62
63
64
65
66
68
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Caesars Entertainment, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Caesars Entertainment, Inc. and subsidiaries (the “Company”) as of December 31, 2022
and 2021, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flow for each of the three years in
the period ended December 31, 2022, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial
statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022
and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with
accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's
internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 21, 2023, expressed an unqualified opinion on
the Company’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial
statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to
those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or
required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2)
involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating a critical audit matter, providing a separate opinion on the critical audit
matter or on the accounts or disclosures to which it relates.
Goodwill and Indefinite-lived Intangible Assets – Refer to Note 7 to the Financial Statements
Critical Audit Matter Description
The Company reviews goodwill and indefinite-lived intangible assets for impairment at least annually and between annual test dates in certain
circumstances. The Company performs its impairment test by comparing the fair value of each reporting unit with the carrying amount. The Company
determines the estimated fair value of each reporting unit based on a combination of earnings before interest, taxes, depreciation and amortization
(“EBITDA”), valuation multiples, and estimated future cash flows discounted at rates commensurate with the capital structure and cost of capital of
comparable market participants, giving appropriate consideration to the prevailing borrowing rates within the casino industry in general. The Company also
evaluates the aggregate fair value of all the reporting units and other non-operating assets in comparison to its aggregate debt and equity market
capitalization at the test date.
Indefinite-lived intangible assets consist primarily of trademarks, expenditures associated with obtaining racing and gaming licenses, and Caesars Rewards.
The Company uses the Excess Earnings Method and Cost Approach to determine the estimated fair value of gaming rights and uses the relief from royalty
method to determine the estimated fair value of trademarks and Caesars Rewards.
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60
The Company performed its annual impairment assessment as of October 1, 2022. The Company’s goodwill balance was $11,004 million as of December
31, 2022, of which $625 million and $1.1 billion was related to one reporting unit in the Las Vegas segment and four reporting units in the Regional
segment, respectively, which had estimated fair values that did not significantly exceed their respective carrying values.
The Company’s indefinite-lived intangibles balance was $3,654 million as of December 31, 2022, of which trademarks totaling $286 million and
$180 million in the Las Vegas and Caesars Digital segments, respectively, and gaming rights totaling $173 million in the Regional segment, had estimated
fair values that do not significantly exceed their respective carrying values.
The determination of fair value of its reporting units and indefinite-lived intangible assets requires management to make significant assumptions and
estimates around forecasts and the selection of discount rates. Therefore, our audit procedures to evaluate the reasonableness of management’s forecasts
required a higher degree of auditor judgment as well as an increased level of audit effort and the need to use more experienced audit professionals. In
addition, the selection of discount rates involved a higher degree of auditor judgment and subjectivity as well as an increased level of audit effort, including
the involvement of valuation specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management’s forecasts and the selection of discount rates used by management to determine the fair value of the
Company’s reporting units and indefinite-lived intangible assets included the following, among others:
• We tested the effectiveness of the Company’s internal controls over the forecasts and the selection of discount rates.
• We evaluated management’s ability to accurately forecast by comparing actual results to management’s historical forecasts.
• We evaluated the assumptions and estimates included in management’s forecasts by: 1) comparing the forecasts to information included in the
Company’s communications to the Board of Directors, gaming industry reports, and analyst reports for the Company and certain of its peer
companies; 2) conducting inquiries with property management; 3) considering the impact of changes in the competitive and regulatory
environment on management’s projections; 4) assessing the reasonableness of strategic plans incorporated by management into the projections and
5) evaluating management’s estimate of the impact of any related expansion of gaming activities by analyzing historical information.
• With the assistance of our valuation specialists, we evaluated the discount rates selected by management, including assessing the impact of the
uncertainty in the forecasts on the discount rates, testing the market-based source information underlying the selection of the discount rates and the
mathematical accuracy of the discount rate calculations, and developing a range of independent estimates and comparing those to the discount
rates selected by management.
/s/ DELOITTE & TOUCHE LLP
Las Vegas, Nevada
February 21, 2023
We have served as the Company’s auditor since 2020.
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61
CAESARS ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
(Dollars in millions, except par value)
CURRENT ASSETS:
Cash and cash equivalents
Restricted cash
Accounts receivable, net
Inventories
Prepayments and other current assets
Assets held for sale
Total current assets
Investments in and advances to unconsolidated affiliates
Property and equipment, net
Gaming rights and other intangibles, net
Goodwill
Other assets, net
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable
Accrued interest
Accrued other liabilities
Current portion of long-term debt
Liabilities related to assets held for sale
Total current liabilities
Long-term financing obligation
Long-term debt
Deferred income taxes
Other long-term liabilities
Total liabilities
Commitments and contingencies (Note 11)
STOCKHOLDERS' EQUITY:
Preferred stock, $0.00001 par value, 150,000,000 shares authorized, no shares issued and outstanding
Common stock, $0.00001 par value, 500,000,000 shares authorized, 214,671,754 and 213,779,848 issued and outstanding,
net of treasury shares
Paid-in capital
Accumulated deficit
Treasury stock at cost, 363,016 and 363,016 shares held
Accumulated other comprehensive income
Caesars stockholders' equity
Noncontrolling interests
Total stockholders’ equity
Total liabilities and stockholders’ equity
December 31,
2022
December 31,
2021
$
$
$
$
1,038 $
131
611
59
263
—
2,102
94
14,598
4,714
11,004
1,015
33,527 $
314 $
318
1,928
108
—
2,668
12,610
12,659
987
852
29,776
—
—
6,953
(3,309)
(23)
92
3,713
38
3,751
33,527 $
1,070
319
472
42
290
3,771
5,964
158
14,601
4,920
11,076
1,312
38,031
254
320
1,973
70
2,680
5,297
12,424
13,722
1,111
936
33,490
—
—
6,877
(2,410)
(23)
36
4,480
61
4,541
38,031
The accompanying notes are an integral part of these consolidated financial statements.
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62
CAESARS ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,
2022
2021
2020
(In millions, except per share data)
REVENUES:
Casino
Food and beverage
Hotel
Other
Net revenues
EXPENSES:
Casino
Food and beverage
Hotel
Other
General and administrative
Corporate
Impairment charges
Depreciation and amortization
Transaction and other costs
Total operating expenses
Operating income (loss)
OTHER EXPENSE:
Interest expense, net
Loss on extinguishment of debt
Other income (loss)
Total other expense
Loss from continuing operations before income taxes
Benefit (provision) for income taxes
Loss from continuing operations, net of income taxes
Discontinued operations, net of income taxes
Net loss
Net (income) loss attributable to noncontrolling interests
Net loss attributable to Caesars
Net loss per share - basic and diluted:
Basic loss per share from continuing operations
Basic loss per share from discontinued operations
Basic loss per share
Diluted loss per share from continuing operations
Diluted loss per share from discontinued operations
Diluted loss per share
Weighted average basic shares outstanding
Weighted average diluted shares outstanding
$
$
$
$
$
$
5,997 $
1,596
1,957
1,271
10,821
3,526
935
529
411
2,068
286
108
1,205
14
9,082
1,739
(2,265)
(85)
46
(2,304)
(565)
41
(524)
(386)
(910)
11
(899) $
(2.39) $
(1.80)
(4.19) $
(2.39) $
(1.80)
(4.19) $
214
214
5,827 $
1,140
1,551
1,052
9,570
3,129
707
438
373
1,782
309
102
1,126
144
8,110
1,460
(2,295)
(236)
(198)
(2,729)
(1,269)
283
(986)
(30)
(1,016)
(3)
(1,019) $
(4.69) $
(0.14)
(4.83) $
(4.69) $
(0.14)
(4.83) $
211
211
2,482
342
450
354
3,628
1,271
265
170
140
902
195
215
583
270
4,011
(383)
(1,202)
(197)
176
(1,223)
(1,606)
(132)
(1,738)
(20)
(1,758)
1
(1,757)
(13.35)
(0.15)
(13.50)
(13.35)
(0.15)
(13.50)
130
130
The accompanying notes are an integral part of these consolidated financial statements.
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63
CAESARS ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions)
Net loss
Foreign currency translation adjustments
Change in fair market value of interest rate swaps, net of tax
Other
Other comprehensive income, net of tax
Comprehensive loss
Amounts attributable to noncontrolling interests:
Net (income) loss attributable to noncontrolling interests
Foreign currency translation adjustments
Comprehensive (income) loss attributable to noncontrolling interests
Comprehensive loss attributable to Caesars
2022
Years Ended December 31,
2021
2020
(910) $
34
21
—
55
(855)
11
1
12
(843) $
(1,016) $
(45)
47
(1)
1
(1,015)
(3)
1
(2)
(1,017) $
(1,758)
9
26
—
35
(1,723)
1
(1)
—
(1,723)
$
$
The accompanying notes are an integral part of these consolidated financial statements.
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64
CAESARS ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Caesars Stockholders' Equity
Preferred Stock
Common Stock
Treasury
Stock
(In millions)
Shares Amount Shares Amount
Retained
Earnings
(Accumulated
Deficit)
Accumulated
Other
Comprehensive
Income
Paid-in
Capital
Amount
Noncontrolling
interests
Total
Stockholders'
Equity
Balance, January 1, 2020
— $ —
78 $ — $
760 $
366 $
— $
(9) $
— $
1,117
Stock-based
compensation
Issuance of common
stock, net
Net loss
Shares issued to Former
Caesars shareholders
Former Caesars
replacement awards
Other comprehensive
income, net of tax
Shares withheld related
to net share settlement
of stock awards
Acquired noncontrolling
interests
Other
Balance, December 31,
2020
Stock-based
compensation
Issuance of common
stock, net
Net income (loss)
Other comprehensive
income, net of tax
Shares withheld related
to net share settlement
of stock awards
Transactions with
noncontrolling
interests
Balance, December 31,
2021
Stock-based
compensation
Net loss
Other comprehensive
income, net of tax
Shares withheld related
to net share settlement
of stock awards
Transactions with
noncontrolling
interests
Balance, December 31,
2022
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1
67
—
62
—
—
—
—
—
208
1
5
—
—
—
—
—
—
—
—
—
—
214
1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
72
3,172
—
2,381
24
—
(16)
(18)
7
—
—
(1,757)
—
—
—
—
—
—
6,382
(1,391)
83
456
—
—
(44)
—
—
—
(1,019)
—
—
—
6,877
(2,410)
102
—
—
(26)
—
(899)
—
—
—
—
—
—
—
—
34
—
—
—
34
—
—
—
2
—
—
36
—
—
56
—
—
—
—
—
—
—
—
—
—
—
(9)
—
(14)
—
—
—
—
(23)
—
—
—
—
—
—
—
(1)
—
—
1
—
18
—
18
—
—
3
(1)
—
41
61
—
(11)
(1)
—
(11)
72
3,172
(1,758)
2,381
24
35
(16)
—
7
5,034
83
442
(1,016)
1
(44)
41
4,541
102
(910)
55
(26)
(11)
—
—
—
—
—
215 $ — $ 6,953 $
(3,309) $
92 $
(23) $
38 $
3,751
The accompanying notes are an integral part of these consolidated financial statements.
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65
CAESARS ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
Adjustments to reconcile net loss to net cash provided by operating activities:
Loss from discontinued operations
Depreciation and amortization
Amortization of deferred financing costs and discounts
Provision for doubtful accounts
Deferred revenue
Loss on extinguishment of debt
Non-cash lease amortization
(Gain) loss on investments
Stock compensation expense
(Gain) loss on sale of businesses and disposal of property and equipment
Impairment charges
(Benefit) provision for deferred income taxes
(Gain) loss on derivatives
Foreign currency transaction gain
Other non-cash adjustments to net loss
Change in operating assets and liabilities:
Accounts receivable
Prepaid expenses and other assets
Income taxes (receivable) payable
Accounts payable, accrued expenses and other liabilities
Other
Net cash provided by (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net
Former Caesars acquisition, net of cash acquired
Acquisition of William Hill, net of cash acquired
Purchase of additional interest in Horseshoe Baltimore, net of cash consolidated
Acquisition of gaming rights and trademarks
Proceeds from sale of businesses, property and equipment, net of cash sold
Proceeds from the sale of investments
Proceeds from insurance related to property damage
Investments in unconsolidated affiliates
Other
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt and revolving credit facilities
Repayments of long-term debt and revolving credit facilities
Proceeds from sale-leaseback financing arrangement
Financing obligation payments
Debt issuance and extinguishment costs
Proceeds from issuance of common stock
Cash paid to settle convertible notes
Taxes paid related to net share settlement of equity awards
Distributions to noncontrolling interest
Net cash provided by (used in) financing activities
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66
2022
Years Ended December 31,
2021
2020
$
(910) $
(1,016) $
(1,758)
386
1,205
297
25
(2)
85
54
54
101
5
108
(41)
(73)
—
(57)
(143)
(15)
(7)
(80)
1
993
(952)
—
—
—
(11)
39
126
36
—
(6)
(768)
1,500
(2,738)
—
(3)
(12)
1
—
(27)
(3)
(1,282)
30
1,126
347
26
(4)
236
39
107
82
11
102
(283)
127
(21)
(8)
(135)
(67)
13
486
1
1,199
(520)
—
(1,581)
(5)
(312)
726
239
44
(39)
—
(1,448)
1,308
(1,977)
—
(5)
(56)
3
(367)
(45)
(2)
(1,141)
20
583
156
29
(11)
197
14
(34)
79
(7)
215
176
(9)
(129)
(2)
(70)
9
(40)
25
(4)
(561)
(164)
(6,314)
—
—
(35)
366
25
17
(1)
6
(6,100)
9,765
(3,742)
3,224
(49)
(356)
2,718
(903)
(16)
—
10,641
(In millions)
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net cash from discontinued operations
Change in cash, cash equivalents, and restricted cash classified as assets held for sale
Effect of foreign currency exchange rates on cash
Increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash, beginning of period
Cash, cash equivalents and restricted cash, end of period
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO
AMOUNTS REPORTED WITHIN THE CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents
Restricted cash
Restricted and escrow cash included in other noncurrent assets
Cash and cash equivalents and restricted cash in discontinued operations
Total cash, cash equivalents and restricted cash
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid
Income taxes (refunded) paid, net
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Payables for capital expenditures
Exchange for sale-leaseback financing obligation
Convertible notes settled with shares
Land contributed to joint venture
Shares issued to Former Caesars shareholders
2022
Years Ended December 31,
2021
2020
(18)
386
—
368
—
(29)
(718)
2,021
1,303 $
1,038 $
131
134
—
1,303 $
2,010 $
22
145
—
—
—
—
(27)
(1,475)
591
(911)
10
32
(2,259)
4,280
2,021 $
1,070 $
319
323
309
2,021 $
1,923 $
9
100
—
440
61
—
(21)
(5)
—
(26)
(20)
129
4,063
217
4,280
1,776
2,021
437
46
4,280
892
(7)
40
246
454
—
2,381
$
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
67
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements include the accounts of Caesars Entertainment, Inc., a Delaware corporation, and its consolidated
subsidiaries which may be referred to as the “Company,” “CEI,” “Caesars,” “we,” “our,” “us,” or the “Registrant” within these financial statements.
We also refer to (i) our Consolidated Financial Statements as our “Financial Statements,” (ii) our Consolidated Statements of Operations and
Consolidated Statements of Comprehensive Income (Loss) as our “Statements of Operations,” (iii) our Consolidated Balance Sheets as our “Balance
Sheets,” and (iv) our Consolidated Statements of Cash Flows as our “Statements of Cash Flows,” which are prepared in accordance with accounting
principles generally accepted in the United States (“GAAP”). References to numbered “Notes” refer to Notes to our Consolidated Financial Statements
included herein.
Note 1. Organization and Basis of Presentation
Organization
The Company is a geographically diversified gaming and hospitality company that was founded in 1973 by the Carano family with the opening of the
Eldorado Hotel Casino in Reno, Nevada. Beginning in 2005, the Company grew through a series of acquisitions, including the acquisition of MTR Gaming
Group, Inc. in 2014, Isle of Capri Casinos, Inc. in 2017, Tropicana Entertainment, Inc. in 2018 and a merger with Caesars Entertainment Corporation
(“Former Caesars”) on July 20, 2020, pursuant to which Former Caesars became a wholly-owned subsidiary of the Company (the “Merger”) and the
Company changed the Company’s ticker symbol on the NASDAQ Stock Market from “ERI” to “CZR”.
On April 22, 2021, the Company completed the acquisition of William Hill PLC (the “William Hill Acquisition”). See below for further discussion of the
William Hill Acquisition.
The Company owns, leases, brands or manages an aggregate of 51 domestic properties in 16 states with approximately 52,800 slot machines, video lottery
terminals and e-tables, approximately 2,800 table games and approximately 47,200 hotel rooms as of December 31, 2022. The Company operates and
conducts sports wagering across 28 jurisdictions in North America, 20 of which are mobile for sports betting, and operates regulated online real money
gaming businesses in six jurisdictions in North America. In addition, we have other domestic and international properties that are authorized to use the
brands and marks of Caesars Entertainment, Inc., as well as other non-gaming properties. The Company’s primary source of revenue is generated by our
casino properties’ gaming operations, including retail and online sports betting, as well as online gaming, and the Company utilizes its hotels, restaurants,
bars, entertainment, racing, retail shops and other services to attract customers to its properties.
The Company’s operations for retail and mobile sports betting, online casino, and online poker are included under the Caesars Digital segment. The
Company has made significant investments into the interactive business in recent years with the completion of the Merger, the William Hill Acquisition,
and strategic expansion into new markets as legalization permits. The Company utilized significant marketing campaigns with distinguished actors, athletes
and media personalities promoting the launch of the Caesars Sportsbook app. The app offers numerous pre-match and live markets, extensive odds and
flexible limits, player props, and same-game parlays. Caesars Sportsbook has partnerships with the NFL, NBA, NHL and MLB while being the exclusive
odds provider for ESPN and CBS Sports. The Company has continued to create new partnerships among professional sports teams and, in 2021, entered
into a 20-year exclusive naming-rights partnership branding the Caesars Superdome in New Orleans. The Company expects to continue to expand its
operations in the Caesars Digital segment as new jurisdictions legalize retail and online gaming and sports betting.
The Company has divested certain properties and other assets, including non-core properties and divestitures required by regulatory agencies. See Note 4
for a discussion of properties recently sold and Note 19 for segment information.
William Hill Acquisition
On September 30, 2020, the Company announced that it had reached an agreement with William Hill PLC on the terms of a recommended cash acquisition
pursuant to which the Company would acquire the entire issued and to be issued share capital (other than shares owned by the Company or held in
treasury) of William Hill PLC, in an all-cash transaction. On the acquisition date, the Company’s intent was to divest William Hill PLC’s non-U.S.
operations, including the United Kingdom and international online divisions and the retail betting shops (collectively, “William Hill International”), all of
which were held for sale as of the date of the closing of the William Hill Acquisition with such operations reflected within discontinued operations. On
April 22, 2021, the Company completed the acquisition of William Hill PLC for £2.9 billion, or approximately $3.9 billion. See Note 3.
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68
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
On September 8, 2021, the Company entered into an agreement to sell William Hill International to 888 Holdings Plc for approximately £2.2 billion. On
April 7, 2022, the Company amended the agreement to sell William Hill International to 888 Holdings Plc for a revised enterprise value of approximately
£2.0 billion. The amended agreement reflected a £250 million reduction in consideration payable at closing and up to £100 million in deferred
consideration to be paid to the Company, subject to 888 Holdings Plc meeting certain 2023 financial targets. During the year ended December 31, 2022, the
Company recorded impairments to assets held for sale of $503 million within discontinued operations based on the revised and final sales prices.
On July 1, 2022, the Company completed the sale of William Hill International to 888 Holdings Plc and outstanding borrowings under the Bridge Credit
Agreement between the Company and certain lenders party thereto and Deutsche Bank AG, London Branch, as administrative agent and collateral agent,
were immediately repaid. After the repayment of the Bridge Credit Agreement, other permitted leakage, and the settlement of related forward contracts,
Caesars received net proceeds of $730 million. Including open market repurchases and repayments, the Company utilized all $730 million to reduce the
Company’s outstanding debt. See Note 12.
Basis of Presentation
Our Financial Statements are prepared in accordance with accounting principles generally accepted in the United States, which requires management to
make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and
liabilities. Management believes the accounting estimates are appropriate and reasonably determined. Actual amounts could materially differ from those
estimates.
The presentation of financial information herein for the periods after the Company’s acquisitions or before divestitures of various properties is not fully
comparable to the periods prior to their respective purchase or after the sale dates. See Note 3 for further discussion of the acquisitions and related
transactions and Note 4 for properties recently sold.
Consolidation of Subsidiaries and Variable Interest Entities
Our Financial Statements include the accounts of Caesars Entertainment, Inc. and its subsidiaries after elimination of all intercompany accounts and
transactions.
We consolidate all subsidiaries in which we have a controlling financial interest and variable interest entities (“VIEs”) for which we or one of our
consolidated subsidiaries is the primary beneficiary. Control generally equates to ownership percentage, whereby (i) affiliates that are more than 50%
owned are consolidated; (ii) investments in affiliates of 50% or less but greater than 20% are generally accounted for using the equity method where we
have determined that we have significant influence over the entities; and (iii) investments in affiliates of 20% or less are generally accounted for as
investments in equity securities.
We consider ourselves the primary beneficiary of a VIE when we have both the power to direct the activities that most significantly affect the results of the
VIE and the right to receive benefits or the obligation to absorb losses of the entity that could be potentially significant to the VIE. We review investments
for VIE consideration if a reconsideration event occurs to determine if the investment qualifies, or continues to qualify, as a VIE. If we determine an
investment qualifies, or no longer qualifies, as a VIE, there may be a material effect to our Financial Statements.
Developments Related to COVID-19
Despite the resurgence of the COVID-19 Omicron variant at the beginning of the year, operations at many of our properties experienced positive trends
during much of the year ended December 31, 2022, including higher hotel occupancy, particularly in Las Vegas, and increased gaming and food and
beverage volumes. The reduction in mandates and restrictions, combined with pent up consumer demand and supplemental discretionary spend from
governmental stimulus, resulted in strong results across our properties during 2021. Future variants, mandates or restrictions imposed by various regulatory
bodies are uncertain and could have a significant impact on our future operations.
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69
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 2. Summary of Significant Accounting Policies
Additional significant accounting policy disclosures are provided within the applicable Notes to the Financial Statements.
Cash and Cash Equivalents
Cash equivalents include investments in money market funds that can be redeemed immediately at the current net asset value per share. A money market
fund is a mutual fund whose investments are primarily in short-term debt securities designed to maximize current income with liquidity and capital
preservation, usually maintaining per share net asset value at a constant amount, such as one dollar. Cash and cash equivalents also include cash maintained
for gaming operations. The carrying amounts approximate the fair value because of the short maturity of those instruments (Level 1).
Restricted Cash
Restricted cash includes certificates of deposit and similar instruments that are subject to remeasurement on a recurring basis (see Note 8) and cash deposits
which are restricted under certain operating agreements or restricted for future capital expenditures in the normal course of business.
Advertising
Advertising costs are expensed in the period the advertising initially takes place. Advertising costs were $571 million, $518 million and $64 million for the
years ended December 31, 2022, 2021 and 2020, respectively, and are included within operating expenses. During the years ended December 31, 2022 and
2021, the Company launched significant television, radio and internet marketing campaigns promoting the Caesars Sportsbook. Advertising costs related to
the Caesars Digital segment are primarily recorded in Casino expense.
Interest Expense, Net
(In millions)
Interest expense
Capitalized interest
Interest income
Total interest expense, net
Recently Issued Accounting Pronouncements
Pronouncements Implemented in 2022
2022
Years Ended December 31,
2021
2020
$
$
2,303 $
(26)
(12)
2,265 $
2,320 $
(9)
(16)
2,295 $
1,213
(1)
(10)
1,202
Effective January 1, 2022, we adopted Accounting Standards Update 2020-04 (amended through December 2022), Reference Rate Reform. We will apply
this guidance to applicable contracts and instruments if, and when, they are modified. Such application is not expected to have a material effect on our
Financial Statements.
Note 3. Acquisitions, Purchase Price Accounting and Pro forma Information
Acquisition of William Hill
On April 22, 2021, we completed the acquisition of William Hill PLC for cash consideration of approximately £2.9 billion, or approximately $3.9 billion,
based on the GBP to USD exchange rate on the closing date.
We acquired William Hill PLC and its U.S. subsidiary, William Hill U.S. Holdco (“William Hill US” and together with William Hill PLC, “William Hill”)
to better position the Company to address the extensive usage of digital platforms, continued legalization in additional states and jurisdictions, and growing
bettor demand, which are driving the market for online sports betting platforms in the U.S. In addition, we continue to leverage the World Series of Poker
(“WSOP”) brand, and license the WSOP trademarks for a variety of products and services across these digital platforms. At the time that the William Hill
Acquisition was consummated, the Company’s intent was to divest William Hill International.
On September 8, 2021, the Company entered into an agreement to sell William Hill International to 888 Holdings Plc for approximately £2.2 billion. On
April 7, 2022, the Company amended the agreement to sell William Hill International to 888 Holdings Plc for a revised enterprise value of approximately
£2.0 billion. During the year ended December 31, 2022, the Company recorded impairments to assets held for sale of $503 million within discontinued
operations based on the revised and final sales prices. On July 1, 2022, the Company completed the sale of William Hill International to 888 Holdings Plc.
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70
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Prior to the acquisition, the Company accounted for its investment in William Hill PLC as an investment in equity securities and William Hill US as an
equity method investment. Accordingly, the acquisition was accounted for as a business combination achieved in stages, or a “step acquisition.”
As mentioned above, the total purchase consideration for William Hill was approximately $3.9 billion. The purchase consideration in the acquisition was
determined with reference to its acquisition date fair value.
(In millions)
Cash for outstanding William Hill common stock
Fair value of William Hill equity awards
Settlement of preexisting relationships (net of receivable/payable)
Settlement of preexisting relationships (net of previously held equity investment and off-market settlement)
(a)
Total purchase consideration
Consideration
3,909
30
7
(34)
3,912
$
$
____________________
(a)
William Hill common stock of approximately 1.0 billion shares as of the acquisition date was paid at £2.72 per share, or approximately $3.77 per share using the GBP to USD exchange
rate on the acquisition date.
Final Purchase Price Allocation
The fair values are based on management’s analysis, including work performed by third-party valuation specialists, and were finalized over the one-year
measurement period. The following table summarizes the allocation of the purchase consideration to the identifiable assets acquired and liabilities assumed
of William Hill, with the excess recorded as goodwill as of December 31, 2022:
(In millions)
Other current assets
Assets held for sale
Property and equipment, net
Goodwill
Intangible assets
Other noncurrent assets
(a)
Total assets
Other current liabilities
Liabilities related to assets held for sale
Deferred income taxes
Other noncurrent liabilities
(b)
Total liabilities
Noncontrolling interests
Net assets acquired
Fair Value
164
4,337
55
1,154
565
317
6,592
242
2,142
251
35
2,670
10
3,912
$
$
$
$
____________________
(a)
Intangible assets consist of gaming rights valued at $80 million, trademarks valued at $27 million, developed technology valued at $110 million, reacquired rights valued at $280 million
and user relationships valued at $68 million.
Includes the fair value of debt of $1.1 billion related to William Hill International at the acquisition date.
(b)
The fair values of the assets acquired and liabilities assumed were determined using the market, income, and cost approaches, or a combination. Valuation
methodologies under both a market and income approach used for the identifiable net assets acquired in the William Hill Acquisition make use of Level 3
inputs, such as expected cash flows and projected financial results. The market approach indicates value for a subject asset based on available market
pricing for comparable assets.
Trade receivables and payables and other current and noncurrent assets and liabilities were valued at the existing carrying values as they represented the
estimated fair value of those items at the William Hill acquisition date.
Assets and liabilities held for sale substantially represented William Hill International which was valued using a combination of approaches including a
market approach based on valuation multiples and EBITDA, the relief from royalty method and the replacement cost method. In addition to the approaches
described, our estimates were updated to reflect the sale price of William Hill International in the sale to 888 Holdings Plc, described above.
Table of Contents
71
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The acquired net assets of William Hill included certain investments in common stock. Investments with a publicly available share price were valued using
the share price on the acquisition date. Investments without publicly available share data were valued at their carrying value, which approximated fair
value.
Other personal property assets such as furniture, equipment, computer hardware, and fixtures were valued using a cost approach which determined that the
carrying values represented fair value of those items at the William Hill acquisition date.
Trademarks and developed technology were valued using the relief from royalty method, which presumes that without ownership of such trademarks or
technology, the Company would have to make a series of payments to the assets’ owner in return for the right to use their brand or technology. By virtue of
their ownership of the respective intangible assets, the Company avoids any such payments and records the related intangible value. The estimated useful
lives of the trademarks and developed technology were approximately 15 years and six years, respectively, from the acquisition date.
Online user relationships are valued using a cost approach based on the estimated marketing and promotional cost to acquire the new active user base if the
user relationships were not already in place and needed to be replaced. We estimated the useful life of the user relationships to be approximately three years
from the acquisition date.
Operating agreements with non-Caesars entities allowed William Hill to operate retail and online sportsbooks as well as online gaming within certain
states. These agreements were valued using the excess earnings method, estimating the projected profits of the business attributable to the rights afforded
through the agreements, adjusted for returns of other assets that contribute to the generation of this profit, such as working capital, fixed assets and other
intangible assets. We estimated the useful life of these operating agreements to be approximately 20 years from the acquisition date and have included them
within amortizing gaming rights.
The reacquired rights intangible asset represents the estimated fair value of the Company’s share of William Hill’s forecasted profits arising from the prior
contractual arrangement with the Company to operate retail and online sportsbooks and online gaming. This fair value estimate was determined using the
excess earnings method, an income-based approach that reflects the present value of the future profit William Hill expected to earn over the remaining term
of the contract, adjusted for returns of other assets that contribute to the generation of this profit, such as working capital, fixed assets and other intangible
assets. The forecasted profit used within the valuation was adjusted for the settlement of the preexisting relationship in order to avoid double counting of
the settlement. Reacquired rights are amortizable over the remaining contractual period of the contract in which the rights were granted and estimated to be
approximately 24 years from the acquisition date.
Goodwill is the result of expected synergies from the operations of the combined company and future customer relationships including the brand names and
strategic partner relationships of Caesars and the technology and assembled workforce of William Hill. The goodwill acquired will not generate
amortization deductions for income tax purposes.
The fair value of long-term debt assumed was calculated based on market quotes.
The Company recognized acquisition-related transaction costs of $21 million, $68 million and $8 million for the years ended December 31, 2022, 2021 and
2020, respectively, excluding additional transaction costs associated with sale of William Hill International. These costs were associated with legal,
professional services, and certain severance and retention costs and were primarily recorded in Transaction and other costs in our Statements of Operations.
For the period of April 22, 2021 through December 31, 2021, the operations of William Hill generated net revenues of $183 million, excluding
discontinued operations (see Note 4), and a net loss of $415 million.
Unaudited Pro Forma Financial Information
The following unaudited pro forma financial information is presented to illustrate the estimated effects of the William Hill Acquisition as if it had occurred
on January 1, 2020. The pro forma amounts include the historical operating results of the Company and William Hill prior to the acquisition, with
adjustments directly attributable to the acquisition. The pro forma results include adjustments and consequential tax effects to reflect incremental
amortization expense to be incurred based on preliminary fair values of the identifiable intangible assets acquired, eliminate gains and losses related to
certain investments and adjustments to the timing of acquisition related costs and expenses incurred during the year ended December 31, 2021. The
unaudited pro forma financial information is not necessarily indicative of the financial position or results that would have occurred had the William Hill
Acquisition been consummated as of the dates indicated, nor is it indicative of any future results. In addition, the unaudited pro forma financial information
does not reflect the expected realization of any synergies or cost savings associated with the acquisition.
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72
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In millions)
Net revenues
Net loss
Net loss attributable to Caesars
Consolidation of Horseshoe Baltimore
Years Ended December 31,
2021
2020
$
9,696 $
(893)
(896)
3,834
(1,991)
(1,989)
On August 26, 2021 (the “Consolidation Date”), the Company increased its ownership interest in Horseshoe Baltimore, a property which it also manages,
to approximately 75.8% for cash consideration of $55 million. Our previously held investment was remeasured as of the date of the change in ownership
and the Company recognized a gain of $40 million during the year ended December 31, 2021. Subsequent to the change in ownership, the Company was
determined to have a controlling financial interest and began to consolidate the operations of Horseshoe Baltimore.
Prior to the purchase, the Company held an interest in Horseshoe Baltimore of approximately 44.3% which was accounted for as an equity method
investment.
(In millions)
Cash for additional ownership interest
Preexisting relationships (net of receivable/payable)
Preexisting relationships (net of previously held equity investment)
Total purchase consideration
Final Purchase Price Allocation
Consideration
55
18
81
154
$
$
The fair values are based on management’s analysis, including work performed by a third-party valuation specialist, and were finalized over the one-year
measurement period. The following table summarizes the allocation of the purchase consideration to the identifiable assets and liabilities of Horseshoe
Baltimore, with excess recorded as goodwill as of December 31, 2022:
(In millions)
Current assets
Property and equipment, net
Goodwill
Intangible assets
Other noncurrent assets
(a)
Total assets
Current liabilities
Long-term debt
Other long-term liabilities
Total liabilities
Noncontrolling interests
Net assets acquired
Fair Value
60
317
63
53
183
676
26
272
182
480
42
154
$
$
$
$
____________________
(a)
Intangible assets consist of gaming rights valued at $43 million and customer relationships valued at $10 million.
The fair values of the assets acquired and liabilities assumed were determined using the market, income, and cost approaches, or a combination. Valuation
methodologies under both a market and income approach used for the identifiable net assets of Horseshoe Baltimore on the Consolidation Date make use of
Level 3 inputs, such as expected cash flows and projected financial results. The market approach indicates value for a subject asset based on available
market pricing for comparable assets.
Trade receivables and payables and other current and noncurrent assets and liabilities were valued at the existing carrying values as they represented the
estimated fair value of those items on the Consolidation Date.
Other personal property assets such as furniture, equipment, computer hardware, and fixtures were valued at the existing carrying values as they closely
represented the estimated fair value of those items on the Consolidation Date.
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73
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The fair value of the buildings and improvements were estimated via the income approach. The remaining estimated useful life of the buildings and
improvements on the Consolidation Date is 40 years.
The right of use asset and operating lease liability related to a ground lease for the site on which Horseshoe Baltimore is located was recorded at fair value
and will be amortized over the estimated remaining useful life due to changes in the underlying fair value and estimated remaining useful life of the
building and improvements. Renewal options are considered to be reasonably certain. The income approach was used to determine fair value, based on the
estimated present value of the future lease payments over the lease term, including renewal options, using an incremental borrowing rate of approximately
7.6%.
Customer relationships are valued using an income approach, comparing the prospective cash flows with and without the customer relationships in place to
estimate the fair value of the customer relationships, with the fair value assumed to be equal to the discounted cash flows of the business that would be lost
if the customer relationships were not in place and needed to be replaced. We estimate the useful life of these customer relationships to be approximately
seven years from the Consolidation Date.
