UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020March 31, 2021
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                to                 
Commission File No. 001-36629
CAESARS ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
Delaware46-3657681
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)
100 West Liberty Street, Suite 1150,12th Floor, Reno, Nevada 89501
(Address and zip code of principal executive offices)
(775) 328-0100
(Registrant’s telephone number, including area code)
Eldorado Resorts, Inc.N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.00001 par valueCZRNASDAQ Stock Market
Indicate by check mark whether the registrant (1) has filed all 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, smaller reporting company or an 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☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
The number of shares of the Registrant’s Common Stock, $0.00001 par value per share, outstanding as of July 31, 2020April 30, 2021 was 160,833,608.208,698,623.


CAESARS ENTERTAINMENT, INC.
QUARTERLY REPORT FOR THE THREE MONTHS ENDED
JUNE 30, 2020
TABLE OF CONTENTS
Page
2
2
 
Consolidated Condensed Balance Sheets at
June2
30, 2020 (unaudited) and December 31, 2019Consolidated Condensed Statements of Operations
3
 
Consolidated Condensed Statements of Operations for theComprehensive Three and Six Months Ended June 30, 2020 and 2019 (unaudited)Loss
4
 
Consolidated Condensed Statements of Comprehensive (Loss) Income for the Three and Six Months Ended June 30, 2020 and 2019 (unaudited)Stockholders’ Equity
5
 
Consolidated Condensed Statements of Stockholders’ Equity for theSix Months Ended June 30, 2020 and 2019 (unaudited)Cash Flows
6
Notes to Consolidated Condensed Financial Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019 (unaudited)
7
9
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Item 6.
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1




PART I-FINANCIALI - FINANCIAL INFORMATION
Item 1.  Unaudited Financial Statements
CAESARS ENTERTAINMENT, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
(In millions)March 31,
2021		December 31,
2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$1,794 $1,758 
Restricted cash and investments2,073 2,021 
Accounts receivable, net324 338 
Due from affiliates48 44 
Inventories41 44 
Prepayments and other current assets236 250 
Assets held for sale ($0 and $130 attributable to our VIEs)2,046 2,212 
Total current assets6,562 6,667 
Investment in and advances to unconsolidated affiliates263 173 
Property and equipment, net14,083 14,333 
Gaming rights and other intangibles, net4,235 4,253 
Goodwill9,729 9,723 
Other assets, net1,147 1,236 
Total assets$36,019 $36,385 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable$148 $165 
Accrued interest238 229 
Accrued other liabilities1,307 1,239 
Current portion of long-term debt67 67 
Liabilities related to assets held for sale ($0 and $130 attributable to our VIEs)744 885 
Total current liabilities2,504 2,585 
Long-term financing obligation12,334 12,295 
Long-term debt14,103 14,073 
Deferred income taxes1,091 1,166 
Other long-term liabilities1,357 1,232 
Total liabilities31,389 31,351 
Commitments and contingencies (Note 8)


0
0STOCKHOLDERS' EQUITY:
Caesars stockholders’ equity4,613 5,016 
Noncontrolling interests17 18 
Total stockholders’ equity4,630 5,034 
Total liabilities and stockholders’ equity$36,019 $36,385 
The accompanying notes are an integral part of these consolidated condensed financial statements.
Table of Contents
2

CAESARS ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETSCONDENSED STATEMENTS OF OPERATIONS
(dollars in thousands)(UNAUDITED)
June 30,
2020		December 31,
2019
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$950,483  $206,317  
Restricted cash and investments9,035  3,507  
Marketable securities36,071  34,634  
Accounts receivable, net44,305  53,899  
Due from affiliates585  3,806  
Inventories17,369  18,379  
Prepaid expenses33,096  30,966  
Assets held for sale443,793  253,135  
Total current assets1,534,737  604,643  
Investment in and advances to unconsolidated affiliates134,939  135,828  
Property and equipment, net2,418,687  2,614,524  
Gaming licenses and other intangibles, net1,056,429  1,111,398  
Goodwill810,187  909,717  
Right-of-use assets127,550  188,219  
Other assets, net65,918  76,224  
Total assets$6,148,447  $5,640,553  
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt$111  $246,175  
Accounts payable40,079  61,951  
Accrued property, gaming and other taxes32,035  43,050  
Accrued payroll and related42,676  62,337  
Accrued interest36,496  36,480  
Income taxes payable25,188  23,898  
Short-term lease obligation13,933  19,991  
Accrued other liabilities153,810  157,079  
Liabilities related to assets held for sale131,674  37,485  
Total current liabilities476,002  688,446  
Long-term financing obligation to GLPI975,792  970,519  
Long-term debt, less current portion2,670,739  2,324,541  
Deferred income taxes144,973  197,266  
Long-term lease obligation98,040  176,932  
Other long-term liabilities166,452  165,592  
Total liabilities4,531,998  4,523,296  
Commitments and contingencies (Note 14)


STOCKHOLDERS' EQUITY:
Common stock, 200,000,000 shares authorized, 98,565,678 and 77,569,117 issued and outstanding, net of treasury shares, par value $0.00001 as of June 30, 2020 and December 31, 2019, respectively1  1  
Paid-in capital1,534,373  759,547  
Retained earnings90,829  366,463  
Treasury stock at cost, 223,823 shares held at June 30, 2020 and December 31, 2019(9,131) (9,131) 
Accumulated other comprehensive income377  377  
Total stockholders’ equity1,616,449  1,117,257  
Total liabilities and stockholders’ equity$6,148,447  $5,640,553  
Three Months Ended March 31,
(In millions, except per share data)20212020
REVENUES:
Casino and pari-mutuel commissions$1,140 $340 
Food and beverage166 56 
Hotel215 48 
Other178 29 
Net revenues1,699 473 
EXPENSES:
Casino and pari-mutuel commissions541 179 
Food and beverage106 53 
Hotel81 22 
Other68 9 
General and administrative366 98 
Corporate66 16 
Impairment charges0 161 
Depreciation and amortization265 50 
Transaction costs and other operating costs20 8 
Total operating expenses1,513 596 
Operating income (loss)186 (123)
OTHER EXPENSE:
Interest expense, net(563)(67)
Other loss(133)(23)
Total other expense(696)(90)
Loss from continuing operations before income taxes(510)(213)
Benefit for income taxes79 37 
Net loss from continuing operations, net of income taxes(431)(176)
Discontinued operations, net of income taxes7 0 
Net loss(424)(176)
Net loss attributable to noncontrolling interests1 0 
Net loss attributable to Caesars$(423)$(176)
Net loss per share - basic and diluted:
Basic loss per share from continuing operations$(2.06)$(2.25)
Basic income per share from discontinued operations0.03 0 
Basic loss per share$(2.03)$(2.25)
Diluted loss per share from continuing operations$(2.06)$(2.25)
Diluted income per share from discontinued operations0.03 0 
Diluted loss per share$(2.03)$(2.25)
Weighted average basic shares outstanding208 78 
Weighted average diluted shares outstanding208 78 
The accompanying condensed notes are an integral part of these consolidated condensed financial statements.
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3

CAESARS ENTERTAINMENT, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONSCOMPREHENSIVE LOSS
(dollars in thousands, except per share data)(UNAUDITED)
(unaudited)
Three Months Ended
June 30,		Six Months Ended
June 30,
2020201920202019
REVENUES:
Casino and pari-mutuel commissions$101,479  $457,162  $441,228  $927,848  
Food and beverage6,567  75,356  62,813  150,637  
Hotel8,916  78,391  57,292  143,175  
Other9,508  26,212  38,206  51,284  
Net revenues126,470  637,121  599,539  1,272,944  
EXPENSES:
Casino and pari-mutuel commissions43,354  203,240  202,510  413,546  
Food and beverage8,250  59,497  61,505  119,882  
Hotel5,846  25,136  28,114  48,786  
Other1,179  10,723  10,360  21,972  
Marketing and promotions5,105  32,080  30,058  64,381  
General and administrative64,862  117,431  156,537  237,319  
Corporate13,050  21,051  29,532  37,805  
Impairment charges—  —  160,758  958  
Depreciation and amortization48,939  56,533  99,372  114,290  
Total operating expenses190,585  525,691  778,746  1,058,939  
(Loss) gain on sale or disposal of property and equipment(65) (366) 1,393  21,952  
Transaction expenses(12,697) (7,292) (21,991) (9,186) 
Loss from unconsolidated affiliates(1,450) (1,222) (1,702) (617) 
Operating (loss) income(78,327) 102,550  (201,507) 226,154  
OTHER EXPENSE:
Interest expense, net(68,136) (71,798) (134,600) (145,308) 
Loss on extinguishment of debt—  —  (158) —  
Unrealized gain (loss) on investments and marketable securities12,806  (1,398) (10,202) (2,858) 
Total other expense(55,330) (73,196) (144,960) (148,166) 
(Loss) income before income taxes(133,657) 29,354  (346,467) 77,988  
Benefit (provision) for income taxes33,661  (10,418) 70,833  (20,823) 
Net (loss) income$(99,996) $18,936  $(275,634) $57,165  
Net (loss) income per share of common stock:
Basic$(1.25) $0.24  $(3.49) $0.74  
Diluted$(1.25) $0.24  $(3.49) $0.73  
Weighted average basic shares outstanding80,053,676  77,682,759  79,009,373  77,625,303  
Weighted average diluted shares outstanding80,053,676  78,725,289  79,009,373  78,657,552  
Three Months Ended March 31,
(In millions)20212020
Net loss$(424)$(176)
Change in fair market value of interest rate swaps, net of tax12 0 
Other(1)0 
Other comprehensive income, net of tax11 0 
Comprehensive loss(413)(176)
Comprehensive loss attributable to noncontrolling interests1 0 
Comprehensive loss attributable to Caesars$(412)$(176)
The accompanying condensed notes are an integral part of these consolidated condensed financial statements.
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4

CAESARS ENTERTAINMENT, INC.
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE (LOSS) INCOMESTOCKHOLDERS’ EQUITY
(dollars in thousands)(UNAUDITED)
(unaudited)
Three Months Ended
June 30,		Six Months Ended
June 30,
2020201920202019
Net (loss) income$(99,996) $18,936  $(275,634) $57,165  
Other comprehensive income, net of tax—  —  —  —  
Comprehensive (loss) income, net of tax$(99,996) $18,936  $(275,634) $57,165  
Caesars Stockholders’ Equity
Common StockTreasury Stock
(In millions)SharesAmountPaid-in
Capital		Retained
Earnings (Accumulated Deficit)		Accumulated
Other
Comprehensive
Income		AmountNon controlling InterestsTotal Stockholders’ Equity
Balance, December 31, 201978 $0 $760 $366 $0 $(9)$0 $1,117 
Issuance of restricted stock units— — 6 — — — — 6 
Net loss— — — (176)— — — (176)
Shares withheld related to net share settlement of stock awards— — (7)— — — — (7)
Balance, March 31, 202078 $0 $759 $190 $0 $(9)$0 $940 
Balance, December 31, 2020208 $0 $6,382 $(1,391)$34 $(9)$18 $5,034 
Issuance of restricted stock units— — 23 — — — — 23 
Net loss— — — (423)— — (1)(424)
Other comprehensive income, net of tax— — — — 11 — — 11 
Shares withheld related to net share settlement of stock awards— — (14)— — — — (14)
Balance, March 31, 2021208 $0 $6,391 $(1,814)$45 $(9)$17 $4,630 
The accompanying condensed notes are an integral part of these consolidated condensed financial statements.
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5

CAESARS ENTERTAINMENT, INC.
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITYCASH FLOWS
(dollars in thousands)(UNAUDITED)
(unaudited)
Common StockTreasury Stock
SharesAmountPaid-in
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income		SharesAmountTotal
Balance, December 31, 201977,792,940  $1  $759,547  $366,463  $377  223,823  $(9,131) $1,117,257  
Issuance of restricted stock units356,367  —  5,742  —  —  —  —  5,742  
Net loss—  —  —  (175,638) —  —  —  (175,638) 
Shares withheld related to net share settlement of stock awards(122,590) —  (7,152) —  —  —  —  (7,152) 
Balance, March 31, 202078,026,717  $1  $758,137  $190,825  $377  223,823  $(9,131) $940,209  
Issuance of restricted stock units71,887  —  4,229  —  —  —  —  4,229  
Issuance of common stock, net20,700,000  —  772,392  —  —  —  —  772,392  
Net loss—  —  (99,996) —  —  —  (99,996) 
Exercise of stock options15,300  —  62  —  —  —  —  62  
Shares withheld related to net share settlement of stock awards(24,403) —  (447) —  —  —  —  (447) 
Balance, June 30, 202098,789,501  $1  $1,534,373  $90,829  $377  223,823  $(9,131) $1,616,449  
Balance, December 31, 201877,438,889  $1  $748,076  $290,206  $1  223,823  $(9,131) $1,029,153  
Cumulative change in accounting principle, net of tax—  —  —  (4,744) —  —  —  (4,744) 
Issuance of restricted stock units330,641  —  4,948  —  —  —  —  4,948  
Net income—  —  —  38,229  —  —  —  38,229  
Shares withheld related to net share settlement of stock awards(106,542) —  (4,322) —  —  —  —  (4,322) 
Balance, March 31, 201977,662,988  $1  $748,702  $323,691  $1  223,823  $(9,131) $1,063,264  
Issuance of restricted stock units169,248  —  6,509  —  —  —  —  6,509  
Net income—  —  —  18,936  —  —  —  18,936  
Shares withheld related to net share settlement of stock awards(65,312) —  (3,190) —  —  —  —  (3,190) 
Balance, June 30, 201977,766,924  $1  $752,021  $342,627  $1  223,823  $(9,131) $1,085,519  
Three Months Ended March 31,
(In millions)20212020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities$45 $30 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net(65)(23)
Acquisition of gaming rights(2)0 
Proceeds from sale of businesses, property and equipment, net of cash sold4 10 
Proceeds from the sale of investments42 0 
Proceeds from insurance related to property damage26 0 
Investments in unconsolidated affiliates(30)0 
Net cash used in investing activities(25)(13)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt and revolving credit facilities0 465 
Repayments of long-term debt and revolving credit facilities(16)(10)
Taxes paid related to net share settlement of equity awards(14)(7)
Net cash provided by (used in) financing activities(30)448 
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Cash flows from operating activities27 0 
Net cash from discontinued operations27 0 
Effect of foreign currency exchange rates on cash21 0 
Increase in cash, cash equivalents and restricted cash38 465 
Cash, cash equivalents and restricted cash, beginning of period4,216 217 
Cash, cash equivalents and restricted cash, end of period$4,254 $682 
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO AMOUNTS REPORTED WITHIN THE CONSOLIDATED CONDENSED BALANCE SHEETS:
Cash and cash equivalents$1,794 $672 
Restricted cash included in restricted cash and investments2,050 4 
Restricted and escrow cash included in other assets, net410 6 
Total cash, cash equivalents and restricted cash$4,254 $682 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid$490 $64 
Income taxes refunded, net(1)(16)
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Payables for capital expenditures33 16 
Land contributed to joint venture61 0 
The accompanying condensed notes are an integral part of these consolidated condensed financial statements.
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6

CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF CASH FLOWS
(dollars in thousands)(UNAUDITED)
(unaudited)
Six Months Ended
June 30,
20202019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income$(275,634) $57,165  
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization99,372  114,290  
Amortization of deferred financing costs, discount and debt premium8,497  9,186  
Deferred revenue(3,752) (3,182) 
Equity in loss of unconsolidated affiliates1,702  617  
Loss on extinguishment of debt158  —  
Lease amortization1,699  1,332  
Unrealized loss on investments10,202  2,858  
Stock compensation expense9,971  11,457  
Gain on sale of property and equipment(1,393) (21,952) 
Impairment charges160,758  958  
Benefit for deferred income taxes(52,293) (6,671) 
Other1,513  631  
Change in operating assets and liabilities:
Accounts receivable6,391  (3,786) 
Prepaid expenses and other assets(10,633) 3,347  
Income taxes payable1,291  (8,636) 
Accounts payable and accrued other liabilities(38,312) (29,756) 
Net cash (used in) provided by operating activities(80,463) 127,858  
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net(41,014) (97,114) 
Purchase of restricted investments(116) —  
Sale of restricted investments—  4,985  
Proceeds from sale of businesses, property and equipment, net of cash sold543  167,609  
Investment in unconsolidated affiliates(812) —  
Net cash (used in) provided by investing activities(41,399) 75,480  
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under Revolving Credit Facility465,000  —  
Payments under Revolving Credit Facility(357,000) (245,000) 
Payments on Term Loan(10,000) —  
Debt issuance costs—  (449) 
Proceeds from issuance of common stock772,392  —  
Proceeds from exercise of stock options62  —  
Taxes paid related to net share settlement of equity awards(7,599) (7,512) 
Payments on other long-term payables(144) (243) 
Net cash (used in) provided by financing activities862,711  (253,204) 
7

Six Months Ended
June 30,
20202019
Increase (decrease) in cash, cash equivalents and restricted cash740,849  (49,866) 
Cash, cash equivalents and restricted cash, beginning of period216,578  246,691  
Cash, cash equivalents and restricted cash, end of period$957,427  $196,825  
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO AMOUNTS REPORTED WITHIN THE CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents$950,483  $183,139  
Restricted cash3,017  7,258  
Restricted and escrow cash included in other assets, net3,927  6,428  
Total cash, cash equivalents and restricted cash$957,427  $196,825  
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid$126,485  $134,083  
Income taxes (refunded) paid, net(17,352) 38,210  
NON-CASH FINANCING ACTIVITIES:
Payables for capital expenditures4,129  14,525 ��
The accompanying consolidated condensed notes are an integral partfinancial 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,” or “us” within these consolidated financial statements.
8
This Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Annual Report”). Capitalized terms used but not defined in this Form 10-Q have the same meanings as in the 2020 Annual Report.
We also refer to (i) our Consolidated Condensed Financial Statements as our “Financial Statements,” (ii) our Consolidated Condensed Balance Sheets as our “Balance Sheets,” (iii) our Consolidated Condensed Statements of Operations and Consolidated Condensed Statements of Comprehensive Loss as our “Statements of Operations,” and (iv) our Consolidated Condensed Statements of Cash Flows as our “Statements of Cash Flows.”

CAESARS ENTERTAINMENT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Organization and Basis of Presentation
Organization
The accompanying consolidated financial statements include the accounts of Caesars Entertainment, Inc., a Delaware corporation formerly known as Eldorado Resorts, Inc. (“ERI” or “Eldorado”), and its consolidated subsidiaries which may be referred to as the “Company,” “we,” “our,” or “us” within these financial statements.
The Company is a geographically diversified gaming and hospitality company with 23 gaming facilities in 11 states as of June 30, 2020. As of June 30, 2020, the Company’s properties were located in Colorado, Florida, Illinois, Indiana, Iowa, Mississippi, Missouri, Louisiana, Nevada, New Jersey and Ohio, and featured approximately 23,900 slot machines, video lottery terminals (“VLTs”) and e-tables, approximately 660 table games and approximately 11,300 hotel rooms. On July 20, 2020, the Company completed the merger in which a wholly-owned subsidiary of the Company merged with and into Caesars Entertainment Corporation (“Former Caesars”) with Former Caesars surviving as a wholly-owned subsidiary of the Company (the “Merger”) pursuant to the Agreement and Plan of Merger dated as of June 24, 2019 (as amended by Amendment No. 1 to Agreement and Plan of Merger, dated as of August 15, 2019, the “Merger Agreement”). As a result of the Merger, the Company currently owns an aggregate of 54 domestic properties in 16 states with approximately 60,400 slot machines, VLTs and e-tables, approximately 3,350 table games and approximately 51,200 hotel rooms, which includes international operations in 5 countries outside of the U.S. The Company’s primary source of revenue is generated by gaming operations, and the Company utilizes its hotels, restaurants, bars, entertainment, racing, sportsbook offerings, retail shops and other services to attract customers to its properties.
The Company thatwas founded in 1973 by the Carano family with the opening of the Eldorado Hotel Casino in Reno, Nevada, and in 1993,Nevada. The Company partnered with MGM Resorts International to build Silver Legacy Resort Casino in Reno, Nevada. BeginningNevada in 1993 and, beginning in 2005, the Company grew through a series of acquisitions, including the acquisition of Eldorado Resort Casino Shreveport (“Eldorado Shreveport”) in 2005, MTR Gaming Group, Inc. in 2014, Circus Circus Reno (“Circus Reno”) and the 50% membership interest in the Silver Legacy that was owned by MGM Resorts International in 2015, Isle of Capri Casinos, Inc. (“Isle” or “Isle of Capri”) in 2017 and Grand Victoria Casino (“Elgin”) and Tropicana Entertainment, Inc. (“Tropicana”) in 2018.
On January 11, 2019 and March 8, 2019, respectively, the Company completed its sales of Presque Isle Downs & Casino (“Presque”) and Lady Luck Casino Nemacolin (“Nemacolin”), which are both located in Pennsylvania. On December 6, 2019, the Company completed its sales of Mountaineer Casino, Racetrack and Resort (“Mountaineer”), Isle Casino Cape Girardeau (“Cape Girardeau”) and Lady Luck Casino Caruthersville (“Caruthersville”). Mountaineer is located in West Virginia and Cape Girardeau and Caruthersville are located in Missouri. On July 1,20, 2020, the Company completed the sales of Isle of Capri Casino Kansas City (“Kansas City”) and Lady Luck Casino Vicksburg (“Vicksburg”). Kansas City is located in Missouri and Vicksburg is located in Mississippi. See Note 5.
In connectionmerger with the Merger, Caesars Entertainment Corporation changed its name to “Caesars Holdings, Inc.” and Eldorado Resorts, Inc. converted into a Delaware corporation and changed its name to “Caesars Entertainment, Inc.” In addition, effective as of July 21, 2020 the Company’s ticker symbol on the NASDAQ Stock Market changed from “ERI” to “CZR”. In connection with the execution of the Merger Agreement, the Company also entered into a Master Transaction Agreement (the “MTA”(“Former Caesars”) with VICI Properties L.P., a Delaware limited partnership (“VICI”), pursuant to which among other things,Former Caesars became a wholly-owned subsidiary of the Company agreed(the “Merger”).
The Company owns, leases or manages an aggregate of 54 domestic properties in 16 states with approximately 54,600 slot machines, video lottery terminals (“VLTs”) and e-tables, approximately 3,200 table games and approximately 47,700 hotel rooms as of March 31, 2021. We also have international operations in 5 countries outside of the U.S. In addition, we have other domestic and international properties that are authorized to consummateuse the brands and marks of Caesars Entertainment, Inc., as well as other non-gaming properties. Upon completion of our previously announced sales, or expected sales, of certain salegaming properties, we expect to continue to own, lease or manage 48 properties. See Note 15 for segment information. The Company’s primary source of revenue is generated by gaming operations, and leaseback transactionsthe Company utilizes its hotels, restaurants, bars, entertainment, racing, sportsbook offerings, retail shops and amendother services to attract customers to its properties.
The Company has entered into several agreements to divest of certain lease agreements with VICI and/properties and initiated plans to divest of other assets, including non-core properties or its affiliates, with respect to certain property described in the MTA.divestitures required by regulatory agencies. See Note 2 for further discussion of the Merger and related transactions.other transactions and Note 3 for a discussion of properties recently sold or currently held for sale.
Certain properties, including Harrah’s Louisiana Downs, Caesars Southern Indiana, Horseshoe Hammond, and Caesars UK group, including Emerald Resort & Casino, met held for sale criteria as of the date of the closing of the Merger. The sales of these properties are expected to close within one year and the properties are classified as discontinued operations.
Acquisition of William Hill
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 of approximately £2.9 billion. In order to manage the risk of appreciation of the GBP denominated purchase price the Company entered into foreign exchange forward contracts, which were settled as of March 31, 2021. See Note 7.
On April 24,September 29, 2020, the Company entered into a debt financing commitment letter pursuant to which the lenders party thereto committed to arrange and provide a newly formed subsidiary of the Company with (a) a £1.0 billion senior secured 540-day bridge loan facility, (b) a £116 million senior secured 540-day revolving credit facility and (c) a £503 million senior secured 60-day bridge loan facility (collectively, the “Debt Financing”), which was amended and restated on December 11, 2020 in order to join additional lenders as parties thereto.
Pending negotiation of the definitive purchaseloan agreement with Twin River Worldwide Holdings, Inc. (“Twin River”) and certain of its affiliates for the saleDebt Financing, on October 6, 2020, a newly formed subsidiary of the equity interestsCompany entered into a £1.5 billion Interim Facilities Agreement (the “Interim Facilities Agreement”) with Deutsche Bank
Table of Eldorado Resort Casino Shreveport Joint VentureContents
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CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
AG, London Branch and Columbia Properties Tahoe, LLC,JPMorgan Chase Bank, N.A. to provide: (a) a 90-day £1.0 billion interim asset sale bridge facility and (b) a 90-day £503 million interim cash confirmation bridge facility, which Interim Facilities Agreement was amended and restated on December 11, 2020 in order to join additional lenders as parties thereto.
On April 20, 2021, a UK Court sanctioned the entities that hold Eldorado Resort Casino Shreveportproposed acquisition and MontBleu Casino Resort & Spa,on April 22, 2021, the Company completed the acquisition of William Hill PLC for aggregate£2.9 billion, or approximately $4.0 billion (the “William Hill Acquisition”). See Note 2.
In addition to the financing transactions described above, certain net assets of Caesars and William Hill will be assessed in determining the consideration of $155 million, subject to a working capital adjustment. The definitive agreement provides thattransferred and the consummationallocation of the sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in the first quarter of 2021.purchase price.
In connection with its reviewthe William Hill Acquisition, on April 22, 2021, a newly formed subsidiary of the Merger, the Indiana Gaming Commission determined on July 16, 2020 that the Company will be required to divest three properties within the state of Indiana in order to avoid undue economic concentrations as conditions to the Indiana Gaming Commission’s approval of the Merger. As a result, the Company plans to enter into agreements to divest of Evansville, as well as two additional properties that the Company acquired as a result of the Merger, prior to December 31, 2020.
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The following table sets forth certain information regarding our properties (listed by segment in which each property is reported) as of June 30, 2020:
SegmentPropertyDate AcquiredState
WestEldorado Resort Casino Reno (“Eldorado Reno”)(a)Nevada
Silver Legacy Resort Casino (“Silver Legacy”)(a)Nevada
Circus Circus Reno (“Circus Reno”)(a)Nevada
MontBleu Casino Resort & Spa (“MontBleu”)October 1, 2018 (c)Nevada
Tropicana Laughlin Hotel & Casino (“Laughlin”)October 1, 2018Nevada
Isle Casino Hotel - Blackhawk (“Isle Black Hawk”)May 1, 2017Colorado
Lady Luck Casino - Black Hawk (“Lady Luck Black Hawk”)May 1, 2017Colorado
Midwest (b)Isle Casino Waterloo (“Waterloo”)May 1, 2017Iowa
Isle Casino Bettendorf (“Bettendorf”)May 1, 2017Iowa
Isle of Capri Casino Boonville (“Boonville”)May 1, 2017Missouri
Isle of Capri Casino Kansas City (“Kansas City”)May 1, 2017 (c)Missouri
SouthIsle Casino Racing Pompano Park (“Pompano”)May 1, 2017Florida
Eldorado Resort Casino Shreveport (“Eldorado Shreveport”)(a) (c)Louisiana
Isle of Capri Casino Hotel Lake Charles (“Lake Charles”)May 1, 2017Louisiana
Belle of Baton Rouge Casino & Hotel (“Baton Rouge”)October 1, 2018Louisiana
Isle of Capri Casino Lula (“Lula”)May 1, 2017Mississippi
Lady Luck Casino Vicksburg (“Vicksburg”)May 1, 2017 (c)Mississippi
Trop Casino Greenville (“Greenville”)October 1, 2018Mississippi
East (b)Eldorado Gaming Scioto Downs (“Scioto Downs”)(a)Ohio
Tropicana Casino and Resort, Atlantic City (“Trop AC”)October 1, 2018New Jersey
CentralGrand Victoria Casino (“Elgin”)August 7, 2018Illinois
Lumière Place Casino (“Lumière”)October 1, 2018Missouri
Tropicana Evansville (“Evansville”)October 1, 2018 (c)Indiana
(a)Property was aggregated into segment prior to January 1, 2016.
(b)Presque was sold on January 11, 2019, Nemacolin was sold on March 8, 2019 and Mountaineer was sold on December 6, 2019. All three properties were previously reported in the East segment. Cape Girardeau and Caruthersville were sold on December 6, 2019. Both properties were previously reported in the Midwest segment.
(c)Kansas City and Vicksburg were sold on July 1, 2020. The Company entered into an agreementa Credit Agreement (the “Bridge Credit Agreement”) with certain lenders party thereto and Deutsche Bank AG, London Branch, as administrative agent and collateral agent, pursuant to sell Eldorado Shreveportwhich the lenders party thereto provided the Debt Financing. The Bridge Credit Agreement provides for (a) a 540-day £1.0 billion asset sale bridge facility, (b) a 60-day £503 million cash confirmation bridge facility and MontBleu,(c) a 540-day £116 million revolving credit facility. The proceeds of the bridge loan facilities provided under the Bridge Credit Agreement were used (i) to pay a portion of the cash consideration for the acquisition and (ii) to pay fees and expenses related to the acquisition and related transactions. The proceeds of the revolving credit facility under the Bridge Credit Agreement will be used for working capital and general corporate purposes. The Interim Facilities Agreement was terminated upon the execution of the Bridge Credit Agreement for the Debt Financing. The Bridge Credit Agreement is included within William Hill’s non-U.S. operations which areis expected to close in the first quarter of 2021. The Company plans to enter into an agreement to divest Evansville prior to December 31, 2020.be divested.
Reclassifications
Certain reclassifications of prior year presentations have been made to conform to the current period presentation. Marketing and promotions expense previously disclosed for the three months ended March 31, 2020 has been reclassified to Casino and pari-mutuel commissions expense and General and administrative expense based on the nature of the expense.
Basis of Presentation
The accompanying unaudited consolidated condensed financial statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments, all of which are normal and recurring, considered necessary for a fair presentation. The results of operations for these interim periods are not necessarily indicative of the operating results for other quarters, for the full year or any future period.
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 5 geographic regions and reportable segments. The reportable segments are based on the similar characteristics of the operating segments within the regions in which they operate: West, Midwest, South, East, and Central. See the table aboveNote 15 for a listing of properties included in each segment.
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segment and the determination of our segments.
The presentation of financial information herein for the period after the Company’s acquisition of Former Caesars on July 20, 2020 is not fully comparable to the periods prior to the acquisition. In addition, the presentation of financial information herein for the periods after the Company’s sales of Presque and Nemacolin on January 11, 2019 and March 8, 2019, respectively, and the Company’s sales of Mountaineer, Cape Girardeau and Caruthersville on December 6, 2019various properties are not fully comparable to the periods prior to their respective sale dates. See Note 5.2 for further discussion of the Merger and related transactions and Note 3 for properties recently sold or currently held for sale.
These unauditedConsolidation of Subsidiaries and Variable Interest Entities
Our consolidated condensed financial statements shouldinclude the accounts of Caesars 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 readpotentially significant to the VIE. We review our investments for VIE consideration if a reconsideration event occurs to determine if the investment continues to qualify as a VIE. If we determine an investment no longer qualifies as a VIE, there may be a material effect to our financial statements.
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CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Consolidation of Korea Joint Venture
The Company had a joint venture to acquire, develop, own, and operate a casino resort project in conjunctionIncheon, South Korea (the “Korea JV”). We determined that the Korea JV was a VIE and the Company was the primary beneficiary, and therefore, we had consolidated the Korea JV into our financial statements. As of December 31, 2020, the assets and liabilities of the Korea JV were classified as held for sale and consisted of $130 million of Property and equipment and other assets and $130 million of current and other long-term liabilities. We sold our interest in the Korea JV on January 21, 2021 and derecognized its assets and liabilities from our Balance Sheets. There was 0 gain or loss associated with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.sale.
Recent Developments Related to COVID-19
In January 2020, an outbreak of a new strain of coronavirus (“COVID-19”) was identified and has since spread throughout much of the world, including the United States.U.S. All of the Company’s casino properties were temporarily closed for the period from mid-March 2020 through mid-May 2020 due to orders issued by various state government agencies and tribal bodies as part of certain precautionary measures intended to help slow the spread of the COVID-19 public health emergency. On May 18, 2020, theThe Company began reopening properties and has resumed certain operations at substantially all of our properties as of June 30, 2020,March 31, 2021, with the exception of ElginLake Charles which was severely damaged by Hurricane Laura (See Note 8), and Trop AC which reopened on July 1 and July 2, 2020, respectively. As a resultmany of the temporary closures, the COVID-19 public health emergency has had a material adverse effect on the Company’s business, financial condition and results of operations forour international properties. During the three and six months ended June 30, 2020. March 31, 2021, most of our properties have experienced positive trends as restrictions on maximum capacities and amenities available are eased.
The Company continued to pay its full-time employees through April 10, 2020, including tips and tokens. Effective April 11, 2020, the Company furloughed approximately 90% of its employees, implemented salary reductions and committed to continue to provide benefits to its employees through June 30, 2020. Subsequently, the benefit coverage fortheir furloughed employees was extended through August 31, 2020.period. A portion of the Company’s workforce has returned to service as the properties have resumed operations with limited capacities and in compliance with operating restrictions in accordance withimposed by governmental or tribal orders, directives, and guidelines. As a result of these payroll changes combined with other cost saving measures, the Company’s operating expenses were reduced significantly. Due to a triggering event resulting from the COVID-19 public health emergency, the Company recognized impairment charges of $116 million related to goodwill and trade names during the sixthree months ended June 30,March 31, 2020. See Note 8 for details.
On June 15, 2020, in order to address the effects of the property closures resulting from the ongoingThe COVID-19 public health emergency has had, and continues to have, a material adverse effect on the Company obtained waivers onCompany’s business, financial condition and results of operations for the three months ended March 31, 2021 and 2020. As a result, the terms of our debt arrangements provide that the financial covenant on the existing credit facility agreements and the master leasemeasurement period is not effective through September 30, 2021, so long as we comply with GLP Capital, L.P., the operating partnership of Gaming and Leisure Properties, Inc. (“GLPI”), that we entered into in connection with the acquisition of Tropicana (the “GLPI Master Lease”). The amendment to the GLPI Master Lease is subject to the receipt of applicable gaming regulatory approvals, the provision of applicable gaming regulatory notices and the expiration of applicable gaming regulatory advance notice periods. As of June 30, 2020, the amendment was not effective.a minimum liquidity requirement. See Note 119. In addition, on March 19, 2021, the Company filed a lawsuit against its insurance carriers for details.losses attributed to COVID-19 public health emergency. See Note 8.
TheAlthough the Company is experiencing positive operating trends thus far in 2021, the extent of the ongoing and future effects of the COVID-19 public health emergency on the Company’s business and the casino resort industry generally is uncertain, but the Company expects that it will continue to have a significant impact on its business, results of operations and financial condition.uncertain. The extent and duration of the negative impact of COVID-19 public health emergency will ultimately depend on future developments, including but not limited to, the duration and severity of the outbreak, varying levels of restrictions on operations imposed by governmental authorities, the potential for authorities reimposing stay at home orders or additional restrictions in response to continued developments with the COVID-19 public health emergency, the Company’s ability to adapt to evolving operating procedures, the impact on consumer demand and discretionary spending, the length of time it takes for demand to return, the efficacy and availability of vaccines, and the Company’s ability to adjust its cost structures for the duration of the outbreak’s effect on its operations.
Recently Issued Accounting Pronouncements
Pronouncements Implemented in 2020
In June 2016 (modified in November 2018), theThe Financial Accounting Standards Board (“FASB”(the “FASB”) issued ASU No 2016-13, Financial Instruments – Credit Losses related to the timing of recognizing impairment losses on financial assets. The newfollowing authoritative guidance lowersamending the threshold on when losses are incurred, from a determination that a loss is probable to a determination that a loss is expected. The change in guidance is applicable to the Company’s evaluation of the Casino Reinvestment Development AuthorityFASB Accounting Standards Codification (“CRDA”ASC”) investments. The guidance is effective for interim and annual periods beginning after December 15, 2019. Adoption of the guidance required a modified-retrospective approach and a cumulative adjustment to retained earnings to the first reporting period that the update is effective. The Company.
Effective January 1, 2021, we adopted the new guidance on January 1, 2020. Adoption of this guidancefollowing Accounting Standards Updates (“ASU”) which did not have a material impacteffect on the Company’s Consolidated Financial Statements.our financial statements:
In August 2018, the FASB issued •ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use
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software license). This generally means that an intangible asset is recognized for the software license and, to the extent that the payments attributable to the software license are made over time, a liability also is recognized. If a cloud computing arrangement does not include a software license, the entity should account for the arrangement as a service contract. This generally means that the fees associated with the hosting element (service) of the arrangement are expensed as incurred. The amendment was effective for annual and interim periods beginning after December 15, 2019. The Company adopted the new guidance on January 1, 2020. Adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements.
In August 2018, the FASB issued ASU 2018-13, Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. This amendment modifies the disclosure requirements for fair value measurements and was effective for annual and interim periods beginning after December 15, 2019. The Company adopted the new guidance on January 1, 2020. Adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements.
Pronouncements To Be Implemented In Future Periods
In August 2018, the FASB issued ASU No 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General. This amendment improves disclosures over defined benefit plans and is effective for interim and annual periods ending after December 15, 2020 with early adoption allowed. General
The Company anticipates adopting this amendment during the first quarterfollowing ASUs were not implemented as of 2021, and currently does not expect it to have a significant impact on its Consolidated Financial Statements.March 31, 2021:
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. This amendment modifies accounting guidelines for income taxes and is effective for annual and interim periods beginning after December 15, 2020 with early adoption allowed. The Company will adopt the new guidance on January 1, 2021. The Company is evaluating the qualitative and quantitative effect the new guidance will have on its Consolidated Financial Statements.Previously Disclosed
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform. The amendments in this update are intended to provide relief to the companies that have contracts, hedging relationships or other transactions that reference the London Inter-bank Offered Rate (“LIBOR”) or another reference rate which is expected to be discontinued because of reference rate reform.
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The amendments provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions if certain criteria are met. The amendments in this update are effective as of March 12, 2020 and companies may elect to apply the amendments prospectively through December 31, 2022. The Company has not yet adopted this new guidance and is evaluating the qualitative and quantitative effect the new guidance will have on its ConsolidatedFinancial Statements.
In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options and Derivatives and Hedging. This update amends guidance on convertible instruments and the guidance on derivative scope exception for contracts in an entity’s own equity. The amendments for convertible instruments reduce the number of accounting models for convertible debt instruments and convertible preferred stock. In addition, the amendments provide guidance on instruments that will continue to be subject to separation models and improves disclosure for convertible instruments and guidance for earnings per share. Furthermore, the update amends guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. The amendments in this update are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. These amendments should be applied on either a modified retrospective basis or a fully retrospective basis. The Company is currently assessing the effect the adoption of this standard will have on its Financial Statements.
Note 2. Merger Related TransactionsAcquisitions and Purchase Price Accounting
Merger with Caesars Entertainment Corporation
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
•The largest and most diversifiedDiversification of the Company’s domestic footprint
•IconicAccess to iconic brands, rewards programprograms and new gaming opportunities expected to enhance customer experience
•Realization of significant identified synergies
Based onThe total purchase consideration for Former Caesars was $10.9 billion. The estimated purchase consideration in the closing price of $38.00 per share of Company common stock, par value $0.00001 per share (“Company Common Stock”), reported on NASDAQ on July 17, 2020, the aggregate implied value of the aggregate merger consideration paidacquisition was determined with reference to former holders of its acquisition date fair value.
(In millions)Consideration
Cash consideration paid$6,090 
Shares issued to Former Caesars shareholders (a)
2,381 
Cash paid to retire Former Caesars debt2,356 
Other consideration paid48 
Total purchase consideration$10,875 