The fair value of the gaming rights was determined using the excess earnings method, which is an income approach methodology that estimates the
projected cash flows of the business attributable to the gaming license intangible asset, which is net of charges for the use of other identifiable assets of the
business including working capital, fixed assets and other intangible assets. The acquired gaming rights are considered to have an indefinite life.
The goodwill acquired will generate amortization deductions for income tax purposes.
The fair value of long-term debt has been calculated based on market quotes.
For the period of August 26, 2021 through December 31, 2021, the operations of Horseshoe Baltimore generated net revenues of $72 million, and a net
income of $4 million.
Unaudited Pro Forma Financial Information
The following unaudited pro forma financial information is presented to illustrate the estimated effects of the Horseshoe Baltimore consolidation as if it had
occurred on January 1, 2020. The pro forma amounts include the historical operating results of the Company and Horseshoe Baltimore prior to the
consolidation. The pro forma results include adjustments and consequential tax effects to reflect incremental amortization expense to be incurred based on
preliminary fair values of the identifiable intangible assets acquired and the adjustments to eliminate certain revenues and expenses which are considered
intercompany activities. The unaudited pro forma financial information is not necessarily indicative of the financial results that would have occurred had
the consolidation of Horseshoe Baltimore occurred as of the dates indicated, nor is it indicative of any future results. In addition, the unaudited pro forma
financial information does not reflect the expected realization of any synergies or cost savings associated with the consolidation.
(In millions)
Net revenues
Net loss
Net loss attributable to Caesars
Merger with Caesars Entertainment Corporation
Years Ended December 31,
2021
2020
$
9,693 $
(1,049)
(1,056)
3,764
(1,784)
(1,778)
On July 20, 2020, the Merger was consummated and Former Caesars became a wholly-owned subsidiary of the Company. The strategic rationale for the
Merger includes, but is not limited to, the following:
Creation of the largest owner, operator and manager of domestic gaming assets
•
• Diversification of the Company’s domestic footprint
• Access to iconic brands, rewards programs and new gaming opportunities expected to enhance customer experience
•
Realization of significant identified synergies
The total purchase consideration for Former Caesars was $10.9 billion. The estimated purchase consideration in the acquisition was determined with
reference to its acquisition date fair value.
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74
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In millions)
Cash consideration paid
Shares issued to Former Caesars shareholders
Cash paid to retire Former Caesars debt
Other consideration paid
(a)
Total purchase consideration
Consideration
6,090
2,381
2,356
48
10,875
$
$
____________________
(a)
Former Caesars common stock was converted into the right to receive approximately 0.3085 shares of the Company’s Common Stock, with a value equal to approximately $12.41 in cash
(based on the volume weighted average price per share of the Company’s Common Stock for the ten trading days ending on July 16, 2020).
Final Purchase Price Allocation
The fair values are based on management’s analysis including work performed by third party valuation specialists, which were finalized over the one-year
measurement period. The following table summarizes the allocation of the purchase consideration to the identifiable assets acquired and liabilities assumed
of Former Caesars, with the excess recorded as goodwill as of December 31, 2021:
(In millions)
Current and other assets
Property and equipment
Goodwill
Intangible assets
Other noncurrent assets
(a)
Total assets
Current liabilities
Financing obligation
Long-term debt
Noncurrent liabilities
Total liabilities
Noncontrolling interests
Net assets acquired
Fair Value
3,540
13,096
9,064
3,394
710
29,804
1,771
8,149
6,591
2,400
18,911
18
10,875
$
$
$
$
____________________
(a)
Intangible assets consist of gaming rights valued at $396 million, trade names valued at $2.1 billion, the Caesars Rewards programs valued at $523 million and customer relationships
valued at $425 million.
The fair values of the assets acquired and liabilities assumed were determined using the market, income, and cost approaches, or a combination. Valuation
methodologies under both a market and income approach used for the identifiable net assets acquired in the Former Caesars acquisition make use of Level
3 inputs, such as expected cash flows and projected financial results. The market approach indicates value for a subject asset based on available market
pricing for comparable assets.
Trade receivables and payables and other current and noncurrent assets and liabilities were valued at the existing carrying values as they represented the
estimated fair value of those items at the Former Caesars acquisition date. Assets and liabilities held for sale are recorded at fair value, less costs to sell,
based on the agreements reached as of the acquisition date, or an income approach.
Certain financial assets acquired were determined to have experienced more than insignificant deterioration of credit quality since origination. A
reconciliation of the difference between the purchase price of financial assets, including acquired markers, and the face value of the assets is as follows:
(In millions)
Purchase price of financial assets
Allowance for credit losses at the acquisition date based on the acquirer’s assessment
Discount attributable to other factors
Face value of financial assets
Table of Contents
75
$
$
95
89
2
186
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The fair value of land was determined using the sales comparable approach. The market data is then adjusted for any significant differences, to the extent
known, between the identified comparable sites and the site being valued. The value of building and site improvements was estimated via the income
approach. Other personal property assets such as furniture, gaming and computer equipment, fixtures, computer software, and restaurant equipment were
valued using the cost approach which is based on replacement or reproduction costs of the asset. The cost approach is an estimation of fair value developed
by computing the current cost of replacing a property and subtracting any depreciation resulting from one or more of the following factors: physical
deterioration, functional obsolescence, and/or economic obsolescence.
Non-amortizing intangible assets acquired primarily include trademarks, Caesars Rewards and gaming rights. The fair value for these intangible assets was
determined using either the relief from royalty method and excess earnings method under the income approach or a replacement cost market approach.
Trademarks and Caesars Rewards were valued using the relief from royalty method, which presumes that without ownership of such trademarks or loyalty
program, the Company would have to make a stream of payments to a brand or franchise owner in return for the right to use their name or program. By
virtue of this asset, the Company avoids any such payments and records the related intangible value of the Company’s ownership of the brand name or
program. The acquired trademarks, including Caesars Rewards, are indefinite lived intangible assets.
Customer relationships are valued using an income approach, comparing the prospective cash flows with and without the customer relationships in place to
estimate the fair value of the customer relationships, with the fair value assumed to be equal to the discounted cash flows of the business that would be lost
if the customer relationships were not in place and needed to be replaced. We estimated the useful life of these customer relationships to be approximately
seven years from the Merger date.
Gaming rights include our gaming licenses in various jurisdictions and may have indefinite lives or an estimated useful life. The fair value of the gaming
rights was determined using the excess earnings or replacement cost methodology, based on whether the license resides in gaming jurisdictions where
competition is limited to a specified number of licensed gaming operators. The excess earnings methodology is an income approach methodology that
estimates the projected cash flows of the business attributable to the gaming license intangible asset, which is net of charges for the use of other identifiable
assets of the business including working capital, fixed assets and other intangible assets. The replacement cost of the gaming license was used as an
indicator of fair value. The acquired gaming rights have indefinite lives, with the exception of one jurisdiction in which we estimated the useful life of the
license to be approximately 34 years from the Merger date.
Goodwill is the result of expected synergies from the operations of the combined company and the assembled workforce of Former Caesars. The final
assignment of goodwill to reporting units has not been completed. The goodwill acquired will not generate amortization deductions for income tax
purposes.
The fair value of long-term debt has been calculated based on market quotes. The fair value of the financing obligations was calculated as the net present
value of both the fixed base rent payments and the forecasted variable payments plus the expected residual value of the land and building returned at the
end of the expected usage period.
The Company recognized acquisition-related transaction costs of $30 million and $160 million for the years ended December 31, 2021, and 2020,
respectively, in connection with the Merger. Transaction costs were associated with legal, IT costs, internal labor and professional services and were
recorded in Transaction and other costs in our Statements of Operations.
For the period of July 20, 2020 through December 31, 2020, the properties of Former Caesars generated net revenues of $2.1 billion, excluding
discontinued operations, and a net loss of $1.2 billion.
Unaudited Pro Forma Financial Information
The following unaudited pro forma financial information is presented to illustrate the estimated effects of the acquisition of Former Caesars as if it had
occurred on January 1, 2019. The pro forma amounts include the historical operating results of the Company and Former Caesars prior to the acquisition,
with adjustments directly attributable to the acquisition. The pro forma results include adjustments and consequential tax effects to reflect incremental
depreciation and amortization expense to be incurred based on preliminary fair values of the identifiable property and equipment and intangible assets
acquired, the incremental interest expense associated with the issuance of debt to finance the acquisition and the adjustments to exclude acquisition related
costs incurred during the year ended December 31, 2020 as if incurred on January 1, 2019. The unaudited pro forma financial information is not necessarily
indicative of what the consolidated results of operations of the combined company were, nor does it reflect the expected realization of any synergies or cost
savings associated with the acquisition.
Table of Contents
76
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In millions)
Net revenues
Net loss
Net loss attributable to Caesars
Note 4. Assets and Liabilities Held for Sale
Year Ended December 31,
2020
$
5,926
(2,738)
(2,670)
The Company periodically divests assets to raise capital or, in previous cases, to comply with conditions, terms, obligations or restrictions imposed by
antitrust, gaming and other regulatory entities. The carrying value of the net assets held for sale are compared to the expected selling price and any
expected losses are recorded immediately. Gains or losses associated with the disposal of assets held for sale are recorded within other operating costs,
unless the assets represent a discontinued operation.
Held for sale - Sold
Baton Rouge, Evansville, MontBleu, Shreveport, Kansas City and Vicksburg Divestitures
On December 1, 2020, the Company entered into a definitive agreement to sell the operations of Belle of Baton Rouge Casino & Hotel (“Baton Rouge”) to
CQ Holding Company, Inc. As a result, an impairment charge totaling $50 million was recorded during the year ended December 31, 2020 due to the
carrying value exceeding the estimated net sales proceeds. On May 5, 2022, the Company consummated the sale of the equity interests of Baton Rouge to
CQ Holding Company, Inc., resulting in a loss of $3 million.
On June 3, 2021, the Company consummated the sale of the real property and equity interests of Tropicana Evansville (“Evansville”) to Gaming and
Leisure Properties, Inc. (“GLPI”) and Bally’s Corporation, respectively, for $480 million, resulting in a gain of $12 million.
On April 24, 2020, the Company entered into a definitive agreement to sell the equity interests of MontBleu Casino Resort & Spa (“MontBleu”) to Bally’s
Corporation. As a result, an impairment charge totaling $45 million was recorded during the year ended December 31, 2020 due to the carrying value
exceeding the estimated net sales proceeds. On April 6, 2021, the Company consummated the sale of the equity interests of MontBleu to Bally’s
Corporation for $15 million, resulting in a gain of less than $1 million. The Company received the payment in full on April 5, 2022.
On December 23, 2020, the Company consummated the sale of Eldorado Shreveport (“Shreveport”) to Bally's Corporation for $140 million resulting in a
gain of $29 million. On July 1, 2020, the Company consummated the sale of the equity interests of the entities that hold Lady Luck Casino Vicksburg
(“Vicksburg”) and Isle of Capri Kansas City (“Kansas City”) to Bally’s Corporation (formerly Twin River Worldwide Holdings, Inc.) for $230 million
resulting in a gain of $8 million.
Prior to their respective closing dates, Baton Rouge, Evansville, MontBleu, Shreveport, Kansas City and Vicksburg, met the requirements for presentation
as assets held for sale. However, they did not meet the requirements for presentation as discontinued operations. All properties were previously reported in
the Regional segment.
The following information presents the net revenues and net income (loss) of previously held for sale properties, which were recently sold:
(In millions)
Net revenues
Net loss
(In millions)
Net revenues
Net income (loss)
Table of Contents
Year Ended December
31, 2022
Baton Rouge
$
Baton Rouge
Year Ended December 31, 2021
Evansville
MontBleu
17 $
(2)
58 $
26
6
(1)
11
4
$
77
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In millions)
Baton Rouge
Evansville
MontBleu
Shreveport
Kansas City
Vicksburg
Net revenues
Net income (loss)
$
15 $
(70)
98 $
(5)
31 $
(42)
68 $
12
18 $
3
Year Ended December 31, 2020
The assets and liabilities held for sale were as follows as of December 31, 2021:
(In millions)
Assets:
Cash
Property and equipment, net
Other assets, net
Assets held for sale
Liabilities:
Current liabilities
Other long-term liabilities
Liabilities related to assets held for sale
Held for sale - Discontinued operations
Baton Rouge
$
$
$
$
7
(1)
3
2
1
6
3
1
4
On the closing date of the Merger, Harrah’s Louisiana Downs, Caesars Southern Indiana and Caesars UK Group, which included Emerald Resort & Casino,
met held for sale criteria. The operations of these properties, until their respective date of divestiture, have been presented within discontinued operations.
In addition, at the time that the William Hill Acquisition was consummated, the Company’s intent was to divest William Hill International. Accordingly,
the assets and liabilities of these reporting units were classified as held for sale with operations presented within discontinued operations.
On September 3, 2020, the Company and VICI Properties L.P., a Delaware limited partnership (“VICI”) entered into an agreement to sell the equity
interests of Harrah’s Louisiana Downs to Rubico Acquisition Corp. for $22 million. On November 1, 2021, the sale of Harrah’s Louisiana Downs was
completed and proceeds were split between the Company and VICI. The annual base rent payments under the Regional Master Lease between Caesars and
VICI remained unchanged.
On December 24, 2020, the Company entered into an agreement to sell the equity interests of Caesars Southern Indiana to the Eastern Band of Cherokee
Indians (“EBCI”) for $250 million, subject to customary purchase price adjustments. On September 3, 2021, the Company completed the sale of Caesars
Southern Indiana, resulting in a gain of $12 million. In connection with this transaction, the Company’s annual base rent payments to VICI under the
Regional Master Lease were reduced by $33 million. Additionally, the Company and EBCI entered into a 10-year brand license agreement, for the
continued use of the Caesars brand and Caesars Rewards loyalty program at Caesars Southern Indiana. The agreement contains cancellation rights in
exchange for a termination fee at the buyer’s discretion following the fifth anniversary of the agreement.
On July 16, 2021, the Company completed the sale of Caesars UK Group, in which the buyer assumed all liabilities associated with the Caesars UK Group,
and recorded an impairment of $14 million within discontinued operations.
The following information presents the net revenues and net income (loss) for the Company’s properties that are part of discontinued operations for the
year ended December 31, 2022 and 2021:
(In millions)
Net revenues
Net loss
(In millions)
Net revenues
Net income (loss)
Table of Contents
Year Ended December
31, 2022
William Hill
International
$
820
(448)
Harrah’s Louisiana
Downs
Caesars UK Group
Caesars Southern
Indiana
William Hill
International
Year Ended December 31, 2021
$
48 $
10
78
30 $
(30)
155 $
27
1,221
(18)
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
As of December 31, 2021, assets and liabilities held for sale of $3.8 billion and $2.7 billion, respectively, related to William Hill International and included
$617 million of debt related to a Bridge Credit Agreement, which was repaid upon the sale of William Hill International on July 1, 2022. In addition,
$850 million of debt was held for sale related to two trust deeds assumed in the William Hill Acquisition. One trust deed related to £350 million aggregate
principal amount of 4.750% Senior Notes due 2026, and the other trust deed related to £350 million aggregate principal amount of 4.875% Senior Notes
due 2023. The Bridge Credit Agreement was repaid and the two trust deeds were divested with the completion of the sale of William Hill International on
July 1, 2022 and the Company is no longer subject to the related covenants or guarantees.
Note 5. Investments in and Advances to Unconsolidated Affiliates
NeoGames
The acquired net assets of William Hill included an investment in NeoGames S.A. (“NeoGames”), a global leader of iLottery solutions and services to
national and state-regulated lotteries, and other investments. On September 16, 2021, the Company sold a portion of its shares of NeoGames common stock
for $136 million which decreased its ownership interest from 24.5% to approximately 8.4%. Additionally, on March 14, 2022 the Company sold its
remaining 2 million shares at fair value for $26 million. During the years ended December 31, 2022 and 2021, the Company recorded losses related to the
investment in NeoGames of $34 million and $54 million, respectively, which is included within Other income (loss) on the Statements of Operations.
Pompano Joint Venture
In April 2018, the Company entered into a joint venture with Cordish Companies (“Cordish”) to plan and develop a mixed-use entertainment and
hospitality destination expected to be located on unused land adjacent to the casino and racetrack at the Company’s Pompano property. As the managing
member, Cordish will operate the business and manage the development, construction, financing, marketing, leasing, maintenance and day-to-day operation
of the various phases of the project. Additionally, Cordish will be responsible for the development of the master plan for the project with the Company’s
input and will submit it for the Company’s review and approval. In June 2021, the joint venture issued a capital call and we contributed $3 million, for a
total of $4 million in cash contributions since inception of the joint venture. On February 12, 2021, the Company contributed 186 acres to the joint venture
with a fair value of $61 million. Total contributions of approximately 206 acres of land have been made with a fair value of approximately $69 million, and
the Company has no further obligation to contribute additional real estate or cash.
While the Company holds a 50% variable interest in the joint venture, it is not the primary beneficiary; as such the investment in the joint venture is
accounted for using the equity method. The Company participates evenly with Cordish in the profits and losses of the joint venture, which are included in
Transaction and other costs on the Statements of Operations.
As of December 31, 2022 and 2021, the Company’s investment in the joint venture is recorded in Investment in and advances to unconsolidated affiliates
on the Balance Sheets.
Note 6. Property and Equipment
Property and equipment are stated at cost, except for assets acquired in our business combinations which were adjusted for fair value under Accounting
Standards Codification (“ASC”) 805. Internal use software costs are capitalized during the application development stage. Costs of major improvements
are capitalized, while costs of normal repairs and maintenance are charged to expense as incurred. Depreciation is computed using the straight-line method
over the estimated useful life of the asset as noted in the table below, or the term of the lease, whichever is less. Gains or losses on the disposal of property
and equipment are included in operating income. Useful lives of each asset class are generally as follows:
Buildings and improvements
Land improvements
Furniture, fixtures and equipment
Riverboats
3 to 40 years
12 to 40 years
3 to 15 years
30 years
A portion of our property and equipment is subject to various operating leases for which we are the lessor. Leased property includes our hotel rooms,
convention space and retail space through various short-term and long-term operating leases. See Note 10 for further discussion of our leases.
Table of Contents
79
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company evaluates its property and equipment and other long-lived assets for impairment whenever indicators of impairment exist. The Company
compares the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed
the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then an impairment charge may be
recorded for any difference between fair value and the carrying value. All recognized impairment losses are recorded as operating expenses, unless the
assets represent a discontinued operation. For the year ended December 31, 2020, we recorded a tangible asset impairment of $4 million related to the sale
of a corporate airplane. See Note 4 for further discussion of impairment on assets held for sale.
Property and Equipment, Net
(In millions)
Land
Buildings, riverboats, and leasehold and land improvements
Furniture, fixtures, and equipment
Construction in progress
Total property and equipment
Less: accumulated depreciation
Total property and equipment, net
Depreciation Expense
(In millions)
Depreciation expense
December 31,
2022
2021
$
$
2,092 $
13,094
2,054
351
17,591
(2,993)
14,598 $
2,125
12,433
1,650
395
16,603
(2,002)
14,601
2022
Years Ended December 31,
2021
2020
$
1,018 $
987 $
527
Depreciation is calculated using the straight-line method over the shorter of the estimated useful life of the asset or the related lease.
Note 7. Goodwill and Intangible Assets, net
The purchase price of an acquisition is allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date
of acquisition. The Company determines the estimated fair values after review and consideration of relevant information including discounted cash flows,
quoted market prices, and estimates made by management. To the extent the purchase price exceeds the fair value of the net identifiable tangible and
intangible assets acquired and liabilities assumed, such excess is recorded as goodwill.
Goodwill and indefinite-lived intangible assets must be reviewed for impairment at least annually and between annual test dates in certain circumstances.
The Company performs its annual impairment tests as of October 1 of each fiscal year. The Company performs this assessment more frequently if
impairment indicators exist. We utilized an income approach using a discounted cash flow method to determine the fair value of our goodwill. The
Company performed the annual goodwill impairment test by comparing the fair value of each reporting unit with its carrying amount. The Company
determines the estimated fair value of each reporting unit based on a combination of earnings before interest, taxes, depreciation and amortization
(“EBITDA”), valuation multiples, and estimated future cash flows discounted at rates commensurate with the capital structure and cost of capital of
comparable market participants, giving appropriate consideration to the prevailing borrowing rates within the casino industry in general, and expected sales
proceeds. The Company also evaluates the aggregate fair value of all of its reporting units and other non-operating assets in comparison to its aggregate
debt and equity market capitalization at the test date. EBITDA multiples and discounted cash flows are common measures used to value businesses in the
industry.
Indefinite-lived intangible assets consist primarily of trademarks, Caesars Rewards and expenditures associated with obtaining racing and gaming licenses.
Indefinite-lived intangible assets are not subject to amortization but are subject to an annual impairment test. If the carrying amount of an indefinite-lived
intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess amount.
Trademarks and Caesars Rewards were valued using the relief from royalty method, which presumes that without ownership of such trademarks or loyalty
program, the Company would have to make a stream of payments to a brand or franchise owner in return for the right to use their name or program. By
virtue of this asset, the Company avoids any such payments and records the related intangible value of the Company’s ownership of the brand name or
program.
Table of Contents
80
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Gaming rights represent intangible assets acquired from the purchase of a gaming entity located in a gaming jurisdiction where competition is limited, such
as when only a limited number of gaming operators are allowed to operate in the jurisdiction. These gaming license rights are not subject to amortization as
the Company has determined that they have indefinite useful lives. For gaming jurisdictions with high barriers of renewal of the gaming rights, such as
material costs of renewal, the gaming rights are deemed to have a finite useful life and are amortized over the expected useful life. We used the Excess
Earnings Method and a Cost Approach for estimating fair value for these gaming rights.
Finite-lived intangible assets consist of trade names and customer relationships acquired in business combinations. Amortization is recorded using the
straight-line method over the estimated useful life of the asset. The Company evaluates for impairment whenever indicators of impairment exist. When
indicators are noted, the Company then compares estimated future cash flows, undiscounted, to the carrying value of the asset. If the undiscounted cash
flows exceed the carrying value, no impairment is recorded. Impairment charges are presented on the statements of operations.
As a result of the finalized and approved capital and operating plans and the completion of the annual impairment testing, the Company recognized
impairment charges in our Regional segment primarily due to an increase in the related discount rates, which represents the higher required cost of capital
as a result of the macroeconomic environment and projected outlook. The Company identified one property, where the estimated fair value of the
associated gaming rights was less than the carrying value and recorded an impairment of $30 million. In addition, the Company identified two reporting
units with which the estimated fair value of the respective reporting unit was below the carrying value and we recorded a total impairment of $78 million to
goodwill.
In December 2021, the Company approved a capital plan which included the planned rebranding of certain of our properties. The Company utilized an
income approach to determine the fair value of the trademarks subject to rebranding based on their expected future cash flows, which resulted in an
impairment charge of $102 million during the year ended December 31, 2021. The adjusted carrying values of these trademarks were amortized over their
respective useful lives.
During the year ended December 31, 2020, the Company recognized impairment charges in our Regional segment related to goodwill and trade names
totaling $100 million and $16 million, respectively, due to declines in recent performance and the expected impact on future cash flows as a result of
COVID-19.
When assets are deemed to be held for sale, any associated intangible assets, including goodwill, are reclassified to Assets held for sale on our Balance
Sheets (see Note 4).
Changes in Carrying Value of Goodwill by Segment
(In millions)
Gross Goodwill:
(a)
Balance as of January 1, 2021
Acquired
Other
Balance as of December 31, 2021
Accumulated Impairment:
Balance as of January 1, 2021
Balance as of December 31, 2021
Net carrying value, as of December 31, 2021
Gross Goodwill:
Balance as of January 1, 2022
Other
Balance as of December 31, 2022
(a)
Accumulated Impairment:
Balance as of January 1, 2022
Impairment
Balance as of December 31, 2022
Net carrying value, as of December 31, 2022
(b)
Las Vegas
Regional
Caesars Digital
Managed and
Branded
CEI Total
$
$
$
$
6,873 $
—
16
6,889
—
—
6,889 $
6,889 $
—
6,889
—
—
—
6,889 $
3,045 $
63
(15)
3,093
(104)
(104)
2,989 $
3,093 $
—
3,093
(104)
(78)
(182)
2,911 $
50 $
1,148
—
1,198
—
—
1,198 $
1,198 $
6
1,204
—
—
—
1,204 $
— $
—
—
—
—
—
— $
— $
—
—
—
—
—
— $
9,968
1,211
1
11,180
(104)
(104)
11,076
11,180
6
11,186
(104)
(78)
(182)
11,004
____________________
(a)
See Note 3 for further detail. Purchase price allocation finalized in 2022.
$468 million of goodwill within our Regional segment is associated with reporting units with zero or negative carrying value.
(b)
Table of Contents
81
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Changes in Carrying Value of Intangible Assets Other than Goodwill
(In millions)
Balance as of January 1
Impairment
Amortization expense
(a)
Acquired
Acquisition of gaming rights and trademarks
Other
Balance as of December 31
____________________
(a)
See Note 3 for further detail.
Amortizing
Non-Amortizing
Total
2022
2021
2022
2021
2022
2021
$
$
1,209 $
—
(187)
—
10
28
1,060 $
501 $
—
(139)
575
253
19
1,209 $
3,711 $
(30)
—
—
1
(28)
3,654 $
3,782 $
(102)
—
43
50
(62)
3,711 $
4,920 $
(30)
(187)
—
11
—
4,714 $
4,283
(102)
(139)
618
303
(43)
4,920
Gross Carrying Value and Accumulated Amortization of Intangible Assets Other Than Goodwill
December 31, 2022
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross Carrying
Amount
December 31, 2021
Accumulated
Amortization
Net Carrying
Amount
(Dollars in millions)
Amortizing intangible assets
Customer relationships
Gaming rights and other
Trademarks
Reacquired rights
Technology
Useful Life
3 - 7 years
10 - 34 years
15 years
24 years
6 years
Non-amortizing intangible assets
Trademarks
Gaming rights
Caesars Rewards
$
$
587 $
212
313
250
110
1,472 $
(276) $
(16)
(73)
(17)
(30)
(412)
587 $
174
322
250
110
1,443 $
311 $
196
240
233
80
1,060 $
1,998
1,133
523
3,654
4,714
(187) $
(7)
(21)
(7)
(12)
(234)
$
400
167
301
243
98
1,209
1,998
1,190
523
3,711
4,920
Total amortizing and non-amortizing intangible assets, net
$
Amortization expense with respect to intangible assets for the years ended December 31, 2022, 2021 and 2020 totaled $187 million, $139 million and $56
million, respectively, which is included in depreciation and amortization in the Statements of Operations.
Estimated Five-Year Amortization
(In millions)
2023
2024
Years Ended December 31,
2025
2026
2027
Estimated annual amortization expense
$
141 $
126 $
119 $
119 $
76
Note 8. Fair Value Measurements
Items Measured at Fair Value on a Recurring Basis
The following table sets forth the assets and liabilities, where applicable, measured at fair value on a recurring basis, by input level, in the Balance Sheets at
December 31, 2022 and 2021:
(In millions)
Assets:
Marketable securities
Total assets at fair value
Table of Contents
December 31, 2022
Level 1
Level 2
Level 3
Total
$
2
2 $
2
2 $
—
— $
4
4
82
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In millions)
Assets:
Restricted cash
Marketable securities
Derivative instruments - FX forward
Total assets at fair value
Liabilities:
Derivative instruments - interest rate swaps
Derivative instruments - FX forwards
Total liabilities at fair value
Change in restricted investments using Level 3 inputs
(In millions)
Fair value of investment at December 31, 2020
Change in fair value
Acquisition of William Hill
Fair value of investment at December 31, 2021
Restricted Cash
Level 1
Level 2
Level 3
Total
December 31, 2021
$
$
$
$
1 $
69
—
70 $
— $
—
— $
1 $
9
1
11 $
28 $
16
44 $
— $
—
—
— $
— $
—
— $
$
$
2
78
1
81
28
16
44
Level 3 Investment
44
7
(51)
—
The estimated fair values of the Company’s restricted cash are based upon quoted prices available in active markets (Level 1), or quoted prices for similar
assets in active and inactive markets (Level 2) and represent the amounts the Company would expect to receive if the Company sold instruments classified
as restricted cash. Restricted cash includes cash equivalents held in short-term certificate of deposit accounts or money market type funds. Restricted cash
that is not subject to remeasurement on a recurring basis is not included in the table above.
Marketable Securities
Marketable securities consist primarily of trading securities held by the Company’s captive insurance subsidiary, deferred compensation plans and
investments acquired in the William Hill Acquisition. The estimated fair values of the Company’s marketable securities are determined on an individual
asset basis based upon quoted prices of identical assets available in active markets (Level 1), quoted prices of identical assets in inactive markets, or quoted
prices for similar assets in active and inactive markets (Level 2), and represent the amounts the Company would expect to receive if the Company sold
these marketable securities.
The Company held common shares of Flutter Entertainment PLC, which is a publicly traded company with a readily determinable share price. During the
year ended December 31, 2020, the Company sold a portion of these shares for $24 million and recorded a gain of $14 million. On July 7, 2021, the
Company sold the remaining shares for $9 million and recorded a loss of $1 million on the sale date. Gains and losses have been included in Other income
(loss) on the Statements of Operations.
Derivative Instruments
The Company does not purchase or hold any derivative financial instruments for trading purposes.
Forward contracts
The Company entered into several foreign exchange forward contracts with third parties to hedge the risk of fluctuations in the foreign exchange rates
between USD and GBP. During the years ended December 31, 2022 and 2021, the Company recorded a gain of $73 million and $23 million, respectively,
related to forward contracts, which was recorded in the Other income (loss) on the Statements of Operations. All forward contracts have been settled as of
July 1, 2022.
Table of Contents
83
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Interest Rate Swap Derivatives
We assumed Former Caesars’ interest rate swaps to manage the mix of assumed debt between fixed and variable rate instruments. During the year
ended December 31, 2022, we had four interest rate swap agreements to fix the interest rate on $1.3 billion of variable rate debt related to the CRC Credit
Agreement. The interest rate swaps were designated as cash flow hedging instruments. The difference to be paid or received under the terms of the interest
rate swap agreements was accrued as interest rates changed and recognized as an adjustment to interest expense at settlement. The term of the interest rate
swaps ended on December 31, 2022.
Valuation Methodology
The estimated fair values of our interest rate swap derivative instruments were derived from market prices obtained from dealer quotes for similar, but not
identical, assets or liabilities. Such quotes represented the estimated amounts we would receive or pay to terminate the contracts. The interest rate swap
derivative instruments were included in either Other assets, net or Other long-term liabilities on our Balance Sheets. Our derivatives were recorded at their
fair values, adjusted for the credit rating of the counterparty if the derivative was an asset, or adjusted for the credit rating of the Company if the derivative
was a liability. None of our derivative instruments were offset and all were classified as Level 2.
Financial Statement Effect
The effect of interest rate swaps designated as hedging instruments on the Balance Sheets for amounts transferred into Accumulated other comprehensive
income (loss) (“AOCI”) before tax was a gain of $28 million and $62 million, during the years ended December 31, 2022 and 2021, respectively. AOCI
reclassified to Interest expense on the Statements of Operations was $12 million and $59 million, for years ended December 31, 2022 and 2021,
respectively. As of December 31, 2021, the interest rate swaps derivative liability was $28 million. Net settlement of these interest rate swaps resulted in
the reclassification of deferred gains and losses within AOCI to be reclassified to the income statement as a component of interest expense as settlement
occurred.
Accumulated Other Comprehensive Income
The changes in AOCI by component, net of tax, for the periods through December 31, 2022 and 2021 are shown below.
(In millions)
Balances as of December 31, 2020
Other comprehensive loss before reclassifications
Amounts reclassified from accumulated other comprehensive income
Total other comprehensive income (loss), net of tax
Balances as of December 31, 2021
Other comprehensive income before reclassifications
Amounts reclassified from accumulated other comprehensive income
Total other comprehensive income , net of tax
Balances as of December 31, 2022
Table of Contents
Unrealized Net
Gains on Derivative
Instruments
Foreign Currency
Translation
Adjustments
Other
Total
26 $
(12)
59
47
73 $
9
12
21
94 $
$
$
$
84
8 $
(44)
—
(44)
(36) $
35
—
35
(1) $
— $
(1)
—
(1)
(1) $
—
—
—
(1) $
34
(57)
59
2
36
44
12
56
92
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 9. Accrued Other Liabilities
Accrued other liabilities consisted of the following:
(In millions)
Contract and contract related liabilities (See Note 13)
Accrued payroll and other related liabilities
Self-insurance claims and reserves (See Note 11)
Accrued taxes
Operating lease liability
Disputed claims liability
Accrued marketing
Exit cost accrual
Other accruals
Total accrued other liabilities
Disputed Claims Liability and Exit Cost Accrual
December 31,
2022
2021
747 $
283
203
195
50
26
20
13
391
614
377
221
183
49
50
159
12
308
1,928 $
1,973
$
$
The disputed claims liability and exit cost accrual were assumed liabilities of Former Caesars. The disputed claims liability represents certain remaining
unsecured claims related to Former Caesars bankruptcy for which we have estimated the fair value of the remaining liability. Exit costs are related to the
unbundling of electric service provided by NV Energy which we assumed from the Merger.
Note 10. Leases
The Company has operating and finance leases for various real estate and equipment. Certain of the Company’s lease agreements include rental payments
based on a percentage of sales over specified contractual amounts, rental payments adjusted periodically for inflation and rental payments based on usage.
The Company’s leases include options to extend the lease term one month to 75 years. The Company’s lease agreements do not contain any material
restrictive covenants, other than those described below.
Lessee Arrangements
Operating Leases
We lease real estate and equipment used in our operations from third parties. As of December 31, 2022, the remaining term of our operating leases ranged
from 1 to 69 years with various extension options available, if we elect to exercise them. However, our remaining terms only include extension options that
we have determined are reasonably certain as of December 31, 2022. In addition to minimum rental commitments, certain of our operating leases provide
for contingent rentals based on a percentage of revenues in excess of specified amounts. We do not include costs associated with our non-lease components
in our lease costs disclosed in the table below. During the years ended December 31, 2022 and 2021, we obtained $43 million and $13 million, respectively,
of right-of-use (“ROU”) assets in exchange for new lease liabilities. During the year ended December 31, 2022, we disposed of $12 million of ROU assets
and lease liabilities.
Leases recorded on the balance sheet consist of the following:
(In millions)
Assets:
Classification on the Balance Sheet
2022
2021
December 31,
Operating lease ROU assets
(a)
Other assets, net
$
639 $
Liabilities:
Current operating lease liabilities
Non-current operating lease liabilities
(a)
(a)
Accrued other liabilities
Other long-term liabilities
50
710
662
49
726
___________________
(a)
As noted above, we have elected the short-term lease measurement and recognition exemption and do not establish ROU assets or liabilities for operating leases with terms of 12 months or
less.