____________________
(a)Former Caesars common stock in connection withwas converted into the Merger wasright to receive approximately $8.46 billion, including approximately $2.37 billion in the Company Common Stock and approximately $6.09 billion in cash. The aggregate merger consideration transferred also included the repayment of certain outstanding debt balances of Former Caesars and the replacement of equity awards of certain employees attributable to services provided prior to the Merger.
The cash consideration paid in the Merger was $12.41 per share (inclusive of the applicable ticking fee) of Former Caesars common stock for which cash consideration was payable and the stock consideration per share of Former Caesars common stock for which stock consideration was payable was 0.3085 shares of Company Common Stock, with a value equal to approximately $12.41 in cash (based on the volume weighted average price per share of Company Common Stock for the 10ten trading days ending on July 16, 2020). Following
Preliminary Purchase Price Allocation
The fair values are based on management’s analysis including preliminary work performed by third party valuation specialists, which are subject to finalization over the consummationone-year measurement period. The purchase price accounting for Former Caesars is preliminary as it relates to determining the fair value of certain assets and liabilities, including goodwill, and is subject to change. The following table summarizes the preliminary allocation of the Merger,purchase consideration to the identifiable assets acquired and liabilities assumed of Former Caesars, with the excess recorded as goodwill as of March 31, 2021:
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CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In millions)Fair Value
Current and other assets$4,149 
Property and equipment12,691 
Goodwill8,928 
Intangible assets (a)
3,364 
Other noncurrent assets676 
Total assets$29,808 
Current liabilities$1,844 
Financing obligation8,149 
Long-term debt6,591 
Noncurrent liabilities2,331 
Total liabilities18,915 
Noncontrolling interests18 
Net assets acquired$10,875 
____________________
(a)Intangible assets consist of gaming rights valued at $388 million, trade names valued at $2.1 billion, Caesars Rewards programs valued at $523 million and customer relationships valued at $403 million.
As noted above, the preliminary purchase price allocation is subject to a measurement period and our estimates as of December 31, 2020 have been revised as of March 31, 2021. The net impact of these changes in our preliminary valuations was a $6 million increase to goodwill, $8 million increase to current liabilities and $2 million decrease to noncurrent liabilities. The effect of these revisions during the quarter did not have any impact on our Statements of Operations.
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$95 
Allowance for credit losses at the acquisition date based on the acquirer’s assessment89 
Discount (premium) attributable to other factors2 
Face value of financial assets$186 
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.
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CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 and Former Caesars’ stockholders hold approximately 56% and 44%, respectively,ownership of the outstanding sharesbrand 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 estimate 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 estimate the useful life of the license to be approximately 34 years.
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 our 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 were 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 Common Stock.recognized acquisition-related transaction costs in connection with the Merger of $12 million and $9 million for the three months ended March 31, 2021 and 2020, respectively. These costs were associated with legal, IT costs, internal labor and professional services and were recorded in Transaction costs and other operating costs in our Statements of Operations.
For the period of January 1, 2021 through March 31, 2021, the properties of Former Caesars generated net revenues of $1.3 billion, excluding discontinued operations, and net loss of $482 million.
Acquisition of William Hill
On April 22, 2021, we completed the previously announced acquisition of William Hill PLC for cash consideration of approximately £2.9 billion, or approximately $4.0 billion, based on the GBP:USD exchange rate on the closing date.
Currently, William Hill PLC’s U.S. subsidiary, William Hill U.S. Holdco (“William Hill US” and together with William Hill PLC, “William Hill”) operates 37 sportsbooks at our properties in 8 states (see Note 4) and, following the William Hill Acquisition, Caesars and William Hill will conduct sports wagering across 17 states across the U.S. plus the District of Columbia. Additionally, we will operate regulated online real money gaming businesses in 4 states — Nevada, Pennsylvania, New Jersey, and Michigan — and continue to leverage the World Series of Poker (“WSOP”) brand, and license the WSOP trademarks for a variety of products and services. Extensive usage of digital platforms and growing bettor demand are driving the market for online sports betting platforms in the U.S. and the William Hill Acquisition positions us to address this growing market. The Company intends to divest the non-U.S. operations including the UK and international online divisions and the retail betting shops.
The Company previously held an equity interest in William Hill PLC and William Hill US (see Note 4). Accordingly, the acquisition will be accounted for as a business combination achieved in stages, or a “step acquisition.” The major classes of assets acquired through the Merger include cash and cash equivalents, trade and restricted cash,other accounts receivable, including receivables from affiliates, property and equipment, goodwill and intangible assets, and other assets. The major classes of liabilities assumed through the Merger include trade and other accounts payable, accrued expenses, contract liabilities,
12