Table of Contents
85
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Lease Terms and Discount Rate
Weighted Average Remaining Lease Term (in years)
Weighted Average Discount Rate
Components of Lease Expense
(In millions)
Operating lease expense
Short-term and variable lease expense
Total operating lease costs
Supplemental cash flow information related to leases is as follows:
Cash payments included in the measurement of lease liabilities
(In millions)
Operating cash flows for operating leases
Maturities of Lease Liabilities
(In millions)
2023
2024
2025
2026
2027
Thereafter
Total future minimum lease payments
Less: present value factor
Total lease liability
Finance Leases
December 31,
2022
2021
32.2
8.3 %
2022
Years Ended December 31,
2021
2020
132 $
138
270 $
128 $
104
232 $
28.8
8.1 %
53
50
103
2022
Years Ended December 31,
2021
110 $
96
2020
49
$
$
$
Operating Leases
109
75
73
71
72
1,975
2,375
(1,615)
760
$
$
We have finance leases for certain equipment and real estate. As of December 31, 2022, our finance leases had remaining lease terms of up to
approximately 36 years, some of which include options to extend the lease terms in one month increments. Our finance lease ROU assets and liabilities
were $73 million and $78 million as of December 31, 2022, respectively, and $40 million and $43 million as of December 31, 2021, respectively.
Financing Obligations
VICI Leases & Golf Course Use Agreement
The fair value of the real estate assets and the related failed sale-leaseback financing obligations were estimated based on the present value of the estimated
future lease payments over the lease term of 15 years, plus renewal options, using an imputed discount rate of approximately 11.01%.
CEI leases certain real property assets from VICI under the following agreements: (i) for a portfolio of properties located throughout the United States (the
“Regional Lease”), (ii) for Caesars Palace Las Vegas and Harrah’s Las Vegas (the “Las Vegas Lease”), and (iii) for Harrah’s Joliet Hotel & Casino (the
“Joliet Lease”), (collectively, “VICI Leases”). The lease agreements, inclusive of all amendments, include (i) a 15-year initial term with four five-year
renewal options, (ii) annual fixed rent payments of $1.1 billion, subject to annual escalation provisions based on the Consumer Price Index (“CPI”) and a
2% floor which commenced in lease year two of the initial terms and (iii) a variable element based on net revenues of the underlying leased properties,
commencing in lease year eight of the initial term.
Table of Contents
86
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Regional Lease includes a put-call option whereby the Company may require VICI to purchase and lease back (as lessor) or whereby VICI may require
the Company to sell to VICI and lease back (as lessee) the real estate components of the gaming and racetrack facilities of Harrah’s Hoosier Park Racing &
Casino and Indiana Grand (“Centaur properties”). Election to exercise the option by either party must be made during the election period beginning January
1, 2022 and ending December 31, 2024. Upon either party exercising their option, the Centaur properties would be sold at a price in accordance with the
agreement and leased back to CEI in accordance to the pre-existing terms of the Regional Lease.
The Golf Course Use Agreement between the Company and VICI, encompassing four golf courses in three states, has a 35-year term (inclusive of all
renewal periods), whereby the Company agrees to pay (i) an annual membership fee of $11 million, subject to annual escalation provisions based on the
CPI and a 2% floor (ii) annual use fees of $3 million, including escalation provisions based on the CPI and a 2% floor commencing on the second lease
year through and including the final lease year and (iii) certain per-round fees, as set forth in the agreement. Furthermore, the term of the Golf Course Use
Agreement was extended such that there will be 15 years remaining until the expiration of the initial term.
GLPI Leases
The fair value of the real estate assets and the related failed sale-leaseback financing obligations were estimated based on the present value of the estimated
future lease payments over the lease term of 35 years, including renewal options, using an imputed discount rate of approximately 9.75%. The value of the
failed sale-leaseback financing obligations is dependent upon assumptions regarding the amount of the lease payments and the estimated discount rate of
the lease payments required by a market participant.
CEI leases certain real property assets from GLPI under the Master Lease (as amended, the “GLPI Master Lease”). The GLPI Master Lease, encompassing
a portfolio of properties within the United States, provides for the lease of land, buildings, structures and other improvements on the land, easements and
similar appurtenances to the land and improvements relating to the operation of the leased properties. The GLPI Master Lease, inclusive of all amendments,
provides for (i) an initial term of 20 years (through September 2038), with four five-year renewals at the Company’s option, (ii) annual land and building
base rent of $24 million and $63 million, respectively, (iii) escalating provisions of building base rent equal to 101.25% of the rent for the preceding year
for lease years five and six, 101.75% for lease years seven and eight and 102% for each lease year thereafter and (iv) relief from the operating, capital
expenditure and financial covenants in the event of involuntary closures. The GLPI Master Lease does not provide the Company with an option to purchase
the leased property or the ability to terminate its obligations under the GLPI Master Lease prior to its expiration without GLPI’s consent.
The Lumière Lease was entered into by the Company and GLPI, whereby the Company sold the real estate underlying Horseshoe St. Louis, formerly
known as Lumière, to GLPI and leased back the property under a long-term financing obligation. The Lumière Lease, inclusive of all amendments,
provides for (i) an initial term commencing on September 29, 2020 and ending on October 31, 2033, (ii) four five-year renewal options, (iii) annual rent
payments of $23 million, (iv) escalation provisions commencing in lease year two equal to 101.25% of the rent for the preceding year for lease years two
through five, 101.75% for lease years six and seven and 102% for each lease year thereafter, (v) maintaining a minimum of 1.20:1 adjusted revenue to rent
ratio and (vi) certain relief under the financial covenant in the event of involuntary closures.
The Company continues to reflect the real estate assets related to the failed sale-lease back transactions on the Balance Sheets in Property and equipment,
net as if the Company was the legal owner, and continues to recognize depreciation expense over their estimated useful lives.
The future minimum payments related to the GLPI Leases, including the Lumière Lease, and VICI Leases financing obligation, as amended, at
December 31, 2022 were as follows:
(In millions)
2023
2024
2025
2026
2027
Thereafter
Total future payments
Less: Amounts representing interest
Plus: Residual values
Financing obligation
Table of Contents
GLPI Leases
VICI Leases
111 $
112
113
115
117
4,487
5,055
(4,050)
240
1,245 $
1,166
1,188
1,204
1,221
1,242
44,616
50,637
(40,236)
893
11,294
$
$
87
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Cash payments made relating to our long-term financing obligations during the years ended December 31, 2022, 2021 and 2020 were as follows:
(In millions)
Cash paid for principal
Cash paid for interest
2022
$
(a)
GLPI Leases
December 31,
2021
2020
2022
(a)
VICI Leases
December 31,
2021
— $
110
— $
109
— $
93
1 $
1,095
1 $
983
2020
49
472
____________________
(a)
For the initial periods of the VICI and GLPI Leases, cash payments are less than the interest expense recognized, which causes the failed-sale leaseback obligation to increase during the
initial years of the lease term.
Lease Covenants
The GLPI Leases and VICI Leases contain certain covenants requiring minimum capital expenditures based on a percentage of net revenues along with
maintaining certain financial ratios. The Company was in compliance with all applicable covenants as of December 31, 2022.
Lessor Arrangements
Lodging Arrangements
Lodging arrangements are considered short-term and generally consist of lease and nonlease components. The lease component is the predominant
component of the arrangement and consists of the fees charged for lodging. The nonlease components primarily consist of resort fees and other
miscellaneous items. As the timing and pattern of transfer of both the lease and nonlease components are over the course of the lease term, we have elected
to combine the revenue generated from lease and nonlease components into a single lease component based on the predominant component in the
arrangement. During the years ended December 31, 2022, 2021 and 2020, we recognized $2.0 billion, $1.6 billion and $450 million, respectively, in lease
revenue related to lodging arrangements, which is included in Hotel revenues in the Statements of Operations.
Conventions
Convention arrangements are considered short-term and generally consist of lease and nonlease components. The lease component is the predominant
component of the arrangement and consists of fees charged for the use of meeting space. The nonlease components primarily consist of food and beverage
and audio/visual services. Revenue from conventions is included in Other revenue in the Statement of Operations, and during the years ended
December 31, 2022, 2021 and 2020, we recognized $34 million, $7 million and $3 million, respectively, in lease revenue related to conventions.
Real Estate Operating Leases
We enter into long-term real estate leasing arrangements with third-party lessees at our properties. As of December 31, 2022, the remaining terms of these
operating leases ranged from 1 to 83 years, some of which include options to extend the lease term for up to five years. In addition to minimum rental
commitments, certain of our operating leases provide for contingent payments including contingent rentals based on a percentage of revenues in excess of
specified amounts and reimbursements for common area maintenance and utilities charges. As the timing and pattern of transfer of both the lease and
nonlease components are over the course of the lease term, we have elected to combine the revenue generated from lease and nonlease components into a
single lease component based on the predominant component in the arrangement. In addition, to maintain the value of our leased assets, certain leases
include specific maintenance requirements of the lessees or maintenance is performed by the Company on behalf of the lessees. During the years ended
December 31, 2022, 2021 and 2020, we recognized $168 million, $149 million and $41 million, respectively, of real estate lease revenue, which is included
in Other revenue in the Statement of Operations. Real estate lease revenue includes $64 million, $45 million and $13 million, respectively, of variable
rental income for the years ended December 31, 2022, 2021 and 2020.
Table of Contents
88
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Maturities of Lease Receivables
(In millions)
2023
2024
2025
2026
2027
Thereafter
Total
Note 11. Litigation, Commitments and Contingencies
Litigation
General
Operating Leases
73
66
60
58
52
703
1,012
$
$
We are a party to various legal proceedings, which have arisen in the normal course of our business. Such proceedings can be costly, time consuming and
unpredictable and, therefore, no assurance can be given that the final outcome of such proceedings will not materially impact our consolidated financial
condition or results of operations. Estimated losses are accrued for these proceedings when the loss is probable and can be estimated. While we maintain
insurance coverage that we believe is adequate to mitigate the risks of such proceedings, no assurance can be given that the amount or scope of existing
insurance coverage will be sufficient to cover losses arising from such matters. The current liability for the estimated losses associated with these
proceedings is not material to our consolidated financial condition and those estimated losses are not expected to have a material impact on our results of
operations.
COVID-19 Insurance Claims
The COVID-19 public health emergency had a significant impact on the Company’s business and employees, as well as the communities where the
Company operates and serves. The Company purchased broad property insurance coverage to protect against “all risk of physical loss or damage” and
resulting business interruption, unless specifically excluded by policies. The Company submitted claims for losses incurred as a result of the COVID-19
public health emergency which exceed $2 billion. The insurance carriers under the Company’s insurance policies have asserted that the policies do not
cover losses incurred by the Company as a result of the COVID-19 public health emergency and have refused to make payments under the applicable
policies. Therefore, on March 19, 2021, the Company filed a lawsuit against its insurance carriers in the state court in Clark County, Nevada. On June 8,
2021, the Company filed an amended complaint. Litigation is proceeding and there can be no assurance as to the outcome of the litigation.
Contractual Commitments
Capital Commitments
Harrah’s New Orleans
In April 2020, the Company and the State of Louisiana, by and through the Louisiana Gaming Control Board, entered into an Amended and Restated
Casino Operating Contract. Additionally, the Company, New Orleans Building Corporation and the City entered into a Second Amended and Restated
Lease Agreement. Based on these amendments related to Harrah’s New Orleans, the Company is required to make a capital investment of $325 million on
or around Harrah’s New Orleans by July 15, 2024. The capital investment will include a renovation and full interior and exterior redesign, updated casino
floor, new culinary experiences and a new 340 room hotel tower as part of the project to rebrand the property to Caesars New Orleans. As of December 31,
2022, total capital expenditures on the project have been $112 million.
Atlantic City
As required by the New Jersey Gaming Control Board in connection with its approval of the Merger, we funded $400 million in escrow to provide funds
for a three year capital expenditure plan in the state of New Jersey. This amount is currently included in restricted cash in Other assets, net. As of
December 31, 2022 and 2021, our restricted cash balance in the escrow account was $118 million and $297 million, respectively, for future capital
expenditures in New Jersey.
Table of Contents
89
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Sports Sponsorship/Partnership Obligations
We have agreements with certain professional sports leagues and teams, sporting event facilities and media companies for tickets, suites, and advertising,
marketing, promotional and sponsorship opportunities including communication with partner customer databases. Additionally, a selection of such
partnerships provide Caesars with exclusivity to access the aforementioned rights within the casino and/or sports betting category. In connection with the
launch of the Caesars Sportsbook app, we entered into a significant marketing campaign with distinguished actors, former athletes and other media
personalities. As of December 31, 2022 and 2021, obligations related to these agreements were $898 million and $997 million, respectively, which include
obligations assumed in the William Hill Acquisition, with contracts extending through 2040. These obligations include leasing of event suites that are
generally considered short term leases for which we do not record a right of use asset or lease liability. We recognize expenses in the period services are
received in accordance with the various agreements. In addition, assets or liabilities may be recorded related to the timing of payments as required by the
respective agreement.
Self-Insurance
We are self-insured for workers compensation and other risk insurance, as well as health insurance and general liability. Our total estimated self-insurance
liability was $203 million and $221 million as of December 31, 2022 and 2021, respectively, which is included in Accrued other liabilities on our Balance
Sheets.
The assumptions utilized by our actuaries are subject to significant uncertainty and if outcomes differ from these assumptions or events develop or progress
in a negative manner, the Company could experience a material adverse effect and additional liabilities may be recorded in the future.
Contingencies
Weather Disruption - Lake Charles
On August 27, 2020, Hurricane Laura made landfall on Lake Charles as a Category 4 storm severely damaging the Isle of Capri Casino Lake Charles
(“Lake Charles”). During the year ended December 31, 2022, the Company reached a final settlement agreement with the insurance carriers for a total
amount of $128 million, before our insurance deductible of $25 million. The Company has received a total of $103 million related to damaged fixed assets,
remediation costs and business interruption.
The Company recorded gains of $38 million and $21 million during the years ended December 31, 2022 and 2021, respectively, which are included in
Transaction and other costs, net in our Statements of Operations, as proceeds received for the cost to replace damaged property were in excess of respective
carrying value of the assets. The construction of our new land-based casino, Horseshoe Lake Charles, was completed and reopened in December 2022.
Table of Contents
90
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 12. Long-Term Debt
(Dollars in millions)
Secured Debt
(a)
Baltimore Revolving Credit Facility
Baltimore Term Loan
CRC Term Loan
CRC Incremental Term Loan
CEI Revolving Credit Facility
CEI Term Loan A
CRC Senior Secured Notes
CEI Senior Secured Notes
Convention Center Mortgage Loan
(a)
Unsecured Debt
CEI Senior Notes due 2027
CEI Senior Notes due 2029
Special Improvement District Bonds
Long-term notes and other payables
Final
Maturity
2023
2024
2024
2025
2028
2028
2025
2025
2025
2027
2029
2037
Total debt
Current portion of long-term debt
Deferred finance charges associated with the CEI Revolving Credit Facility
Long-term debt
Unamortized discounts and deferred finance charges
Fair value
December 31, 2022
December 31, 2021
Rates
Face Value
Book Value
Book Value
variable
variable
variable
variable
variable
variable
5.75%
6.25%
8.01%
8.125%
4.625%
4.30%
$
$
$
— $
267
3,415
1,004
—
750
989
3,400
400
1,611
1,200
47
2
13,085
(108)
—
12,977 $
$
12,675
— $
262
3,243
972
—
747
979
3,360
400
1,589
1,186
47
2
12,787
(108)
(20)
12,659 $
318 $
—
275
4,190
1,705
—
—
985
3,346
399
1,673
1,183
49
2
13,807
(70)
(15)
13,722
531
____________________
(a)
Refer to “Subsequent Amendment to the CEI Credit Agreement and issuance of New Senior Secured Notes” for a discussion of the repayment of these term loans.
Annual Estimated Debt Service Requirements
(In millions)
Annual maturities of long-term debt
Estimated interest payments
Total debt service obligation
(b)
2023
108 $
920
1,028 $
$
$
Years Ended December 31,
2025
(a)
2024
(a)
2026
2027
Thereafter
(a)
Total
3,690 $
830
4,520 $
5,797 $
560
6,357 $
40 $
220
260 $
1,651 $
220
1,871 $
1,799 $
120
1,919 $
13,085
2,870
15,955
____________________
(a)
Maturities of $3.4 billion in 2024 and $1.0 billion in 2025 were repaid with the net proceeds of the $2.5 billion CEI Term Loan B and the $2.0 billion CEI Senior Secured Notes, due 2030.
See “Subsequent Amendment to the CEI Credit Agreement and issuance of New Senior Secured Notes” below.
(b)
Debt principal payments are estimated amounts based on contractual maturity and scheduled repayment dates. Interest payments are estimated based on the forward-looking LIBOR and
SOFR curve, where applicable. Actual payments may differ from these estimates.
Current Portion of Long-Term Debt
The current portion of long-term debt as of December 31, 2022 includes the principal payments on the term loans, other unsecured borrowings, and special
improvement district bonds that are contractually due within 12 months. The Company may, from time to time, seek to repurchase its outstanding
indebtedness. Any such purchases may be funded by existing cash balances or the incurrence of debt. The amount and timing of any repurchase will be
based on business and market conditions, capital availability, compliance with debt covenants and other considerations.
Debt Discounts or Premiums and Deferred Finance Charges
Debt discounts or premiums and deferred finance charges incurred in connection with the issuance of debt are amortized to interest expense based on the
related debt agreements primarily using the effective interest method. Unamortized discounts are written off and included in our gain or loss calculations to
the extent we extinguish debt prior to the original maturity or payment dates.
Table of Contents
91
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Net amortization of the debt issuance costs and the discount and/or premium associated with the Company’s indebtedness totaled $139 million, $177
million and $80 million for the years ended December 31, 2022, 2021 and 2020, respectively. Amortization of debt issuance costs is computed using the
effective interest method and is included in interest expense.
Fair Value
The fair value of debt has been calculated primarily based on the borrowing rates available as of December 31, 2022 and based on market quotes of our
publicly traded debt. We classify the fair value of debt within Level 1 and Level 2 in the fair value hierarchy.
Terms of Outstanding Debt
Baltimore Term Loan and Baltimore Revolving Credit Facility
As a result of the increased ownership interest in Horseshoe Baltimore, the Company began to consolidate the aggregate principal amount of Horseshoe
Baltimore’s senior secured term loan facility (the “Baltimore Term Loan”) and amount outstanding, if any, under Horseshoe Baltimore’s senior secured
revolving credit facility (the “Baltimore Revolving Credit Facility”). The Baltimore Term Loan matures in July 2024 and is subject to a variable rate of
interest calculated as LIBOR plus 4.00%. The Baltimore Revolving Credit Facility has borrowing capacity of up to $10 million, subject to a variable rate of
interest calculated as Term SOFR plus 4.00% subject to one 0.25% step-down based on senior secured leverage ratio, the ratio of first lien senior secured
net debt to adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). On June 24, 2022, the Company entered into an
amendment related to the Baltimore Revolving Credit Facility to extend the maturity date to July 7, 2023. As of December 31, 2022, there was $10 million
of available borrowing capacity under the Baltimore Revolving Credit Facility. On November 14, 2022, the Company made partial prepayment of
$10 million of the outstanding principal balance of the Baltimore Term Loan.
CRC Term Loans and CRC Revolving Credit Facility
The CRC Term Loan, the CRC Incremental Term Loan and the CRC Revolving Credit Facility were subject to the terms described below prior to
termination or repayment. The CRC Revolving Credit Facility was terminated in October 2022 and on February 6, 2023, the Company repaid the CRC
Term Loan and the CRC Incremental Term Loan with proceeds from a new CEI Term Loan B and new CEI Senior Secured Notes, due 2030. See
“Subsequent Amendment to the CEI Credit Agreement and issuance of New Senior Secured Notes” below.
CRC was party to a credit agreement, dated as of December 22, 2017 (as amended, the “CRC Credit Agreement”), which provided for a $1.0 billion five-
year revolving credit facility (the “CRC Revolving Credit Facility”), an initial $4.7 billion seven-year senior secured term loan (the “CRC Term Loan”),
and an incremental $1.8 billion five-year senior secured term loan that was incurred in connection with the Merger (the “CRC Incremental Term Loan”).
The CRC Term Loan had a maturity date in December 2024 and the CRC Incremental Term Loan had a maturity date in July 2025. The CRC Term Loan
and the CRC Incremental Term Loan required scheduled quarterly principal payments in amounts equal to 0.25% of the original aggregate principal
amount, with the balances due at maturity. The CRC Credit Agreement also included customary voluntary and mandatory prepayment provisions, subject
to certain exceptions.
The CRC Revolving Credit Facility contained a maturity date in December 2022 and included a $400 million letter of credit sub-facility.
Borrowings under the CRC Credit Agreement were subject to interest at a rate equal to either (a) LIBOR adjusted for certain additional costs, subject to a
floor of 0% or (b) a base rate determined by reference to the highest of (i) the federal funds rate plus 0.50%, (ii) the prime rate as determined by Credit
Suisse AG, Cayman Islands Branch, as administrative agent under the CRC Credit Agreement and (iii) the one-month adjusted LIBOR rate plus 1.00%, in
each case plus an applicable margin. Such applicable margin shall be (a) with respect to the CRC Term Loan, 2.75% per annum in the case of any LIBOR
loan or 1.75% per annum in the case of any base rate loan and (b) with respect to the CRC Incremental Term Loan, 3.50% per annum in the case of any
LIBOR loan or 2.50% in the case of any base rate loan. The CRC Term Loan and the CRC Incremental Term Loan were LIBOR based loans as of
December 31, 2022.
During the year ended December 31, 2022, the Company utilized and fully repaid borrowings on the CRC Revolving Credit Facility, prior to its
termination. Additionally, the Company made several partial prepayments of outstanding principal of the CRC Term Loan utilizing operating cash flows
totaling $300 million, excluding the prepayments resulting from the proceeds of the CEI Term Loan A described below, and recognized a related
$16 million loss on the early extinguishment of debt during the year ended December 31, 2022.
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92
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Following the closing of the sale of William Hill International, the Company utilized the proceeds from the sale, as well as cash on hand to make partial
prepayments totaling $755 million of the outstanding principal of the CRC Incremental Term Loan and recognized a $27 million loss on the early
extinguishment of debt during the year ended December 31, 2022.
On October 5, 2022, in connection with the Third Amendment (as defined below) to the CEI Credit Agreement, the Company utilized the entire proceeds
of a new $750 million CEI Term Loan A (as defined below) to make a partial prepayment of the outstanding principal of the CRC Term Loan, as well as
terminate the CRC Revolving Credit Facility. As a result of the partial prepayment, the Company recognized a $41 million loss on the early extinguishment
of debt. See below.
CEI Term Loan A and CEI Revolving Credit Facility
CEI is party to a credit agreement, dated as of July 20, 2020, with JPMorgan Chase Bank, N.A., as administrative agent, U.S. Bank National Association,
as collateral agent, and certain banks and other financial institutions and lenders party thereto (the “CEI Credit Agreement”), which provided for a five-year
CEI Revolving Credit Facility in an aggregate principal amount of $1.2 billion (the “CEI Revolving Credit Facility”). The CEI Revolving Credit Facility
contained reserves of $190 million which are available only for certain permitted uses. On May 23, 2022, the Company obtained approval for a reduction
of $150 million in required reserves. Prior to further amendment, described below, the CEI Revolving Credit Facility was scheduled to mature in July 2025
and included a letter of credit sub-facility of $250 million.
Prior to the Third Amendment (as defined below) of the CEI Credit Agreement on October 5, 2022, the interest rate per annum applicable under the CEI
Revolving Credit Facility, at the Company’s option was either (a) LIBOR adjusted for certain additional costs, subject to a floor of 0% or (b) a base rate
determined by reference to the highest of (i) the federal funds rate plus 0.50%, (ii) the rate of interest per annum last quoted by The Wall Street Journal as
the “Prime Rate” in the United States and (iii) the one-month adjusted LIBOR rate plus 1.00%, in each case plus an applicable margin. Such applicable
margin was 3.25% per annum in the case of any LIBOR loan and 2.25% per annum in the case of any base rate loan, subject to three 0.25% step-downs
based on the Company’s net total leverage ratio.
Additionally, prior to the Third Amendment (as defined below) of the CEI Credit Agreement, the Company was required to pay a commitment fee in
respect of any unused commitments under the CEI Revolving Credit Facility in the amount of 0.50% per annum, subject to a step-down to 0.375% per
annum based upon the Company’s net total leverage ratio. The Company was also required to pay customary agency fees as well as letter of credit
participation fees computed at a rate per annum equal to the applicable margin for LIBOR borrowings on the dollar equivalent of the daily stated amount of
outstanding letters of credit, plus such letter of credit issuer’s customary documentary and processing fees and charges and a fronting fee in an amount
equal to 0.125% per annum of the daily stated amount of such letter of credit.
On October 5, 2022, Caesars entered into a third amendment to the CEI Credit Agreement (the “Third Amendment”) pursuant to which the Company (a)
incurred a senior secured term loan in an aggregate principal amount of $750 million (the “CEI Term Loan A”) as a new term loan under the credit
agreement, (b) amended and extended the CEI Revolving Credit Facility under the CEI Credit Agreement (the CEI Revolving Credit Facility, as so
amended, the “Amended CEI Revolving Credit Facility” and, together with the CEI Term Loan A, the “Senior Credit Facilities”), (c) increased the
aggregate principal amount of the CEI Revolving Credit Facility to $2.25 billion, and (d) made certain other amendments to the CEI Credit Agreement.
Both the Amended CEI Revolving Credit Facility and the new CEI Term Loan A mature on January 31, 2028, subject to a springing maturity in the event
certain other long-term debt of Caesars is not extended or repaid. The Amended CEI Revolving Credit Facility includes a letter of credit sub-facility of
$388 million. The CEI Term Loan A requires scheduled quarterly payments in amounts equal to 1.25% of the original aggregate principal amount of the
CEI Term Loan A, with the balance payable at maturity. The Company may make voluntary prepayments of the CEI Term Loan A at any time prior to
maturity at par.
Borrowings under the Senior Credit Facilities bear interest at a rate equal to, at the Company’s option, either (a) a forward-looking term rate based on the
secured overnight financing rate (“SOFR”) for the applicable interest period plus an adjustment of 0.10% per annum (“Adjusted Term SOFR”), subject to a
floor of 0% or (b) a base rate (the “Base Rate”) determined by reference to the highest of (i) the rate of interest per annum last quoted by The Wall Street
Journal as the “Prime Rate” in the United States, (ii) the federal funds rate plus 0.50% per annum and (iii) the one-month Adjusted Term SOFR plus 1.00%
per annum, in each case, plus an applicable margin. Such applicable margin is 2.25% per annum in the case of any Adjusted Term SOFR loan and 1.25%
per annum in the case of any Base Rate loan, subject to three 0.25% step-downs based on the Company’s net total leverage ratio. In addition, on a quarterly
basis, the Company is required to pay each lender under the Amended CEI Revolving Credit Facility a commitment fee in respect of any unused
commitments under the Amended CEI Revolving Credit Facility in the amount of 0.35% per annum of the principal amount of the unused commitments of
such lender, subject to three 0.05% step-downs based on the Company’s net total leverage ratio.
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93
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
As of December 31, 2022, the Company had $2.1 billion of available borrowing capacity under the Amended CEI Revolving Credit Facility, after
consideration of $82 million in outstanding letters of credit, $48 million committed for regulatory purposes and the reserves described above.
Subsequent Amendment to the CEI Credit Agreement and issuance of New Senior Secured Notes
On February 6, 2023, the Company issued $2.0 billion in aggregate principal amount of 7.00% senior secured notes (the “CEI Senior Secured Notes due
2030”) pursuant to an indenture by and among the Company, the subsidiary guarantors party thereto from time to time, U.S. Bank Trust Company, National
Association, as trustee, and U.S. Bank National Association, as collateral agent. The CEI Senior Secured Notes due 2030 rank equally with all existing and
future first-priority lien obligations of the Company and the subsidiary guarantors. The CEI Senior Secured Notes due 2030 will mature in February 2030,
with interest paid semi-annually on February 15 and August 15 of each year, commencing August 15, 2023.
Additionally, on February 6, 2023, Caesars entered into an Incremental Assumption Agreement No. 2 pursuant to which the Company incurred a new
senior secured term loan facility in an aggregate principal amount of $2.5 billion (the “CEI Term Loan B”) as a new term loan under the CEI Credit
Agreement. The CEI Term Loan B requires scheduled quarterly amortization payments in amounts equal to 0.25% of the original aggregate principal
amount of the CEI Term Loan B, with the balance payable at maturity. Borrowings under the CEI Term Loan B bear interest at a rate equal to, at the
Company’s option, either (a) a forward-looking term rate based on the secured overnight financing rate for the applicable interest period plus an adjustment
of 0.10% per annum (“Adjusted Term SOFR”), subject to a floor of 0.50% or (b) a base rate (the “Base Rate”) determined by reference to the highest of (i)
the rate of interest per annum last quoted by The Wall Street Journal as the “Prime Rate” in the United States, (ii) the federal funds rate plus 0.50% per
annum and (iii) the one-month Adjusted Term SOFR plus 1.00% per annum, in each case, plus an applicable margin. Such applicable margin is 3.25% per
annum in the case of any Adjusted Term SOFR loan and 2.25% per annum in the case of any Base Rate loan, subject to one 0.25% step-down based on the
Company’s net total leverage ratio. The CEI Term Loan B was issued at a price of 99.0% of the principal amount and will mature in February 2030.
The net proceeds from the issuance of the CEI Senior Secured Notes due 2030 and the net proceeds from the CEI Term Loan B, were used to repay the
outstanding principal balance, including accrued and unpaid interest, of both the CRC Term Loan and the CRC Incremental Term Loan. The remaining net
proceeds were to be used to pay related fees, or for general corporate use. Upon the termination of the CRC Term Loan and the CRC Incremental Term
Loan, the Company recorded a loss on extinguishment of debt of approximately $200 million.
CRC Senior Secured Notes due 2025
On July 6, 2020, Colt Merger Sub, Inc. (the “Escrow Issuer”) issued $1.0 billion in aggregate principal amount of 5.75% Senior Secured Notes due 2025
pursuant to an indenture, dated July 6, 2020 (the “CRC Senior Secured Notes”), by and among the Escrow Issuer, U.S. Bank National Association, as
trustee and Credit Suisse AG, Cayman Islands Branch, as collateral agent. In connection with the consummation of the Merger, CRC assumed the rights
and obligations under the CRC Senior Secured Notes and the indenture governing such notes. The CRC Senior Secured Notes rank equally with all existing
and future first priority lien obligations of CRC, CRC Finco, Inc. and the subsidiary guarantors. The CRC Senior Secured Notes will mature on July 1,
2025 with interest payable semi-annually in cash in arrears on January 1 and July 1 of each year. During the year ended December 31, 2022, the Company
purchased a total of $11 million in principal amount of the CRC Senior Secured Notes.
CEI Senior Secured Notes due 2025
On July 6, 2020, the Escrow Issuer issued $3.4 billion in aggregate principal amount of 6.25% Senior Secured Notes due 2025 pursuant to an indenture
dated July 6, 2020 (the “CEI Senior Secured Notes”), by and among the Escrow Issuer, U.S. Bank National Association, as trustee, and U.S. Bank National
Association, as collateral agent. The Company assumed the rights and obligations under the CEI Senior Secured Notes and the indenture governing such
notes on July 20, 2020. The CEI Senior Secured Notes rank equally with all existing and future first-priority lien obligations of the Company and the
subsidiary guarantors. The CEI Senior Secured Notes will mature on July 1, 2025 with interest payable semi-annually in cash in arrears on January 1 and
July 1 of each year.
Convention Center Mortgage Loan
On September 18, 2020, the Company entered into a loan agreement with VICI to borrow a 5-year, $400 million Forum Convention Center mortgage loan
(the “Mortgage Loan”). The Mortgage Loan bears interest at a rate of, initially, 7.7% per annum, which escalates annually on the anniversary of the closing
date to a maximum interest rate of 8.3% per annum.
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94
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
CEI Senior Notes due 2027
On July 6, 2020, the Escrow Issuer issued $1.8 billion in aggregate principal amount of 8.125% Senior Notes due 2027 pursuant to an indenture, dated July
6, 2020 (the “CEI Senior Notes due 2027”), by and between the Escrow Issuer and U.S. Bank National Association, as trustee. The Company assumed the
rights and obligations under the CEI Senior Notes due 2027 and the indenture governing such notes on July 20, 2020. The CEI Senior Notes due 2027 rank
equally with all existing and future senior unsecured indebtedness of the Company and the subsidiary guarantors. The CEI Senior Notes due 2027 will
mature on July 1, 2027 with interest payable semi-annually in cash in arrears on January 1 and July 1 of each year. During the year ended December 31,
2022, the Company purchased a total of $89 million in principal amount of the CEI Senior Notes due 2027.
CEI Senior Notes due 2029
On September 24, 2021, the Company issued $1.2 billion in aggregate principal amount of 4.625% Senior Notes due 2029 (the “CEI Senior Notes due
2029”) pursuant to an indenture dated as of September 24, 2021 between the Company and U.S. Bank National Association, as Trustee. The CEI Senior
Notes due 2029 rank equally with all existing and future senior unsecured indebtedness of the Company and the subsidiary guarantors. The CEI Senior
Notes due 2029 will mature on October 15, 2029 with interest payable on April 15 and October 15 of each year, which began on April 15, 2022.
Summary of Debt and Revolving Credit Facility Cash Flows from Financing Activities in 2022
(In millions)
Proceeds
Repayments
(a)
CRC Revolving Credit Facility
CEI Term Loan A
CEI Senior Notes due 2027
CRC Term Loan
CRC Incremental Term Loan
CRC Senior Secured Notes
Baltimore Term Loan
Special Improvement District Bonds
Total
$
$
750 $
750
—
—
—
—
—
—
1,500 $
750
—
89
1,097
773
11
16
2
2,738
____________________
(a)
Includes contractually scheduled repayments as well as voluntary accelerated repayments.
Debt Covenant Compliance
The CRC Credit Agreement, the Senior Credit Facilities, the Baltimore Term Loan, the Baltimore Revolving Credit Facility and the indentures governing
the CEI Senior Secured Notes, the CEI Senior Notes due 2027, the CEI Senior Notes due 2029, and the CRC Senior Secured Notes contain covenants
which are standard and customary for these types of agreements. These include negative covenants, which, subject to certain exceptions and baskets, limit
the Company’s and its subsidiaries’ ability to (among other items) incur additional indebtedness, make investments, make restricted payments, including
dividends, grant liens, sell assets and make acquisitions.
Following the Third Amendment, the Amended CEI Revolving Credit Facility and the CEI Term Loan A include a maximum net total leverage ratio
financial covenant of 7.25:1 until December 31, 2024 and 6.50:1 from and after December 31, 2024. In addition, the Amended CEI Revolving Credit
Facility and the CEI Term Loan A include a minimum fixed charge coverage ratio financial covenant of 1.75:1 until December 31, 2024 and 2.00:1 from
and after December 31, 2024. From and after the repayment of the CEI Term Loan A, the financial covenants applicable to the Amended CEI Revolving
Credit Facility will be tested solely to the extent that certain testing conditions are satisfied. The Baltimore Revolving Credit Facility includes a net senior
secured leverage ratio financial covenant of 5.0:1. Failure to comply with such covenants could result in an acceleration of the maturity of indebtedness
outstanding under the relevant debt document.
As of December 31, 2022, the Company was in compliance with all of the applicable financial covenants described above.
Guarantees
The Senior Credit Facilities, the CEI Senior Secured Notes and the CEI Senior Secured Notes are guaranteed on a senior secured basis by each existing and
future material wholly-owned domestic subsidiary of the Company (subject to certain exceptions including CRC and its subsidiaries) and are secured by
substantially all of the existing and future property and assets of the Company and its subsidiary guarantors (subject to certain exceptions). The CEI Senior
Notes due 2027 and the CEI Senior Notes due 2029 are guaranteed on a senior unsecured basis by such subsidiaries.
Table of Contents
95
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The CRC Credit Agreement and the CRC Senior Secured Notes are guaranteed on a senior secured basis by each existing and future material wholly-
owned domestic subsidiary of CRC (subject to certain exceptions) and are secured by substantially all of the existing and future property and assets of CRC
and its subsidiary guarantors (subject to certain exceptions). The CRC Credit Agreement and the CRC Senior Secured Notes are also guaranteed on a
senior unsecured basis by the Company.
Note 13. Revenue Recognition
Accounting Policies
Casino Revenues
Our casino revenues consists of gaming wagers, pari-mutuel commissions, sports betting and iGaming wagers. The Company recognizes as casino revenue
the net win from these gaming activities, which is the difference between gaming wins and losses, not the total amount wagered. Progressive jackpots are
accrued and charged to revenue at the time the obligation to pay the jackpot is established. Gaming revenues are recognized net of free bets, free play,
matched deposits, and other similar incentives to its customers. During significant promotional periods, such as entering new jurisdictions with our Caesars
Sportsbook or Caesars Racebook apps, such activity could result in negative net gaming revenue. Such periods are not expected to be long in duration as
our level of investment during these promotional periods is within our discretion. Pari-mutuel commissions consist of commissions earned from
thoroughbred and harness racing and importing of simulcast signals from other race tracks and are recognized at the time wagers are made. Such
commissions are a designated portion of the wagering handle as determined by state racing commissions and are shown net of the taxes assessed by state
and local agencies, as well as purses and other contractual amounts paid to horsemen associations. The Company recognizes revenues from fees earned
through the exporting of simulcast signals to other race tracks at the time wagers are made, which are recorded on a gross basis. Such fees are based upon a
predetermined percentage of handle as contracted with the other race tracks.
Non-gaming Revenues
Hotel, food and beverage, and other operating revenues are recognized as services are performed and is the net amount collected from the customer for
such goods and services. Hotel, food and beverage services have been determined to be separate, stand-alone performance obligations and are recorded as
revenue as the good or service is transferred to the customer over the customer’s stay at the hotel or when the delivery is made for the food and beverage.
Advance deposits for future hotel occupancy, convention space or food and beverage services contract are recorded as deferred income until revenue
recognition criteria has been met. The Company also provides goods and services that may include multiple performance obligations, such as for packages,
for which revenues are allocated on a pro rata basis based on each service’s stand-alone selling price.
Sales and other taxes collected from customers on behalf of governmental authorities are accounted for on a net basis and are not included in net revenues
or operating expenses.
The Company’s Statement of Operations presents net revenue disaggregated by type or nature of the good or service. A summary of net revenues
disaggregated by type of revenue and reportable segment is presented below. Refer to Note 1 and Note 19 for additional information on the Company’s
reportable segments.
(In millions)
Casino
Food and beverage
Hotel
Other
Net revenues
(In millions)
Casino
Food and beverage
Hotel
Other
Net revenues
Table of Contents
$
$
$
$
Las Vegas
Regional
1,247 $
1,063
1,341
636
4,287 $
4,291 $
533
616
264
5,704 $
Year Ended December 31, 2022
Managed and
Branded
Caesars Digital
Corporate and
Other
Total
462 $
—
—
86
548 $
— $
—
—
282
282 $
(3) $
—
—
3
— $
5,997
1,596
1,957
1,271
10,821
Las Vegas
Regional
Year Ended December 31, 2021
Managed and
Branded
Caesars Digital
Corporate and
Other
Total
1,226 $
702
968
513
3,409 $
4,305 $
438
583
211
5,537 $
96
296 $
—
—
41
337 $
— $
—
—
278
278 $
— $
—
—
9
9 $
5,827
1,140
1,551
1,052
9,570
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In millions)
Casino
Food and beverage
Hotel
Other
Net revenues
Accounts Receivable and Credit Risk
Las Vegas
Regional
$
$
319 $
130
186
116
751 $
2,079 $
211
264
106
2,660 $
Year Ended December 31, 2020
Managed and
Branded
Caesars Digital
Corporate and
Other
Total
84 $
—
—
11
95 $
— $
1
—
106
107 $
— $
—
—
15
15 $
2,482
342
450
354
3,628
We issue credit to approved casino customers following investigations of creditworthiness. Business or economic conditions or other significant events
could affect the collectability of these receivables. Accounts receivable are non-interest bearing and are initially recorded at cost.
Marker play represents a meaningful portion of our overall table games volume. We maintain strict controls over the issuance of markers and aggressively
pursue collection from those customers who fail to pay their marker balances timely. These collection efforts include the mailing of statements and
delinquency notices, personal contacts, the use of outside collection agencies and civil litigation. Markers are generally legally enforceable instruments in
the United States. Markers are not legally enforceable instruments in some foreign countries, but the United States assets of foreign customers may be
reached to satisfy judgments entered in the United States. We consider the likelihood and difficulty of enforceability, among other factors, when we issue
credit to customers who are not residents of the United States.
Trade receivables, including casino and hotel receivables, are typically non-interest bearing. Accounts are written off when management deems the account
to be uncollectible. Recoveries of accounts previously written off are recorded when received. Management believes that as of December 31, 2022 and
2021, no significant concentrations of credit risk related to receivables existed.
Reserve for Uncollectible Accounts Receivable
An estimated allowance for doubtful accounts is maintained to reduce the Company’s receivables to their carrying amount, which approximates fair value.
The allowance is estimated based on specific review of customer accounts, historical collection experience and reasonable forecasts which consider current
economic and business conditions. As with many estimates, management must make judgments about potential actions by third parties in establishing and
evaluating our reserves for bad debts.
Accounts Receivable, Net
(In millions)
Casino
Food and beverage and hotel
Other
Accounts receivable, net
Table of Contents
December 31,
2022
2021
$
$
259 $
144
208
611 $
168
100
204
472
97
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Allowance for Doubtful Accounts
(In millions)
Balance as of January 1, 2020
Former Caesars consolidation
Provision for doubtful accounts
Write-offs less recoveries
Balance as of December 31, 2020
Provision for doubtful accounts
Write-offs less recoveries
Balance as of December 31, 2021
Provision for doubtful accounts
Write-offs less recoveries
Balance as of December 31, 2022
Contracts
Other
(a)
Total
$
$
4 $
95
18
3
120
16
(26)
110
13
(22)
101 $
1 $
35
11
(29)
18
10
(8)
20
12
(15)
17 $
5
130
29
(26)
138
26
(34)
130
25
(37)
118
____________________
(a)
“Other” includes allowance associated with lease receivables under ASC 842. See Note 10 for further details.
Contract and Contract Related Liabilities
The Company records contract or contract-related liabilities related to differences between the timing of cash receipts from the customer and the
recognition of revenue. The Company generally has three types of liabilities related to contracts with customers: (1) outstanding chip liability, which
represents the amounts owed in exchange for gaming chips held by a customer,(2) Caesars Rewards player loyalty program obligations, which represent the
deferred allocation of revenue relating to reward credits granted to Caesars Rewards members based on certain types of customer spend, including online
and retail gaming, hotel, dining, retail shopping, and player loyalty program incentives earned, and (3) customer deposits and other deferred revenue, which
primarily represents funds deposited by customers related to gaming play, advance payments received for goods and services yet to be provided (such as
advance ticket sales, deposits on rooms and convention space, unpaid wagers, iGaming deposits, or future sports bets). These liabilities are generally
expected to be recognized as revenue within one year of being purchased, earned, or deposited and are recorded within accrued other liabilities on the
Company’s Balance Sheets. Liabilities expected to be recognized as revenue beyond one year of being purchased, earned, or deposited are recorded within
other long-term liabilities on the Company’s Balance Sheets.
Outstanding Chip Liability
The Company recognizes the impact on gaming revenues on an annual basis to reflect an estimate of the change in the value of outstanding chips that are
not expected to be redeemed. This estimate is determined by measuring the difference between the total value of chips placed in service less the value of
chips under our control. This measurement is performed on an annual basis utilizing a methodology in which a consistent formula is applied to estimate the
percentage of chips not in our custody that are not expected to be redeemed. In addition to the formula, certain judgments are made with regard to various
denominations and souvenir chips. The outstanding chip liability is included in accrued other liabilities on the Balance Sheets.
Caesars Rewards Loyalty Program
Caesars Rewards grants Reward Credits to Caesars Rewards Members based on various types of consumer spend, including online and retail gaming, hotel,
dining, and retail shopping at Caesars-affiliated properties. Members may redeem Reward Credits for complimentary or discounted goods and services
such as rooms, food and beverages, merchandise, free play, entertainment, and travel accommodations. Members are able to accumulate Reward Credits
over time that they may redeem at their discretion under the terms of the program. A member’s Reward Credit balance is forfeited if the member does not
earn at least one Reward Credit during a continuous six-month period.
Because of the significance of the Caesars Rewards program and the ability for customers to accumulate Reward Credits based on their past play, we have
determined that Reward Credits granted in conjunction with other earning activity represent a performance obligation. As a result, for transactions in which
Reward Credits are earned, we allocate a portion of the transaction price to the Reward Credits that are earned based upon the relative standalone selling
prices (“SSP”) of the goods and services involved. When the activity underlying the “earning” of the Reward Credits has a wide range of selling prices and
is highly variable, such as in the case of gaming activities, we use the residual approach in this allocation by computing the value of the Reward Credits as
described below and allocating the residual amount to the gaming activity. This allocation results in a significant portion of the transaction price being
deferred and presented as a Contract liability on our accompanying Balance Sheets. Any amounts allocated to Contract liabilities are recognized as revenue
when the Reward Credits are redeemed in accordance with the specific recognition policy of the activity for which the credits are redeemed.
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98
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Our Caesars Rewards loyalty program includes various tiers that offer different benefits, and members are able to earn credits towards tier status, which
generally enables them to receive discounts similar to those provided as complimentaries described below. We have determined that any such discounts
received as a result of tier status do not represent material rights, and therefore, we do not account for them as distinct performance obligations.
We have determined the SSP of a Reward Credit by computing the redemption value of credits expected to be redeemed. Because Reward Credits are not
otherwise independently sold, we analyzed all Reward Credit redemption activity over the preceding calendar year and determined the redemption value
based on the fair market value of the goods and services for which the Reward Credits were redeemed. We have applied the practical expedient under the
portfolio approach to our Reward Credit transactions because of the similarity of gaming and other transactions and the homogeneity of Reward Credits.
As part of determining the SSP for Reward Credits, we also determined that there is generally an amount of Reward Credits that is not redeemed, which is
considered “breakage.” We recognize the expected breakage proportionally with the pattern of revenue recognized related to the redemption of Reward
Credits. We periodically reassess our customer behaviors and revise our expectations as deemed necessary on a prospective basis.
The following table summarizes the activity related to contract and contract-related liabilities:
(In millions)
Balance at January 1
Balance at December 31
Increase (decrease)
Outstanding Chip Liability
2022
2021
Caesars Rewards
Customer Deposits and Other
Deferred Revenue
2022
2021
2022
2021
$
$
48 $
45
(3) $
34 $
48
14 $
91 $
87
(4) $
94 $
91
(3) $
560 $
693
133 $
310
560
250
The table above excludes liabilities related to assets held for sale as of December 31, 2021 (see Note 4). Customer deposits and other deferred revenues
have increased primarily due to our expansion in the Caesars Digital segment with the legalization of retail and online sports betting in new states.
Complimentaries
The Company offers discretionary coupons and other discretionary complimentaries to customers outside of the loyalty program such as matching deposits,
free bets and free play. Such complimentaries are provided in conjunction with other revenue‑earning activities and are generally provided to encourage
additional customer spending on those activities. Accordingly, the Company allocates a portion of the transaction price received from such customers to the
complimentary goods and services. The Company performs this allocation based on the SSP of the underlying goods and services, which is determined
based upon the weighted-average cash sales prices received for similar services at similar points during the year. The retail value of complimentary food,
beverage, hotel rooms and other services provided to customers is recognized as a reduction of revenues for the department which issued the
complimentary and revenue for the department redeemed. Complimentaries provided by third parties at the discretion and under the control of the
Company is recorded as an expense when incurred.
The Company’s revenues included complimentaries and loyalty point redemptions totaling $1.2 billion, $1.0 billion and $406 million for the years ended
December 31, 2022, 2021 and 2020, respectively.
Note 14. Earnings per Share
Basic earnings per share (“EPS”) is computed by dividing net income (loss) by the weighted average shares outstanding during the reporting period.
Diluted EPS is computed similarly to basic EPS except that the weighted average shares outstanding are increased to include additional shares from the
assumed exercise of stock options and the assumed vesting of restricted share units, if dilutive. The number of additional shares is calculated by assuming
that outstanding stock options were exercised, that outstanding restricted share units were released and that the proceeds from such activities were used to
acquire shares of common stock at the average market price during the reporting period.
For a period in which the Company generated a net loss from continuing operations, the weighted average shares outstanding - basic was used in
calculating diluted loss per share because using diluted shares would have been anti-dilutive to loss per share.
Table of Contents
99
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following table illustrates the required disclosure of the reconciliation of the numerators and denominators of the basic and diluted net income (loss)
per share computations during the years ended December 31, 2022, 2021 and 2020:
(In millions, except per share amounts)
Net loss from continuing operations attributable to Caesars, net of income taxes
Discontinued operations, net of income taxes
Net loss attributable to Caesars
Shares outstanding:
Weighted average shares outstanding – basic
Effect of dilutive securities:
Stock-based compensation awards
Weighted average shares outstanding – diluted
Basic loss per share from continuing operations
Basic loss per share from discontinued operations
Net loss per common share attributable to common stockholders – basic:
Diluted loss per share from continuing operations
Diluted loss per share from discontinued operations
Net loss per common share attributable to common stockholders – diluted:
Weighted-Average Number of Anti-Dilutive Shares Excluded from Calculation of EPS
(In millions)
Stock-based compensation awards
5% Convertible notes
Total anti-dilutive common stock
Note 15. Stock-Based Compensation and Stockholders’ Equity
Stock-Based Awards
Years Ended December 31,
2021
2020
2022
(513) $
(386)
(899) $
214
—
214
(2.39) $
(1.80)
(4.19) $
(2.39) $
(1.80)
(4.19) $
(989) $
(30)
(1,019) $
211
—
211
(4.69) $
(0.14)
(4.83) $
(4.69) $
(0.14)
(4.83) $
(1,737)
(20)
(1,757)
130
—
130
(13.35)
(0.15)
(13.50)
(13.35)
(0.15)
(13.50)
$
$
$
$
$
$
Years Ended December 31,
2021
2020
2022
3
—
3
3
—
3
9
4
13
The Company maintains long-term incentive plans which allow for granting stock-based compensation awards for directors, employees, officers, and
consultants or advisers who render services to the Company or its subsidiaries, based on Company Common Stock, including stock options, restricted
stock, restricted stock units (“RSUs”), performance stock units (“PSUs”), market-based performance stock units (“MSUs”), stock appreciation rights, and
other stock-based awards or dividend equivalents. Forfeitures are recognized in the period in which they occur.
Performance Incentive Plans
In 2015, the Board of Directors (“Board”) adopted, and the Company’s stockholders approved, the 2015 Equity Incentive Plan (“2015 Plan”). In 2019, the
Company’s Board approved, and the Company’s stockholders approved, the amended and restated 2015 Plan. The amendment to the 2015 Plan allows for 3
million shares available for grant, plus the number of shares available for issuance under the 2015 Plan on the date the Company’s stockholders approved
the amendment. As of December 31, 2022, the Company had 5 million shares available for grant under the 2015 Plan.
Equity awards granted to employees and executive officers generally vest within one to three years from the grant date either ratably on each anniversary,
or entirely at the end of the service period. Awards may also contain performance conditions in addition to time based vesting conditions. Performance
awards relate to the achievement of defined levels of performance and will vest and become payable at the end of the vesting period. Performance awards
may contain targeted performance levels, which may ultimately vest within a range of 0% to 200% of the target award, based on defined operating metrics
or market performance as compared to a peer group. RSUs granted to non-employee directors generally vest immediately and are issued on the vesting
date, or may be deferred.
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100
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Total stock-based compensation expense in the accompanying Statements of Operations was $101 million, $82 million and $79 million during the years
ended December 31, 2022, 2021 and 2020, respectively. These amounts are included in corporate expenses and, in the case of certain property positions,
general and administrative expenses in the Company’s Statements of Operations.
Restricted Stock Unit Activity
During the year ended December 31, 2022, as part of the annual incentive program, the Company granted RSUs to employees of the Company with an
aggregate fair value of $56 million. Each RSU represents the right to receive payment in respect of one share of the Company’s Common Stock.
A summary of the RSUs activity for the year ended December 31, 2022 is presented in the following table:
Unvested outstanding as of December 31, 2021
(b)
Granted
Vested
Forfeited
Unvested outstanding as of December 31, 2022
Units
Weighted Average Grant
Date Fair Value
(a)
2,090,607 $
773,778
(907,764)
(93,140)
1,863,481
61.47
70.58
55.88
67.12
66.87
____________________
(a)
Represents the weighted-average grant date fair value of RSUs, which is the share price of our common stock on the grant date.
Included are 23,956 RSUs granted to non-employee members of the Board during the year ended December 31, 2022.
(b)
Performance Stock Unit Activity
During the year ended December 31, 2022, the Company granted approximately 80 thousand PSUs that are scheduled to vest over a period of one to three
years from the grant date. On the vesting date, recipients will receive between 0% and 200% of the target number of PSUs granted, in the form of Company
Common Stock, based on the achievement of specified performance conditions. The fair value of the PSUs is based on the market price of our common
stock when a mutual understanding of the key terms and conditions of the awards between the Company and recipient is achieved. The awards are
remeasured each period until such an understanding is reached. The aggregate value of PSUs granted during the year was $3 million as of December 31,
2022.
A summary of the PSUs activity for the year ended December 31, 2022 is presented in the following table:
Unvested outstanding as of December 31, 2021
Granted
Performance Adjustment
Vested
Forfeited
Unvested outstanding as of December 31, 2022
Units
Weighted Average Grant
Date Fair Value
(a)
417,069 $
80,420
80,030
(191,279)
(3,083)
383,157
62.20
41.60
45.39
53.60
51.73
____________________
(a)
This represents the weighted-average grant date fair value for PSUs where the grant date has been achieved or the price of our common stock as of the balance sheet date for PSUs where a
grant date has not been achieved.
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101
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Market-Based Stock Unit Activity
During the year ended December 31, 2022, the Company granted approximately 428 thousand MSUs that are scheduled to cliff vest over a period of one to
three years from the grant date. On the vesting date, recipients will receive between 0% and 200% of the granted MSUs in the form of Company Common
Stock based on the achievement of specified market and service conditions. Based on the terms and conditions of the awards, the grant date fair value of the
MSUs was determined using a Monte Carlo simulation model. Key assumptions for the Monte Carlo simulation model are the risk-free interest rate,
expected volatility, expected dividends and correlation coefficient. The effect of market conditions is considered in determining the grant date fair value,
which is not subsequently revised based on actual performance. Included in the MSUs granted during the period is an award for the Company’s CEO in the
amount of 225,000 MSUs, with a grant date fair value of $16 million which is eligible to be earned based on the achievement of certain stock prices over a
three-year period. The stock-based compensation expense associated with this award was recognized over the derived service period ending December 31,
2022. The aggregate value of MSUs granted during the year ended December 31, 2022 was $36 million.
A summary of the MSUs activity for the year ended December 31, 2022 is presented in the following table:
Unvested outstanding as of December 31, 2021
Granted
Performance Adjustment
Vested
Forfeited
Unvested outstanding as of December 31, 2022
____________________
(a)
Represents the grant date fair value determined using a Monte Carlo simulation model.
Stock Option Activity
Outstanding as of December 31, 2021
Exercised
Expired
Outstanding as of December 31, 2022
Vested and expected to vest as of December 31, 2022
Exercisable as of December 31, 2022
Stock Option Exercises
(Dollars in millions)
Option Exercises:
Number of options exercised
Cash received for options exercised
Aggregate intrinsic value of options exercised
Unrecognized Compensation Cost
Units
Weighted- Average Fair
Value
(a)
381,923 $
428,153
56,591
(117,149)
(7,715)
741,803
77.09
82.96
37.88
102.76
83.24
Shares
Weighted Average
Exercise Price
Weighted Average
Remaining
Contractual Term
(years)
Aggregate Intrinsic
Value
(in millions)
43,905 $
(43,384)
(433)
88
88
88
20.69
20.63
26.65
30.63
30.63
30.63
1.05 $
0.14
0.14
0.14
3
—
—
—
2022
Years Ended December 31,
2021
2020
43,384
114,884
$
$
1 $
2 $
3 $
9 $
70,608
1
5
As of December 31, 2022, the Company had $92 million of unrecognized compensation expense, which is expected to be recognized over a weighted-
average period of 1.2 years.
Common Stock
On June 19, 2020, the Company completed the public offering of 20,700,000 shares (including the shares sold pursuant to the underwriters’ overallotment
option) of Company Common Stock, at an offering price of $39.00 per share, which provided $772 million of proceeds, net of fees and estimated expenses
of $35 million.
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102
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
On October 1, 2020, the Company completed the public offering of 35,650,000 shares (including the shares sold pursuant to the underwriters’
overallotment option) of Company Common Stock, at an offering price of $56.00 per share, which provided $1.9 billion of proceeds, net of fees and
estimated expenses of $50 million.
On June 17, 2021, following receipt of required shareholder approvals, the Company amended its Certificate of Incorporation to increase the number of
authorized shares of common stock from 300 million to 500 million.
Preferred Stock
On June 17, 2021, following receipt of required shareholder approvals, the Company amended its Certificate of Incorporation to authorize the issuance of
up to 150 million shares of preferred stock.
Share Repurchase Program
In November 2018, the Board authorized a $150 million common stock repurchase program (the “Share Repurchase Program”) pursuant to which the
Company may, from time to time, repurchase shares of common stock on the open market (either with or without a 10b5-1 plan) or through privately
negotiated transactions. The Share Repurchase Program has no time limit and may be suspended or discontinued at any time without notice. There is no
minimum number of shares of common stock that the Company is required to repurchase under the Share Repurchase Program.
As of December 31, 2022, the Company has acquired 223,823 shares of common stock at an aggregate value of $9 million and an average of $40.80 per
share. No shares were repurchased during the years ended December 31, 2022 or 2021.
Note 16. Employee Benefit Plans
401(k) Plans
The Company offers several savings and retirement plans to substantially all employees who are not covered by collective bargaining agreements, who
meet certain eligibility requirements, namely terms of service. All existing savings and retirement plans merged into the Caesars Entertainment, Inc. 401(k)
Plan. Under the 401(k) plan, the Company matches contributions equal to 50% of the first 6% as outlined per plan documents.
The Company’s matching contribution expense totaled $29 million, $27 million and $11 million for the years ended December 31, 2022, 2021 and 2020,
respectively.
Defined-Benefit Plans
Scioto Downs sponsors a noncontributory defined-benefit plan covering all full-time employees meeting certain age and service requirements. On May 31,
2001, the plan was amended to freeze eligibility, accrual of years of service and benefits. As of December 31, 2022, the fair value of the plan assets and
benefit obligation was $1 million. The plan assets are comprised primarily of money market and mutual funds whose values are determined based on
quoted market prices and are classified in Level 1 of the fair value hierarchy. We did not make cash contributions to the Scioto Downs pension plan during
2022, 2021 and 2020.
In addition, the Company also sponsors a defined-benefit plan for certain Tropicana Atlantic City employees under a Variable Annuity Pension Plan. As of
December 31, 2022, the fair value of the plan assets was $21 million and benefit obligations was $15 million. Contributions to the plan were $2 million for
the year ended December 31, 2022 and less than $1 million for the year ended December 31, 2021.
Deferred Compensation Plans
CEI assumed Former Caesars deferred compensation plans, the Caesars Entertainment Corporation Executive Supplemental Savings Plan III (“ESSP III”)
and the Caesars Entertainment Corporation Outside Director Deferred Compensation Plan. These plans are unfunded, non-qualified deferred compensation
plans. Payment obligations pursuant to the plans are unsecured general obligations of the Company and affiliates of the Company employing participants in
the ESSP III. The liability as of December 31, 2022 and 2021 was $2 million and $3 million, respectively, which was recorded in Other long-term liabilities
on the Balance Sheets.
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103
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
As of December 31, 2022, certain current and former employees of Caesars, and our subsidiaries and affiliates, have balances under: (i) the Harrah’s
Entertainment, Inc. Executive Supplemental Savings Plan, (ii) the Harrah’s Entertainment, Inc. Executive Supplemental Savings Plan II, (iii) the Park Place
Entertainment Corporation Executive Deferred Compensation Plan, (iv) the Harrah’s Entertainment, Inc. Deferred Compensation Plan, and (v) the Harrah’s
Entertainment, Inc. Executive Deferred Compensation Plan (collectively, the “existing deferred compensation plans”). These plans are deferred
compensation plans that allow certain employees an opportunity to save for retirement and other purposes. Each of the plans is now frozen and is no longer
accepting contributions. However, participants may still earn returns on existing plan balances based upon their selected investment alternatives, which are
reflected in their deferral accounts. The total liability recorded in Other long-term liabilities on the Balance Sheets for these plans was $33 million and $43
million as of December 31, 2022 and 2021, respectively.
Trust Assets
CEI is a party to a trust agreement (the “Trust Agreement”) and an escrow agreement with respect to all five of the existing deferred compensation plans
(the “Escrow Agreement”), each structured as a so-called “rabbi trust” arrangement, which holds assets that may be used to satisfy obligations under the
existing deferred compensation plans above. Amounts held pursuant to the Trust Agreement and the Escrow Agreement were $60 million and $87 million,
respectively, as of December 31, 2022 and 2021 and have been reflected within Other assets, net on the Balance Sheets.
Multi-employer Pension Plans
As a result of the Merger, the Company continues to contribute to a number of multi-employer defined benefit pension plans under the terms of collective
bargaining agreements that cover union-represented employees of Former Caesars. Prior to the Merger, no significant contributions were made to such
plans. The risks of participating in these multi-employer plans are different from a single-employer plan in the following respects:
i. Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers.
ii.
iii.
If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating
employers.
If the Company chooses to stop participating in some of its multi-employer plans, the Company may be required to pay those plans an amount
based on the underfunding of the plan, referred to as a “withdrawal liability.”
Table of Contents
104
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Multi-employer Pension Plan Participation
Pension Protection
(a)
Act Zone Status
Contributions
(In millions)
Pension Fund
Southern Nevada Culinary and
(d)(e)
Bartenders Pension Plan
Legacy Plan of the UNITE HERE
Retirement Fund
(d)(e)(f)
Central Pension Fund of the IUOE &
Participating Employers
Western Conference of Teamsters
Pension Plan
EIN/Pension Plan
Number
88-6016617/001
82-0994119/001
36-6052390/001
91-6145047/001
Local 68 Engineers Union Pension Plan
(g)
51-0176618/001
Painters IUPAT
Other Funds
Total Contributions
52-6073909/001
2022
Green
Red
Green
Green
Yellow
Yellow
FIP/RP
(b)
Status
No
2022
2021
$
24 $
18 $
2020
5
Surcharge
Imposed
No
Yes
No
No
Yes
Yes
9
7
6
1
1
9
6
5
1
1
2
50 $
1
41 $
$
No
N/A
N/A
No
No
4
—
—
—
—
5
14
Expiration Date of
Collective
Bargaining
(c)
Agreement
May 31, 2023
Various up to
May 31, 2026
March 31, 2024
March 31, 2024
April 30, 2027
Various up to
June 30, 2026
____________________
(a)
Represents the Pension Protection Act zone status for applicable plan year beginning January 1, except where noted otherwise. The zone status is based on information that the Company
received from the plan administrator and is certified by the plan’s actuary. Among other factors, plans in the red zone are generally less than 65% funded, plans in the yellow zone are
between 65% and less than 80% funded, and plans in the green zone are at least 80% funded. All plans detailed in the table above utilized extended amortization provisions to calculate
zone status.
Indicates plans for which a financial improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented.
The terms of the current agreement continue indefinitely until either party provides appropriate notice of intent to terminate the contract.
The Company provided more than 5% of the total contributions for the plan year ended December 31, 2020.
The Company provided more than 5% of the total contributions for the plan year ended December 31, 2021 and as of the date the financial statements were issued, Forms 5500 were not
available for the 2022 plan year.
The HEREIU Pension Fund consists of two separate plans, the Legacy Plan of the HEREIU Pension Fund and the Adjustable Plan of the HEREIU Pension Fund. CEI makes a single
contribution to the HEREIU Pension Fund, the Trustees of which allocate such contribution between the Legacy Plan and the Adjustable Plan. The contribution amount reflected to the
Legacy Plan is the aggregate contribution made to the HEREIU Pension Fund before such allocation between the Legacy Plan and the Adjustable Plan of the HEREIU Pension Fund.
Plan years begin July 1.
(b)
(c)
(d)
(e)
(f)
(g)
Note 17. Income Taxes
The components of the Company’s provision for income taxes for the years ended December 31, 2022, 2021 and 2020 are presented below.
Components of Income (Loss) Before Income Taxes
(In millions)
United States
Outside of the U.S.
Table of Contents
$
$
105
2022
Years Ended December 31,
2021
2020
(590) $
25
(565) $
(1,272) $
3
(1,269) $
(1,608)
2
(1,606)
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Income Tax Provision (Benefit)
(In millions)
United States
Current
Federal
State & Local
Deferred
Federal
State & Local
Outside of the U.S.
Current
Deferred
Allocation of Income Tax Provision (Benefit)
(In millions)
Income tax provision (benefit) applicable to:
Income from operations
Discontinued operations
Other comprehensive income
2022
Years Ended December 31,
2021
2020
$
$
$
— $
7
(57)
2
7
—
(41) $
(1) $
(2)
(219)
(106)
2
43
(283) $
2022
Years Ended December 31,
2021
2020
(41) $
(50)
(30)
(283) $
19
3
(43)
(24)
208
(11)
2
—
132
132
(9)
8
The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the years ended December 31, 2022, 2021
and 2020:
Effective Income Tax Rate Reconciliation
Federal statutory rate
State and local taxes
Nondeductible compensation and benefits
Goodwill disposition and impairment
Transaction expenses
Nondeductible convertible notes costs
Decrease in uncertain tax positions
Change in tax rates from change in tax law before valuation allowance
Foreign taxes
Deferred tax adjustment related to William Hill acquisition
Minority interests
Valuation allowance
Tax credits
Deferred tax recognition on life insurance
Other
Effective income tax rate
2022
Years Ended December 31,
2021
2020
21.0 %
(0.2)%
(2.3)%
(0.6)%
— %
— %
0.1 %
(15.3)%
(1.1)%
(5.3)%
(0.5)%
9.8 %
1.8 %
— %
(0.2)%
7.2 %
21.0 %
4.2 %
(0.2)%
— %
— %
(3.3)%
0.4 %
(1.2)%
0.1 %
— %
— %
2.6 %
0.4 %
(1.3)%
(0.4)%
22.3 %
21.0 %
5.4 %
(0.2)%
(1.6)%
(0.5)%
(1.0)%
0.9 %
— %
1.0 %
— %
— %
(33.9)%
0.1 %
— %
0.6 %
(8.2)%
Table of Contents
106
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of the Company’s net deferred taxes at December 31, 2022 and 2021 are
as follows:
(In millions)
Deferred tax assets:
Loss carryforwards
Excess business interest expense
Credit carryforwards
Financing obligation
Long-term lease obligation
Other
Deferred tax liabilities:
Identified intangibles
Foreign investment - held for sale
Fixed assets
Right-of-use assets
Other
Valuation allowance
Net deferred tax liabilities
The net deferred tax liabilities above are presented in the Balance Sheets as follows:
(In millions)
Deferred income taxes
Assets held for sale
Liabilities related to assets held for sale
Net deferred tax liabilities
As of December 31,
2022
2021
779 $
288
126
2,534
160
272
4,159
(803)
—
(2,243)
(128)
(163)
(3,337)
(1,809)
(987) $
As of December 31,
2022
2021
(987) $
—
—
(987) $
1,006
180
114
2,517
161
330
4,308
(1,111)
(139)
(2,212)
(131)
(138)
(3,731)
(1,840)
(1,263)
(1,111)
7
(159)
(1,263)
$
$
$
$
As a result of the Merger, the Company assumed $767 million of additional net deferred tax liabilities, net of valuation allowances, plus $24 million in
additional accruals for uncertain tax positions including accrued interest. As a result of the William Hill Acquisition, the Company assumed $381 million of
additional net deferred tax liabilities net of valuation allowances, plus $34 million in additional accruals for uncertain tax positions including accrued
interest. Of the deferred tax liabilities and uncertain tax positions recorded due to the William Hill Acquisition, $132 million and $34 million, respectively,
have been presented in Liabilities related to assets held for sale.
A valuation allowance is recognized if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax
asset will not be realized. Management must analyze all available positive and negative evidence regarding realization of the deferred tax assets and make
an assessment of the likelihood of sufficient future taxable income. We have provided a valuation allowance on certain federal, state, and foreign deferred
tax assets that were not deemed realizable based upon estimates of future taxable income.
As of December 31, 2022, the Company had federal and state net operating loss carryforwards of $1.9 billion and $9.2 billion, respectively and federal
general business tax credit and research tax credit carryforwards of $129 million, which will expire on various dates as follows:
Year of Expiration
(In millions)
2023-2027
2028-2032
2033-2042
Do not expire
Table of Contents
Net Operating Losses
Federal
States
Tax Credits
Federal
—
914
589
437
1,940 $
530
1,376
5,030
2,219
9,155 $
—
39
90
—
129
$
107
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In general, Section 382 of the Internal Revenue Code provides an annual limitation with respect to the ability of a corporation to utilize its net operating
loss carryovers, as well as certain built-in losses, against future taxable income in the event of a change in ownership. The Merger in July 2020 and the
William Hill Acquisition in April 2021 resulted in a change in ownership for purposes of Section 382, making its provisions applicable to the Company.
However, it is unlikely that the annual limitation on tax attribute usage resulting from the acquisition will adversely affect the Company’s ability to utilize
its net operating loss carryovers against its future taxable income.
Reconciliation of Unrecognized Tax Benefits
(In millions)
Balance as of beginning of year
Acquisition of Caesars Entertainment Corporation
Acquisition of William Hill
Sale of William Hill International
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax positions for prior years
Settlements
Expiration of statutes
Balance as of end of year
2022
Years Ended December 31,
2021
2020
$
$
157 $
—
—
(24)
3
1
(8)
—
(1)
128 $
137 $
—
32
—
4
5
(8)
—
(13)
157 $
—
152
—
—
—
1
—
(4)
(12)
137
We classify reserves for tax uncertainties within Other long-term liabilities in our Balance Sheets, separate from any related income tax payable or Deferred
income taxes. Reserve amounts relate to any potential income tax liabilities resulting from uncertain tax positions as well as potential interest or penalties
associated with those liabilities.