financing obligations and long-term debt which includes $1.1 billion in aggregate principal amount of 5% convertible notes due 2024 that are convertible into the weighted averageand other liabilities. Certain of the numbernet assets of sharesWilliam Hill are the result of Company Common Stocktransactions with Caesars. Such net assets will be assessed and amount of cash actually received by holders of common stock of Former Caesars that made elections for considerationmay be eliminated in connection with the Merger.William Hill Acquisition.
Given the short period of time from the Mergeracquisition completion date and the date of these consolidated condensed financial statements, and the size and complexity of the transaction, the initial accounting for the business combination is incomplete at this time. The Company is not able to provide the valuation of certain components of consideration transferred or provide the
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12
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
allocation of consideration paid to the assets acquired or liabilities assumed. Supplemental pro forma revenue and earnings of the combined company are predicated on the completion of the business combination accounting and allocation of consideration.
The Company recognized acquisition-related transaction costs of $12.7 million and $22.0$5 million for the three and six months ended June 30, 2020, respectively,March 31, 2021.
Note 3. Assets Held for Sale
The Company periodically divests assets that it does not consider core to its business to raise capital or, in some cases, to comply with conditions, terms, obligations or restrictions imposed by antitrust, gaming and $4.5other 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 - Continuing operations
MontBleu, Evansville and Baton Rouge
On April 6, 2021, the Company consummated the sale of the equity interests of MontBleu Casino Resort & Spa (“MontBleu”) to Bally’s Corporation (formerly Twin River Worldwide Holdings, Inc.) for $15 million, subject to a customary working capital adjustment, resulting in a loss of approximately $2 million. The purchase price for MontBleu is due no later than the first anniversary of the consummation of the transaction. MontBleu’s assets and liabilities were held for sale as of March 31, 2021, and the results of operations are included in income from continuing operations in the periods presented.
As a result of the execution of the agreement to sell MontBleu, an impairment charge totaling $45 million was recorded during the three and six months ended June 30, 2019.
DebtMarch 31, 2020 due to the carrying value exceeding the estimated net sales proceeds. The impairment charges resulted in a reduction to the carrying amounts of the right-of-use assets, property and Financing Activityequipment, and goodwill and other intangibles totaling $18 million, $23 million and $4 million, respectively. MontBleu was within the Regional segment.
On July 6, 2020, a wholly-owned subsidiary of the Company issued $3.4 billion aggregate principal amount of 6.250% Senior Secured Notes due 2025 (the “2025 Secured Notes”) and $1.8 billion aggregate principal amount of 8.125% Senior Notes due 2027 (the “2027 Senior Notes”). The Company assumed the obligations under the 2025 Secured Notes and 2027 Senior Notes upon consummation of the Merger. In addition, Caesars Resort Collection (“CRC”), a subsidiary of Former Caesars, issued $1.0 billion aggregate principal amount of 5.750% Senior Secured Notes due 2025 (the “CRC Secured Notes”).
On July 20,16, 2020, in connection with the closingits review of the Merger, the Indiana Gaming Commission determined as a condition to their approval of the Merger that the Company will be required to divest 3 properties within the state of Indiana in order to avoid undue economic concentration. On October 27, 2020, the Company entered into a new creditan agreement which provides a five-year senior secured revolving credit facility for an aggregate principal amountto sell the equity interests of $1.0 billion (the “ERI Revolving Credit Facility”Tropicana Evansville (“Evansville”) to Gaming and Leisure Properties, Inc. (“GLPI”) and an additional revolving credit facility commitment underBally’s Corporation for $480 million, subject to a customary working capital adjustment. The sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in mid-2021. On December 24, 2020, the ERI Revolving Credit Facility in an aggregate principal amount equal to $185 million, and CRCCompany entered into an incremental agreement to its existing credit agreement dated assell the equity interests of December 22, 2017 for an aggregate principal amount of $1.8 billion of incremental term loan and an additional $25 million of revolving credit facility commitments. The additional capacities of $185 million under the ERI Revolving Credit Facility and $25 million under the existing CRC revolving credit facility are subject to approval from certain gaming authorities which we expect to receive in the third quarter of 2020.Caesars Southern Indiana. In addition, the borrowing capacity and obligations under CRC’s existing $1.0 billion revolving credit facility remain outstanding followingCompany plans to enter into an agreement to sell Horseshoe Hammond prior to December 31, 2021. Evansville met the consummation of the Merger.
A portion of the proceeds from these arrangements,requirements for presentation as well as cash on hand of the Company, was used (a) to fund a portion of the cash consideration of the Merger, (b) to prepay in full the loans outstanding and terminate all commitments under the Company’s existing Credit Agreement, datedassets held for sale as of April 17, 2017, (c) to satisfyMarch 31, 2021, while Caesars Southern Indiana and dischargeHorseshoe Hammond met the Company’s 6% Senior Notes due 2025, the Senior Notes due 2026, and the 7% Senior Notes due 2023, (d) to repay $975 million of the outstanding amount under CRC’s existing revolving credit facility, (e) to repay in full the loans outstanding and terminate all commitments under the CEOC, LLC Credit Agreement, datedrequirements for presentation as of October 6, 2017, (f) to pay fees and expenses related to the financing arrangements, and (g) for general corporate use. See Note 11 for details.
VICI Transactions
In connection with the closing of the Merger on July 20, 2020, the Company consummated a series of transactions with VICI in accordance with the Master Transaction Agreement (“MTA”) entered on June 24, 2019 and the Purchase and Sales Agreement entered on September 26, 2019. The Company consummated the sale leaseback transactions related to Harrah’s New Orleans, Harrah’s Laughlin and Harrah’s Resort Atlantic City, including the Harrah’s Atlantic City Waterfront Conference Center, for approximately $1.82 billion of net proceeds. Additionally, the Company received a one-time payment from VICI of approximately $1.38 billion for amendments to VICI lease agreements. The Caesars Palace Las Vegas (“CPLV”) Lease with VICI was amended to include Harrah’s Las Vegas (“HLV”) under the CPLV lease and increased HLV’s annual rent by $15 million and CPLV’s annual rent by $84 million. In addition, Harrah’s New Orleans, Harrah’s Laughlin, Harrah’s Resort Atlantic City and the Harrah’s Atlantic City Waterfront Conference Center were added to the Non-CPLV lease with VICI, with an increase in total aggregate annual rent for these properties of $154 million. The CPLV, Non-CPLV and Joliet lease agreements, as well as the Golf Course Use Agreement, were extended such that there will be 15 years remaining until the expiration of the initial term. The amendment also contains a put-call agreement related to the Centaur properties pursuant to which CRC may require VICI or its applicable affiliate to purchase and lease back (as lessor) to the Company or its applicable affiliate(s) the real estate components of the gaming and racetrack facilities of Hoosier Park Racing & Casino (“Hoosier Park”) and Indiana Grand Racing & Casino (“Indiana Grand”) and VICI or its applicable affiliate may require CRC to sell to VICI or its affiliate(s) and lease back (as lessee) the real estate components of such gaming and racetrack facilities.discontinued operations (see discussion below).
On June 15,December 1, 2020, the Company entered into a non-binding letterdefinitive agreement with CQ Holding Company, Inc. to sell the equity interests of intent with VICI to borrow a new 5-year, $400 million mortgage loan (the “Convention Center Mortgage Loan”) and sell to VICI approximately 23 acresBelle of land in the vicinity of, or adjacent to, The LINQ, Bally’s Paris and Planet Hollywood in Las Vegas, Nevada and commonly known as the
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Eastside Land (the “Eastside Land Sale”Baton Rouge Casino & Hotel (“Baton Rouge”). The Convention Center Mortgage Loan anddefinitive agreement provides that the Eastside Land Sale are expected to close concurrently and areconsummation of the sale is subject to satisfaction of customary closing conditions, including completion of due diligence, and negotiation of definitive documents and receipt of required regulatory approvals. These transactions areapprovals and is expected to close in the third quarter of 2020.2021. Baton Rouge met the requirements for presentation as assets held for sale as of March 31, 2021.
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Note 3. Leases13
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The Company has operatingassets and finance leasesliabilities held for various real estatesale of continuing operations, accounted for at carrying value unless fair value is lower, were as follows as of March 31, 2021 and equipment. Certain ofDecember 31, 2020:
March 31, 2021
(In millions)MontBleuEvansvilleBaton Rouge
Assets:
Cash$2 $8 $2 
Property and equipment, net37 302 2 
Goodwill0 9 0 
Gaming licenses and other intangibles, net0 138 0 
Other assets, net33 33 1 
Assets held for sale$72 $490 $5 
Current liabilities$8 $11 $3 
Other long-term liabilities63 13 1 
Liabilities related to assets held for sale$71 $24 $4 
December 31, 2020
(In millions)MontBleuEvansvilleBaton Rouge
Assets:
Cash$3 $7 $2 
Property and equipment, net37 302 2 
Goodwill0 9 0 
Gaming licenses and other intangibles, net0 138 0 
Other assets, net32 49 1 
Assets held for sale$72 $505 $5 
Current liabilities$8 $12 $2 
Other long-term liabilities63 24 1 
Liabilities related to assets held for sale$71 $36 $3 
The following information presents the net revenues and net income (loss) for the Company’s lease agreements include rental payments based on a percentageproperties considered continuing operations, that are held for sale:
Three Months Ended March 31, 2021
(In millions)MontBleuEvansvilleBaton Rouge
Net revenues$11 $31 $4 
Net income (loss)4 13 (1)
Three Months Ended March 31, 2020
(In millions)MontBleuEvansvilleBaton Rouge
Net revenues$9 $33 $6 
Net income (loss)(42)1 (10)
Held for sale - Sold
Eldorado Shreveport, Kansas City and Vicksburg Divestitures
Prior to their respective closing dates, Eldorado Shreveport, Isle of sales over specified contractual amounts, rental payments adjusted periodicallyCapri Casino Kansas City (“Kansas City”), and Lady Luck Casino Vicksburg (“Vicksburg”) met the requirements for inflation and rental payments based on usage. The Company’s leases include options to extendpresentation as assets held for sale under GAAP. However, they did not meet the lease term one month to 60 years. Asrequirements for presentation as discontinued operations. All properties were previously reported in the Regional segment.
Table of June 30, 2020, except for the GLPI Master Lease (see Note 10), the Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The components of lease expense are as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
Classification on the
Statement of Operations		2020201920202019
Operating lease expense:
Operating lease expenseOperating expense$4,432  $4,273  $8,880  $8,325  
Short-term and variable lease expenseOperating expense563  11,251  9,367  23,065  
Finance lease expense:
Interest expense on lease liabilitiesInterest expense, net24,886  24,632  49,707  49,235  
Amortization of ROU assetsDepreciation and amortization expense4,069  2,628  8,158  5,139  
Total lease expense$33,950  $42,784  $76,112  $85,764  

Contents
Supplemental cash flow information related to leases is as follows (in thousands):
Six Months Ended June 30,
20202019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$10,411  $13,698  
Operating cash flows for financing obligation and finance leases$44,527  $43,862  
Note 4. Revenue Recognition
The Company recognizes as casino revenue the net win from 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 certain cash and free play incentives. 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.
The Company’s consolidated 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 (amounts in thousands). Refer to Note 1 and Note 16 for additional information on the Company’s reportable segments.
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CAESARS ENTERTAINMENT, INC.
Three Months Ended June 30, 2020
WestMidwestSouthEastCentralCorporate
and Other		Total
Casino and pari-mutuel commissions$15,276  $21,119  $27,303  $19,777  $18,004  $—  $101,479  
Food and beverage3,564  614  1,519  245  625  —  6,567  
Hotel6,171  616  1,378  —  751  —  8,916  
Other4,926  438  560  1,204  468  1,912  9,508  
Net revenues$29,937  $22,787  $30,760  $21,226  $19,848  $1,912  $126,470  
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
Three Months Ended June 30, 2019
WestMidwestSouthEastCentralCorporate
and Other		Total
Casino and pari-mutuel commissions$55,493  $85,223  $94,871  $124,052  $97,523  $—  $457,162  
Food and beverage29,209  5,897  13,056  14,959  12,235  —  75,356  
Hotel33,943  4,101  6,838  24,336  9,173  —  78,391  
Other9,082  2,018  2,172  7,108  3,861  1,971  26,212  
Net revenues$127,727  $97,239  $116,937  $170,455  $122,792  $1,971  $637,121  
(UNAUDITED)
Six Months Ended June 30, 2020
WestMidwestSouthEastCentralCorporate
and Other		Total
Casino and pari-mutuel commissions$60,253  $74,432  $106,955  $99,708  $99,880  $—  $441,228  
Food and beverage27,147  4,013  12,170  9,709  9,774  —  62,813  
Hotel28,016  3,160  6,312  13,560  6,244  —  57,292  
Other20,011  1,975  2,375  6,305  3,655  3,885  38,206  
Net revenues$135,427  $83,580  $127,812  $129,282  $119,553  $3,885  $599,539  
Six Months Ended June 30, 2019
WestMidwestSouthEastCentralCorporate
and Other		Total
Casino and pari-mutuel commissions$108,899  $170,392  $204,221  $249,003  $195,333  $—  $927,848  
Food and beverage57,187  11,984  27,765  29,680  24,021  —  150,637  
Hotel61,451  7,723  13,175  44,333  16,493  —  143,175  
Other18,285  3,927  4,490  13,672  7,417  3,493  51,284  
Net revenues$245,822  $194,026  $249,651  $336,688  $243,264  $3,493  $1,272,944  

Contract and Contract Related Liabilities
The Company records contractfollowing information presents the net revenues and net income of held for sale properties, which were recently sold, for the three months ended March 31, 2020:
Three Months Ended March 31, 2020
(In millions)Eldorado ShreveportKansas CityVicksburg
Net revenues$23 $14 $5 
Net income2 3 0 
Held for sale - Discontinued operations
As result of the Merger, certain Former Caesars properties, including Harrah’s Louisiana Downs, Caesars Southern Indiana, Horseshoe Hammond, and Caesars UK group, including Emerald Resorts & Casino met held for sale criteria as of the date of the closing of the Merger. The sales of these properties have 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) player loyalty program obligations, which represents the deferred allocation of revenue relating to player loyalty program incentives earned, and (3) customer deposits and other deferred revenue, which is primarily 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 or for unpaid wagers), and deferred revenues associated with the Company’s interests in William Hill (see Note 7) and Flutter Entertainment PLC (“Flutter”), following Flutter’s acquisition of The Stars Group (“TSG”). Except for deferred revenues related to William Hill and TSG, these liabilities are generally expected to be recognized as revenueclose within one year and the properties are classified as discontinued operations. Caesars UK group, including Emerald Resorts & Casino, is within the Managed, International, CIE segment while all other discontinued operations are in the Regional segment.
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 being purchased, earned, or depositedHarrah’s Louisiana Downs to Rubico Acquisition Corp. for $22 million, subject to a customary working capital adjustment, which proceeds will be split between the Company and are recorded within accrued other liabilities onVICI. The sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in the third quarter of 2021.
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. The sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals, and is expected to close in the third quarter of 2021.
The following information presents the net revenues and net income (loss) for the Company’s Consolidated Balance Sheets.properties that are part of discontinued operations for the three months ended March 31, 2021:
Three Months Ended March 31, 2021
(In millions)Harrah’s Louisiana DownsHorseshoe HammondCaesars UKCaesars Southern Indiana
Net revenues$13 $93 $10 $49 
Net income (loss)4 14 (7)0 
The assets and liabilities held for sale as discontinued operations, accounted for at carrying value unless fair value was lower, were as follows as of March 31, 2021 and December 31, 2020:
March 31, 2021
(In millions)Harrah’s Louisiana DownsHorseshoe HammondCaesars UKCaesars Southern Indiana
Assets:
Cash$7 $16 $18 $8 
Property and equipment, net10 405 75 415 
Goodwill3 141 3 136 
Gaming licenses and other intangibles, net5 30 29 23 
Other assets, net0 37 114 4 
Assets held for sale$25 $629 $239 $586 
Current liabilities$8 $28 $65 $17 
Other long-term liabilities (a)
5 72 116 334 
Liabilities related to assets held for sale$13 $100 $181 $351 
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15

CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The following table summarizes the activity related to contract
December 31, 2020
(In millions)Harrah’s Louisiana DownsHorseshoe HammondCaesars UKCaesars Southern Indiana
Assets:
Cash$6 $18 $32 $8 
Property and equipment, net11 402 75 418 
Goodwill3 141 3 136 
Gaming licenses and other intangibles, net5 30 28 23 
Other assets, net0 38 117 4 
Assets held for sale$25 $629 $255 $589 
Current liabilities$6 $26 $73 $13 
Other long-term liabilities (a)
6 72 120 332 
Liabilities related to assets held for sale$12 $98 $193 $345 
____________________
(a)We have included $339 million and contract-related liabilities (in thousands):
Outstanding Chip LiabilityPlayer Loyalty LiabilityCustomer Deposits and Other
Deferred Revenue
202020192020201920202019
Balance at January 1$9,770  $8,930  $13,461  $17,639  $171,641  $27,588  
Balance at June 307,041  7,802  12,975  14,723  167,245  174,287  
Increase / (decrease)$(2,729) $(1,128) $(486) $(2,916) $(4,396) $146,699  

The June 30,$336 million of deferred finance obligation as of March 31, 2021 and December 31, 2020, balances exclude liabilities related to assetsrespectively, as held for sale recorded in 2020liabilities for Caesars Southern Indiana and 2019 (see Note 5). The significant change in customer deposits and other deferred revenue during the six months ended June 30, 2019 was primarily attributed to the initial recognitionHarrah’s Louisiana Downs, which represent our preliminary purchase price allocation of the Company’s interestsliability which will be derecognized upon completion of those divestitures. We have not included any portion of the deferred finance obligation associated with Horseshoe Hammond as held for sale as we do not yet have any sale agreements in William Hill, which is recorded in other long-term liabilitiesplace or know the effect of any possible master lease modification on the Consolidated Balance Sheets (see Note 7).our deferred finance lease liability.
Note 5. Assets Held4. Investments in and Advances to Unconsolidated Affiliates
William Hill
The Company entered into a 25-year agreement, which became effective January 29, 2019, with William Hill which granted to William Hill the right to conduct betting activities, including operating our sportsbooks, in retail channels under certain skins for Saleonline channels with respect to the Company’s current and future properties, and conduct certain real money online gaming activities. The Company received a 20% ownership interest in William Hill US as well as 13 million ordinary shares of William Hill PLC, which shares initially received were subject to restrictions on transfer. The time restrictions on approximately 6 million shares expire within the next twelve months and are classified as current. Additionally, the Company receives a profit share from the operations of sports betting and other gaming activities associated with the Company’s properties. “Skin” in the context of this agreement refers to the Company’s ability to grant to William Hill an online channel that allows William Hill to operate online casino and sports gaming activities in reliance on, and utilizing the benefit of, any licenses granted to the Company or its subsidiaries.
Kansas City, Vicksburg, Eldorado ShreveportAs of March 31, 2021 and MontBleuDecember 31, 2020, the Company’s receivable from William Hill totaled $13 million and $7 million, respectively, and is reflected in Due from affiliates on the Balance Sheets.
The Company is accounting for its investment in William Hill US under the equity method. The fair value of the Company’s initial investment in William Hill US of $129 million at January 29, 2019 was determined using Level 3 inputs. As of March 31, 2021 and December 31, 2020, the carrying value of the Company’s interest in William Hill US totaled $126 million and $128 million, respectively, and is recorded in Investment in and advances to unconsolidated affiliates on the Balance Sheets.
The Company is accounting for its investment in William Hill PLC as an investment in equity securities. As of March 31, 2021 and December 31, 2020, the fair value of the William Hill PLC shares totaled $45 million and $44 million, respectively, net of cumulative unrealized gains of $18 million and $17 million, respectively, and is included in Other assets, net on the Balance Sheets. The Company recorded an unrealized gain of $1 million and an unrealized loss of $19 million during the three months ended March 31, 2021 and 2020, respectively.
As described above, the Company granted William Hill the right to the use of certain skins to operate online sports betting operations through our market access in each state and operate retail sports betting in our current and future properties for an equity method investment. The fair value of the William Hill US and William Hill PLC shares received have been deferred and are recognized as revenue on a straight-line basis over the 25-year agreement term. The Company recognized revenue of $2 million for the three months ended March 31, 2021 and 2020, and is recorded in Other revenue in the Statements of Operations.
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16
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
As of March 31, 2021 and December 31, 2020, the balance of the William Hill deferred revenue totaled $132 million and $134 million, respectively, and is recorded in other long-term liabilities on the Balance Sheets.
On July 10, 2019,April 22, 2021, the Company consummated its previously announced acquisition of William Hill PLC in an all-cash transaction. See Note 1. The investments and transactions among Caesars and William Hill described above will be assessed as part of the consideration transferred and the allocation of the purchase price. See Note 2.
Pompano Joint Venture
In April 2018, the Company entered into a definitivejoint 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. The Company has made cash contributions totaling $1 million and has contributed land. On February 12, 2021, the Company contributed an additional 186 acres to the joint venture for 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 as of March 31, 2021. We entered into a short-term lease agreement in February 2021, which we can cancel at anytime, to selllease back a portion of the land from the joint venture.
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 interestsmethod. The Company participates evenly with Cordish in the profits and losses of the entitiesjoint venture, which are included in Transaction costs and other operating costs on the Statements of Operations. As of March 31, 2021 and December 31, 2020, the Company’s investment in the joint venture is recorded in Investment in and advances to unconsolidated affiliates on the Balance Sheets.
Note 5. Property and Equipment
(In millions)March 31, 2021December 31, 2020
Land$2,113 $2,174 
Buildings, riverboats, and leasehold and land improvements11,702 11,686 
Furniture, fixtures, and equipment1,426 1,404 
Construction in progress134 118 
Total property and equipment15,375 15,382 
Less: accumulated depreciation(1,292)(1,049)
Total property and equipment, net$14,083 $14,333 
Our property and equipment is subject to various operating leases for which we are the lessor. We lease our property and equipment related to our hotel rooms, convention space and retail space through various short-term and long-term operating leases.
Depreciation Expense
Three Months Ended March 31,
(In millions)20212020
Depreciation expense$245 $43 
Depreciation is calculated using the straight-line method over the shorter of the estimated useful life of the asset or the related lease.
Note 6. 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.
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17
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Changes in Carrying Value of Goodwill and Other Intangible Assets
Non-Amortizing Intangible Assets
(In millions)Amortizing Intangible AssetsGoodwillOther
December 31, 2020$479 $9,723 $3,774 
Amortization(20)— — 
Acquisition of gaming rights— 0 2 
Other— 6 — 
March 31, 2021$459 $9,729 $3,776 
Gross Carrying Value and Accumulated Amortization of Intangible Assets Other Than Goodwill
March 31, 2021December 31, 2020
(Dollars in millions)Useful LifeGross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Amortizing intangible assets
Customer relationships3 - 7 years$488 $(111)$377 $488 $(92)$396 
Gaming rights and other34 years84 (2)82 84 (1)83 
$572 $(113)459 $572 $(93)479 
Non-amortizing intangible assets
Trademarks2,161 2,161 
Gaming rights1,092 1,090 
Caesars Rewards523 523 
3,776 3,774 
Total amortizing and non-amortizing intangible assets, net$4,235 $4,253 
Amortization expense with respect to intangible assets for the three months ended March 31, 2021 and 2020 totaled $20 million and $7 million, respectively, which is included in depreciation and amortization in the Statements of Operations.
Estimated Five-Year Amortization
Remaining 2021Years Ended December 31,
(In millions)20222023202420252026
Estimated annual amortization expense$61 $64 $60 $60 $60 $60 
Note 7. Fair Value Measurements
Items Measured at Fair Value on a Recurring Basis: The following table sets forth the assets and liabilities measured at fair value on a recurring basis, by input level, in the Balance Sheets at March 31, 2021 and December 31, 2020:
March 31, 2021
(In millions)Level 1Level 2Level 3Total
Assets:
Restricted cash and investments$1 $1 $45 $47 
Marketable securities20 11 0 31 
Total assets at fair value$21 $12 $45 $78 
Liabilities:
Derivative instruments - 5% Convertible Notes$0 $477 $0 $477 
Derivative instruments - interest rate swaps0 75 0 75 
Total liabilities at fair value$0 $552 $0 $552 
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18
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
December 31, 2020
(In millions)Level 1Level 2Level 3Total
Assets:
Restricted cash and investments$1 $3 $44 $48 
Marketable securities23 10 0 33 
Derivative instruments - FX forward0 40 0 40 
Total assets at fair value$24 $53 $44 $121 
Liabilities:
Derivative instruments - 5% Convertible Notes$0 $326 $0 $326 
Derivative instruments - interest rate swaps0 90 0 90 
Total liabilities at fair value$0 $416 $0 $416 
The change in restricted cash and investments valued using Level 3 inputs for the three months ended March 31, 2021 is as follows:
(In millions)Level 3 Investments
Fair value of investment at December 31, 2020$44 
Unrealized gain1 
Fair value at March 31, 2021$45 
There were no transfers in or out of Level 3 investments during the three months ended March 31, 2021.
Restricted Cash and Investments
The estimated fair values of the Company’s restricted cash and investments are based upon quoted prices available in active markets (Level 1), or quoted prices for similar assets in active and inactive markets (Level 2), or quoted prices available in active markets adjusted for time restrictions related to the sale of the investment (Level 3) and represent the amounts the Company would expect to receive if the Company sold the restricted cash and investments. Restricted cash classified as Level 1 includes cash held in short-term certificate of deposit accounts or money market type funds. Restricted investments include shares acquired in conjunction with the Company’s sports betting agreements that hold Vicksburgcontain restrictions related to the ability to liquidate shares within a specified timeframe.
Marketable Securities 
Marketable securities consist primarily of trading securities held by the Company’s captive insurance subsidiary and Kansas Cityunrestricted shares acquired in conjunction with the Company’s sports betting agreements. These investments also include collateral for several escrow and trust agreements with third-party beneficiaries. 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 Twin Riverreceive if the Company sold these marketable securities.
In November 2018, the Company entered into a 20-year agreement with The Stars Group Inc., which was subsequently acquired by Flutter Entertainment PLC (“Flutter”) to provide options to obtain access to a second skin for approximately $230 million,online sports wagering and third skin for real money online gaming and poker with respect to the Company’s properties in the U.S. Under the terms of the agreement, the Company received common shares, as a revenue share from certain operations of Flutter under the Company’s licenses. The fair value of the shares received has been deferred and is recognized as revenue on a straight-line basis over the 20-year agreement term. All shares initially received were subject to a working capital adjustment.one year restriction on transfer from the date they are received. All shares held are unrestricted as of March 31, 2021.
As of March 31, 2021 and December 31, 2020, the fair value of shares held was $10 million, and is included in Prepayments and other current assets on the Balance Sheets. The definitive agreements provideCompany recorded an unrealized gain of less than a million during the three months ended March 31, 2021, and an unrealized loss of $3 million during the three months ended March 31, 2020, which were included in Other income (loss) on the Statements of Operations.
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19
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Derivative Instruments
The Company does not purchase or hold any derivative financial instruments for trading purposes.
5% Convertible Notes - Derivative Liability
On October 6, 2017, Former Caesars issued $1.1 billion aggregate principal amount of 5% Convertible Notes.
The 5% Convertible Notes are convertible into approximately 0.014 shares of Company Common Stock and $1.17 of cash per $1.00 principal amount of 5% Convertible Notes. The 5% Convertible Notes are convertible at any time at the option of the holders thereof or the Company. We do not intend to exercise our option to convert these notes prior to maturity.
Conversion of the remaining $325 million in aggregate principal amount of outstanding 5% Convertible Notes, of which $10 million was held in trust as of March 31, 2021, would result in the issuance of an aggregate of 4.5 million shares of Company Common Stock and payment of $379 million. The 5% Convertible Notes mature in October 2024 and have a remaining life of approximately 3.5 years.
Management analyzed the conversion features for derivative accounting consideration under ASC Topic 815, Derivatives and Hedging, (“ASC 815”) and determined that the consummation5% Convertible Notes contain bifurcated derivative features and qualify for derivative accounting. In accordance with ASC 815, the Company has bifurcated the conversion features of the sales5% Convertible Notes and recorded a derivative liability. The 5% Convertible Notes derivative features are subject to satisfaction of customary conditions, including receipt of required regulatory approvals.not designated as hedging instruments. The salederivative features of the equity interests closed5% Convertible Notes are carried on July 1, 2020the Company’s Balance Sheets at fair value in Other long-term liabilities. The derivative liability is marked-to-market each period and the change in fair value, which is primarily due to fluctuations in the share price of our common stock, is recorded as a component of Other income (loss) in the Statements of Operations. For the three months ended March 31, 2021, the change in fair value resulted in a gainloss of approximately $8 million.$151 million. The derivative liability associated with the 5% Convertible Notes will remain in effect until such time as the underlying convertible notes are exercised or terminated and the resulting derivative liability will be reclassified from a liability to equity as of such date.
On April 24,Valuation Methodology
The 5% Convertible Notes had an initial face value of $1.1 billion, an initial term of seven years, and a coupon rate of 5%.
As of March 31, 2021 we estimated the fair value of the 5% Convertible Notes using a market-based approach that incorporated the value of both the straight debt and conversion features of the 5% Convertible Notes. The valuation model incorporated actively traded prices of the 5% Convertible Notes as of the reporting date, and assumptions regarding the incremental cost of borrowing for CEI. The key assumption used in the valuation model is the actively traded price of the 5% Convertible Notes and the incremental cost of borrowing is an indirectly observable input. The fair value for the conversion features of the 5% Convertible Notes is classified as Level 2 measurement.
Key Assumptions as of March 31, 2021:
•Actively traded price of 5% Convertible Notes - $254.05
•Incremental cost of borrowing - 4.3%
Forward contracts
In relation to the William Hill Acquisition, on September 28, 2020, the Company entered into a definitive purchase agreement with Twin River and certainforeign exchange forward contract to hedge the risk of its affiliates for the saleappreciation of the equity interestsGBP denominated purchase price. On October 9, 2020, the Company entered into a foreign exchange forward contract to purchase £536 million at a contracted exchange rate. On March 25, 2021, the forward contract was settled, for which the Company received $41 million in proceeds. The Company recorded a gain of Eldoradoapproximately $1 million during the three months ended March 31, 2021, which was recorded in the Other income (loss) on the Statements of Operations.
Interest Rate Swap Derivatives
We assumed Former Caesars interest rate swaps to manage the mix of assumed debt between fixed and variable rate instruments. As of March 31, 2021, we have 7 interest rate swap agreements to fix the interest rate on $2.3 billion of variable rate debt related to the Caesars Resort Casino Shreveport Joint Venture and Columbia Properties Tahoe, LLC,Collection (“CRC”) Credit Agreement. The interest rate swaps are designated as cash flow hedging instruments. The difference to be paid or received under the entities that hold Eldorado Shreveport and MontBleu, respectively, for aggregate consideration of $155 million, subject to a working capital adjustment. The definitive agreement provides that the consummationterms of the saleinterest rate swap agreements is subjectaccrued as interest rates change and recognized as an adjustment to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to closeinterest expense at settlement. Changes in the first quartervariable interest rates to be received pursuant to the terms of 2021.the interest rate swap agreements will have a corresponding effect on future
Kansas City and Vicksburg met
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20
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
cash flows.
The major terms of the requirements for presentation as assets held for sale under generally accepted accounting principlesinterest rate swap agreements as of June 30, 2020 and DecemberMarch 31, 2019. Eldorado Shreveport and MontBleu met2021 are as follows:
Effective Date
Notional Amount
(In millions)
Fixed Rate PaidVariable Rate Received as of
March 31, 2021		Maturity Date
1/1/20192502.196%0.1145%12/31/2021
12/31//20182502.274%0.1145%12/31/2022
1/1/20194002.788%0.1145%12/31/2021
12/31//20182002.828%0.1145%12/31/2022
1/1/20192002.828%0.1145%12/31/2022
12/31//20186002.739%0.1145%12/31/2022
1/2/20194002.707%0.1145%12/31/2021
Valuation Methodology
The estimated fair values of our interest rate swap derivative instruments are derived from market prices obtained from dealer quotes for similar, but not identical, assets or liabilities. Such quotes represent the requirements for presentation as assets held for sale as of June 30, 2020. However, none ofestimated amounts we would receive or pay to terminate the pending divestitures met the requirements for presentation as discontinued operations andcontracts. The interest rate swap derivative instruments are included in income from continuing operations ineither Other assets, net or Other long-term liabilities on our Balance Sheets. Our derivatives are recorded at their fair values, adjusted for the periods presented.
As a resultcredit rating of the agreement to sell MontBleu,counterparty if the derivative is an impairment charge totaling $45.6asset, or adjusted for the credit rating of the Company if the derivative is a liability. None of our derivative instruments are offset and all were classified as Level 2.
Financial Statement Effect
The effect of derivative instruments designated as hedging instruments on the Balance Sheets for amounts transferred into Accumulated other comprehensive income (loss) (“AOCI”) before tax was a gain of $15 million was recorded during the six threemonths ended June 30, 2020 dueMarch 31, 2021. AOCI reclassified to the carrying value exceeding the estimated net sales proceeds. The impairment charges resulted in a reduction to the carrying amounts of the right-of-use assets, property and equipment, goodwill and other intangibles totaling $17.8 million, $23.2 million and $4.6 million, respectively. See Note 8.
16