We accrue interest and penalties related to unrecognized tax benefits in income tax expense. During 2022, we decreased our accrual by $29 million,
primarily due to the sale of William Hill International. During 2021, we increased our accrual by $20 million, primarily due to the William Hill
Acquisition. During 2020, we increased our accrual by $137 million, primarily as a result of the Merger. There was no accrual for the payment of interest
and penalties as of December 31, 2022 and an accrual of $2 million as of December 31, 2021. Included in the balances of unrecognized tax benefits as of
December 31, 2022 and December 31, 2021 was $115 million and $117 million, respectively, of unrecognized tax benefits that, if recognized, would
impact the effective tax rate.
The Company, including its subsidiaries, files tax returns with federal, state and foreign jurisdictions. The Company does not have tax sharing agreements
with the other members within the consolidated group. With few exceptions, the Company is no longer subject to US federal or state and local tax
assessments by tax authorities for years before 2019. We believe that it is reasonably possible that the unrecognized tax benefits liability will not materially
change within the next 12 months. Audit outcomes and the timing of audit settlements are subject to significant uncertainty. Although we believe that
adequate provision has been made for such issues, there is the possibility that the ultimate resolution of such issues could have an adverse effect on our
earnings. Conversely, if these issues are resolved favorably in the future, the related provision would be reduced, thus having a favorable impact on
earnings.
Note 18. Related Parties
REI
As of December 31, 2022, Recreational Enterprises, Inc. (“REI”) owned approximately 4.0% of outstanding common stock of the Company. The directors
of REI are the Company’s Executive Chairman of the Board, Gary L. Carano, its Chief Executive Officer and Board member, Thomas R. Reeg, and its
Vice President of Player Development, Gene Carano. In addition, Gary L. Carano also serves as the Vice President of REI and Gene Carano also serves as
the Secretary and Treasurer of REI. Members of the Carano family, including Gary L. Carano and Gene Carano, own the equity interests in REI. For each
of the years ended December 31, 2022, 2021 and 2020, there were no related party transactions between the Company and the Carano family other than
compensation, including salary and equity incentives and the CSY Lease listed below.
C. S. & Y. Associates
The Company owns the entire parcel on which Eldorado Reno is located, except for approximately 30,000 square feet which is leased from C. S. & Y.
Associates (“CSY”) which is an entity partially owned by REI (the “CSY Lease”). The CSY Lease expires on June 30, 2057. Annual rent pursuant to the
CSY Lease is currently $0.6 million, paid monthly. Annual rent is subject to periodic rent escalations through the term of the lease. As of December 31,
2022 and 2021 there were no amounts due to or from CSY.
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108
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Transactions with Horseshoe Baltimore
The Company held an interest in Horseshoe Baltimore of approximately 44.3%, which was accounted for as an equity method investment, prior to our
acquisition of an additional interest and subsequent consolidation on August 26, 2021. These related party transactions included items such as casino
management fees, reimbursement of various costs incurred on behalf of Horseshoe Baltimore, and the allocation of other general corporate expenses.
Transactions with NeoGames
The Company held an interest in NeoGames (see Note 5). NeoGames provides the player account management system to our wholly-owned Liberty
platform. We have a dedicated team of programmers at NeoGames working on enhancements to our player account management system on our behalf, for
which NeoGames is compensated under a services agreement.
Note 19. Segment Information
The executive decision maker of the Company reviews operating results, assesses performance and makes decisions on a “significant market” basis.
Management views each of the Company’s casinos as an operating segment. Operating segments are aggregated based on their similar economic
characteristics, types of customers, types of services and products provided, and their management and reporting structure. The Company’s principal
operating activities occur in four reportable segments. The reportable segments are based on the similar characteristics of the operating segments with the
way management assesses these results and allocates resources, which is a consolidated view that adjusts for the effect of certain transactions between these
reportable segments within Caesars: (1) Las Vegas, (2) Regional, (3) Caesars Digital, and (4) Managed and Branded, in addition to Corporate and Other.
See table below for a summary of these segments. Also, see Note 4, Note 6 and Note 7 for a discussion of the impairment of intangibles and long-lived
assets related to certain segments.
The following table sets forth certain information regarding our properties (listed by segment in which each property is reported) as of December 31, 2022:
Las Vegas
Caesars Palace Las Vegas
The Cromwell
Flamingo Las Vegas
Harrah’s Las Vegas
Horseshoe Las Vegas
The LINQ Hotel & Casino
Paris Las Vegas
Planet Hollywood Resort & Casino
Rio All-Suite Hotel & Casino
(a)
Caesars Digital
Caesars Digital
Caesars Atlantic City
Circus Circus Reno
Eldorado Gaming Scioto Downs
Eldorado Resort Casino Reno
Grand Victoria Casino
Harrah’s Atlantic City
Harrah’s Council Bluffs
Harrah’s Gulf Coast
Harrah’s Hoosier Park Racing & Casino
Harrah’s Joliet
Harrah’s Lake Tahoe
Harrah’s Laughlin
Harrah’s Metropolis
Harrah’s New Orleans
Harrah’s North Kansas City
Harrah’s Philadelphia
Harrah’s Pompano Beach
Harveys Lake Tahoe
Horseshoe Baltimore
(a)
Regional
(a)
(a)
(b)
(a)
Horseshoe Black Hawk
Horseshoe Bossier City
Horseshoe Council Bluffs
Horseshoe Hammond
Horseshoe Indianapolis
Horseshoe Lake Charles
Horseshoe St. Louis
Horseshoe Tunica
Isle Casino Bettendorf
Isle of Capri Casino Boonville
Isle of Capri Casino Lula
Isle Casino Waterloo
Lady Luck Casino - Black Hawk
Silver Legacy Resort Casino
Trop Casino Greenville
Tropicana Atlantic City
Tropicana Laughlin Hotel & Casino
Managed and Branded
Managed
Harrah’s Ak-Chin
Harrah’s Cherokee
Harrah’s Cherokee Valley River
Harrah’s Resort Southern California
Caesars Windsor
Caesars Dubai
Branded
Caesars Southern Indiana
Harrah’s Northern California
___________________
(a) During the year ended December 31, 2022, Bally’s Las Vegas was rebranded as Horseshoe Las Vegas, Isle Casino Hotel - Black Hawk was rebranded as Horseshoe Black Hawk, Indiana
Grand was rebranded as Horseshoe Indianapolis, Isle Casino Racing Pompano Park was rebranded as Harrah’s Pompano Beach, and Lumière Place Casino was rebranded as Horseshoe
St. Louis.
(b)
Isle of Capri Casino Hotel Lake Charles temporarily closed at the end of August 2020 due to damage from Hurricane Laura and reopened in December 2022 as Horseshoe Lake Charles,
the new land-based casino.
Table of Contents
109
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Certain of our properties operate off-track betting locations, including Harrah’s Hoosier Park Racing & Casino, which operates Winner’s Circle
Indianapolis and Winner’s Circle New Haven; and Horseshoe Indianapolis (formerly “Indiana Grand”), which operates Winner’s Circle Clarksville. The
LINQ Promenade is an open-air dining, entertainment, and retail promenade located on the east side of the Las Vegas Strip next to The LINQ Hotel &
Casino that features the High Roller, a 550-foot observation wheel, and the Fly LINQ Zipline attraction. We also own the CAESARS FORUM conference
center, which is a 550,000 square feet conference center with 300,000 square feet of flexible meeting space, two of the largest pillarless ballrooms in the
world and direct access to the LINQ.
“Corporate and Other” includes certain unallocated corporate overhead costs and other adjustments, including eliminations of transactions among
segments, to reconcile to the Company’s consolidated results.
The following table sets forth, for the periods indicated, certain operating data for the Company’s four reportable segments, in addition to Corporate and
Other.
(In millions)
Las Vegas:
Net revenues
Adjusted EBITDA
Regional:
Net revenues
Adjusted EBITDA
Caesars Digital:
Net revenues
Adjusted EBITDA
Managed and Branded:
Net revenues
Adjusted EBITDA
Corporate and Other:
Net revenues
Adjusted EBITDA
2022
Years Ended December 31,
2021
2020
$
4,287 $
1,964
3,409 $
1,568
5,704
1,985
548
(666)
282
84
—
(124)
5,537
1,979
337
(476)
278
87
9
(168)
751
133
2,660
711
95
26
107
25
15
(101)
Reconciliation of Net Income (Loss) Attributable to Caesars to Adjusted EBITDA by Segment
Adjusted EBITDA is presented as a measure of the Company’s performance. Adjusted EBITDA is defined as revenues less certain operating expenses and
is comprised of net income (loss) before (i) interest income and interest expense, net of interest capitalized, (ii) income tax (benefit) provision, (iii)
depreciation and amortization, and (iv) certain items that we do not consider indicative of our ongoing operating performance at an operating property
level.
In evaluating Adjusted EBITDA you should be aware that, in the future, we may incur expenses that are the same or similar to some of the adjustments in
this presentation. The presentation of Adjusted EBITDA should not be construed as an inference that future results will be unaffected by unusual or
unexpected items.
Adjusted EBITDA is a financial measure commonly used in our industry and should not be construed as an alternative to net income (loss) as an indicator
of operating performance or as an alternative to cash flow provided by operating activities as a measure of liquidity (as determined in accordance with
GAAP). Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies within the industry. Adjusted EBITDA is
included because management uses Adjusted EBITDA to measure performance and allocate resources, and believes that Adjusted EBITDA provides
investors with additional information consistent with that used by management.
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110
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In millions)
Net loss attributable to Caesars
(a)
Net income (loss) attributable to noncontrolling interests
Net loss from discontinued operations
(Benefit) provision for income taxes
Other (income) loss
Loss on extinguishment of debt
Interest expense, net
Depreciation and amortization
Impairment charges
Transaction costs and other
Stock-based compensation expense
(b)
Adjusted EBITDA
Adjusted EBITDA by Segment:
Las Vegas
Regional
Caesars Digital
Managed and Branded
Corporate and Other
$
$
$
2022
Years Ended December 31,
2021
2020
(899) $
(11)
386
(41)
(46)
85
2,265
1,205
108
90
101
3,243 $
1,964 $
1,985
(666)
84
(124)
(1,019) $
3
30
(283)
198
236
2,295
1,126
102
220
82
2,990 $
1,568 $
1,979
(476)
87
(168)
(1,757)
(1)
20
132
(176)
197
1,202
583
215
300
79
794
133
711
26
25
(101)
____________________
(a)
Other (income) loss primarily includes the net changes in fair value of (i) investments held by the Company (ii) foreign exchange forward contracts (iii) the disputed claims liability related
to Former Caesars’ bankruptcy prior to the Merger, and (iv) the derivative liability related to the 5% Convertible Notes, which were fully converted during the year ended December 31,
2021, and the change in the foreign exchange rate associated with restricted cash held in GBP associated with our acquisition of William Hill.
(b)
Transaction costs and other primarily includes costs related to the William Hill Acquisition, the Merger, various contract or license termination exit costs, professional services for
integration activities and non-cash changes in equity method investments partially offset by gains resulting from insurance proceeds received in excess of the respective carrying value of the
assets damaged at Lake Charles by Hurricane Laura.
Capital Expenditures, Net - By Segment
(In millions)
Las Vegas
Regional
Caesars Digital
Corporate and Other
Total
(a)
____________________
(a)
Includes capital expenditures associated with our discontinued operations, where applicable.
Total Assets - By Segment
(In millions)
Las Vegas
Regional
Caesars Digital
Managed and Branded
(b)
Corporate and Other
(a)
Total
$
$
2022
Years Ended December 31,
2021
2020
165 $
597
106
84
952 $
$
$
85 $
327
67
39
518 $
December 31,
2022
2021
23,547 $
14,908
1,200
140
(6,268)
33,527 $
32
104
—
33
169
22,374
14,419
1,878
3,527
(4,167)
38,031
____________________
(a)
Assets held for sale associated with William Hill International were divested on July 1, 2022.
(b)
Includes eliminations of transactions among segments, to reconcile to the Company’s consolidated results.
Table of Contents
111
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We have established and maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports
that we file under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, evaluated and reported
within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to management, including
our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of December 31, 2022. Based on these evaluations, our
Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures required by Rules 13a-15(e) and 15d-15(e) were
effective as of December 31, 2022, at a reasonable assurance level.
Management’s Annual Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-
15(f) or 15d-15(f) promulgated under the Exchange Act. This system is designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of consolidated financial statements for external purposes in accordance with US GAAP.
Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated and assessed the effectiveness of our internal
control over financial reporting as of the end of the period covered by this Form 10-K Annual Report based upon the framework set forth in the Internal
Control-Integrated Framework issued in 2013 by the Committee of Sponsoring Organization of the Treadway Commission. Based on their evaluation and
assessment, they concluded that, as of December 31, 2022, our internal control over financial reporting was effective based on those criteria.
Deloitte & Touche LLP, an independent registered public accounting firm, has issued an attestation report on our internal control over financial reporting as
of December 31, 2022, which report follows below.
Changes in Internal Control Over Financial Reporting
As of December 31, 2022, there were no significant changes in our internal control over financial reporting that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
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112
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Caesars Entertainment, Inc.:
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Caesars Entertainment, Inc. and subsidiaries (the “Company”) as of December 31, 2022,
based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated
financial statements as of and for the year ended December 31, 2022, of the Company and our report dated February 21, 2023, expressed an unqualified
opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
Las Vegas, Nevada
February 21, 2023
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113
Item 9B. Other Information
Not applicable.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
Table of Contents
114
Item 10. Directors, Executive Officers and Corporate Governance
PART III
The information required by this Item is hereby incorporated by reference to our definitive Proxy Statement for our Annual Meeting of Stockholders (our
“Proxy Statement”) to be filed with the Securities and Exchange Commission no later than April 30, 2023, pursuant to Regulation 14A under the Securities
Act.
We have adopted a code of ethics and business conduct applicable to all directors and employees, including the Chief Executive Officer, Chief Financial
Officer and Principal Accounting Officer. The code of business conduct and ethics is posted on our website, http://www.caesars.com/corporate (accessible
through the “Governance” caption of the Investors page) and a printed copy will be delivered on request by writing to the Corporate Secretary at Caesars
Entertainment, Inc., c/o Corporate Secretary, 100 West Liberty Street, 12th Floor, Reno, NV 89501. We intend to satisfy the disclosure requirement
regarding certain amendments to, or waivers from, provisions of its code of business conduct and ethics by posting such information on our website.
Item 11. Executive Compensation
The information required by this Item is hereby incorporated by reference to our Proxy Statement, to be filed with the Securities and Exchange
Commission no later than April 30, 2023, pursuant to Regulation 14A under the Securities Act.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item is hereby incorporated by reference to our Proxy Statement, to be filed with the Securities and Exchange
Commission no later than April 30, 2023, pursuant to Regulation 14A under the Securities Act.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item is hereby incorporated by reference to our Proxy Statement, to be filed with the Securities and Exchange
Commission no later than April 30, 2023, pursuant to Regulation 14A under the Securities Act.
Item 14. Principal Accounting Fees and Services
The information about aggregate fees billed to us by our principal accountant, Deloitte & Touche LLP (PCAOB ID No. 34) is incorporated herein by
reference to our Proxy Statement, to be filed with the Securities and Exchange Commission no later than April 30, 2023, pursuant to Regulation 14A under
the Securities Act.
Table of Contents
115
Item 15. Exhibits and Financial Statement Schedules
PART IV
(a)(i) Financial Statements
Included in Part II (Item 8) of this Annual Report on Form 10-K:
Reports of Independent Registered Public Accounting Firms
Consolidated Balance Sheets as of December 31, 2022 and 2021
Consolidated Statements of Operations for the Years Ended December 31, 2022, 2021 and 2020
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2022, 2021 and 2020
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2022, 2021 and 2020
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020
Notes to Consolidated Financial Statements
(a)(ii) Financial Statement Schedule
Schedule I—Condensed Financial Information of Registrant Parent Company Only as of December 31, 2022 and 2021 and for the Years Ended December 31,
2022, 2021 and 2020
We have omitted schedules other than the ones listed above because they are not required or are not applicable, or the required information is shown in the
financial statements or notes to the financial statements.
(a)(iii) Exhibits
Table of Contents
116
Exhibit
Number
2.1
2.2
3.1
3.2
4.1
4.2
4.3
4.4
4.4
4.5
4.7
4.6
4.7
4.8
4.9
4.10
10.1
10.2
10.3
10.4
Description of Exhibit
Method of Filing
Agreement and Plan of Merger, dated as of June 24, 2019, by and among Caesars Entertainment Corporation, Eldorado
Resorts, Inc. and Colt Merger Sub, Inc.
Previously filed on Form 8-K filed
on June 25, 2019.
Amendment No. 1 to Agreement and Plan of Merger, dated as of August 15, 2019, by and among Caesars
Entertainment Corporation, Eldorado Resorts, Inc. and Colt Merger Sub, Inc.
Previously filed on Form 8-K filed
on August 16, 2019.
Composite Certificate of Incorporation of Caesars Entertainment, Inc.
Amended and Restated Bylaws of Caesars Entertainment, Inc.
Description of Capital Stock
Previously filed on Form 10-Q filed
on August 4, 2021.
Previously filed on Form 8-K filed
on August 1, 2022.
Filed herewith.
Indenture (6.25% CEI Senior Secured Notes due 2025) dated as of July 6, 2020, by and between Colt Merger Sub,
Inc. and U.S. Bank National Association, as trustee and collateral agent.
Previously filed on Form 8-K filed
on July 7, 2020.
Supplemental Indenture, dated as of July 20, 2020, to Indenture (6.25% CEI Senior Secured Notes due 2025), dated as
of July 6, 2020, by and among Colt Merger Sub, Inc., Eldorado Resorts, Inc., the subsidiary guarantors party thereto
and U.S. Bank National Association, as trustee and collateral agent.
Previously filed on Form 8-K filed
on July 21, 2020.
Supplemental Indenture, dated as of June 4, 2021, to Indenture (6.25% CEI Senior Secured Notes due 2025), dated as
of July 6, 2020, by and among Caesars Entertainment, Inc., the subsidiary guarantors party thereto and U.S. Bank
National Association, as trustee and collateral agent.
Filed herewith.
Indenture (8.125% CEI Senior Notes due 2027) dated as of July 6, 2020, by and between Colt Merger Sub, Inc. and
U.S. Bank National Association, as trustee.
Previously filed on Form 8-K filed
on July 7, 2020.
Supplemental Indenture, dated as of July 20, 2020, to Indenture (8.125% CEI Senior Notes due 2027), dated as of July
6, 2020, by and among Colt Merger Sub, Inc., Eldorado Resorts, Inc., the subsidiary guarantors party thereto and U.S.
Bank National Association, as trustee.
Previously filed on Form 8-K filed
on July 21, 2020.
Supplemental Indenture, dated as of June 4, 2021, to Indenture (8.125% CEI Senior Notes due 2027), dated as of July
6, 2020, by and among Caesars Entertainment, Inc., the subsidiary guarantors party thereto and U.S. Bank National
Association, as trustee.
Filed herewith.
Indenture (5.75% CRC Secured Notes due 2025) dated as of July 6, 2020, by and between Colt Merger Sub, Inc.,
U.S. Bank National Association, as trustee, and Credit Suisse AG, Cayman Islands Branch, as collateral agent.
Previously filed on Form 8-K filed
on July 7, 2020.
Supplemental Indenture, dated as of July 20, 2020, to Indenture (5.75% CRC Secured Notes due 2025), dated as of July
6, 2020, by and among Colt Merger Sub, Inc., CRC Finco, Inc., Caesars Resort Collection, LLC, the subsidiary
guarantors party thereto, U.S. Bank National Association, as trustee, and Credit Suisse AG, Cayman Islands Branch, as
collateral agent.
Previously filed on Form 8-K filed
on July 21, 2020.
Second Supplemental Indenture, dated as of August 6, 2021, to Indenture (5.75% CRC Secured Notes due 2025), dated
as of July 6, 2020, by and among Caesars Entertainment, Inc., CRC Finco, Inc., Caesars Resort Collection, LLC and
U.S. Bank National Association, as trustee and collateral agent.
Previously filed on Form 8-K filed
on August 10, 2021.
Indenture (4.625% CEI Senior Notes due 2029), dated as of September 24, 2021, by and between Caesars
Entertainment, Inc., the guarantors party thereto and U.S. Bank National Association, as trustee.
Previously filed on Form 8-K filed
on September 27, 2021.
First Supplemental Indenture, dated as of October 4, 2022, to Indenture (4.625% CEI Senior Notes due 2029), by and
among Caesars Entertainment, Inc., the guarantors party thereto and U.S. Bank National Association, as trustee.
Previously filed on Form 8-K filed
on October 5, 2022.
Second Amendment to Lease (CPLV) (which includes a conformed copy of the Las Vegas Lease through the Second
Amendment), dated as of July 20, 2020, by and among CPLV Property Owner LLC, Claudine Propco LLC, Propco
TRS LLC, Desert Palace LLC, CEOC, LLC and Harrah’s Las Vegas, LLC
Previously filed on Form 8-K filed
on July 21, 2020.
Third Amendment to Lease, dated as of September 30, 2020, by and among CPLV Property Owner LLC, Claudine
Propco LLC, Propco TRS LLC, Desert Palace LLC, CEOC, LLC and Harrah’s Las Vegas, LLC.
Previously filed on Form 10-Q filed
on November 9, 2020.
Fourth Amendment to Lease, dated as of November 18, 2020, by and among CPLV Property Owner LLC, Claudine
Propco LLC, Propco TRS LLC, Desert Palace LLC, CEOC, LLC and Harrah’s Las Vegas, LLC.
Previously filed on Form 10-K on
March 1, 2021.
Fifth Amendment to Lease, dated as of September 3, 2021, by and among CPLV Property Owner LLC, Claudine
Propco LLC, Propco TRS LLC, Desert Palace LLC, CEOC, LLC and Harrah’s Las Vegas, LLC.
Previously filed on Form 10-Q on
November 5, 2021.
Table of Contents
117
Exhibit
Number
10.5
10.6
10.7**
Description of Exhibit
Method of Filing
Sixth Amendment to Lease, dated as of November 1, 2021, by and among CPLV Property Owner LLC, Claudine
Propco LLC, Propco TRS LLC, Desert Palace LLC, CEOC, LLC and Harrah’s Las Vegas, LLC.
Previously filed on Form 10-K filed
on February 24, 2022.
Guaranty, dated as of July 20, 2020, by and among Eldorado Resorts, Inc., CPLV Property Owner LLC and Claudine
Propco LLC.
Previously filed on Form 8-K filed
on July 21, 2020.
Fifth Amendment to Lease (Non-CPLV) (which includes a conformed copy of the Regional Lease through the Fifth
Amendment), dated as of July 20, 2020, by and among the entities listed on Schedule A attached thereto, Harrah’s
Atlantic City LLC, New Laughlin Owner LLC, Harrah’s New Orleans LLC, the entities listed on Schedule B attached
thereto, Harrah’s Atlantic City Operating Company, LLC, Harrah’s Laughlin, LLC, Jazz Casino Company, L.L.C. and
Propco TRS LLC.
Previously filed on Form 8-K filed
on July 21, 2020.
10.8**
Sixth Amendment to Lease, dated as of September 30, 2020, by and among the entities listed on Schedules A and B
thereto and Propco TRS LLC.
Previously filed on Form 10-Q filed
on November 9, 2020.
10.9
10.10
10.11
10.12
10.13
10.14
Seventh Amendment to Lease, dated as of November 18, 2020, by and among the entities listed on Schedules A and B
thereto and Propco TRS LLC.
Previously filed on Form 10-K on
March 1, 2021.
Eighth Amendment to Lease, dated as of September 3, 2021, by and among the entities listed on Schedule A and B
thereto and Propco TRS LLC.
Previously filed on Form 10-Q on
November 5, 2021.
Ninth Amendment to Lease, dated as of November 1, 2021, by and among the entities listed on Schedules A and B
thereto and Propco TRS LLC.
Previously filed on Form 10-K filed
on February 24, 2022.
Tenth Amendment to Lease (Regional), dated as of December 30, 2021, by and among the entities listed on Schedules
A and B thereto and Propco TRS LLC.
Previously filed on Form 10-K filed
on February 24, 2022.
Eleventh Amendment to Lease, dated as of August 25, 2022, by and among the entities listed on Schedules A and B
thereto and Propco TRS LLC.
Previously filed on Form 10-Q filed
on November 2, 2022.
Guaranty of Lease, dated as of July 20, 2020, by and among Eldorado Resorts, Inc. and the entities listed on Schedule
A thereto (Regional).
Previously filed on Form 8-K filed
on July 21, 2020.
10.15**
Second Amendment to Lease (Joliet) (which includes a conformed copy of the Joliet Lease through the Second
Amendment), dated as of July 20, 2020, by and among Harrah’s Joliet Landco LLC, Des Plaines Development Limited
Partnership, CEOC, LLC and Propco TRS LLC.
Previously filed on Form 8-K filed
on July 21, 2020.
10.16**
Third Amendment to Lease, dated as of September 30, 2020,by and among Harrah’s Joliet Landco LLC, Des Plaines
Development Limited Partnership, CEOC, LLC and Propco TRS LLC.
Previously filed on Form 10-Q filed
on November 9, 2020.
10.17
10.18
10.19
Fourth Amendment to Lease, dated as of November 18, 2020, by and among Harrah’s Joliet Landco LLC, Des Plaines
Development Limited Partnership, CEOC, LLC and Propco TRS LLC.
Previously filed on Form10-K on
March 1, 2021.
Fifth Amendment to Lease, dated as of September 3, 2021, by and among Harrah’s Joliet Landco LLC, Des Plaines
Development Limited Partnership, CEOC, LLC and Propco TRS LLC.
Previously filed on Form 10-Q on
November 5, 2021
Sixth Amendment to Lease, dated as of November 1, 2021, by and among Harrah’s Joliet Landco LLC, Des Plaines
Development Limited Partnership, CEOC, LLC and Propco TRS LLC.
Previously filed on Form 10-K filed
on February 24, 2022.
10.20
Guaranty, dated as of July 20, 2020, by and between Eldorado Resorts, Inc. and Harrah’s Joliet Landco LLC.
Previously filed on Form 8-K filed
on July 21, 2020.
10.21*
Right of First Refusal Agreement, dated as of July 20, 2020, by and between Eldorado Resorts, Inc. and VICI
Properties L.P. (Las Vegas Strip).
Previously filed on Form 8-K filed
on July 21, 2020.
10.22
10.23
10.24*
10.25*
10.26*
Right of First Refusal Agreement, dated as of July 20, 2020, by and between Eldorado Resorts, Inc. and VICI
Properties L.P. (Horseshoe Baltimore).
Previously filed on Form 8-K filed
on July 21, 2020.
Second Amendment to Golf Course Use Agreement, dated as of July 20, 2020, by and among Rio Secco LLC, Cascata
LLC, Chariot Run LLC, Grand Bear LLC, Caesars Enterprise Services, LLC, CEOC, LLC and, solely for purposes of
Section 2.1(c) thereof, Caesars License Company, LLC.
Previously filed on Form 8-K filed
on July 21, 2020.
Amended and Restated Put-Call Right Agreement, dated as of July 20, 2020, by and among Claudine Propco, LLC and
Eastside Convention Center, LLC.
Previously filed on Form 8-K filed
on July 21, 2020.
Second Amended and Restated Put-Call Right Agreement entered into as of September 18, 2020 by and among
Claudine Propco LLC and Caesars Convention Center Owner, LLC.
Previously filed on Form 8-K filed
on September 18, 2020.
Put-Call Right Agreement entered into as of July 20, 2020 by and between Centaur Propco LLC and Caesars Resort
Collection, LLC.
Previously filed on Form 8-K filed
on July 21, 2020.
Table of Contents
118
Exhibit
Number
10.27
10.28
10.29
10.30
10.31
10.32
10.33*
10.34††
10.35††
10.36††
10.37††
10.38††
Description of Exhibit
First Amendment to Third Amended and Restated Omnibus License and Enterprise Services Agreement, dated as of
July 20, 2020, by and among Caesars Enterprise Services, LLC, CEOC, LLC, Caesars Resort Collection, LLC, Caesars
License Company, LLC and Caesars World LLC (including as Exhibit A thereto a conformed copy of the Third
Amended and Restated Omnibus License and Enterprise Services Agreement, dated as of December 26, 2018, as
amended).
Method of Filing
Previously filed on Form 8-K filed
by Caesars Holdings, Inc. on July
21, 2020.
Credit Agreement, dated as of July 20, 2020, by and among Eldorado Resorts, Inc., the lenders party thereto from time
to time, JPMorgan Chase Bank, N.A., as administrative agent, and U.S. Bank National Association, as collateral agent.
Previously filed on Form 8-K filed
on July 21, 2020.
Incremental Assumption Agreement No. 1, dated as of July 20, 2020, by and among Eldorado Resorts, Inc., the
subsidiary guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent.
Previously filed on Form 8-K filed
on July 21, 2020.
First Amendment to Credit Agreement, dated as of November 10, 2021, by and between Caesars Entertainment, Inc.
and JPMorgan Chase Bank, N.A., as administrative agent.
Previously filed on Form 8-K filed
on November 10, 2021.
Second Amendment to Credit Agreement, dated as of January 26, 2022, by and between Caesars Entertainment, Inc.
and JPMorgan Chase Bank, N.A., as administrative agent.
Previously filed on Form 8-K filed
on January 27, 2022.
Third Amendment to Credit Agreement, dated as of October 5, 2022, by and among Caesars Entertainment, Inc., the
subsidiary guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent.
Previously filed on Form 8-K filed
on October 5, 2022.
Incremental Assumption Agreement No. 2, dated as of February 6, 2023, by and among Caesars Entertainment, Inc.,
the subsidiary guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative
agent.
Previously filed on Form 8-K filed
on February 6, 2023.
Credit Agreement, dated as of December 22, 2017, by and among Caesars Resort Collection, LLC, the other borrowers
from time to time party thereto, the lenders party thereto, and Credit Suisse, AG, Cayman Islands Branch, as
administrative agent and collateral agent.
Previously filed on Form 8-K filed
by Caesars Holdings, Inc. on
December 22, 2017.
First Amendment to Credit Agreement, dated as of June 15, 2020, by and among Caesars Resort Collection, LLC, the
subsidiary guarantors party thereto, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as
administrative agent.
Previously filed on Form 8-K filed
by Caesars Holdings, Inc. on June
15, 2020.
Second Amendment to Credit Agreement, dated as of September 21, 2021, by and among Caesars Resort Collection,
LLC, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
Previously filed on Form 8-K filed
on September 27, 2021
Incremental Assumption Agreement No. 1, dated as of July 20, 2020, by and among Caesars Resort Collection, LLC,
the subsidiary guarantors party thereto, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as
administrative agent.
Previously filed on Form 8-K filed
on July 21, 2020.
Incremental Assumption Agreement No. 2, dated as of July 20, 2020, by and among Caesars Resort Collection, LLC,
the subsidiary guarantors party thereto, the lender party thereto and Credit Suisse AG, Cayman Islands Branch, as
administrative agent.
Previously filed on Form 8-K filed
on July 21, 2020.
10.39††
Guarantee Agreement, dated as of August 6, 2021, by Caesars Entertainment, Inc. in favor of U.S. Bank National
Agent, as collateral agent.
Previously filed on Form 8-K filed
on August 10, 2021.
10.40
10.41
10.42
Caesars Entertainment Corporation Amended and Restated Escrow Agreement, dated as of December 12, 2016,
between Caesars Entertainment Corporation and Wells Fargo Bank, N.A.
Amended and Restated Casino Operating Contract, dated April 1, 2020, by and between Jazz Casino Company, L.L.C.
and the State of Louisiana, by and through the Louisiana Gaming Control Board.
Previously filed on Form 8-K filed
by Caesars Holdings, Inc. on
October 13, 2017.
Previously filed on Form 8-K filed
by Caesars Holdings, Inc. on April
6, 2020.
First Amendment to the Amended and Restated Casino Operating Contract, made and entered into as of April 9, 2020,
and made effective as of April 1, 2020, by and between Jazz Casino Company, L.L.C. and the State of Louisiana, by
and through the Louisiana Gaming Control Board.
Previously filed on Form 8-K/A
filed by Caesars Holdings, Inc. on
April 14, 2020.
10.43†
Caesars Entertainment Corporation Executive Supplemental Savings Plan III.
10.44†
Caesars Entertainment Corporation Outside Director Deferred Compensation Plan.
10.45†
Eldorado Resorts, Inc. Amended and Restated 2015 Equity Incentive Plan
10.46†
Form of Director Indemnification Agreement.
Table of Contents
119
Previously filed on Form S-8 filed
by Caesars Holdings, Inc. on
December 13, 2018.
Previously filed on Form S-8 filed
by Caesars Holdings, Inc. on
December 13, 2018.
Previously filed on Form S-8 POS
filed on June 29, 2019.
Previously filed on Form 10-Q filed
on November 9, 2020.
Previously filed on Registration
Statement Form S-1 filed by
Eldorado Resorts, Inc. June 14,
2015.
Previously filed on Form 10-K filed
on March 1, 2019.
Exhibit
Number
10.47†
Form of Director Non-Deferred Restricted Stock Unit Award Agreement pursuant to the Eldorado Resorts, Inc. 2015
Equity Incentive
Previously filed on Form 10-K filed
on February 28, 2020.
Description of Exhibit
Method of Filing
10.48†
Form of Restricted Stock Unit Award Agreement pursuant to the Amended & Restated 2015 Equity Incentive Plan.
Previously filed on Form 10-K on
March 1, 2021.
Form of Restricted Stock Unit Award Agreement Performance-Based (TSR) pursuant to the Amended & Restated 2015
Equity Incentive Plan.
Previously filed on Form 10-K on
March 1, 2021.
Form of Restricted Stock Unit Time-Based Award Agreement pursuant to the Eldorado Resorts, Inc. 2015 Equity
Incentive Plan.
Previously filed on Form 10-K filed
on February 28, 2020.
Form of Director Restricted Stock Unit Award Agreement pursuant to the Eldorado Resorts, Inc. 2015 Equity Incentive
Plan.
10.49†
10.50†
10.51†
10.52†
Form of Performance Stock Unit Award Agreement pursuant to the Eldorado Resorts, Inc. 2015 Equity Incentive Plan.
10.53
10.54†
10.55†
10.56†
10.57†
10.58†
10.59†
10.60
Registration Rights Agreement, dated as of May 1, 2017, by and among Eldorado Resorts, Inc., Recreational
Enterprises, Inc., GFIL Holdings, LLC and certain of its affiliates.
Previously filed on Form 8-K filed
on May 1, 2017.
Amended and Restated Executive Employment Agreement, dated as of August 10, 2022, by and between Caesars
Enterprise Services, LLC and Bret Yunker.
Previously filed on Form 10-Q filed
on November 2, 2022.
Amended and Restated Executive Employment Agreement, dated as of August 10, 2022, by and between Caesars
Enterprise Services, LLC and Gary Carano.
Previously filed on Form 10-Q filed
on November 2, 2022.
Amended and Restated Executive Employment Agreement, dated as of August 10, 2022, by and between Caesars
Enterprise Services, LLC and Thomas Reeg.
Previously filed on Form 10-Q filed
on November 2, 2022.
Restricted Stock Unit Award Agreement by and between Caesars Entertainment, Inc. and Thomas R. Reeg dated
February 25, 2022.
Previously filed on Form 8-K filed
on March 1, 2022.
Amended and Restated Executive Employment Agreement, dated as of August 10, 2022, by and between Caesars
Enterprise Services, LLC and Anthony Carano.
Previously filed on Form 10-Q filed
on November 2, 2022.
Amended and Restated Executive Employment Agreement, dated as of August 10, 2022, by and between Caesars
Enterprise Services, LLC and Edmund L. Quatmann, Jr.
Previously filed on Form 10-Q filed
on November 2, 2022
Amended and Restated Omnibus Amendment to Leases, dated as of October 27, 2020, by and among the entities listed
on Schedule A attached thereto CPLV Property Owner LLC, Claudine Propco LLC, Harrah’s Joliet Landco LLC,
CEOC, LLC, the entities listed on Schedule B attached thereto, Desert Palace LLC, Harrah’s Las Vegas, LLC, Des
Plaines Development Limited Partnership and Propco TRS LLC.
Previously filed on Form 10-Q filed
on November 9, 2020.
10.61
Second Amended and Restated Master Lease, dated as of December 18, 2020, by and among Tropicana Entertainment,
Inc., IOC Black Hawk County, Inc., Isle of Capri Bettendorf, L.C. and GLP Capital L.P.
Previously filed on Form 10-K filed
on February 24, 2022.
14
21
23.1
31.1
31.2
32.1
32.2
99.1
99.2
101.1
101.2
101.3
Code of Ethics and Business Conduct
Subsidiaries of the Registrant
Consent of Deloitte & Touche LLP
Certification of Thomas R. Reeg pursuant to Rule 13a-14a and Rule 15d-14(a)
Certification of Bret Yunker pursuant to Rule 13a-14a and Rule 15d-14(a)
Certification of Thomas R. Reeg in accordance with 18 U.S.C. Section 1350
Certification of Bret Yunker in accordance with 18 U.S.C. Section 1350
Gaming and Regulatory Overview
Financial Information of Caesars Resort Collection, LLC
Inline XBRL Instance Document
Inline XBRL Taxonomy Extension Schema Document
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Table of Contents
120
Filed herewith.
Filed herewith.
Filed herewith.
Filed herewith.
Filed herewith.
Filed herewith.
Filed herewith.
Filed herewith.
Filed herewith.
Filed herewith.
Filed herewith.
Filed herewith.
Exhibit
Number
101.4
101.5
101.6
104
Description of Exhibit
Method of Filing
Inline XBRL Taxonomy Extension Definition Linkbase Document
Inline XBRL Taxonomy Extension Label Linkbase Document
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File (embedded within the Inline XBRL document)
Filed herewith.
Filed herewith.
Filed herewith.
Filed herewith.
______________________
†
††
*
**
w
Denotes a management contract or compensatory plan or arrangement.
On February 6, 2023, CRC Credit Agreement, the related amendments/incremental assumption agreements and the guarantee agreement were terminated.
Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K.
Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K because such information is (i) not material and (ii) could be
competitively harmful if publicly disclosed.
Annexes, schedules and/or exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K.
Item 16. Form 10-K Summary
None.
Table of Contents
121
CONDENSED FINANCIAL INFORMATION OF REGISTRANT PARENT COMPANY ONLY
CAESARS ENTERTAINMENT, INC.
CONDENSED BALANCE SHEETS
Schedule I
(In millions)
ASSETS
Current assets
Investment in and advances to unconsolidated affiliates
Investment in subsidiaries
Property and equipment, net
Other assets, net
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Long-term debt
Other long-term liabilities
Total liabilities
Total stockholders’ equity
Total liabilities and stockholders’ equity
See accompanying Notes to Condensed Financial Information.
Table of Contents
122
As of December 31,
2022
2021
$
$
$
$
188 $
3
10,465
4
146
10,806 $
236 $
6,826
31
7,093
3,713
10,806 $
221
60
10,311
8
333
10,933
228
6,190
35
6,453
4,480
10,933
CONDENSED FINANCIAL INFORMATION OF REGISTRANT PARENT COMPANY ONLY
CAESARS ENTERTAINMENT, INC.
CONDENSED STATEMENTS OF OPERATIONS
Schedule I
(In millions)
Net revenues
Expenses:
Corporate expense
Management fee
Depreciation and amortization
Transaction and other costs
Total operating expenses
Operating loss
Other expense:
Interest expense
Loss on interests in subsidiaries
Loss on extinguishment of debt
Other income (loss)
Loss from operations before income taxes
Benefit (provision) for income taxes
Net loss
2022
Years Ended December 31,
2021
2020
$
— $
4 $
7
4
—
4
11
19
(19)
(428)
(492)
—
40
(899)
—
(899) $
43
—
6
60
109
(105)
(395)
(437)
(14)
(72)
(1,023)
4
(1,019) $
71
(36)
6
113
154
(147)
(257)
(1,346)
(132)
197
(1,685)
(72)
(1,757)
$
See accompanying Notes to Condensed Financial Information.
Table of Contents
123
CONDENSED FINANCIAL INFORMATION OF REGISTRANT PARENT COMPANY ONLY
CAESARS ENTERTAINMENT, INC.
CONDENSED STATEMENTS OF CASH FLOWS
Schedule I
(In millions)
Cash flows used in operating activities
Cash flows from investing activities
Purchase of property and equipment, net
Former Caesars acquisition
William Hill Acquisition
Proceeds from sale of businesses, property and equipment, net of cash sold
Proceeds from the sale of investments
Cash flows provided by (used in) investing activities
Cash flows from financing activities
Proceeds from long-term debt and revolving credit facilities
Debt issuance and extinguishment costs
Repayments of long-term debt and revolving credit facilities
Net proceeds (repayments) with related parties
Cash paid to settle convertible notes
Proceeds from sale-leaseback financing arrangement
Taxes paid related to net share settlement of equity awards
Proceeds from issuance of common stock
Cash flows provided by financing activities
Effect of foreign currency exchange rates on cash
Net increase (decrease) in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash, beginning of period
Cash, cash equivalents, and restricted cash, end of period
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO
AMOUNTS REPORTED WITHIN THE CONDENSED BALANCE SHEETS
Cash and cash equivalents in current assets
Restricted cash in current assets
Restricted and escrow cash included in other assets, net
Total cash, cash equivalents and restricted cash
2022
Years Ended December 31,
2021
2020
$
(329) $
(448) $
—
—
—
15
84
99
750
(12)
(89)
(592)
—
—
(27)
1
31
—
(199)
515
316 $
185 $
—
131
316 $
(1)
—
(3,938)
—
89
(3,850)
1,200
(17)
(100)
705
(367)
—
(45)
3
1,379
—
(2,919)
3,434
515 $
199 $
—
316
515 $
$
$
$
(296)
(8)
(8,470)
—
—
24
(8,454)
9,365
(353)
(3,339)
1,320
(903)
3,219
(16)
2,718
12,011
129
3,390
44
3,434
1,114
1,895
425
3,434
See accompanying Notes to Condensed Financial Information.
Table of Contents
124
CONDENSED FINANCIAL INFORMATION OF REGISTRANT PARENT COMPANY ONLY
CAESARS ENTERTAINMENT, INC.
NOTES TO CONDENSED FINANCIAL INFORMATION
Schedule I
1. Background and basis of presentation
These condensed parent company financial statements have been prepared in accordance with Rule 12-04, Schedule 1 of Regulation S-X, as the restricted
net assets of Caesars Entertainment, Inc. and its subsidiaries exceed 25% of the consolidated net assets of Caesars Entertainment, Inc. and its subsidiaries
(the “Company”). This information should be read in conjunction with the Company’s consolidated financial statements included elsewhere in this filing.
2. Restricted net assets of subsidiaries
Certain of the Company’s subsidiaries have restrictions on their ability to pay dividends or make intercompany loans and advances pursuant to financing
arrangements and regulatory restrictions. The amount of restricted net assets the Company’s consolidated subsidiaries held as of December 31, 2022 was
approximately $3.6 billion. Such restrictions are on net assets of Caesars Entertainment, Inc. and its subsidiaries. The amount of restricted net assets in the
Company’s unconsolidated subsidiaries was not material to the financial statements.
3. Commitments, contingencies, and long-term obligations
For a discussion of the Company’s commitments, contingencies, and long-term obligations under its credit facilities, see Note 11 and Note 12 of the
Company’s consolidated financial statements.
Table of Contents
125
Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Dated: February 21, 2023
CAESARS ENTERTAINMENT, INC.
By:
/s/ Thomas R. Reeg
Thomas R. Reeg
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Thomas R. Reeg
Thomas R. Reeg
/s/ Bret Yunker
Bret Yunker
/s/ Stephanie D. Lepori
Stephanie D. Lepori
/s/ Gary L. Carano
Gary L. Carano
/s/ Bonnie Biumi
Bonnie Biumi
/s/ Jan Jones Blackhurst
Jan Jones Blackhurst
/s/ Frank J. Fahrenkopf Jr.
Frank J. Fahrenkopf Jr.
/s/ Don Kornstein
Don Kornstein
/s/ Courtney Mather
Courtney Mather
/s/ Michael E. Pegram
Michael E. Pegram
/s/ David P. Tomick
David P. Tomick
Chief Executive Officer (Principal Executive Officer) and
Director
February 21, 2023
Chief Financial Officer (Principal Financial Officer)
February 21, 2023
Chief Administrative and Accounting Officer (Principal
Accounting Officer)
February 21, 2023
Executive Chairman of the Board
February 21, 2023
Director
Director
Director
Director
Director
Director
Director
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
Table of Contents
126
Exhibit 4.1
DESCRIPTION OF CAPITAL STOCK
We have one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended: our common stock, par value $0.00001
per share. The following is a general description of the terms and provisions of our capital stock and related provisions of our certificate of incorporation
and our bylaws, each of which is incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this Exhibit 4.1 is a part. The
following description is only a summary of the material provisions of our capital stock, certificate of incorporation and bylaws and does not purport to be
complete and is subject and qualified in its entirety by reference to the applicable provisions of the Delaware General Corporation Law, or the DGCL, our
certificate of incorporation and our bylaws. We encourage you to read our certificate of incorporation, our bylaws and the applicable provisions of the
DGCL for additional information.
General
Our authorized capital stock consists of 500,000,000 shares of common stock, par value $0.00001 per share.
Common Stock
Dividend rights
We will be permitted to pay dividends if, as and when declared by our board of directors, subject to compliance with limitations imposed by the DGCL.
The holders of our common stock are entitled to receive and share equally in these dividends as they may be declared by our board of directors out of funds
legally available for such purpose. We do not currently expect to pay dividends on our common stock.
Voting rights
Our common stock votes as a single class on all matters on which stockholders are entitled to vote, and each share of our common stock is entitled to cast
one vote in person or by proxy on such matters. Holders of our common stock do not have the right to cumulate votes in the election of directors. Directors
are elected by a plurality of the shares actually voting on the matter at each annual meeting or special meeting called for the purpose of electing such
directors at which a quorum is present.
Liquidation rights
Upon our liquidation, dissolution or winding-up, whether voluntary or involuntary, the holders of our common stock will be entitled to receive, after
payment or provision for payment of all our debts and liabilities, all of our assets available for distribution.
Preemptive rights
Holders of our common stock are not entitled to any preemptive rights to subscribe for additional shares of our common stock, nor are they liable to further
capital calls or to assessments by us. Therefore, if we issue additional shares without the opportunity for existing stockholders to purchase more shares, a
stockholder’s ownership interest in our Company may be subject to dilution.
Other Rights or Preferences
Our common stock has no sinking fund, redemption provisions, or conversion or exchange rights, other than redemption provisions related to compliance
with gaming laws.
Preferred Stock
We are authorized to issue up to 150,000,000 shares of preferred stock, none of which is outstanding. Our board of directors is authorized without further
action by holders of our common stock, subject to limitations prescribed by Delaware law and our certificate of incorporation, to issue preferred stock and
to determine the terms and conditions
4812-2185-9293
of the preferred stock, including whether the shares of preferred stock will be issued in one or more series, the number of shares to be included in each
series and the powers, designations, preferences and rights of the shares. Our board of directors is authorized to designate any qualifications, limitations or
restrictions on the shares without any further vote or action by our stockholders. The issuance of preferred stock may have the effect of delaying, deferring
or preventing a change in control of our company that some stockholders believe to be in their best interests or in which holders of our common stock
might receive a premium over the market price and may adversely affect the voting and other rights of the holders of our common stock, which could have
an adverse impact on the market price of our common stock. We have no current plan to issue any shares of preferred stock.
Transfer agent and registrar
The transfer agent and registrar for our common stock is Continental Stock Transfer & Trust Company.
Limitation of liability and indemnification matters
We have entered into indemnification agreements with certain of our executive officers and each of our directors pursuant to which we have agreed to
indemnify such executive officers and directors against liability incurred by them by reason of their services as an executive officer or director to the fullest
extent allowable under applicable law. We also provide liability insurance for each officer and director for losses arising from claims or charges made
against them while acting in their capacities as our officer or director.
To the extent that indemnification for liabilities arising under the Securities Act may be permitted to our executive officers and directors pursuant to the
foregoing, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is
therefore unenforceable.
National market listing
Our common stock is listed on the NASDAQ Stock Market under the symbol “CZR.”
39337.00400
4812-2185-9293
Exhibit 4.4
SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of June 4, 2021, among AMERICAN WAGERING,
INC., AWI GAMING, INC., AWI MANUFACTURING, INC., BRANDYWINE BOOKMAKING LLC, BW SUB CO., COMPUTERIZED
BOOKMAKING SYSTEMS, INC., WH NV III, LLC, WHUS TECHCO, INC., WILLIAM HILL DFSB, INC., WILLIAM HILL NEVADA
I, WILLIAM HILL NEVADA II, WILLIAM HILL NEW JERSEY, INC. and WILLIAM HILL U.S. HOLDCO, INC. (each, a “New
Guarantor”), CAESARS ENTERTAINMENT, INC., a Delaware corporation (the “Issuer”), the other Subsidiary Guarantors (as defined in the
Indenture referred to herein), U.S. BANK NATIONAL ASSOCIATION, as trustee (in such capacity, the “Trustee”), and U.S. BANK
NATIONAL ASSOCIATION, as collateral agent (in such capacity, the “Collateral Agent”).
W I T N E S E T H :
WHEREAS, the Issuer has heretofore executed and delivered to the Trustee and the Collateral Agent an indenture, dated as of July 6,
2020, providing for the issuance of 6.250% Senior Secured Notes due 2025 (the “Notes”), initially in the aggregate principal amount of
$3,400,000,000, as supplemented by that certain supplemental indenture, dated as of July 20, 2020, by and among the Issuer, the guarantors
party thereto, the Trustee and the Collateral Agent, pursuant to which the Issuer assumed the Escrow Issuer’s obligations under the Notes and
the Indenture, and the guarantors became party thereto (as further amended, supplemented or otherwise modified, the “Indenture”);
WHEREAS, Section 4.11 of the Indenture provides that under certain circumstances the Issuer is required to cause each New
Guarantor to execute and deliver to the Trustee a supplemental indenture pursuant to which each New Guarantor shall unconditionally
guarantee all the Issuer’s Obligations under the Notes and the Indenture pursuant to a Note Guarantee on the terms and conditions set forth
herein; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee, the Collateral Agent, the Issuer and the Subsidiary Guarantors, if
any, are authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby
acknowledged, each New Guarantor, the Issuer, the Subsidiary Guarantors and the Trustee mutually covenant and agree for the equal and
ratable benefit of the holders of the Notes as follows:
1. Defined Terms. As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are
used herein as therein defined, except that the term “holders” in this Supplemental Indenture shall refer to the term “holders” as defined in the
Indenture and the Trustee acting on behalf of and for the benefit of such holders. The words “herein,” “hereof” and “hereby” and other words
of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.
2. Agreement to Guarantee. Each New Guarantor hereby agrees, jointly and severally with all existing guarantors (if any), to
unconditionally guarantee the Issuer’s Obligations under the Notes and the Indenture on the terms and subject to the conditions set forth in
Article XIII of the Indenture and to be bound by all other applicable provisions of the Indenture and the Notes and to perform all of the
obligations and agreements of a guarantor under the Indenture. From and after the date hereof, all references in the Indenture to the
“Guarantors” and the “Subsidiary Guarantors” shall include the New Guarantors.
3. Notices. All notices or other communications to each New Guarantor shall be given as provided in Section 14.02 of the
Indenture.
4. Execution and Delivery. Each New Guarantor agrees that its Note Guarantee shall remain in full force and effect
notwithstanding the absence of the endorsement of any notation of such Note Guarantee.
5. Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all
respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental
Indenture shall form a part of the Indenture for all purposes, and every holder of Notes heretofore or hereafter authenticated and delivered
shall be bound hereby.
6. Governing Law. This Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of
New York.
7. No Recourse Against Others. No director, officer, employee, manager, incorporator or holder of any Equity Interests in any New
Guarantor or any direct or indirect parent corporation, as such, shall have any liability for any obligations of any New Guarantor under the
Notes or the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their
creation. Each holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration
for issuance of the Notes.
8. Trustee Makes No Representation. The Trustee makes no representation as to the validity or sufficiency of this Supplemental
Indenture.
9. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original,
but all of them together represent the same agreement. The words “execution,” “execute”, “signed,” “signature,” and words of like import in
or related to this Supplemental Indenture and any document to be signed in connection with this Supplemental Indenture and the transactions
contemplated hereby (including without limitation supplements, amendments, waivers and consents) shall be deemed to include electronic
signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Trustee, or the
keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed
signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law,
including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records
Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that (x) notwithstanding anything contained
herein to the contrary the Trustee is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly
agreed to by the Trustee pursuant to procedures approved by it and (y) each party hereto shall use commercially reasonable efforts to
promptly provide manually executed counterparts of its electronic signatures if reasonably requested by any other party hereto. Without
limiting the generality of the foregoing, each New Guarantor hereby (i) agrees that, for all purposes, including without limitation, in
connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation among the Trustee, the Collateral
Agent, the Issuer and the Subsidiary Guarantors, electronic images of this Supplemental Indenture (including with respect to any signature
pages thereto) shall have the same legal effect, validity and enforceability as any paper original, and (ii) waives any argument, defense or
right to contest the validity or enforceability of this Supplemental Indenture based solely on the lack of paper original copies of this
Supplemental Indenture, including with respect to any signature pages thereto. The Issuer and the Subsidiary Guarantors assume all risks
arising out of the use of digital signatures and electronic methods to submit communications, including without limitation the risk of a Person
acting on unauthorized instructions, and the risk of interception and misuse by third parties.
10. Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction thereof.
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above
written.
CAESARS ENTERTAINMENT, INC.,
as Issuer
By:
Name: Edmund L. Quatmann, Jr.
Title: Secretary
[Signature Page to Supplemental Indenture]
AZTAR INDIANA GAMING COMPANY, LLC
AZTAR RIVERBOAT HOLDING COMPANY, LLC
BLACK HAWK HOLDINGS, L.L.C.
CAESARS DUBAI, LLC
CAESARS GROWTH PARTNERS, LLC
CAESARS HOLDINGS, INC.
CAESARS HOSPITALITY, LLC
CAESARS INTERNATIONAL HOSPITALITY, LLC
CAESARS PARLAY HOLDING, LLC
CATFISH QUEEN PARTNERSHIP IN COMMENDAM
CCR NEWCO, LLC
CC-RENO LLC
CCSC/BLACKHAWK, INC.
CENTROPLEX CENTRE CONVENTION HOTEL, L.L.C.
CIE GROWTH, LLC
CIRCUS AND ELDORADO JOINT VENTURE, LLC
CRS ANNEX, LLC
EASTSIDE CONVENTION CENTER, LLC
ELDO FIT, LLC
ELDORADO HOLDCO LLC
ELDORADO LIMITED LIABILITY COMPANY
ELDORADO RESORTS LLC
ELDORADO SHREVEPORT #1, LLC
ELDORADO SHREVEPORT #2, LLC
ELGIN HOLDINGS I LLC
ELGIN HOLDINGS II LLC
ELGIN RIVERBOAT RESORT–RIVERBOAT CASINO,
GB INVESTOR, L.L.C.
IC HOLDINGS COLORADO, INC.
IOC - BLACK HAWK DISTRIBUTION COMPANY, LLC
IOC - BOONVILLE, INC.
IOC - LULA, INC.
IOC BLACK HAWK COUNTY, INC.
IOC HOLDINGS, L.L.C.
IOC-VICKSBURG, INC.
IOC-VICKSBURG, L.L.C.
ISLE OF CAPRI BETTENDORF, L.C.
ISLE OF CAPRI BLACK HAWK, L.L.C.
ISLE OF CAPRI CASINOS LLC
as Subsidiary Guarantors
By:
Name: Edmund L. Quatmann, Jr.
Title: Secretary
[Signature Page to Supplemental Indenture]
LIGHTHOUSE POINT, LLC
MTR GAMING GROUP, INC.
NEW JAZZ ENTERPRISES, L.L.C.
NEW TROPICANA HOLDINGS, INC.
NEW TROPICANA OPCO, INC.
OLD PID, INC.
POMPANO PARK HOLDINGS, L.L.C.
PPI DEVELOPMENT HOLDINGS LLC
PPI DEVELOPMENT LLC
PPI, INC.
ROMULUS RISK AND INSURANCE COMPANY, INC.
SCIOTO DOWNS, INC.
ST. CHARLES GAMING COMPANY, L.L.C.
TEI (ES), LLC
TEI (ST. LOUIS RE), LLC
TEI (STLH), LLC
TEI R7 INVESTMENT LLC
TROPICANA ATLANTIC CITY CORP.
TROPICANA ENTERTAINMENT INC.
TROPICANA LAUGHLIN, LLC
TROPICANA ST. LOUIS LLC
TROPWORLD GAMES LLC
VEGAS DEVELOPMENT LAND OWNER LLC,
as Subsidiary Guarantors
By:
Name: Edmund L. Quatmann, Jr.
Title: Secretary
CAESARS INTERACTIVE ENTERTAINMENT NEW JERSEY, LLC,
as a Subsidiary Guarantor
William Hill U.S. HoldCo, Inc., as its sole member
By:
Name: Edmund L. Quatmann, Jr.
Title: Secretary
[Signature Page to Supplemental Indenture]
AMERICAN WAGERING, INC.
AWI GAMING, INC.
AWI MANUFACTURING, INC.
BRANDYWINE BOOKMAKING LLC
BW SUB CO.
COMPUTERIZED BOOKMAKING SYSTEMS, INC.
WH NV III, LLC
WHUS TECHCO, INC.
WILLIAM HILL DFSB, INC.
WILLIAM HILL NEVADA I
WILLIAM HILL NEVADA II
WILLIAM HILL NEW JERSEY, INC.
WILLIAM HILL U.S. HOLDCO, INC.,
as New Guarantors
By:
Name: Edmund L. Quatmann, Jr.
Title: Secretary
[Signature Page to Supplemental Indenture]
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION,
as Collateral Agent
By:
Name:
Title:
[Signature Page to Supplemental Indenture]
Exhibit 4.7
SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of June 4, 2021, among AMERICAN WAGERING,
INC., AWI GAMING, INC., AWI MANUFACTURING, INC., BRANDYWINE BOOKMAKING LLC, BW SUB CO., COMPUTERIZED
BOOKMAKING SYSTEMS, INC., WH NV III, LLC, WHUS TECHCO, INC., WILLIAM HILL DFSB, INC., WILLIAM HILL NEVADA
I, WILLIAM HILL NEVADA II, WILLIAM HILL NEW JERSEY, INC. and WILLIAM HILL U.S. HOLDCO, INC. (each, a “New
Guarantor”), CAESARS ENTERTAINMENT, INC., a Delaware corporation (the “Issuer”), the other Subsidiary Guarantors (as defined in the
Indenture referred to herein), and U.S. BANK NATIONAL ASSOCIATION, as trustee (in such capacity, the “Trustee”).
W I T N E S E T H :
WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an indenture, dated as of July 6, 2020, providing for the
issuance of 8.125% Senior Notes due 2027 (the “Notes”), initially in the aggregate principal amount of $1,800,000,000, as supplemented by
that certain supplemental indenture, dated as of July 20, 2020, by and among the Issuer, the Subsidiary Guarantors party thereto, and the
Trustee, pursuant to which the Issuer assumed the Escrow Issuer’s obligations under the Notes and the Indenture, and the guarantors became
party thereto (as further amended, supplemented or otherwise modified, the “Indenture”);
WHEREAS, Section 4.11 of the Indenture provides that under certain circumstances the Issuer is required to cause each New
Guarantor to execute and deliver to the Trustee a supplemental indenture pursuant to which each New Guarantor shall unconditionally
guarantee all the Issuer’s Obligations under the Notes and the Indenture pursuant to a Note Guarantee on the terms and conditions set forth
herein; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee, the Issuer and the Subsidiary Guarantors, if any, are authorized to
execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby
acknowledged, each New Guarantor, the Issuer, the Subsidiary Guarantors and the Trustee mutually covenant and agree for the equal and
ratable benefit of the holders of the Notes as follows:
1. Defined Terms. As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are
used herein as therein defined, except that the term “holders” in this Supplemental Indenture shall refer to the term “holders” as defined in the
Indenture and the Trustee acting on behalf of and for the benefit of such holders. The words “herein,” “hereof” and “hereby” and other words
of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.
2. Agreement to Guarantee. Each New Guarantor hereby agrees, jointly and severally with all existing guarantors (if any), to
unconditionally guarantee the Issuer’s Obligations under the Notes and the Indenture on the terms and subject to the conditions set forth in
Article XII of the Indenture and to be bound by all other applicable provisions of the Indenture and the Notes and to perform all of the
obligations and agreements of a guarantor under the Indenture. From and after the date hereof, all references in the Indenture to the
“Subsidiary Guarantors” shall include the New Guarantors.
3. Notices. All notices or other communications to each New Guarantor shall be given as provided in Section 13.02 of the
Indenture.
4. Execution and Delivery. Each New Guarantor agrees that its Note Guarantee shall remain in full force and effect
notwithstanding the absence of the endorsement of any notation of such Note Guarantee.
5. Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all
respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental
Indenture shall
form a part of the Indenture for all purposes, and every holder of Notes heretofore or hereafter authenticated and delivered shall be bound
hereby.
6. Governing Law. This Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of
New York.
7. No Recourse Against Others. No director, officer, employee, manager, incorporator or holder of any Equity Interests in any New
Guarantor or any direct or indirect parent corporation, as such, shall have any liability for any obligations of any New Guarantor under the
Notes or the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their
creation. Each holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration
for issuance of the Notes.
8. Trustee Makes No Representation. The Trustee makes no representation as to the validity or sufficiency of this Supplemental
Indenture.
9. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original,
but all of them together represent the same agreement. The words “execution,” “execute”, “signed,” “signature,” and words of like import in
or related to this Supplemental Indenture and any document to be signed in connection with this Supplemental Indenture and the transactions
contemplated hereby (including without limitation supplements, amendments, waivers and consents) shall be deemed to include electronic
signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Trustee, or the
keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed
signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law,
including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records
Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that (x) notwithstanding anything contained
herein to the contrary the Trustee is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly
agreed to by the Trustee pursuant to procedures approved by it and (y) each party hereto shall use commercially reasonable efforts to
promptly provide manually executed counterparts of its electronic signatures if reasonably requested by any other party hereto. Without
limiting the generality of the foregoing, each New Guarantor hereby (i) agrees that, for all purposes, including without limitation, in
connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation among the Trustee, the Issuer and
the Subsidiary Guarantors, electronic images of this Supplemental Indenture (including with respect to any signature pages thereto) shall
have the same legal effect, validity and enforceability as any paper original, and (ii) waives any argument, defense or right to contest the
validity or enforceability of this Supplemental Indenture based solely on the lack of paper original copies of this Supplemental Indenture,
including with respect to any signature pages thereto. The Issuer and the Subsidiary Guarantors assume all risks arising out of the use of
digital signatures and electronic methods to submit communications, including without limitation the risk of a Person acting on unauthorized
instructions, and the risk of interception and misuse by third parties.
10. Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction thereof.
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above
written.
CAESARS ENTERTAINMENT, INC.,
as Issuer
By:
Name: Edmund L. Quatmann, Jr.
Title: Secretary
[Signature Page to Supplemental Indenture]
AZTAR INDIANA GAMING COMPANY, LLC
AZTAR RIVERBOAT HOLDING COMPANY, LLC
BLACK HAWK HOLDINGS, L.L.C.
CAESARS DUBAI, LLC
CAESARS GROWTH PARTNERS, LLC
CAESARS HOLDINGS, INC.
CAESARS HOSPITALITY, LLC
CAESARS INTERNATIONAL HOSPITALITY, LLC
CAESARS PARLAY HOLDING, LLC
CATFISH QUEEN PARTNERSHIP IN COMMENDAM
CCR NEWCO, LLC
CC-RENO LLC
CCSC/BLACKHAWK, INC.
CENTROPLEX CENTRE CONVENTION HOTEL, L.L.C.
CIE GROWTH, LLC
CIRCUS AND ELDORADO JOINT VENTURE, LLC
CRS ANNEX, LLC
EASTSIDE CONVENTION CENTER, LLC
ELDO FIT, LLC
ELDORADO HOLDCO LLC
ELDORADO LIMITED LIABILITY COMPANY
ELDORADO RESORTS LLC
ELDORADO SHREVEPORT #1, LLC
ELDORADO SHREVEPORT #2, LLC
ELGIN HOLDINGS I LLC
ELGIN HOLDINGS II LLC
ELGIN RIVERBOAT RESORT–RIVERBOAT CASINO,
GB INVESTOR, L.L.C.
IC HOLDINGS COLORADO, INC.
IOC - BLACK HAWK DISTRIBUTION COMPANY, LLC
IOC - BOONVILLE, INC.
IOC - LULA, INC.
IOC BLACK HAWK COUNTY, INC.
IOC HOLDINGS, L.L.C.
IOC-VICKSBURG, INC.
IOC-VICKSBURG, L.L.C.
ISLE OF CAPRI BETTENDORF, L.C.
ISLE OF CAPRI BLACK HAWK, L.L.C.
ISLE OF CAPRI CASINOS LLC
as Subsidiary Guarantors
By:
Name: Edmund L. Quatmann, Jr.
Title: Secretary
[Signature Page to Supplemental Indenture]
LIGHTHOUSE POINT, LLC
MTR GAMING GROUP, INC.
NEW JAZZ ENTERPRISES, L.L.C.
NEW TROPICANA HOLDINGS, INC.
NEW TROPICANA OPCO, INC.
OLD PID, INC.
POMPANO PARK HOLDINGS, L.L.C.
PPI DEVELOPMENT HOLDINGS LLC
PPI DEVELOPMENT LLC
PPI, INC.
ROMULUS RISK AND INSURANCE COMPANY, INC.
SCIOTO DOWNS, INC.
ST. CHARLES GAMING COMPANY, L.L.C.
TEI (ES), LLC
TEI (ST. LOUIS RE), LLC
TEI (STLH), LLC
TEI R7 INVESTMENT LLC
TROPICANA ATLANTIC CITY CORP.
TROPICANA ENTERTAINMENT INC.
TROPICANA LAUGHLIN, LLC
TROPICANA ST. LOUIS LLC
TROPWORLD GAMES LLC
VEGAS DEVELOPMENT LAND OWNER LLC,
as Subsidiary Guarantors
By:
Name: Edmund L. Quatmann, Jr.
Title: Secretary
CAESARS INTERACTIVE ENTERTAINMENT NEW JERSEY, LLC,
as a Subsidiary Guarantor
William Hill U.S. HoldCo, Inc., as its sole member
By:
Name: Edmund L. Quatmann, Jr.
Title: Secretary
[Signature Page to Supplemental Indenture]
AMERICAN WAGERING, INC.
AWI GAMING, INC.
AWI MANUFACTURING, INC.
BRANDYWINE BOOKMAKING LLC
BW SUB CO.
COMPUTERIZED BOOKMAKING SYSTEMS, INC.
WH NV III, LLC
WHUS TECHCO, INC.
WILLIAM HILL DFSB, INC.
WILLIAM HILL NEVADA I
WILLIAM HILL NEVADA II
WILLIAM HILL NEW JERSEY, INC.
WILLIAM HILL U.S. HOLDCO, INC.,
as New Guarantors
By:
Name: Edmund L. Quatmann, Jr.
Title: Secretary
[Signature Page to Supplemental Indenture]
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
Name:
Title:
[Signature Page to Supplemental Indenture]
Exhibit 14
Caesars Entertainment, Inc.
Code of Ethics and Business Conduct
This Code of Ethics and Business Conduct, which includes our Conflicts of Interest Policy attached as Exhibit A hereto
(collectively, the “Code”), embodies the commitment of Caesars Entertainment, Inc. and its subsidiaries (the “Company”) to
conduct business in accordance with all applicable laws, rules and regulations, and ethical standards. All employees, officers,
and members of the Caesars Entertainment, Inc. Board of Directors (the “Board”) are expected to adhere to those principals
and procedures set forth in the Code that apply to them.
We also expect the consultants that we retain generally to abide by the Code.
The Code includes standards that are designed to deter wrongdoing and to promote:
(1)
(2)
(3)
(4)
Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest
between personal and professional relationships;
Full, fair, accurate, timely, and understandable disclosure in reports and documents that the Company
files with, or submits to, the Securities and Exchange Commission (the “SEC”) and in other public
communications made by the Company;
Compliance with applicable governmental laws, rules and regulations;
The prompt internal reporting of violations of the Code to an appropriate person or persons identified
in the Code; and
(5)
Accountability for adherence to the Code.
Section I
A.
Implementation and Oversight of The Code
The Board is ultimately responsible for the implementation of the Code. The Board has designated the Company’s
Chief Legal Officer to be the compliance officer (such person, or such other person as the Board may subsequently designate
as the compliance officer, the “Compliance Officer”) for the implementation and administration of the Code, provided,
however, that notwithstanding any provision to the contrary in this Code, any matter submitted to the Audit Committee of the
Board pursuant to the Company’s Whistleblower Hotline Policy and Procedures shall not be reviewed or otherwise
administered by the Compliance Officer unless so directed by the Audit Committee.
Questions regarding the application or interpretation of the Code are inevitable.
Directors, officers, employees and consultants of the Company should direct all questions to the Compliance Officer.
1
The Code, and all amendments of the Code, will be included in the Company’s periodic filings with the SEC and will
be available on the Company’s website.
Statements in the Code to the effect that certain actions may be taken only with the “Company’s approval” mean that
the Compliance Officer must give prior written approval before the proposed action may be undertaken. The Compliance
Officer will act in a manner that is consistent with the requirements and spirit of the Code.
The Code should be read in conjunction with the Company’s other policy statements, including, without limitation, the
Company’s Whistleblower Hotline Policy and Procedures, Conflicts of Interest Policy, Company’s Securities Trading Policy
and Gaming Compliance Policy.
Periodic training may be provided regarding the contents and importance of the Code and related policy statements and
the manner in which violations must be reported and waivers must be requested.
B.