The assets and liabilities held for sale, accounted for at carrying value as it was lower than fair value, were as follows as of June 30, 2020 (in thousands):
June 30, 2020
ShreveportMontBleuKansas CityVicksburgTotal
Assets:
Accounts receivable, net$1,838  $1,170  $441  $162  $3,611  
Due from affiliates—  163  —  (9) 154  
Inventories1,039  606  42  122  1,809  
Right-of-use assets11,837  28,241  37,425  —  77,503  
Prepaid expenses and other847  845  364  4,311  6,367  
Property and equipment, net85,077  36,334  39,169  31,729  192,309  
Goodwill—  —  39,623  8,806  48,429  
Other intangibles, net20,574  —  90,329  2,708  113,611  
Assets held for sale$121,212  $67,359  $207,393  $47,829  $443,793  
Liabilities:
Accounts payable$743  $766  $152  $192  $1,853  
Accrued payroll and related748  351  403  278  1,780  
Accrued property and other taxes1,626  225  325  592  2,768  
Short-term lease obligation974  5,353  2,291  —  8,618  
Long-term lease obligations13,051  62,884  34,370  —  110,305  
Accrued other liabilities2,483  2,081  956  237  5,757  
Other long-term liabilities218  69  229  77  593  
Liabilities related to assets held for sale$19,843  $71,729  $38,726  $1,376  $131,674  

The assets and liabilities held for sale, accounted for at carrying value as it was lower than fair value, were as follows as of December 31, 2019 (in thousands):
December 31, 2019
Kansas CityVicksburgTotal
Assets:
Accounts receivable, net$285  $75  $360  
Inventories52  119  171  
Right-of-use assets36,135  —  36,135  
Prepaid expenses and other216  4,168  4,384  
Property and equipment, net39,126  31,493  70,619  
Goodwill39,623  8,806  48,429  
Other intangibles, net90,329  2,708  93,037  
Assets held for sale$205,766  $47,369  $253,135  
Liabilities:
Accounts payable$307  $188  $495  
Accrued payroll and related567  327  894  
Accrued property and other taxes26  891  917  
Short-term lease obligation764  —  764  
Long-term lease obligation33,080  —  33,080  
Accrued other liabilities1,055  280  1,335  
Liabilities related to assets held for sale$35,799  $1,686  $37,485  

17

The following information presents the net revenues and net (loss) income for the Company’s properties that are held for sale (in thousands):
Three Months Ended June 30, 2020
ShreveportMontBleuKansas CityVicksburg
Net revenues$7,757  $3,072  $4,301  $2,551  
Net (loss) income2,714  2,329  (737) (202) 
Six Months Ended June 30, 2020
ShreveportMontBleuKansas CityVicksburg
Net revenues$30,307  $11,689  $18,049  $7,081  
Net (loss) income4,393  (39,835) 2,477  (675) 

Mountaineer, Caruthersville and Cape Girardeau Divestitures
The sales of Mountaineer, Caruthersville and Cape Girardeau were consummatedInterest expense on December 6, 2019. Prior to the closing date, Mountaineer, Cape Girardeau and Caruthersville met the requirements for presentation as assets held for sale. However, they did not meet the requirements for presentation as discontinued operations. Mountaineer was previously reported in the East segment and Cape Girardeau and Caruthersville were reported in Midwest segment.
The following information presents the net revenues and net income of Mountaineer, Cape Girardeau and Caruthersville for the three and six months ended June 30, 2019 (in thousands):
Three Months Ended June 30, 2019Six Months Ended June 30, 2019
MountaineerCape GirardeauCaruthersvilleMountaineerCape GirardeauCaruthersville
Net revenues$32,707  $14,340  $8,651  $62,873  $29,742  $17,577  
Net income2,414  1,578  1,907  4,037  3,692  3,687  

Presque and Nemacolin Divestitures
The sale of Presque closed on January 11, 2019 resulting in a gain on sale of $22.1 million, net of final working capital adjustments, for the six months ended June 30, 2019. The sale of Nemacolin closed on March 8, 2019 resulting in a gain on sale of $0.1 million, net of final working capital adjustments, for the six months ended June 30, 2019. Presque and Nemacolin were both previously reported in the East segment.
The following information presents the net revenues and net loss of Presque and Nemacolin prior to the respective divestitures (in thousands):
Six Months Ended June 30, 2019
PresqueNemacolin
Net revenues$3,235  $4,836  
Net loss(62) (754) 

These amounts include historical operating results, adjusted to eliminate the internal allocation of interest expense that was not be assumed by the buyer.
Note 6. Stock-Based Compensation and Stockholders’ Equity
Common Stock Offering
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 $772.4 million of proceeds, net of fees and estimated expenses of $34.9 million.
18