Honest and Ethical Conduct
One person’s dishonest or unethical conduct can harm the Company’s reputation and compromise the trust that the
public and our shareholders have in the Company. For that reason, each director, officer, employee and consultant must be
familiar with and comply with the Code. Compliance with the Code - and therefore all laws and regulations - forms the
foundation of honest and ethical conduct. Accordingly, compliance with the Code is not simply expected; it is mandatory. In
addition, the Company expects that directors, officers, employees and consultants of the Company will:
o Establish an example by their behavior as a model for others subject to the Code.
o Sustain a culture where honest and ethical conduct is recognized, valued and exemplified by all directors, officers,
employees, consultants and other representatives of the Company.
o Personally participate in, and where applicable, lead compliance efforts through meetings with others subject to the
Code and monitor compliance matters and programs.
o Raise and encourage others to raise concerns and questions about ethical conduct and integrity.
The Company will take such disciplinary or preventive action as it deems appropriate to address any existing or
potential violation of the Code brought to its attention. The Company’s Conflicts of Interest Policy, which is attached to the
Code as Exhibit A, is an integral part of the Code and all Company directors, officers, employees and consultants should
conduct themselves in accordance with its requirements and spirit.
A personal conflict of interest occurs when an individual’s private interest improperly interferes with the interests
of the Company. Personal conflicts of interest are prohibited as a matter of Company policy, unless they have been
approved by the Company. In particular, a
2
director, officer, employee, or consultant must never use his or her position with the Company to obtain any improper personal
benefit for himself or herself, for his or her family members, or for any other person, including loans or guarantees of
obligations, from any person or entity, provided, however, that the Code is not intended to prohibit doing business with
vendors, service providers, licensed lenders and the like who do business with the Company, so long as one does not exploit
his or her position with the Company to obtain preferential treatment and so long as any such actions are not in violation of
any applicable law or regulation (including, without limitation, SEC and Nasdaq rules).
Service to the Company should never be subordinated to personal gain and advantage.
Conflicts of interest, unless properly waived by the Company, must be avoided.
Any director, officer, employee or consultant who is aware of a transaction or relationship that could reasonably be
expected to give rise to a conflict of interest should disclose and discuss the matter fully and promptly with the Compliance
Officer, provided however, that alternatively, any complaint may be reported anonymously as provided by the Company’s
Whistleblower Policy and Procedures referenced herein.
C.
Full, Fair, Accurate, Timely and Understandable Public Disclosure
It is the Company’s policy that the information in its public communications, including SEC filings, be full, fair,
accurate, timely, and understandable. All directors, officers, employees and consultants who are involved in the Company’s
disclosure process are responsible for acting in furtherance of this policy. In particular, these individuals are required to
maintain familiarity with the disclosure requirements applicable to the Company and are prohibited from knowingly
misrepresenting, omitting, or causing others to misrepresent or omit, material facts about the Company to others, whether
within or outside the Company, including the Company’s independent auditors. Our disclosures should comply with the letter
and the spirit of applicable law.
All directors, officers, employees and consultants must follow these guidelines:
o Act honestly, ethically and with integrity.
o Comply with the Code.
o Endeavor to ensure full, fair, timely, accurate and understandable disclosure in the Company’s filings with the
SEC.
o Through communication, make sure that others at the Company understand the Company’s obligations to the
public and under the law with respect to its disclosures, including that results are never more important than
compliance with the law.
o Encourage others at the Company to raise questions and concerns regarding the Company’s public
disclosures and ensure that such questions and concerns are appropriately addressed.
3
o Provide the Company’s directors, officers, employees, consultants and advisors involved in the preparation of the
Company’s disclosures to the public with information that is accurate, complete, objective, relevant, timely and
understandable.
o Act in good faith, responsibly, and with due care, competence and diligence, without misrepresenting material
facts or allowing such person’s independent judgment to be subordinated by others.
o Proactively promote honest and ethical behavior among peers in the work environment.
o Achieve proper and responsible use of and control over Company assets and resources.
o Record or participate in the recording of entries in the Company’s books and records that are accurate.
o Comply with the Company’s disclosure controls and procedures, internal controls and procedures for financial
reporting and other policy statements.
D.
Compliance with Laws, Rules, and Regulations
It is the Company’s policy to comply with all applicable laws, rules, and regulations. Some laws carry criminal
penalties. It is the personal responsibility of each director, officer, employee and consultant to adhere to the standards and
restrictions imposed by those laws, rules, and regulations. The Company expects each director, officer, employee and
consultant to refrain from any illegal, dishonest, or unethical conduct.
Generally, it is both illegal and against Company policy for any director, officer, employee and consultant who is aware
of material nonpublic information relating to the Company, any of the Company’s customers or any other private or
governmental issuer of securities to buy or sell any securities of those issuers, or recommend that another buy, sell or hold the
securities of those issuers. It is the Company’s policy for all directors, officers, employees and consultants to comply with the
Company’s Securities Trading Policy. Any director, officer, employee or consultant with questions regarding these types of
transactions should contact the Compliance Officer.
E.
Duty to Report and Raise Questions and Concerns; Internal Reporting Procedure
Each director, officer, employee, and consultant must report promptly to the Compliance Officer, as well as the
Director of Compliance of any involved Property, the existence (or good faith suspected existence) of any of the following:
• Any outside association, interest, relationship or activity, as it arises, that actually, potentially or apparently
involves a conflict of interest violation (or suspected violation) of the Code;
•
any action or inaction that does not comply with gaming laws or regulations in any jurisdiction in which the
Company does business;
4
•
•
•
any action or inaction that does not comply with any condition or limitation placed on any license or
approval granted by any Gaming Authority to the Company or any of its gaming operations;
any other event or circumstance which the employee, officer, director or consultant believes, in good faith,
could impact the Company’s suitability for licensure, or may bring discredit to the Company or the gaming
industry; and
any violation of the Code.
Failure to report such relationships, activities, interests, non-compliance with gaming laws or regulations or violations of the
Code will be a ground for disciplinary action.
In addition to the foregoing obligation to report to the Compliance Officer, employees who serve as Directors of
Compliance shall also report such relationships, activities, interests, non-compliance with gaming laws or regulations or
violations of the Code to the General Manager of the involved Property (unless the General Manager is the subject of, or
otherwise involved in, such actual or potential violation). If, after consultation with the Compliance Officer and the General
Manager, the Director of Compliance still maintains a good faith belief that the actual or potential violation has not been
adequately addressed, he or she shall report such matter directly to the Company’s Compliance Committee.
Subject to the provisions of the Code, the Compliance Officer will review disclosures of any actual, potential or
apparent violation of the Code with at least one member of the Company’s Audit Committee and , if applicable, at least one
member of the Company’s Compliance Committee, to determine the appropriate manner by which the Company’s approval or
disapproval would be provided. Each director, officer, employee, and consultant must cooperate fully in the review process by
providing all information that the Compliance Officer deems necessary to conduct an effective review. Company actions with
respect to the conflict of interest or potential conflict of interest will take into account the spirit of the Code.
Upon becoming employed by or associated with the Company each director, officer, employee, and consultant must
sign a statement reflecting awareness and understanding of the Code, including the Conflicts of Interest Policy (“Ethics
Statement”). At the same time, each director, officer, employee and consultant must report either the absence or presence of
actual, potential or apparent conflicts of interest. The Company may from time to time request that any such person affirm his
or her awareness of the Code and Conflicts of Interest Policy by delivering an updated Ethics Statement. A form of Ethics
Statement is attached as Exhibit B hereto.
All interests, relationships or participation in transactions disclosed by any director, officer, employee or consultant in
accordance with this policy shall be held in confidence unless the best interests of the Company dictate otherwise.
The Company recognizes the potentially serious impact of a false accusation.
Employees, officers, directors and consultants are expected as part of the ethical standards required by this Code to act
responsibly in reporting violations. Making a complaint without a
5
good-faith basis is itself a violation of the Code. Any employee, officer, director or consultant who makes a complaint in bad
faith will be subject to disciplinary action, up to and including separation of employment.
Employees, officers, directors and consultants who report violations or suspected violations in good faith, as well as
those who participate in investigations, will not be subject to retaliation of any kind.
Retaliation, which will be broadly construed, is generally defined as the use of authority or influence for the purpose of
interfering with, or discouraging a report of, a violation of the Code or an investigation of an alleged Code violation. The
Company will not permit retaliation where a report of an actual or potential violation was made in good faith.
If you believe someone has retaliated against you because of your good faith report of an actual or suspected violation,
you should immediately advise Human Resources as well as the Compliance Officer, and the Director of Compliance of the
involved Property.
F.
Accountability
All who are subject to the Code are responsible for complying with it and for reporting any known or suspected
violations of it. The Company recognizes that such a mandate may not be meaningful without an accompanying provision for
accountability and discipline of violations of the Code.
Subject to the terms of the Code, reported violations of the Code will be investigated, addressed promptly and treated
confidentially to the extent possible. The Company will strive to impose discipline for each Code violation that fits the nature
and particular facts of the violation. The Company uses a system of progressive discipline and generally will issue warnings or
letters of reprimand for less significant, first-time violations. Violations of a more serious nature may result in termination of
employment or suspension without pay, demotion, loss or reduction of bonus or option awards, or any combination of such
disciplinary measures.
Violations of the Code that go unaddressed are treated by the SEC as implicit waivers of the Code. Accordingly, any
violation that is discovered and not addressed will have to be disclosed in accordance with the rules and regulations of the SEC
or applicable listing standards. In such cases, the SEC’s rules will require disclosure of the nature of any violation, the date of
the violation and the name of the person who committed the violation. Such disclosure would be harmful to the Company and
the individuals involved in the violation.
Subject to the provisions of the Code and the Company’s Whistleblower Policy and Procedures, all investigations of
reported violations of the Code will be supervised by the Compliance Officer. A violation shall be deemed to have occurred
and appropriate consequences shall be determined only by the Board of Directors, any of its committees, or such other person
designated by the Board to act on its behalf.
6
G.
Protected Disclosures
Nothing in this Code or any agreement between you and the Company:
• will preclude, prohibit or restrict you from (i) communicating with, any federal, state or local administrative or
regulatory agency or authority, including but not limited to the Securities and Exchange Commission (the
“SEC”); (ii) participating or cooperating in any investigation conducted by any governmental agency or
authority; or (iii) filing a charge of discrimination with the United States Equal Employment Opportunity
Commission or any other federal state or local administrative agency or regulatory authority.
•
•
prohibits, or is intended in any manner to prohibit, you from (i) reporting a possible violation of federal or other
applicable law or regulation to any governmental agency or entity, including but not limited to the Department
of Justice, the SEC, the U.S. Congress, and any governmental agency Inspector General, or (ii) making other
disclosures that are protected under whistleblower provisions of federal law or regulation. Nothing in this Code
or any agreement between you and the Company is intended to limit your right to receive an award (including,
without limitation, a monetary reward) for information provided to the SEC. You do not need the prior
authorization of anyone at the Company to make any such reports or disclosures, and you are not required to
notify the Company that you have made such reports or disclosures.
is intended to interfere with or restrain the immunity provided under 18 U.S.C.
§1833(b). You cannot be held criminally or civilly liable under any federal or state trade secret law for the
disclosure of a trade secret that is made (i) (A) in confidence to federal, state or local government officials,
directly or indirectly, or to an attorney, and (B) for the purpose of reporting or investigating a suspected
violation of law; (ii) in a complaint or other document filed in a lawsuit or other proceeding, if filed under seal;
or (iii) in connection with a lawsuit alleging retaliation for reporting a suspected violation of law, if filed under
seal and does not disclose the trade secret, except pursuant to a court order.
The foregoing provisions regarding protected disclosures are intended to comply with all applicable laws. If any laws
are adopted, amended or repealed after the date hereof, this Code shall be deemed to be amended to reflect the same.
A.
Corporate Opportunities
Section II
Directors, officers and employees owe a duty to the Company to advance the Company’s legitimate business interests
when the opportunity to do so arises. Directors, officers and employees are prohibited from taking for themselves (or directing
to a third party) a business opportunity that is discovered through the use of corporate property, information, or position unless
previously approved by the Board. More generally, directors, officers, employees and
7
consultants are prohibited from using corporate property, information, or position for personal gain or competing with the
Company.
Sometimes the line between personal and Company benefits may be difficult to discern. The only prudent course of
conduct for our directors, officers, employees and consultants is to make sure that any use of Company property or services
that is not solely for the benefit of the Company is approved beforehand through the Compliance Officer.
B.
Confidentiality
In carrying out the Company’s business, directors, officers, employees and consultants often learn confidential or
proprietary information about the Company, its customers, or other third parties. Directors, officers, employees and
consultants must maintain the confidentiality of all information so entrusted to them, except when disclosure is authorized or
legally mandated. Confidential or proprietary information includes, among other things, any non-public information
concerning the Company, including its business relationships, financial performance, results or prospects, personnel
information, guest information, compensation data, computer processes, customer lists, marketing strategies, pending projects
or proposals, and any non-public information provided by a third party with the expectation that the information be kept
confidential and used solely for the business purpose for which it was conveyed. Directors, officers, employees and
consultants should refer to the Company’s Legal Department for more detailed guidance on this topic.
C.
Fair Dealing
The successful business operation and reputation of the Company are built upon the principals of fair dealing and
ethical conduct. Our reputation for integrity and excellence requires careful observance of the spirit and letter of all applicable
laws and regulations as well as a scrupulous regard for standards of conduct and personal integrity consistent with this Code.
We do not seek competitive advantages through illegal or unethical business practices. Each director, officer, employee and
consultant should endeavor to deal fairly with the Company’s customers, service providers, suppliers, competitors, and other
employees. No director, officer, employee or consultant should take unfair advantage of anyone through manipulation,
concealment, abuse of privileged information, misrepresentation of material facts, or any unfair dealing practice.
D.
Equal Employment Opportunity and Harassment
Our focus in personnel decisions is on merit and contribution to the Company’s success.
Concern for the personal dignity and individual worth of every person is an indispensable element in the standard of conduct
that we have set for ourselves. The Company affords equal employment opportunity to all qualified persons without regard to
any impermissible criterion or circumstances. This means equal opportunity in regard to each individual’s terms and
conditions of employment and in regard to any other matter that affects in any way the working environment of the employee.
We do not tolerate or condone any type of discrimination prohibited by law, including harassment.
8
E.
Protection and Proper Use of Company Assets
All employees, officers, directors, and consultants should protect the Company’s assets and ensure their efficient use.
All Company assets should be used for legitimate business purposes only.
F.
Outside Activities/Employment
Non-salaried employees may hold a job with another employer so long as he or she notifies the Company and
satisfactorily performs his or her job responsibilities with the Company. All employees will be judged by the same
performance standards and will be subject to the Company’s scheduling demands, regardless of any existing outside work
requirements.
If the Company determines that an employee’s outside work interferes with performance or the ability to meet the
requirements of the Company as they are modified from time to time, the employee may be asked to terminate the outside
employment if he or she wishes to remain employed by the Company.
Any outside association, including employment and activities with other entities, should not encroach on the time and
attention any director, officer or employee is expected to devote to his or her Company duties and responsibilities, adversely
affect the quality or quantity of his or her work product or entail his or her use of any Company assets, including its real and
personal property, or imply (without the Company’s approval) the Company’s sponsorship or support. In addition, under no
circumstances is any director, officer or employee permitted to compete with the Company.
Section III
Waivers and Amendments of The Code
From time to time, the Board may amend the Code or waive certain provisions of the Code. Any such amendment shall
be disclosed in the manner and within the time required by applicable laws, regulations, rules and listing standards. Any
requests for a waiver of any provision of the Code must be submitted in writing to the Compliance Officer for review. If a
waiver of any provision of the Code is granted, the Company must publicly disclose the nature of the granted waiver, including
any implicit waiver, the name of the person requesting the waiver, the date of the waiver and any other disclosures as and to the
extent required by any rule of the SEC or applicable listing standard. Waivers of any provision of the Code may be made only
by the Board.
Section IV
Anonymous Reporting of Violations
Any violation of the Code and any violation by the Company or its directors, officers, employees or consultants of the
securities laws, rules or regulations or other laws, rules or regulations applicable to the Company may be reported
anonymously using any one of the methods described in the Company’s Whistleblower Hotline Policy and Procedures,
including,
9
without limitation, the making of a phone call to a whistleblower hotline at 800-418-6482, extension 687. All such calls shall
be subject to the Company’s Whistleblower Hotline Policy and Procedures. A copy of the Company’s Whistleblower Hotline
Policy and Procedures is available on the Company’s website, in employee break rooms and on employee bulletin boards.
Section V
Certain Relationships and Related Transactions
Any proposed transaction between the Company and a related party, or in which a related party would have a direct or
indirect material interest, must be promptly disclosed to the Compliance Officer, the Company’s Audit Committee, and the
Company’s Compliance Committee, and must be approved by the Company’s Audit Committee. Any director having an
interest in the transaction is not permitted to vote on such transaction.
The Audit Committee will determine whether or not to approve such transaction on a case by case basis and in
accordance with the provisions of the Audit Committee Charter and the Code.
A “related party” is any of the following:
•
•
•
•
•
•
an executive officer of the Company;
a director (or director nominee) of the Company;
an immediate family member of any executive officer or director (or director nominee);
a beneficial owner of five percent or more of any class of the Company’s voting securities;
an entity in which one of the above described persons has a substantial ownership interest or control of such
entity; or
any other person or entity that would be deemed to be a related person under Item 404 of SEC Regulation
S-K or applicable Nasdaq rules and regulations.
Originally Adopted by Board of Directors on October 31, 2019; Revised October 27, 2022
10
EXHIBIT A
I.
GENERAL STATEMENT OF POLICY
CAESARS ENTERTAINMENT, INC. CONFLICTS OF INTEREST POLICY
It is the policy of Caesars Entertainment, Inc. and its subsidiaries (the “Company”) that directors, officers and
employees (“covered persons”) at all levels be free from any interest, influence or relationship that might conflict, or appear to
conflict, with the best interests of the Company, and that they perform their work with undivided loyalty as measured by the
highest standards of law and ethics. The existence of an actual or potential conflict of interest depends on specific facts. The
principles discussed here are intended to alert covered persons to the possibilities and furnish general guidance. In any
uncertain situation, the covered persons should immediately discuss the matter fully and frankly with his/her supervisor.
Where there is any doubt as to the existence of a conflict of interest, the situation should be disclosed fully, in writing, to the
Compliance Officer (as defined in the Code of Ethics and Business Conduct).
II.
SCOPE OF COVERAGE
This policy applies to both direct and indirect interests of a covered person and members of his or her immediate
family. It extends to transactions by any person who may act on behalf of such covered person or family members in
connection with such interests. In general, a covered person will be regarded as having a beneficial interest in any property
owned or any transactions entered into by such covered person’s spouse or minor children.
Further, this policy is applicable to all parts of the Company including all domestic and foreign subsidiaries and
affiliated companies.
A.
Common Conflict of Interest Situations
The following sections describe a number of common categories of conflicts of interest. They illustrate the application
of Company policy to certain particular situations where conflicts are most likely to arise. They are not all-inclusive, however,
and do not cover all possible situations where conflicts might occur in violation of Company policy:
B.
Relationships with Vendors, Purchasers and Competitors of the Company
Any covered person who holds any position or employment with, or who receives any compensation, credits or loans
from, or who owns or acquires, directly or indirectly, a beneficial interest in, or rights to the profits of income of, any concern
he or she has reason to believe may supply products or services to, or purchase from, or compete with, the Company, is
required to disclose the full details concerning such interest or relationship. In such circumstances, a conflict may arise if such
covered person is in a position to influence decisions with respect to any Company transaction involving such other party and
if the interest or relationship is such that it might bring into question such covered person’s continued ability to make
independent, impartial judgments in the Company’s best interest. In this connection, the mere ownership of
1
securities of a vendor, purchaser or competitor which are listed on a stock exchange or publicly traded in a recognized over-
the-counter market and amounting to less than one percent of the class outstanding, need not be reported.
C.
Gifts or Favors
A covered person may not solicit money, entertainment, hospitality, gifts or favors, including the below market
purchases of goods or services (collectively, “gifts”), from any individual or concern which a covered person has reason to
believe may transact business, or may seek to transact business, with the Company.
Covered persons in one of the Company’s purchasing departments, or covered persons whose primary responsibility is
to purchase supplies or services on behalf of the Company, may not accept gifts from any individual or concern which a
covered person has reason to believe may transact business, or may seek to transact business, with the Company.
Other covered persons may accept gifts provided that:
(i)
the value of such gift (and the collective value of all such gifts from the same individual or concern in the same
calendar year) is trivial and inconsequential (generally $500 or less); or
(ii)
gifts involving entertainment or hospitality are not excessive or lavish under the circumstances as determined
by the Compliance Officer and, if such gift includes travel, it is also approved by the covered person’s supervisor.
1
All offers of gifts or favors beyond this policy should be immediately reported to the employee’s supervisor, in the case
of a covered person who is an employee, and to the Compliance Officer.
D.
Sensitive Payments
The use of the Company funds or assets by employees for any unlawful purpose is strictly prohibited. Covered
persons shall not:
1.
2.
3.
Establish for any purpose undisclosed or unrecorded funds or assets of the Company.
Make false or artificial entries in the books and records of the Company for any reason.
Engage in any arrangement that results in such prohibited acts.
_________________________
1
By way of example, gifts of entertainment or hospitality that would generally be permitted include regular season sporting or cultural events (e.g.,
baseball or football games, ballet, symphony, and theater) and local golf outings. Depending upon the circumstances, special events such as exclusive
cultural events and post-season sporting events may be permitted as determined by the Company’s Compliance Officer.
2
Any covered person having information or knowledge of any unrecorded fund or asset or any prohibited act shall
promptly report such matter to the Compliance Officer.
E.
Foreign Transactions and Payments
Having due regard for the responsibilities relating to international operations, it is the Company’s policy that all covered
persons and agents comply with the ethical standards and applicable legal requirements of the Foreign Corrupt Practices Act and
of each foreign country in which business is conducted.
The Foreign Corrupt Practices Act makes it a criminal offense for a United States company or agent acting on its
behalf to pay anything of value to any foreign government official to influence any official action in securing, retaining, or
directing business. This prohibition applies to bribes, kick-backs or like payments made directly to such foreign officials or
indirectly through seemingly legitimate payments such as commissions or consulting fees paid to overseas agents or
representatives.
F.
Political Campaign Contributions
Political campaign contributions include direct expenditures or contributions, in cash or property, to candidates for
nomination or election to public office or to political parties, as well as indirect assistance or support such as the furnishing of
goods, services or equipment, or other political fund-raising events.
No political campaign contributions shall be made by the Company in cash or by any other means whereby the amount
or origin of the contribution cannot be readily established by reference to the documents and records of the Company. All
contributions shall be made to the candidates authorized campaign committee, or to a political party, or to other recipients who
may legally receive such contributions and all reporting requirements of the state or local jurisdictions shall be complied with.
Each contribution shall be clearly recorded on the Company’s books as a political campaign contribution or its equivalent and
shall not be deducted for federal, state or local income tax purposes unless authorized under applicable law.
The Foreign Corrupt Practices Act also prohibits contributions to foreign political parties or candidates for foreign
political office for the purpose of influencing their actions to secure, retain or direct business. The prohibition applies
regardless of whether the contribution is lawful under the laws of the country in which it is made. Accordingly, company
policy strictly prohibits any payments with corporate funds, to, or any use of corporate assets for the benefit of, any foreign
political party or candidate for political office.
III.
SUMMARY OF GENERAL OBLIGATIONS OF EMPLOYEES
Under this policy, covered persons are responsible for:
o
Full and immediate disclosure to the Compliance Officer of any interest which they or members of their
immediate families have at the time of association with the Company, or acquire during such covered person’s
association with the Company, which create or appear to create a possible conflict with the
3
Company’s interests. In furtherance of this, all new employees will be routinely provided a copy of the
Conflicts of Interest Policy and will be required to execute a signed acknowledgement of its receipt; and
o
Taking any actions regarded by the Company as being necessary to eliminate or satisfactorily regulate a
conflict of interest situation.
IV.
FAILURE TO COMPLY
Failure to comply with this policy and procedures can result in disciplinary actions up to and including termination of
employment, and/or initiation of appropriate legal action.
V.
FURNISHING DISCLOSURE INFORMATION
With respect to any disclosure information furnished in accordance with the Company’s Conflicts of Interest Policy, the
Company will endeavor to properly protect such information.
4
EXHIBIT B
CAESARS ENTERTAINMENT, INC.
CODE OF ETHICS AND BUSINESS CONDUCT CONFIRMATION STATEMENT
I, hereby confirm the following statements to Caesars Entertainment, Inc. (the “Company”):
Date:
(1)
(2)
(3)
(4)
(5)
I am a director, officer, employee or consultant of the Company and/or one of its subsidiaries.
I have read and I understand the Company’s Code of Ethics and Business Conduct (the “Code”),
including its Conflicts of Interest Policy.
There is no actual, potential or apparent conflict of interest between myself or any of my immediate family
members and the Company (or any of its subsidiaries) as described in the Code, except:
.
I understand that I am under an ongoing obligation to notify the Compliance Officer should any of the
information in this confirmation statement change.
I understand that the Code and all amendments to the Code are available for my review on the Company’s
website and upon request from the Company’s Corporate Secretary.
________________________________________________
(Signature)
__________________________________________________
(Name)
__________________________________________________
(Title)
1
CAESARS ENTERTAINMENT, INC.
LIST OF SUBSIDIARIES
As of July 6, 2022
Name
1300 WSED, LLC
1301 WSED, LLC
1400 WSED, LLC
3535 LV Corp.
3535 LV Newco, LLC
AC Conference Holdco., LLC
AC Conference Newco., LLC
American Wagering, Inc.
Aster Insurance Ltd.
AWI Gaming, Inc.
AWI Manufacturing, Inc.
Aztar Riverboat Holding Company, LLC
Bally's Las Vegas Manager, LLC
Bally's Park Place, LLC
Benco, LLC
BetDC, LLC
BL Development, LLC
Black Hawk Holdings, L.L.C.
Boardwalk Regency LLC
Brandywine Bookmaking, LLC
BV Manager, LLC
BW Sub Co.
Caesars Asia Limited
Caesars Bahamas Investment Corporation
Caesars Bahamas Management Corporation
Caesars Baltimore Investment Company, LLC
Caesars Baltimore Management Company, LLC
Caesars Convention Center Owner, LLC
Caesars Digital Canada, Inc.
Caesars Dubai, LLC
Caesars Enterprise Services, LLC
Caesars Entertainment Japan, LLC
Caesars Entertainment Windsor Limited
(1)
(2)
Caesars Growth Bally's LV, LLC
Caesars Growth Baltimore Fee, LLC
Caesars Growth Cromwell, LLC
Caesars Growth Harrah's New Orleans, LLC
Caesars Growth Partners, LLC
Caesars Growth PH Fee, LLC
Caesars Growth PH, LLC
Caesars Growth Quad, LLC
Caesars Holdings, Inc.
Caesars Hospitality, LLC
Caesars Interactive Entertainment New Jersey, LLC
Caesars Interactive Holdco, LLC
Exhibit 21
Jurisdiction of
Incorporation
Delaware
Maryland
Delaware
Nevada
Delaware
Delaware
Delaware
Nevada
Bermuda
Nevada
Minnesota
Indiana
Delaware
New Jersey
Nevada
Delaware
Minnesota
Colorado
New Jersey
Delaware
Delaware
Nevada
Hong Kong
Bahamas
Bahamas
Delaware
Delaware
Delaware
Canada
Delaware
Delaware
Delaware
Canada
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Name
Caesars International Hospitality, LLC
Caesars Joint IP Company Limited
Caesars Korea Holding Company, LLC
Caesars Korea Services, LLC
Caesars License Company, LLC
Caesars Linq, LLC
Caesars Massachusetts Investment Company, LLC
Caesars Nevada Newco LLC
Caesars New Jersey, LLC
Caesars Octavius, LLC
Caesars Palace LLC
Caesars Palace Realty LLC
Caesars Parlay Holding, LLC
Caesars Resort Collection, LLC
Caesars Trading and Technology Services Limited
Caesars Trex, Inc.
Caesars Virginia, LLC
Caesars World International Corporation (S) PTE, Ltd.
Caesars World International Far East Limited
Caesars World, LLC
Caesars World Marketing LLC
Caesars World Merchandising, LLC
California Clearing Corporation
Casino Computer Programming, Inc.
(3)
CBAC Borrower, LLC
(4)
CBAC Gaming, LLC
CBAC Holding Company, LLC
CCR Newco, LLC
CCSC/Blackhawk, Inc.
Centaur Acquisition, LLC
Centaur Colorado, LLC
Centaur Holdings, LLC
CEOC, LLC
CEWL Holdco, LLC
Chester Downs and Marina LLC
Chester Facility Holding Company, LLC
(5)
CIE Growth, LLC
Circus and Eldorado Joint Venture, LLC
Columbus Southeast Hotel Group, LLC
Computerized Bookmaking Systems, Inc.
Corner Investment Company, LLC
CPLV Manager, LLC
CRC Finco, Inc.
Cromwell Manager, LLC
CRS Annex, LLC
Des Plaines Development Limited Partnership
Desert Palace, LLC
(6)
Exhibit 21
Jurisdiction of
Incorporation
Delaware
United Kingdom
Delaware
Delaware
Nevada
Delaware
Delaware
Nevada
New Jersey
Delaware
Delaware
Nevada
Delaware
Delaware
United Kingdom
Delaware
Delaware
Singapore
Hong Kong
Florida
New Jersey
Nevada
California
Indiana
Delaware
Delaware
Delaware
Nevada
Colorado
Indiana
Delaware
Delaware
Delaware
Delaware
Pennsylvania
Delaware
Delaware
Nevada
Ohio
Nevada
Nevada
Delaware
Delaware
Delaware
Nevada
Delaware
Nevada
Name
Eastside Convention Center, LLC
Eldo Fit, LLC
Eldorado Holdco LLC
Eldorado Limited Liability Company
Eldorado Shreveport #1, LLC
Eldorado Shreveport #2, LLC
Elgin Holdings I, LLC
Elgin Holdings II, LLC
Elgin Riverboat Resort - Riverboat Casino
Entertainment RMG Canada, Inc.
Flamingo CERP Manager, LLC
Flamingo Las Vegas Operating Company, LLC
Four Suits Technology
GB Investor, LLC
Giles Road Developer, LLC
Grand Casinos of Biloxi, LLC
Grand Casinos, Inc.
Harrah South Shore Corporation
Harrah's Arizona Corporation
Harrah's Atlantic City Operating Company, LLC
Harrah's Atlantic City Propco, LLC
Harrah's Chester Downs Investment Company, LLC
Harrah's Chester Downs Management Company, LLC
Harrah's Illinois LLC
Harrah's Interactive Investment Company
Harrah's Iowa Arena Management, LLC
Harrah's Las Vegas, LLC
Harrah's Laughlin, LLC
Harrah's Management Company
Harrah's NC Casino Company, LLC
Harrah's Nebraska, LLC
Harrah's New Orleans Management Company, LLC
Harrah's North Kansas City LLC
Harrah's Oklahoma, LLC
Harrah's Operating Company Memphis, LLC
Harrah's Shreveport/Bossier City Investment Company, LLC
Harveys BR Management Company, Inc.
Harveys Iowa Management Company, LLC
Harveys Tahoe Management Company, LLC
HBR Realty Company, LLC
HCAL, LLC
HLV CERP Manager, LLC
Hole in the Wall, LLC
Hoosier Park, LLC
Horseshoe Cincinnati Management, LLC
Horseshoe Entertainment
Horseshoe Gaming Holding, LLC
Exhibit 21
Jurisdiction of
Incorporation
Delaware
Nevada
Nevada
Nevada
Nevada
Nevada
Delaware
Delaware
Illinois
Canada
Nevada
Nevada
Poland
Delaware
Delaware
Minnesota
Minnesota
California
Nevada
New Jersey
Delaware
Delaware
Nevada
Nevada
Nevada
Delaware
Nevada
Nevada
Nevada
North Carolina
Delaware
Nevada
Missouri
Delaware
Delaware
Delaware
Nevada
Nevada
Nevada
Nevada
Nevada
Nevada
Nevada
Indiana
Delaware
Louisiana
Delaware
Name
Horseshoe GP, LLC
Horseshoe Hammond, LLC
HP Dining & Entertainment, LLC
HP Dining & Entertainment II, LLC
HTM Holding, LLC
IC Holdings Colorado, Inc.
IOC - Black Hawk Distribution Company, LLC
IOC - Boonville, Inc.
IOC - Lula, Inc.
IOC Black Hawk County, Inc.
IOC Holdings, L.L.C.
IOC Manufacturing, Inc.
IOC Services, LLC
IOC-Natchez, Inc.
IOC-PA, L.L.C.
IOC-Vicksburg, Inc.
IOC-Vicksburg, L.L.C.
Isle of Capri Bettendorf Marina Corporation
Isle of Capri Bettendorf, LLC
Isle of Capri Black Hawk, LLC
Isle of Capri Casinos, LLC
Isle Promotional Association, Inc.
Jazz Casino Company, LLC
JCC Fulton Development, LLC
JCC Holding Company II, LLC
JGB Vegas Retail Lessee, LLC
Joliet Manager, LLC
Keystone State Development, Inc.
Lady Luck Gaming Corporation
Lady Luck Vicksburg, Inc.
Laughlin CERP Manager, LLC
(7)
(8)
Laundry Newco, LLC
Lighthouse Point, LLC
LINQCUP, LLC
MTR Gaming Group, Inc.
MVCE Middle East, LLC
New Centaur, LLC
New Gaming Capital Partnership
New Jazz Enterprises, LLC
New Robinson Property Group, LLC
New Tropicana Holdings, Inc.
New Tropicana OpCo, Inc.
Non-CPLV Manager, LLC
Octavius/Linq Intermediate Holding, LLC
Old PID, Inc.
OS Holdco, LLC
Parball LLC
Exhibit 21
Jurisdiction of
Incorporation
Nevada
Indiana
Indiana
Indiana
Nevada
Colorado
Colorado
Nevada
Mississippi
Iowa
Louisiana
Mississippi
Delaware
Mississippi
Pennsylvania
Delaware
Delaware
Iowa
Iowa
Colorado
Delaware
Colorado
Louisiana
Louisiana
Delaware
Nevada
Delaware
Pennsylvania
Delaware
Mississippi
Nevada
Delaware
Mississippi
Delaware
Delaware
Dubai
Delaware
Nevada
Nevada
Delaware
Delaware
Delaware
Delaware
Delaware
Pennsylvania
Nevada
Nevada
Name
Parball Newco, LLC
Paris CERP Manager, LLC
Exhibit 21
Jurisdiction of
Incorporation
Delaware
Nevada
Name
Paris Las Vegas Operating Company, LLC
Parlay Solutions, LLC
PHW Las Vegas, LLC
PHW Manager, LLC
(9)
(10)
PHWCUP, LLC
PHWLV, LLC
Pier at Caesars LLC
Players Bluegrass Downs, LLC
Players Holding, LLC
Players International, LLC
Pompano Park JV Holdings LLC
Pompano Park Holdings LLC
PPI Development, LLC
PPI Development Holdings, LLC
PPI, Inc.
Racelinebet, Inc.
Rio CERP Manager, LLC
Rio Properties, LLC
Robinson Property Group LLC
Roman Entertainment Corporation of Indiana
Roman Holding Company of Indiana, LLC
Romulus Risk and Insurance Company, Inc.
Scioto Downs, Inc.
SDRS, Inc.