Share Repurchase Program
In November 2018, the Company’s Board of Directors 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 June 30, 2020, the Company acquired 223,823 shares of common stock under the Share Repurchase Program at an aggregate value of $9.1 million and an average of $40.80 per share. NaN shares were repurchased during the six months ended June 30, 2020 and 2019.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation. Total stock-based compensation expense in the accompanying Consolidated Statements of Operations totaled $4.3 million and $6.5 million during the three months ended June 30, 2020 and 2019, respectively, and $10.0 million and $11.5 million during the six months ended June 30, 2020 and 2019, respectively. These amounts are included in corporate expenses and, in the case of certain property positions, general and administrative expenses in the Company’s Consolidated Statements of Operations. The Company recognized an income tax benefit of $2.8 million for the six months ended June 30, 2020, related to stock-based compensation. The Company recognized an increase in income tax expense of $1.3was $14 million for the three months ended June 30, 2019. The Company recognized a reductionMarch 31, 2021. As of March 31, 2021, the interest rate swaps derivative liability of $75 million was recorded in income tax expenseOther long-term liabilities. Net settlement of $1.3 million for the six months ended June 30, 2019 for excess tax benefits related to stock-based compensation.
A summary of the restricted stock units (“RSUs”) activity, including performance awards, for the six months ended June 30, 2020 is presentedthese interest rate swaps results in the following table:
Restricted Stock Units
UnitsWeighted-
Average Grant
Date
Fair Value
(in millions)
Unvested outstanding as of December 31, 20191,246,641  $35.56  
Granted (1)247,357  57.05  
Vested(443,000) 27.10  
Forfeited(11,424) 30.74  
Unvested outstanding as of June 30, 20201,039,574  44.73  
(1)Includedreclassification of deferred gains and losses within AOCI to be reclassified to the income statement as a component of interest expense as settlements occur. The estimated amount of existing gains or losses that are 20,615 RSUs granted to non-employee members ofreported in AOCI at the Board of Directors during the six months ended June 30, 2020.
As of both June 30, 2020 and 2019, the Company had $27.3 million of unrecognized compensation expense. The RSUsreporting date that are expected to be recognized over a weighted-average periodreclassified into earnings within the next 12 months is approximately $52 million.
Accumulated Other Comprehensive Income
The changes in AOCI by component, net of 1.7 years.
There were 15,300 stock options exercisedtax, for the six months ended June 30, 2020. Outstanding optionsperiod through March 31, 2021 are shown below.
(In millions)Unrealized Net Gains on Derivative InstrumentsForeign Currency Translation AdjustmentsOtherTotal
Balances as of December 31, 2020$26 $8 $0 $34 
Other comprehensive loss before reclassifications(2)0 (1)(3)
Amounts reclassified from accumulated other comprehensive income14 0 0 14 
Total other comprehensive income, net of tax12 0 (1)11 
Balances as of March 31, 2021$38 $8 $(1)$45 
Note 8. Litigation, Commitments and Contingencies
Litigation
We are a party to various legal proceedings. 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. 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.
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21
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
On July 14, 2020, the Company filed a lawsuit for damages and declaratory relief in state court in New York relating to a transfer fee of $50 million that was assessed by the Indiana Gaming Commission upon the Company’s purchase of Hoosier Park Racino and Casino in 2017 from Centaur Holdings, LLC. Contemporaneous with the filing of the lawsuit, the Company notified the sellers that it was withholding payment of $50 million from amounts that were otherwise due to the sellers as a portion of a deferred payment for the purchase from the sellers. In the lawsuit, the Company seeks a declaration from the Court that the Sellers are required to indemnify Caesars for its losses arising out of or relating to payment of the transfer fee and that the Company is entitled to offset the $50 million transfer fee against payments otherwise due to the sellers. The Defendants in that suit have filed Motions to Dismiss the Company’s claims. Briefing on the Motion has been concluded and the parties await a decision from the Court.
COVID-19 Insurance Claims
The COVID-19 public health emergency has 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 are expected to 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. There can be no assurance as to the outcome of the litigation.
General
In addition, we are a party to various legal and administrative proceedings, which have arisen in the normal course of our business. Estimated losses are accrued for these proceedings when the loss is probable and can be estimated. 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.
Contractual Commitments
The following contractual commitments were assumed by the Company associated with Former Caesars as result of the consummation of the Merger.
Capital Commitments
Harrah’s New Orleans
In April 2020, the Company and the State of Louisiana, by and through the Louisiana Gaming Control Board (the “LGCB”), entered into an Amended and Restated Casino Operating Contract. Additionally, the Company, New Orleans Building Corporation (“NOBC”) and the City (collectively, the “Ground Lease Parties”) entered into a Second Amended and Restated Lease Agreement (the “Ground Lease”). Based on these amendments related to Harrah’s New Orleans, the Company is required to make certain payments and to make a capital investment of $325 million on or around Harrah’s New Orleans by July 15, 2024. In connection with the capital investment in Harrah’s New Orleans, we expect to rebrand the property as Caesars New Orleans.
Atlantic City
As required by the New Jersey Gaming Control Board in connection with its approval of the Merger, we have 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. As of March 31, 2021, our restricted cash balance in the escrow account is $376 million for future capital expenditures in New Jersey.
Sports Sponsorship/Partnership Obligations
We have agreements with certain professional sports leagues and teams, sporting event facilities and sports television networks for tickets, suites, and advertising, marketing, promotional and sponsorship opportunities. As of March 31, 2021, obligations related to these agreements were $289 million with contracts extending through 2035, which 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 rendered 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.
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22
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 $227 million and $223 million as of JuneMarch 31, 2021 and December 31, 2020, respectively, recorded in Accrued other liabilities in our Balance Sheets.
Due to the novel nature of the disruption resulting from the COVID-19 public health emergency, actuarial data is limited for determining its effect. 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. Alternatively, as a result of the recent work stoppages and reductions in workforce, a reduction of claims in future periods could be beneficial to our financial condition and results of operations.
Contingencies
Uncertainties
Since 2009, Harrah’s New Orleans has undergone audits by state and local departments of revenue related to sales taxes on hotel rooms, parking and entertainment complimentaries. The periods that have been or are currently being audited are 2004 through 2016. In connection with these audits, certain periods have been paid under protest or are currently in various stages of litigation. On July 2, 2019, the judge denied Harrah’s New Orleans’ motion for partial summary judgment and granted the Department of Revenue’s (the “Department”) partial motion for summary judgment, finding that Harrah’s New Orleans owes state sales taxes, as well as district and New Orleans occupancy taxes to the Department on all discounted or complimentary rooms furnished by Harrah’s New Orleans to patrons or guests at Harrah’s New Orleans hotel and certain third party hotels. Caesars appealed the trial Court’s decision to the Louisiana Court of Appeal, which Appeal was rejected. Caesars has since petitioned to the Louisiana Supreme Court for review of the Appeals Court’s decision. On January 9, 2021, the Louisiana Supreme Court issued a ruling granting in part and denying in part the Company’s Petition for Appeal. In its decision, the Supreme Court upheld the lower Courts’ decisions that the Company must pay taxes for complimentaries at Harrah’s New Orleans, but overturned the lower Courts’ rulings that the Company must pay such taxes for third party hotels. This matter will now proceed to trial for a determination of the amount of taxes due pursuant to the Louisiana Supreme Court’s ruling. Former Caesars paid $9 million under protest and is being held in escrow by the Department. Harrah’s New Orleans had accrued contingent liabilities of $44 million as of March 31, 2021.
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. During the threemonths ended as of March 31, 2021, the Company received insurance proceeds of approximately $26 million related to damaged fixed assets and remediation costs. The Company also recorded a gain of approximately $8 million as proceeds received were in excess of the losses incurred and the net book value of the damaged property. The property will remain closed until 2022 when construction of a new land-based casino is expected to be complete.
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23
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Note 9. Long-Term Debt
Long-term debt consisted of the following:
March 31, 2021December 31,
2020
(Dollars in millions)Final
Maturity		RatesFace ValueBook ValueBook Value
Secured Debt
CRC Revolving Credit Facility2022
variable (a)
$0 $0 $0 
CRC Term Loan2024
variable (b)
4,547 4,146 4,133 
CEI Revolving Credit Facility2025
variable (a)
0 0 0 
CRC Incremental Term Loan2025
variable (c)
1,791 1,707 1,707 
CRC Senior Secured Notes20255.75%1,000 981 981 
CEI Senior Secured Notes20256.25%3,400 3,336 3,333 
Convention Center Mortgage Loan20257.70%400 398 397 
Unsecured Debt
5% Convertible Notes20245.00%315 291 288 
CRC Notes20255.25%1,700 1,507 1,499 
CEI Senior Notes20278.125%1,800 1,769 1,768 
Special Improvement District Bonds20374.30%51 51 51 
Long-term notes and other payables2 2 2 
Total debt15,006 14,188 14,159 
Current portion of long-term debt(67)(67)(67)
Deferred finance charges associated with the CEI Revolving Credit Facility0 (18)(19)
Long-term debt$14,939 $14,103 $14,073 
Unamortized premiums, discounts and deferred finance charges$836 $883 
Fair value$15,435 
____________________
(a)Borrowing rates for our revolving credit facilities vary based on the election made at the time of draw down.
(b)LIBOR plus 2.75%.
(c)LIBOR plus 4.50%.
Annual Estimated Debt Service Requirements as of March 31, 2021
RemainingYears Ended December 31,
(In millions)20212022202320242025ThereafterTotal
Annual maturities of long-term debt$50 $67 $67 $4,753 $8,226 $1,843 $15,006 
Estimated interest payments560 820 810 850 600 300 3,940 
Total debt service obligation (a)
$610 $887 $877 $5,603 $8,826 $2,143 $18,946 
____________________
(a)Debt principal payments are estimated amounts based on maturity dates and potential borrowings under our revolving credit facilities. Interest payments are estimated based on the forward-looking LIBOR curve and include the estimated impact of the 7 interest rate swap agreements related to our CRC Credit Facility (see Note 7). Actual payments may differ from these estimates.
Current Portion of Long-Term Debt
The current portion of long-term debt as of March 31, 2021 includes the principal payments on the term loans, other unsecured borrowings, and special improvement district bonds that are contractually due within 12 months.
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 its original maturity date.
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24
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Fair Value
The fair value of debt has been calculated primarily based on the borrowing rates available as of March 31, 2021 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
Debt Covenant Compliance
The CRC Credit Agreement, the CEI Revolving Credit Facility, and the indentures governing the CEI Senior Secured Notes, the CEI Senior Notes, the CRC Senior Secured Notes and the CRC 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.
The indenture for the 5% Convertible Notes contains limited covenants as a result of amendments that became effective in connection with the consummation of the Merger. The CRC Revolving Credit Facility and CEI Revolving Credit Facility include a maximum first-priority net senior secured leverage ratio financial covenant of 6.35:1, which is applicable solely to the extent that certain testing conditions are satisfied. Failure to comply with such covenants could result in an acceleration of the maturity of indebtedness outstanding under the relevant debt document.
The Company’s results of operations have been materially adversely affected by the impacts of the COVID-19 public health emergency. As a result, the current terms of the CEI Revolving Credit Facility, the CRC Credit Agreement provide that the financial covenant measurement period is not effective through September 30, 2020 totaled 120,656,2021 so long as the Company and CRC, respectively, comply with a minimum liquidity requirement, which includes any such availability under the applicable revolving credit facilities.
As of which 115,857 options were exercisable.March 31, 2021, the Company was in compliance with all of the applicable financial covenants described above.
Guarantees
The CEI Revolving Credit Facility and the CEI Senior Secured Notes are guaranteed on a senior secured basis by each existing and future material wholly-owned domestic subsidiary of CEI (subject to certain exceptions) and are secured by substantially all of the existing and future property and assets of CEI and its subsidiary guarantors (subject to certain exceptions). The CEI Senior Notes are guaranteed on a senior unsecured basis by such subsidiaries.
The CRC Credit Agreement and the CRC Senior Secured Notes are guarantees 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 Notes are guaranteed on a senior unsecured basis by such subsidiaries.
Note 7. Investments10. Revenue Recognition
The Company’s Statements 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. We recast previously reported segment amounts to conform to the way management assesses results and allocates resources following the Merger. Refer to Note 15 for additional information on the Company’s reportable segments.
Three Months Ended March 31, 2021
(In millions)Las VegasRegionalManaged, International & CIECorporate
and Other		Total
Casino and pari-mutuel commissions$226 $890 $24 $0 $1,140 
Food and beverage84 81 1 0 166 
Hotel115 100 0 0 215 
Other72 37 65 4 178 
Net revenues$497 $1,108 $90 $4 $1,699 
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25
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Three Months Ended March 31, 2020
(In millions)Las VegasRegionalManaged, International & CIECorporate
and Other		Total
Casino and pari-mutuel commissions$0 $340 $0 $0 $340 
Food and beverage0 56 0 0 56 
Hotel0 48 0 0 48 
Other0 27 0 2 29 
Net revenues$0 $471 $0 $2 $473 
Accounts receivable, net include the following amounts:
(In millions)March 31, 2021December 31, 2020
Casino and pari-mutuel commissions$123 $135 
Food and beverage and hotel28 25 
Other173 178 
Accounts receivable, net$324 $338 
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) player loyalty program obligations, subsequently combined as Caesars Rewards, which represents the deferred allocation of revenue relating to reward credits granted to Caesars Rewards members based on on-property spending, including gaming, hotel, dining, retail shopping, and Advancesplayer loyalty program incentives earned, and (3) customer deposits and other deferred revenue, which is primarily funds deposited by customers related to Unconsolidated Affiliates
Pompano Joint Venture
In April 2018,gaming play, advance payments received for goods and services yet to be provided (such as advance ticket sales, deposits on rooms and convention space or for unpaid wagers), and deferred revenues associated with the Company entered into a joint venture with Cordish Companies (“Cordish”)Company’s existing interests in William Hill (see Note 4). Except for deferred revenues related to master plan and develop a mixed-use entertainment and hospitality destinationWilliam Hill, these liabilities are generally expected to be locatedrecognized as revenue within one year of being purchased, earned, or deposited and are recorded within accrued other liabilities on unused land adjacent to the casino and racetrack at the Company’s Pompano property.Balance Sheets.
The following table summarizes the activity related to contract and contract-related liabilities:
Outstanding Chip LiabilityCaesars RewardsCustomer Deposits and Other
Deferred Revenue
(In millions)202120202021202020212020
Balance at January 1$32 $10 $94 $13 $278 $172 
Balance at March 3128 7 93 12 298 172 
Increase / (decrease)$(4)$(3)$(1)$(1)$20 $0 
The March 31, 2021 balances exclude liabilities related to assets held for sale recorded in 2021 and 2020 (see Note 3).
Lease Revenue
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 managing member, Cordish will operatetiming and pattern of transfer of both the businesslease and managenonlease components are over the development, construction, financing, marketing, leasing, maintenance and day-to-day operationcourse of the various phases oflease term, we have elected to combine the project. Additionally, Cordish will be responsible forrevenue generated from lease and nonlease components into a single lease component based on the development ofpredominant component in the master plan forarrangement. During the project with the Company’s inputthree months ended March 31, 2021 and will submit it for the Company’s review and approval. The Company has made cash contributions totaling $1.02020, we recognized approximately $215 million and has agreed$48 million, respectively, in lease revenue related to contribute a total of approximately 130 to 200 acres of land to the joint venture for the project. As of June 30, 2020 and December 31, 2019, the Company has contributed approximately 20 acres to the joint venture at a fair value of $6.6 million.
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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,lodging arrangements, which is included in income (loss) from unconsolidated affiliates onHotel revenues in the Consolidated Statements of Operations. As
Conventions
Convention arrangements are considered short-term and generally consist of June 30, 2020lease and December 31, 2019,nonlease components. The lease component is the Company’s investment in the joint venture is recorded in investment in and advances to unconsolidated affiliates on the Consolidated Balance Sheets.
William Hill
In September 2018, the Company entered into a 25-year agreement, which became effective January 29, 2019, with William Hill PLC and William Hill US, its U.S. subsidiary (together, “William Hill”) pursuant to which the Company (i) granted to William Hill the right to conduct betting activities in retail channels and under the Company’s first skin and third skin for online channels with respect to the Company’s current and future properties located in the United States and the territories and possessionspredominant component of the United States, including Puerto Ricoarrangement and consists of fees charged for the U.S. Virgin Islands and (ii) agreed that William Hill will have the right to conduct real money online gaming activities utilizing the Company’s second skin available with respect to properties in such territories. Pursuant to the termsuse of the agreement, in January 2019 the Company received a 20% ownership interest in William Hill US as well as 13.4 million ordinary sharesmeeting space. The
Table of William Hill PLC, which carry certain time restrictions on when they can be sold. Additionally, the Company receives a profit share from the operations of betting and other gaming activities associated with the Company’s properties. “Skin” in the context of this agreement refers to the Company’s ability to grant to William Hill an online channel that allows William Hill to operate online casino and sports gaming activities in reliance on, and utilizing the benefit of, any licenses granted to the Company or its subsidiaries. As of June 30, 2020 and December 31, 2019, the Company’s receivable from William Hill totaled $0.4 million and $3.5 million, respectively, and is reflected in due from affiliates on the Consolidated Balance Sheets.Contents
The Company is accounting for its investment in William Hill US under the equity method. The fair value26
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
nonlease components primarily consist of the Company’s initial investment in William Hill US of $128.9 million at January 29, 2019 was determined using Level 3 inputs. As of June 30, 2020food and December 31, 2019, the carrying value of the Company’s interest in William Hill US totaled $125.7 millionbeverage and $127.1 million, respectively, and is recorded in investment in and advances to unconsolidated affiliates on the Consolidated Balance Sheets.
As of June 30, 2020 and December 31, 2019, the fair value of the William Hill PLC shares totaled $16.6 million and $29.3 million, respectively, net of a cumulative unrealized loss of $10.7 million and a cumulative unrealized gain of $2.0 million, respectively, andaudio/visual services. Revenue from conventions is included in other assets, net onOther revenue in the Consolidated Balance Sheets. The Company recorded an unrealized gainStatements of $6.6 millionOperations, and an unrealized loss of $1.5 million during the three months ended June 30,March 31, 2021, lease revenue related to conventions was not material. During the three months ended March 31, 2020, lease revenue related to conventions was $1 million.
Real Estate Operating Leases
During the three months ended March 31, 2021 and 2019, respectively. The Company recorded unrealized losses totaling $12.72020, we recognized approximately $21 million and $4.4$2 million, duringrespectively, of real estate lease revenue, which is included in Other revenue in the sixStatements of Operations. Real estate lease revenue includes $7 million of variable rental income for the three months ended June 30, 2020March 31, 2021, and 2019, respectively.
The Company also recorded deferred revenue associated with the William Hill US and William Hill PLC shares and is recognizing revenue onless than a straight-line basis over the 25-year agreement term. The Company recognized revenue of $3.7 million and $1.5 million for the three months ended June 30, 2020 and 2019, respectively, and $5.2 million and $2.6 million during the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020 and DecemberMarch 31, 2019, the balance of the William Hill deferred revenue totaled $136.9 million and $142.1 million, respectively, and is recorded in other long-term liabilities on the Consolidated Balance Sheets.2020.
Note 8. Intangible Assets, net11. Earnings per Share
Other and intangible assets, net, include the following amounts (in thousands):
June 30,
2020		December 31,
2019		Useful Life
Goodwill$810,187  $909,717  Indefinite
Gaming licenses$872,158  $893,302  Indefinite
Trade names146,279  165,479  Indefinite
Player loyalty programs97,935  100,694  3 - 4 years
Subtotal1,116,372  1,159,475  
Accumulated amortization player loyalty programs(59,943) (48,077) 
Total gaming licenses and other intangible assets, net$1,056,429  $1,111,398  

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Gaming licenses 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.
Goodwill represents the excess of the purchase prices of acquiring MTR Gaming, Isle, Elgin and Tropicana over the fair market value of the net assets acquired. The following table presentsillustrates the change to goodwill for the six months ended June 30, 2020 (in thousands):
GoodwillAccumulated ImpairmentGoodwill, net
December 31, 2019$921,408  $(11,691) $909,717  
Impairments—  (99,530) (99,530) 
Assets held for sale (see Note 5)(5) 5  —  
June 30, 2020$921,403  $(111,216) $810,187  

During the six months ended June 30, 2020, the Company recognized impairment charges related to goodwill and trade names totaling $99.5 million and $15.6 million, respectively, due to declines in recent performance and the expected impact on future cash flows as a result of COVID-19.
Additionally, in conjunction with the classification of MontBleu’s operations as assets held for sale as of June 30, 2020 (see Note 5) as a resultreconciliation of the announced sale, an impairment charge totaling $45.6 million was recorded due tonumerators and denominators of the carrying value exceeding the estimate sales proceeds. Trade names, property, plantbasic and equipment and right-of-use assets were impaired by $4.6 million, $23.2 million and $17.8 million, respectively. Impairment charges recorded by segment for the six months ended June 30, 2020 (in thousands) were as follows:
WestSouthMidwestTotal
Goodwill$52,805  $15,625  $31,100  $99,530  
Trade names8,990  5,700  5,500  20,190  
Property, plant and equipment (see Note 5)23,228  —  —  23,228  
Right of use assets (see Note 5)17,810  —  —  17,810  
$102,833  $21,325  $36,600  $160,758  