Sharp Dressed Man Las Vegas, LLC
(11)
Sharp Dressed Man Manager, LLC
Showboat Atlantic City Operating Company, LLC
Southern Illinois Riverboat/Casino Cruises, LLC
St. Charles Gaming Company, L.L.C.
(12)
Sterling Suffolk Racecourse, LLC
(13)
SuperDraft, Inc.
TEI (ES), LLC
TEI (St. Louis) RE, LLC
TEI (STLH), LLC
TEI R7 Investment LLC
The Paramount Baltimore
The Quad Manager, LLC
Tropicana Atlantic City Corp.
Tropicana Entertainment, Inc.
Tropicana Laughlin, LLC
Tropicana St. Louis LLC
Tropicana St. Louis RE LLC
TropWorld Games LLC
Tunica Roadhouse LLC
Vegas Development Land Owner, LLC
WH NV III, LLC
WHUS Techco, Inc.
(14)
Exhibit 21
Jurisdiction of
Incorporation
Nevada
Delaware
Nevada
Nevada
Delaware
Nevada
New Jersey
Kentucky
Nevada
Nevada
Florida
Florida
Delaware
Delaware
Florida
Oregon
Nevada
Nevada
Mississippi
Indiana
Indiana
Nevada
Ohio
Ohio
Nevada
Nevada
New Jersey
Illinois
Delaware
Massachusetts
Delaware
Delaware
Delaware
Delaware
Delaware
Maryland
Delaware
New Jersey
Delaware
Nevada
Delaware
Delaware
Nevada
Delaware
Delaware
Delaware
Delaware
Name
William Hill DFSB, Inc.
William Hill Limited
William Hill Nevada I
William Hill Nevada III
William Hill New Jersey, Inc.
William Hill US Holdco, Inc.
Windsor Casino Limited
Exhibit 21
Jurisdiction of
Incorporation
Delaware
United Kingdom
Nevada
Nevada
New Jersey
Delaware
Canada
Exhibit 21
1
2
3
4
5
6
7
8
9
10
11
12
13
14
49% American Wagering, Inc.; 51% third party shareholders
69% CEOC, LLC; 31% Caesars Resort Collection, LLC
50% Caesars Entertainment, Inc.; 50% William Hill U.S. Holdco, Inc.
75.8% CR Baltimore Holdings, LLC; 24.2% third party shareholders
42% Scioto Downs, Inc.; 58% third party shareholders
80% Harrah's Illinois LLC; 20% third party shareholder
8.65% GB Investor, LLC; 91.35% third party shareholders
49% Caesars Dubai LLC; 51% third party shareholders
50% Caesars Parlay Holdings, LLC; 50% third party shareholders
50% PPI Development, LLC; 50% third party shareholders
50% Caesars Hospitality, LLC; 50% third-party shareholders
4.09% Caesars Massachusetts Investment Company, LLC; 95.91% third party shareholders
33.33% William Hill U.S. Holdco, Inc.; 66.67% third party shareholders
6% CBAC Borrower, LLC; 94% third party shareholders
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Exhibit 23.1
We consent to the incorporation by reference in Registration Statement Nos. 333-232336 and 333-245051 on Form S-8, and Registration Statement No.
333-239175 on Form S-3 of our reports dated February 21, 2023, relating to the financial statements of Caesars Entertainment, Inc. (the “Company”) and
the effectiveness of the Company’s internal control over financial reporting appearing in this Annual Report on Form 10-K for the year ended
December 31, 2022.
/s/ DELOITTE & TOUCHE LLP
Las Vegas, Nevada
February 21, 2023
CERTIFICATION PURSUANT TO RULE 13a‑14(a) AND 15d‑14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Exhibit 31.1
I, Thomas R. Reeg, certify that:
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10‑K of Caesars Entertainment, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a‑15(f) and
15d‑15(f) for the registrant and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
(b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date: February 21, 2023
/s/ THOMAS R. REEG
Thomas R. Reeg
Chief Executive Officer
(Principal Executive Officer)
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Exhibit 31.2
I, Bret Yunker, certify that:
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of Caesars Entertainment, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f) for the registrant and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
(b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date: February 21, 2023
/s/ BRET YUNKER
Bret Yunker
Chief Financial Officer
(Principal Financial Officer)
CERTIFICATION
of
Thomas R. Reeg
Chief Executive Officer
Exhibit 32.1
I, Thomas R. Reeg, Chief Executive Officer of Caesars Entertainment, Inc. (the “Company”), do hereby certify in accordance with 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002, that, to my knowledge:
1.
2.
The Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 2022 (the “Report”) fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
The information contained in the Report fairly represents, in all material respects, the financial condition and results of operations of the
Company.
Date: February 21, 2023
/s/ THOMAS R. REEG
Thomas R. Reeg
Chief Executive Officer
CERTIFICATION
of
Bret Yunker
Chief Financial Officer
Exhibit 32.2
I, Bret Yunker, Chief Financial Officer of Caesars Entertainment, Inc. (the “Company”), do hereby certify in accordance with 18 U.S.C. 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
1.
2.
The Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 2022 (the “Report”) fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
The information contained in the Report fairly represents, in all material respects, the financial condition and results of operations of the
Company.
Date: February 21, 2023
/s/ BRET YUNKER
Bret Yunker
Chief Financial Officer
Exhibit 99.1
General
Description of Governmental Regulations
The ownership, operation, and management of our gaming, betting and racing facilities (generically referred to herein as “gaming”) are subject to
significant regulation under the laws and regulations of each of the jurisdictions in which we operate. Gaming laws are generally based upon declarations of
public policy designed to protect gaming consumers and the viability and integrity of the gaming industry. Gaming laws may also be designed to protect
and maximize state and local revenues derived through taxes and licensing fees imposed on gaming industry participants, as well as to enhance
development and tourism. To accomplish these public policy goals, gaming laws establish stringent procedures to ensure that participants in the gaming
industry meet certain standards of character and fitness. In addition, gaming laws require gaming industry participants to:
•
•
•
ensure that unsuitable individuals and organizations have no role in gaming operations;
establish procedures designed to prevent cheating and fraudulent practices;
establish and maintain responsible accounting practices and procedures;
• maintain effective controls over their financial practices, including establishing minimum procedures for internal fiscal affairs and the
safeguarding of assets and revenues;
• maintain systems for reliable record keeping;
•
•
•
file periodic reports with gaming regulators;
ensure that contracts and financial transactions are commercially reasonable, reflect fair market value and are arms-length transactions; and
establish programs to promote responsible gaming.
Typically, a state regulatory environment is established by statute and is administered by a regulatory agency with broad discretion to regulate the affairs of
owners, managers, and persons with financial interests in gaming operations. Among other things, gaming authorities in the various jurisdictions in which
we operate:
•
•
•
•
•
•
•
•
adopt rules and regulations under the implementing statutes;
interpret and enforce gaming laws;
impose disciplinary sanctions for violations, including fines and penalties;
review the character and fitness of participants in gaming operations and make determinations regarding their suitability or qualification for
licensure;
grant licenses for participation in gaming operations;
collect and review reports and information submitted by participants in gaming operations;
review and approve transactions, such as acquisitions or change-of-control transactions of gaming industry participants, securities offerings and
debt transactions engaged in by such participants; and
establish and collect fees and taxes.
Any change in the laws or regulations of a gaming jurisdiction could have a material adverse effect on our gaming operations.
Licensing and Suitability Determinations
Gaming laws require us, each of our subsidiaries engaged in gaming operations, certain of our directors, officers and employees, and in some cases, certain
of our shareholders and holders of our debt securities, to obtain licenses from gaming authorities. Licenses typically require a determination that the
applicant qualifies or is suitable to hold the license. Gaming authorities have broad discretion in determining whether an applicant qualifies for licensing or
should be deemed suitable.
1
Criteria used in determining whether to grant or renew a license to conduct gaming operations, while varying between jurisdictions, generally include
consideration of factors such as:
•
•
•
•
•
the good character, honesty and integrity of the applicant;
the financial stability, integrity and responsibility of the applicant, including whether the operation is adequately capitalized in the state and
exhibits the ability to maintain adequate insurance levels; the quality of the applicant’s casino facilities;
the amount of revenue to be derived by the applicable state from the operation of the applicant’s casino;
the applicant’s practices with respect to minority hiring and training; and
the effect on competition and general impact on the community.
In evaluating individual applicants, gaming authorities consider the individual’s business experience and reputation for good character, the individual’s
criminal history and the character of those with whom the individual associates.
Many gaming jurisdictions limit the number of licenses granted to operate casinos within the state, and some states limit the number of licenses granted to
any one gaming operator. Licenses under gaming laws are generally not transferable without regulatory approval. Licenses in most of the jurisdictions in
which we conduct gaming operations are granted for limited durations and require renewal from time to time. There can be no assurance that any of our
licenses will be renewed. The failure to renew any of our licenses could have a material adverse effect on our gaming operations.
In addition to us and our direct and indirect subsidiaries engaged in gaming operations, gaming authorities may investigate any individual who has a
material relationship to or material involvement with any of these entities to determine whether such individual is suitable or should be licensed. Our
officers, directors and certain key employees must file applications with the gaming authorities and may be required to be licensed, qualify or be found
suitable in many jurisdictions. Gaming authorities may deny an application for licensing for any cause which they deem reasonable. Qualification and
suitability determinations require submission of detailed personal and financial information followed by a thorough investigation. The applicant must pay
all the costs of the investigation. Changes in licensed positions must be reported to gaming authorities and in addition to their authority to deny an
application for licensure, qualification or a finding of suitability, gaming authorities have jurisdiction to disapprove a change in a corporate position.
If one or more gaming authorities were to find that an officer, director or key employee fails to qualify or is unsuitable for licensing or unsuitable to
continue having a relationship with us, we would be required to sever all relationships with such person. In addition, gaming authorities may require us to
terminate the employment of any person who refuses to file appropriate applications.
Moreover, in many jurisdictions, certain of our stockholders or holders of our debt securities may be required to undergo a suitability investigation similar
to that described above. Many jurisdictions require any person who acquires beneficial ownership of more than a certain percentage of our voting
securities, typically 5%, to report the acquisition to gaming authorities, and gaming authorities may require such holders to apply for qualification or a
finding of suitability.
Most gaming authorities, however, allow an “institutional investor” to apply for a waiver. An “institutional investor” is generally defined as an investor
acquiring and holding voting securities in the ordinary course of business as an institutional investor for passive investment purposes only, and not for the
purpose of causing, directly or indirectly, the election of a member of our board of directors, any change in our corporate charter, bylaws, management,
policies or operations, or those of any of our gaming affiliates, or the taking of any other action which gaming authorities find to be inconsistent with
holding our voting securities for passive investment purposes only. Even if a waiver is granted, an institutional investor generally may not take any action
inconsistent with its status when the waiver was granted without once again becoming subject to the foregoing reporting and application obligations.
Generally, any person who fails or refuses to apply for a finding of suitability or a license within the prescribed period after being advised that it is required
by gaming authorities may be denied a license or found unsuitable, as applicable. Any stockholder found unsuitable or denied a license and who holds,
directly or indirectly, any beneficial ownership of our voting securities beyond such period of time, as may be prescribed by the applicable gaming
authorities, may be guilty of a criminal offense. Furthermore, we may be subject to disciplinary action if, after we receive notice that a person is unsuitable
to be a stockholder or to have any other relationship with us or any of our subsidiaries, we: (i) pay that person any dividend or interest upon our voting
securities; (ii) allow that person to exercise, directly or indirectly, any voting right conferred through securities held by that person; (iii) pay remuneration
in any form to that person for services rendered or otherwise; or (iv) fail to pursue all
2
lawful efforts to require such unsuitable person to relinquish his voting securities including, if necessary, the immediate purchase of said voting securities
for cash at fair market value.
The gaming jurisdictions in which we operate also require that suppliers of certain goods and services to gaming industry participants be licensed and
require us to purchase and lease gaming equipment, and certain supplies and services only from licensed suppliers.
Violations of Gaming Laws
If we or our subsidiaries violate applicable gaming laws, our gaming licenses could be limited, conditioned, suspended or revoked by gaming authorities,
and we and any other persons involved could be subject to substantial fines. Further, a supervisor or conservator can be appointed by gaming authorities to
operate our gaming properties, or in some jurisdictions, take title to our gaming assets in the jurisdiction, and under certain circumstances, earnings
generated during such appointment could be forfeited to the applicable state or states. Furthermore, violations of laws in one jurisdiction could result in
disciplinary action in other jurisdictions. As a result, violations by us of applicable gaming laws could have a material adverse effect on our gaming
operations.
Some gaming jurisdictions prohibit certain types of political activity by a gaming licensee, its officers, directors and key people. A violation of such a
prohibition may subject the offender to criminal and/or disciplinary action.
Reporting and Recordkeeping Requirements
We are required periodically to submit detailed financial and operating reports and furnish any other information about us and our subsidiaries which
gaming authorities may require. Under federal law, we are required to record and submit detailed reports of currency transactions involving greater than
$10,000 at our casinos as well as any suspicious activity that may occur at such facilities. We are required to maintain a current stock ledger which may be
examined by gaming authorities at any time. If any securities are held in trust by an agent or by a nominee, the record holder may be required to disclose
the identity of the beneficial owner to gaming authorities. A failure to make such disclosure may be grounds for finding the record holder unsuitable.
Gaming authorities may require certificates for our securities to bear a legend indicating that the securities are subject to specified gaming laws.
Review and Approval of Transactions
Substantially all material loans, leases, sales of securities and similar financing transactions by us and our subsidiaries must be reported to and in some
cases approved by gaming authorities. Neither we nor any of our subsidiaries may make a public offering of securities without the prior approval of certain
gaming authorities. Changes in control through merger, consolidation, stock or asset acquisitions, management or consulting agreements, or otherwise are
subject to receipt of prior approval of gaming authorities. Entities seeking to acquire control of us or one of our subsidiaries must satisfy gaming authorities
with respect to a variety of stringent standards prior to assuming control. Gaming authorities may also require controlling stockholders, officers, directors
and other persons having a material relationship or involvement with the entity proposing to acquire control to be investigated and licensed as part of the
approval process relating to the transaction.
Certain gaming laws and regulations in jurisdictions we operate in establish that certain corporate acquisitions opposed by management, repurchases of
voting securities and corporate defense tactics affecting us or our subsidiaries may be injurious to stable and productive corporate gaming, and as a result,
prior approval may be required before we may make exceptional repurchases of voting securities (such as repurchases which treat holders differently)
above the current market price and before a corporate acquisition opposed by management can be consummated. In certain jurisdictions, the gaming
authorities also require prior approval of a plan of recapitalization proposed by the board of directors of a publicly traded corporation which is registered
with the gaming authority in response to a tender offer made directly to the registered corporation’s stockholders for the purpose of acquiring control of the
registered corporation.
Because of regulatory restrictions, our ability to grant a security interest in any of our gaming assets is limited and subject to receipt of prior approval from
gaming authorities. Further, a pledge of the stock of a subsidiary holding a gaming license and the foreclosure of such a pledge may be ineffective without
the prior approval of gaming authorities in certain jurisdictions. Moreover, our subsidiaries holding gaming licenses may be unable to guarantee a security
issued by an affiliated or parent company pursuant to a public offering, or pledge their assets to secure payment of the obligations evidenced by the security
issued by an affiliated or parent company, without the prior approval of certain gaming authorities.
Some jurisdictions also require us to file a report with the gaming authority within a prescribed period of time following certain financial transactions and
the offering of debt securities. Certain gaming authorities reserve the right to order such transactions rescinded.
3
Certain jurisdictions require the implementation of a compliance review and reporting system created for the purpose of monitoring activities related to our
continuing qualification. These plans require periodic reports to senior management of our company and to the regulatory authorities.
Certain jurisdictions require that an independent audit committee oversee the functions of surveillance and internal audit departments at our casinos.
License Fees and Gaming Taxes
We pay substantial license fees and taxes in many jurisdictions, including some of the counties and cities in which our operations are conducted, in
connection with our casino gaming operations, computed in various ways depending on the type of gaming or activity involved. Depending upon the
particular fee or tax involved, these fees and taxes are payable with varying frequency. License fees and taxes are based upon such factors as:
•
•
•
•
a percentage of the gross gaming revenues received;
the number of gaming devices and table games operated;
admission fees for customers boarding our riverboat casinos; and/or
one time fees payable upon the initial receipt of license and fees in connection with the renewal of license.
In many jurisdictions, gaming tax rates are graduated, such that they increase as gross gaming revenues increase. Furthermore, tax rates are subject to
change, sometimes with little notice, and such changes could have a material adverse effect on our gaming operations.
In addition to taxes specifically unique to gaming, we are required to pay all other applicable taxes.
Operational Requirements
In most jurisdictions, we are subject to certain requirements and restrictions on how we must conduct our gaming operations. In many states, we are
required to give preference to local suppliers and include minority and women-owned businesses as well as organized labor in construction projects to the
maximum extent practicable as well as in general vendor business activity. Similarly, we may be required to give employment preference to minorities,
women and in-state residents in certain jurisdictions.
Some gaming jurisdictions also prohibit a distribution, except to allow for the payment of taxes, if the distribution would impair the financial viability of
the gaming operation. Moreover, many jurisdictions require a gaming operation to maintain insurance and post bonds in amounts determined by their
gaming authority. In addition, our ability to conduct certain types of games, introduce new games or move existing games within our facilities may be
restricted or subject to regulatory review and approval. Some of our operations are subject to restrictions on the number of gaming positions we may have
and the maximum wagers allowed to be placed by our customers.
Some jurisdictions apply specific conditions that impact our ability to conduct gaming and non-gaming operations. Examples include but are not limited to:
Our land-based casino in New Orleans operates under a casino operating contract (the “COC”) with the State of Louisiana by and through the Louisiana
Gaming Control Board, which assumed the regulatory authority, control and jurisdiction from the Louisiana Economic Development Control Board
pursuant to Louisiana Revised Statute 27:31. The COC was recently renegotiated to extend the term by thirty years to 2054. Under Louisiana state law, our
New Orleans casino is subject to restrictions on the number of hotel rooms, the amount of meeting space within the hotel and how we may market and
advertise the rates we charge for rooms. Also in Louisiana we are required to comply with certain operating conditions applicable to our subsidiaries. In
Mississippi we are required to provide certain amenities at our operations. In Iowa we have entered into agreements with non-profit organizations that hold
the license to conduct gambling games. Similar conditions are applicable to subsidiaries in additional jurisdictions.
Indian Gaming
The terms and conditions of management contracts and the operation of casinos and all gaming on Indian land in the United States are subject to the Indian
Gaming Regulatory Act of 1988, (the “IGRA”), which is administered by the National Indian Gaming Commission, (the “NIGC”), the gaming regulatory
agencies of tribal governments, and Class III gaming compacts between the tribes for which we manage casinos and the states in which those casinos are
located. IGRA established three separate classes of tribal gaming-Class I, Class II and Class III. Class I includes all traditional or social games solely for
prizes of minimal value played by a tribe in connection with celebrations or ceremonies. Class II gaming includes games such as
4
bingo, pulltabs, punchboards, instant bingo and non-banked card games (those that are not played against the house) such as poker. Class III gaming
includes casino-style gaming such as banked table games like blackjack, craps and roulette, and gaming machines such as slots and video poker, as well as
lotteries and pari-mutuel wagering. Harrah’s Ak-Chin and Harrah’s Resort Southern California (Rincon) provide Class II gaming and, as limited by the
tribal-state compacts, Class III gaming. Harrah’s Cherokee currently provides only Class III gaming.
IGRA prohibits all forms of Class III gaming unless the tribe has entered into a written agreement or compact with the state that specifically authorizes the
types of Class III gaming the tribe may offer. These compacts may address, among other things, the manner and extent to which each state will conduct
background investigations and certify the suitability of the manager, its officers, directors, and key employees to conduct gaming on tribal lands. We have
received our permanent certification from the Arizona Department of Gaming as management contractor for the Ak-Chin Indian Community’s casino, a
Tribal-State Compact Gaming Resource Supplier Finding of Suitability from the California Gambling Control Commission in connection with
management of the Rincon San Luiseno Band of Indians casino, and have been licensed by the relevant tribal gaming authorities to manage the Ak-Chin
Indian Community’s casino, the Eastern Band of Cherokee Indians’ casino and the Rincon San Luiseno Band of Indians’ casino, respectively. In addition,
we provide advisory services under an agreement with the Buena Vista Rancheria of We-Muk Indians of California tribe for their casino operated in Ione,
California.
IGRA requires NIGC approval of management contracts for Class II and Class III gaming as well as the review of all agreements collateral to the
management contracts. Management contracts which are not so approved are void.
Management contracts can be modified or canceled pursuant to an enforcement action taken by the NIGC based on a violation of the law or an issue
affecting suitability.
Indian tribes are sovereign with their own governmental systems, which have primary regulatory authority over gaming on land within the tribes’
jurisdiction. Therefore, persons engaged in gaming activities, including the company, are subject to the provisions of tribal ordinances and regulations on
gaming. These ordinances are subject to review by the NIGC under certain standards established by IGRA. The NIGC may determine that some or all of
the ordinances require amendment, and that additional requirements, including additional licensing requirements, may be imposed on the management
company. The possession of valid licenses from the Ak-Chin Indian Community, the Eastern Band of Cherokee Indians and the Rincon San Luiseno Band
of Indians, are ongoing conditions of our agreements with these tribes.
Riverboat Casinos
In addition to all other regulations generally applicable to the gaming industry, certain of our riverboat casinos are also subject to regulations applicable to
vessels operating on navigable waterways, including regulations of the U.S. Coast Guard, or alternative inspection requirements. These requirements set
limits on the operation of the vessel, mandate that it must be operated by a minimum complement of licensed personnel, establish periodic inspections,
including the physical inspection of the outside hull, and establish other mechanical and operational rules. In addition, the riverboat casinos may be subject
to future U.S. Coast Guard regulations, or alternative security procedures, designed to increase homeland security which could affect some of our
properties and require significant expenditures to bring such properties into compliance.
Racetracks
We conduct standard bred harness racing at Harrah’s Hoosier Park in Anderson, Indiana, harness racing at Harrah’s Philadelphia in Chester, Pennsylvania,
thoroughbred racing at Indiana Grand Racing & Casino in Shelbyville, Indiana, horse racing operations at our harness racing track Isle Casino Racing
Pompano Park, located in Pompano Beach, Florida, and live standard bred harness racing at Scioto Downs in the Columbus, Ohio area. Each of these
facilities also offer pari-mutuel wagering and live wagering on races held at other facilities.
We currently operate a mix of poker, slot, table games and video lottery terminals at our racetracks depending on the local regulatory environment.
Generally, our gaming operations at racetracks are regulated in the same manner as our gaming operations in other jurisdictions. In some jurisdictions, our
ability to conduct gaming operations may be conditioned on the maintenance of agreements or certain arrangements with horsemen’s or labor groups or
meeting minimum live racing requirements.
Regulations governing our horse, and harness racing operations are, in most jurisdictions, administered separately from the regulations governing gaming
operations, with separate licenses and license fee structures. The racing authorities responsible for regulating our racing operations have broad oversight
authority, which may include: annually reviewing and granting racing licenses and racing dates; approving the opening and operation of off track wagering
facilities; approving simulcasting activities; licensing all officers, directors, racing officials and certain other employees of a racing licensee; and approving
5
certain contracts entered into by a racing licensee affecting racing, pari-mutuel wagering, account wagering and off track wagering operations.
Interactive & Internet Business
We are subject to various federal, state and international laws and regulations that affect our interactive business, including those relating to the privacy and
security of customer and employee personal information and those relating to the Internet, behavioral tracking, mobile applications, advertising and
marketing activities, sweepstakes and contests. Additional laws in all of these areas are likely to be passed in the future, which could result in significant
limitations on or changes to the ways in which we can collect, use, host, store or transmit the personal information and data of our customers or employees,
communicate with our customers, and deliver products and services, or may significantly increase our compliance costs. As our business expands to
include new uses or collection of data that is subject to privacy or security regulations, our compliance requirements and costs will increase and we may be
subject to increased regulatory scrutiny.
Our Caesars Digital segment operates online sports betting and iGaming, including online poker, in various states where legalized. We have also entered
into agreements with third parties for the use of the World Series of Poker brand on online gaming websites internationally and domestically. We are
required to operate under the regulations and established licensing requirements for each state or international jurisdiction in which we operate. Failure to
maintain compliance with these regulations could result in fines or the suspension and possible revocation of our license(s). We and our partners continue
to monitor other domestic markets for points of entry.
The gaming and other laws and regulations to which we are subject could change or could be interpreted differently in the future, or new laws and
regulations could be enacted. For example, in 2018, the U.S. Department of Justice (the “DOJ”) reversed its previously- issued opinion published in 2011,
which stated that interstate transmissions of wire communications that do not relate to a “sporting event or contest” fall outside the purview of the Wire Act
of 1961 (the “Wire Act”). The DOJ’s updated opinion, which is the subject of ongoing litigation in federal court, stated instead that the Wire Act was not
uniformly limited to gaming relating to sporting events or contests and that certain of its provisions apply to non-sports-related wagering activity. Any such
material changes, new laws or regulations, or material differences in interpretations by courts or governmental authorities could adversely affect our
business and operating results.
Some of our social gaming products and features are based upon traditional casino games, such as slots and table games. Although we do not believe these
products and features constitute gambling, it is possible that additional laws or regulations may be passed in the future that would restrict or impose
additional requirements on our social gaming products and features.
Sports Book Wagering & Online Wagering
We and our partners are subject to various federal, state and international laws and regulations that affect our sports wagering and online wagering
businesses. Additional laws in any of these areas are likely to be passed in the future, which could result in impact to the ways in which we and our partners
are able to offer sports wagering and online wagering in jurisdictions that permit such activities.
6
Supplemental Consolidating Financial Information
Caesars Resort Collection, LLC
(Unaudited)
Exhibit. Supplemental Consolidating Financial Information
The following tables present the balance sheets as of December 31, 2022 and 2021, statements of operations for years ended December 31, 2022 and 2021,
cash flows for years ended December 31, 2022 and 2021, and Adjusted EBITDA for the quarter and year ended December 31, 2022 of Caesars Resort
Collection, LLC (“CRC”), as it consolidates into CEI as a wholly-owned subsidiary. “Other Operations, Eliminations” presents the operations of CEI’s
other subsidiaries, including eliminations of intercompany transactions.
Supplemental Consolidating Financial Information
Caesars Resort Collection, LLC
(Unaudited)
The consolidating condensed balance sheets as of December 31, 2022 and 2021 are as follows:
December 31, 2022
December 31, 2021
Other
Operations,
Eliminations
CRC
CEI Consolidated
CRC
Other
Operations,
Eliminations
CEI Consolidated
(In millions)
CURRENT ASSETS:
ASSETS
Cash and cash equivalents
Restricted cash
Accounts receivable, net
Inventories
Prepayments and other current assets
Assets held for sale
Total current assets
Investments in and advances to unconsolidated
affiliates
Property and equipment, net
Gaming rights and other intangibles, net
Goodwill
Other assets, net
Total assets
$
$
432 $
15
463
45
171
—
1,126
—
11,540
3,149
9,014
1,482
26,311 $
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable
Accrued interest
Accrued other liabilities
Due to affiliates
Current portion of long-term debt
Liabilities related to assets held for sale
$
Total current liabilities
Long-term financing obligation
Long-term debt
Long-term debt to related party
Deferred income taxes
Other long-term liabilities
Total liabilities
STOCKHOLDERS' EQUITY:
Caesars stockholders' equity
Noncontrolling interests
Total stockholders’ equity
Total liabilities and stockholders’ equity
$
206
120
1,070
1,481
67 $
—
2,944
11,364
5,173
15
1,518
427
21,441
4,858
12
4,870
26,311 $
606 $
116
148
14
92
—
976
94
3,058
1,565
1,990
(467)
7,216 $
108
198
858
(1,481)
41 $
—
(276)
1,246
7,486
(15)
(531)
425
8,335
(1,145)
26
(1,119)
7,216 $
1,038 $
131
611
59
263
—
2,102
94
14,598
4,714
11,004
1,015
33,527 $
314
318
1,928
—
108 $
—
2,668
12,610
12,659
—
987
852
29,776
3,713
38
3,751
33,527 $
508 $
13
369
30
189
—
1,109
—
11,688
3,255
9,014
1,500
26,566 $
175
118
1,053
601
67 $
—
2,014
11,191
6,861
15
1,555
524
22,160
4,395
11
4,406
26,566 $
562 $
306
103
12
101
3,771
4,855
158
2,913
1,665
2,062
(188)
11,465 $
79
202
920
(601)
3 $
2,680
3,283
1,233
6,861
(15)
(444)
412
11,330
85
50
135
11,465 $
1,070
319
472
42
290
3,771
5,964
158
14,601
4,920
11,076
1,312
38,031
254
320
1,973
—
70
2,680
5,297
12,424
13,722
—
1,111
936
33,490
4,480
61
4,541
38,031
The consolidating condensed statements of operations for years ended December 31, 2022 and 2021 are as follows:
Supplemental Consolidating Financial Information
Caesars Resort Collection, LLC
(Unaudited)
Year Ended December 31, 2022
Other
Operations,
Eliminations
CEI
Consolidated
CRC
Year Ended December 31, 2021
Other
Operations,
Eliminations
CEI
Consolidated
CRC
$
3,961 $
1,351
1,699
1,100
8,111
2,036 $
245
258
171
2,710
5,997 $
1,596
1,957
1,271
10,821
4,010 $
970
1,309
933
7,222
1,817 $
170
242
119
2,348
1,841
775
438
383
1,391
282
30
897
27
6,064
2,047
(1,586)
(85)
24
(1,647)
400
(29)
371
(2)
369
1,685
160
91
28
677
4
78
308
(13)
3,018
(308)
(679)
—
22
(657)
(965)
70
(895)
(384)
(1,279)
3,526
935
529
411
2,068
286
108
1,205
14
9,082
1,739
(2,265)
(85)
46
(2,304)
(565)
41
(524)
(386)
(910)
1,830
587
357
353
1,214
249
102
891
56
5,639
1,583
(1,648)
(200)
(2)
(1,850)
(267)
60
(207)
(22)
(229)
1,299
120
81
20
568
60
—
235
88
2,471
(123)
(647)
(36)
(196)
(879)
(1,002)
223
(779)
(8)
(787)
(2)
367 $
13
(1,266) $
11
(899) $
(3)
(232) $
—
(787) $
5,827
1,140
1,551
1,052
9,570
3,129
707
438
373
1,782
309
102
1,126
144
8,110
1,460
(2,295)
(236)
(198)
(2,729)
(1,269)
283
(986)
(30)
(1,016)
(3)
(1,019)
(In millions)
REVENUES:
Casino
Food and beverage
Hotel
Other
Net revenues
EXPENSES:
Casino
Food and beverage
Hotel
Other
General and administrative
Corporate
Impairment charges
Depreciation and amortization
Transaction and other costs
Total operating expenses
Operating income (loss)
OTHER EXPENSE:
Interest expense, net
Loss on extinguishment of debt
Other income (loss)
Total other expense
Income (loss) from continuing operations before
income taxes
Benefit (provision) for income taxes
Income (loss) from continuing operations, net
of income taxes
Discontinued operations, net of income taxes
Net income (loss)
Net (income) loss attributable to
noncontrolling interests
Net income (loss) attributable to Caesars
$
The consolidating condensed statements of cash flows for years ended December 31, 2022 and 2021 are as follows:
Supplemental Consolidating Financial Information
Caesars Resort Collection, LLC
(Unaudited)
(In millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net
Acquisition of William Hill, net of cash acquired
Purchase of additional interest in Horseshoe Baltimore, net
of cash consolidated
Acquisition of gaming rights and trademarks
Proceeds from sale of businesses, property and equipment,
net of cash sold
Proceeds from the sale of investments
Proceeds from insurance related to property damage
Investments in unconsolidated affiliates
Other
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt and revolving credit facilities
Repayments of long-term debt and revolving credit facilities
Financing obligation payments
Transactions with parent
Debt issuance and extinguishment costs
Proceeds from issuance of common stock
Cash paid to settle convertible notes
Taxes paid related to net share settlement of equity awards
Distributions to noncontrolling interest
Net cash provided by (used in) financing activities
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net cash from discontinued operations
Change in cash, cash equivalents, and restricted cash
classified as assets held for sale
Effect of foreign currency exchange rates on cash
Increase (decrease) in cash, cash equivalents and restricted
cash
Cash, cash equivalents and restricted cash, beginning of
period
Cash, cash equivalents and restricted cash, end of period
$
Year Ended December 31, 2022
Year Ended December 31, 2021
CRC
Other
Operations,
Eliminations
CEI Consolidated
CRC
Other Operations,
Eliminations
CEI Consolidated
$
2,418
$
(1,425)
$
993 $
2,304 $
(1,105) $
1,199
(621)
—
—
(11)
23
—
—
—
—
(609)
750
(2,633)
(4)
—
—
—
—
—
(1)
(1,888)
—
—
—
—
—
—
(79)
527
448
(331)
—
—
—
16
126
36
—
(6)
(159)
750
(105)
1
—
(12)
1
—
(27)
(2)
606
(18)
386
—
368
—
(29)
(639)
1,494
$
855
$
(952)
—
—
(11)
39
126
36
—
(6)
(768)
1,500
(2,738)
(3)
—
(12)
1
—
(27)
(3)
(1,282)
(18)
386
—
368
—
(29)
(718)
2,021
1,303 $
(327)
—
—
(262)
261
—
—
—
—
(328)
108
(1,875)
—
(117)
—
—
—
—
—
(1,884)
26
(2)
—
24
—
—
116
411
527 $
(193)
(1,581)
(5)
(50)
465
239
44
(39)
—
(1,120)
1,200
(102)
(5)
117
(56)
3
(367)
(45)
(2)
743
(53)
(1,473)
591
(935)
10
32
(2,375)
3,869
1,494 $
(520)
(1,581)
(5)
(312)
726
239
44
(39)
—
(1,448)
1,308
(1,977)
(5)
—
(56)
3
(367)
(45)
(2)
(1,141)
(27)
(1,475)
591
(911)
10
32
(2,259)
4,280
2,021
Supplemental Consolidating Financial Information
Caesars Resort Collection, LLC
(Unaudited)
The reconciliations of net income (loss) attributable to Caesars to Adjusted EBITDA for quarter and year ended December 31, 2022 are as follows:
(In millions)
Net income (loss) attributable to Caesars
Net income (loss) attributable to noncontrolling
interests
Net loss from discontinued operations
(Benefit) provision for income taxes
Other (income) loss
Loss on extinguishment of debt
Interest expense
Depreciation and amortization
Impairment charges
Transaction costs and other
Stock-based compensation expense
Adjusted EBITDA
$
$
Three Months Ended December 31, 2022
Other
Operations,
Eliminations
CEI
Consolidated
CRC
Year Ended December 31, 2022
Other
Operations,
Eliminations
CEI
Consolidated
CRC
53 $
1
—
(25)
—
52
402
226
30
26
24
789 $
(201) $
(148) $
367 $
(1,266) $
(15)
—
31
7
—
183
69
78
16
—
168 $
(14)
—
6
7
52
585
295
108
42
24
957 $
2
2
29
(24)
85
1,586
897
30
73
101
3,148 $
(13)
384
(70)
(22)
—
679
308
78
17
—
95 $
(899)
(11)
386
(41)
(46)
85
2,265
1,205
108
90
101
3,243