Amortization expense with respect to player loyalty programsdiluted net loss per share computations for the three months ended June 30, 2020 and 2019 totaled $6.7 million and $7.7 million, respectively, and $14.2 million and $15.3 million for the six months ended June 30, 2020 and 2019, respectively, which is included in depreciation and amortization in the Consolidated Statements of Operations. Such amortization expense is expected to be $12.8 million for the remainder of 2020 and $21.2 million and $4.2 million for the years ended DecemberMarch 31, 2021 and 2022, respectively.2020:
Note 9. Income Taxes
The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted on March 27, 2020. The CARES Act includes, among other things, refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical amendments regarding the income tax depreciation of qualified improvement property placed in service after December 31, 2017. These amendments allow for retroactive accelerated income tax depreciation on certain of the Company’s leasehold improvement assets. The Company is currently assessing the financial impact of these technical amendments on the business.
The Company estimates an annual effective income tax rate based on projected results for the year and applies this rate to income before taxes to calculate income tax expense. Any refinements made due to subsequent information that affects the estimated annual effective income tax rate are reflected as adjustments in the current period.
Three Months Ended March 31,
(In millions, except per share data)20212020
Net loss from continuing operations attributable to Caesars, net of income taxes$(430)$(176)
Discontinued operations, net of income taxes7 0 
Net loss attributable to Caesars$(423)$(176)
Shares outstanding:
Weighted average shares outstanding – basic208 78 
Weighted average shares outstanding – diluted208 78 
Basic loss per share from continuing operations$(2.06)$(2.25)
Basic income per share from discontinued operations0.03 0 
Net loss per common share attributable to common stockholders – basic:$(2.03)$(2.25)
Diluted loss per share from continuing operations$(2.06)$(2.25)
Diluted income per share from discontinued operations0.03 0 
Net loss per common share attributable to common stockholders – diluted:$(2.03)$(2.25)
For the three and six months ended June 30, 2020, the Company’s tax benefit was $33.7 million and $70.8 million, respectively, and for the three and six months ended June 30, 2019, the Company’s tax expense was $10.4 million and $20.8 million, respectively. For the three and six months ended June 30, 2020, the difference between the effective rate and the
21

statutory rate is attributed primarily to goodwill impairments, true-up of certain state tax benefits, state and local income taxes and changesa period in the valuation allowance. For the three and six months ended June 30, 2019, the difference between the effective rate and the statutory rate is attributed primarily to excess tax benefits associated with stock compensation, state and local income taxes and changes in the valuation allowance.
As of June 30, 2020, there were 0 unrecognized tax benefits and the Company does not expect a significant increase or decrease to the total amounts of unrecognized tax benefits within the next twelve months. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense.
The Company and its subsidiaries file US federal income tax returns and various state and local income tax returns. The Company does not have tax sharing agreements with the other members within its consolidated group. With few exceptions, the Company is no longer subject to US federal or state and local tax examinations by tax authorities for years before 2008.
Note 10. Long-Term Financing Obligation
Under the prior lease accounting standard, the GLPI Master Lease was accounted for as a failed sale-leaseback financing obligation equal to the fair value of the leased real estate assets and liabilities acquired in purchase accounting in conjunction with the acquisition of Tropicana in 2018. Upon adoption of ASC 842, the Company re-evaluated the GLPI Master Lease and determined this existing failed sale-leaseback transaction would continue to be accounted for as a financing obligation.
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 10.2%. 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.
The GLPI Master Lease 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 provides for an initial term of 15 years with no purchase option. At the Company’s option, the GLPI Master Lease may be extended for up to 4 five-year renewal terms beyond the initial 15-year term. If the Company elects to renew the term of the GLPI Master Lease, the renewal will be effective as to all, but not less than all, of the leased property then subject to the GLPI Master Lease. The Company does not have the ability to terminate its obligations under the GLPI Master Lease prior to its expiration without GLPI’s consent.
On June 15, 2020, the Company entered into an Amended and Restated Master Lease with GLPI, which, among other things, (i) extended the initial term from 15 to 20 years (through September 2038), with 4 five-year renewals at the Company’s option, (ii) commencing October 1, 2020, removed the percentage rent payable in exchange for an increase to the non-escalating portion of land base rent to $23.5 million, (iii) amended the dates on which, and the amounts by which, the escalating portion of base rent escalates, and (iv) provided certain relief under the operating, capital expenditure and financial covenants in the event of facility closures due to public health emergencies, governmental restrictions and certain other instances of unavoidable delay. The GLPI Master Lease provides that the effectiveness is subject to the receipt of applicable gaming regulatory approvals, the provision of applicable gaming regulatory notices and the expiration of applicable gaming regulatory advance notice periods. Subsequent to June 30, 2020, the amendment to the GLPI Master Lease became effective as the Company obtained all necessary approvals and the applicable waiting period expired.
The rent payable under the GLPI Master Lease is comprised of “Base Rent” and “Percentage Rent.” Base rent is the sum of:
•Building Base Rent: a fixed component equal to $60.9 million during the first year of the GLPI Master Lease, and thereafter escalated annually by 2%, subject to a cap that would cause the preceding year’s adjusted revenue to rent ratio for the properties in the aggregate not to fall below 1.20:1.00 for the first five years of the GLPI Master Lease and 1.80:1:00 thereafter; plus
•Land Base Rent: an additional fixed component equal to $13.4 million, subject to adjustment in the event of the termination of the GLPI Master Lease with respect to any of the leased properties.
The percentage rent payable under the GLPI Master Lease is adjusted every two years based on the actual net revenues of the leased properties during the two-year period then ended. The initial percentage rent, which is fixed for the first two years, is $13.4 million per year. The actual percentage increase is based on actual performance and is subject to change.
22

The initial annual rent under the terms of the lease was approximately $87.7 million and subject to annual escalations as referenced in the table below.
Under the GLPI Master Lease, the Company is required to pay the following, among other things: lease payments to the underlying ground lessor for properties that are subject to ground leases, facility maintenance costs, all insurance premiums for insurance with respect to the leased properties and the business conducted on the leased properties, taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor and all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties).
The estimated future lease payments include the minimum lease payments and were adjusted to reflect estimated lease payments as described in the agreements, including an annual escalator of up to 2%.
The future minimum payments related to the GLPI Master Lease financing obligation at June 30, 2020 were as follows (in thousands):
2020 (excluding the six months ended June 30, 2020)$44,736  
202190,417  
202291,691  
202392,990  
202494,315  
Thereafter3,412,359  
Total future payments3,826,508  
Less: Amounts representing interest at 10.2%(3,270,816) 
Plus: Residual values420,100  
Financing obligation to GLPI$975,792  

Total cash payments and interest expense related to the GLPI Master Lease totaled $22.2 million and $24.9 million, respectively, for the three months ended June 30, 2020, and $44.4 million and $49.7 million, respectively, for the six months ended June 30, 2020. Total cash payments and interest expense related to the GLPI Master Lease totaled $21.9 million and $24.6 million, respectively, for the three months ended June 30, 2019, and $43.8 million and $49.2 million, respectively, for the six months ended June 30, 2019. For the initial periods of the GLPI Master Lease, 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.
The GLPI Master Lease, as amended, contains certain covenants, including minimum capital improvement expenditures and a rent coverage ratio for which certain relief is provided in the event of facility closures due to public health emergencies, governmental restrictions and certain other instances of unavoidable delay.
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Note 11. Long-Term Debt
Long-term debt consisted of the following (in thousands):
June 30,
2020		December 31,
2019
Term Loan$488,750  $498,750  
Less: Unamortized discount and debt issuance costs(6,988) (7,982) 
Net481,762  490,768  
6% Senior Notes due 2026600,000  600,000  
Less: Unamortized debt issuance costs(16,874) (17,958) 
Net583,126  582,042  
6% Senior Notes due 2025875,000  875,000  
Plus: Unamortized debt premium18,512  20,214  
Less: Unamortized debt issuance costs(14,643) (15,939) 
Net878,869  879,275  
7% Senior Notes due 2023375,000  375,000  
Less: Unamortized discount and debt issuance costs(4,317) (4,923) 
Net370,683  370,077  
Revolving Credit Facility108,000  —  
Lumière Loan246,000  246,000  
Long-term notes and other payables2,410  2,554  
Less: Current portion(111) (246,175) 
Total long-term debt$2,670,739  $2,324,541  

Net amortization of the debt issuance costs and the discount and/or premium associated with the Company’s indebtedness totaled $1.6 million and $1.9 million for the three months ended June 30, 2020 and 2019, respectively, and $3.2 million and $3.8 million for the six months ended June 30, 2020 and 2019 respectively. Amortization of debt issuance costs is computed using the effective interest method and is included in interest expense.
As of June 30, 2020, scheduled maturities of long-term debt were $246.1 million for the remainder of 2020, $0.2 million in 2021, $0.2 million in 2022, $483.1 million in 2023, $488.9 million in 2024, and $1.5 billion thereafter. See “Lumière Loan” below regarding $246 million of scheduled maturities during 2020.
Term Loan and Revolving Credit Facility
The Company was party to a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto dated as of April 17, 2017 (as amended the “Credit Facility”), consisting of a $1.5 billion term loan facility (the “Term Loan Facility” or “Term Loan”) and a $500.0 million revolving credit facility (the “Revolving Credit Facility”). The Company’s obligations under the Revolving Credit Facility were to mature on October 1, 2023 and the Company’s obligations under the Term Loan Facility were to mature on April 17, 2024.
In an effort to maintain liquidity and provide financial flexibility as the effects of COVID-19 continue to evolve and impact global financial markets, the Company borrowed $465.0 million under its revolving credit facility on March 16, 2020, of which the Company repaid $357.0 million of the outstanding balance as of June 30, 2020. The Company had $372.9 million of available borrowing capacity, after consideration of $19.1 million in outstanding letters of credit under its Revolving Credit Facility, as of June 30, 2020.
The interest rate per annum applicable to loans under the Revolving Credit Facility were, at the Company’s option, either LIBOR plusgenerated a margin ranging from 1.75% to 2.50% or a base rate plus a margin from 0.75% to 1.50%. The margin is based on the Company’s total leverage ratio. The interest rate per annum applicable to the loans under the Term Loan Facility was, at the Company’s option, either LIBOR plus 2.25%, or a base rate plus 1.25%; provided, however, that in no event will LIBOR be less than zero or the base rate be less than 1.00%. Additionally, the Company paid a commitment fee on the unused portion of the Revolving Credit Facility of 0.50% per annum. As of June 30, 2020,net loss, the weighted average interest rate on the Term Loan and Revolving Credit Facilityshares outstanding - basic was 3.25% and 3.13%, respectively.
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On July 6, 2020, the Company issued $3.4 billion aggregate principal amount of 2025 Secured Notes, $1.8 billion aggregate principal amount of 2027 Senior Notes and $1.0 billion aggregate principal amount of CRC Secured Notes in connection with the Merger. Upon the closing of the Merger, a portion of the net proceeds from the issuance of these notes were used to prepay in full all amounts outstanding under the Term Loan and Revolving Credit Facility and to repay the Company’s 6% Senior Notes due 2025, the Senior Notes due 2026, and the 7% Senior Notes due 2023. As a result of these transactions, the Company may incur a loss on extinguishment of debt during the third quarter of 2020, which could be significant.
Lumière Loan
The Company borrowed $246 million from GLPI to fund the purchase price of the real estate underlying Lumière. The Lumière Loan bears interest at a rate equal to (i) 9.09% until October 1, 2019 and (ii) 9.27% until October 1, 2020, and matures on October 1, 2020. The Lumière Loan was secured by a first priority mortgage on the Lumière real property that was released pursuant to its terms on October 1, 2019. On June 24, 2020, the Company received approval from Missouri Gaming Commission to sell Lumière to GLPI and leaseback the property under a long-term financing obligation. The loan is scheduled to mature during 2020; however, the Company classified the loan balance as long-term debt as of June 30, 2020 as the Lumière real estate will be refinanced under a long-term lease, or financing obligation, during the third quarter of 2020.
Debt and GLPI Master Lease Covenant Compliance
Due to the ongoing effects of the COVID-19 public health emergency, the Company’s ability to maintain compliance with the financial covenants under the Company’s Credit Facility was negatively impacted. On June 15, 2020, the Company entered into an amendment to the Credit Agreement which provided relief for the financial covenant requirement under the Credit Facility through September 30, 2021. During the covenant relief period the Company is required to maintain a minimum liquidity level, including unrestricted cash and unused commitments under the Revolving Credit Facility of $200.0 million.
Additionally, the GLPI Master Lease contains certain operating, capital expenditure and financial covenants thereunder, and the Company’s ability to maintain compliance with these covenants was also negatively impacted. On June 15, 2020, the Company entered into an amendment to the GLPI Master Lease which provides certain relief under these covenants in the event of facility closures due to public health emergencies, governmental restrictions and certain other instances of unavoidable delay. Subsequent to June 30, 2020, the amendment to the GLPI Master Lease became effective as the Company obtained all necessary approvals and the applicable waiting period expired.
As of June 30, 2020, the Company was in compliance with all of the applicable financial covenants under the 7% Senior Notes due 2023, 6% Senior Notes due 2025, 6% Senior Notes due 2026, and the Lumière Loan.
Note 12. Fair Value Measurements
Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Accordingly, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there is a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair values as follows:
•Level 1 Inputs: Quoted market prices in active markets for identical assets or liabilities.
•Level 2 Inputs: Observable market-based inputs or unobservable inputs that are corroborated by market data.
•Level 3 Inputs: Unobservable inputs that are not corroborated by market data.
The following methods and assumptions are usedcalculating diluted loss per share because using diluted shares would have been anti-dilutive to estimate the fair value of each class of financial instruments for which it is practical to estimate fair value:
Cash and Cash Equivalents: Cash equivalents include cash held in money market funds and investments that can be redeemed immediately at the current net asset valueloss 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
Weighted-Average Number of the short maturityAnti-Dilutive Shares Excluded from Calculation of those instruments (Level 1).EPS
Restricted Cash and Investments: The estimated fair values of the Company’s restricted cash and investments are based upon quoted prices available in active markets (Level 1), or quoted prices for similar assets in active and inactive markets (Level 2), or quoted prices available in active markets adjusted for time restrictions related to the sale of the investment (Level 3) and represent the amounts the Company would expect to receive if the Company sold the restricted cash and investments.
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Restricted investments include shares acquired in conjunction with the Company’s sports betting agreements that contain restrictions related to the ability to liquidate shares within a specified timeframe.
Marketable Securities: Marketable securities consist primarily of trading securities held by the Company’s captive insurance subsidiary and unrestricted shares acquired in conjunction with the Company’s sports betting agreements. 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.
Long-term Debt: The fair value of the Company’s long-term debt or other long-term obligations is estimated based on the quoted market price of the underlying debt issue (Level 1) or, when a quoted market price is not available, the discounted cash flow of future payments utilizing current rates available to us for the debt of similar remaining maturities (Level 2). Debt obligations with a short remaining maturity have a carrying amount that approximates fair value.
Items Measured at Fair Value on a Recurring Basis: The following table sets forth the assets measured at fair value on a recurring basis, by input level, in the Consolidated Balance Sheets at June 30, 2020 and December 31, 2019 (amounts in thousands):
June 30, 2020
Assets:Level 1Level 2Level 3Total
Restricted cash and investments$8,018  $2,108  $22,639  $32,765  
Marketable securities27,978  8,093  —  36,071  
Liabilities:
Other liabilities related to restricted investments—  —  3,009  3,009  
December 31, 2019
Assets:Level 1Level 2Level 3Total
Restricted cash and investments$11,276  $2,050  $29,283  $42,609  
Marketable securities27,103  7,531  —  34,634  

The change in restricted cash and investments and liabilities valued using Level 3 inputs for the six months ended June 30, 2020 is as follows (amounts in thousands):
Level 3 InvestmentsLevel 3
Other Liabilities
Fair value of investment and liabilities at December 31, 2019$29,283  $—  
Value of additional investment received4,678  2,339  
Unrealized gain (loss)(11,322) 670  
Fair value at June 30, 2020$22,639  $3,009  

There were 0 transfers between Level 1, Level 2 and Level 3 investments during the six months ended June 30, 2020.
In November 2018, the Company entered into a 20-year agreement with TSG pursuant to which it agreed to provide TSG with options to obtain access to a second skin for online sports wagering and third skin for real money online gaming and poker, in each case with respect to the Company’s properties in the United States. Under the terms of the agreement, the Company will receive a revenue share from the operation of the applicable verticals by TSG under the Company’s licenses. Pursuant to the terms of the TSG agreement, the Company received 1.1 million TSG common shares, and an additional approximately $5.0 million in TSG common shares became payable to the Company upon TSG’s exercise of its first option; all shares are subject to a one year restriction on transfer from the date they are received. The Company may also receive additional TSG common shares in the future based on TSG net gaming revenue generated in its markets. On May 5, 2020, Flutter completed the acquisition of all of the issued and outstanding common shares of TSG in exchange for 0.2253 Flutter shares per common share of TSG.
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As of June 30, 2020 and December 31, 2019, the fair value of unrestricted shares totaled $15.8 million and $14.0 million, respectively, net of cumulative unrealized gains of $5.5 million and $3.7 million, respectively, and is included in marketable securities on the Consolidated Balance Sheet. In addition, as of June 30, 2020, the fair value of restricted shares in Flutter totaled $6.0 million, net of cumulative unrealized gains of $1.3 million, and is included in restricted cash and investments on the Consolidated Balance Sheet. The Company recorded unrealized gains of $6.5 million and $3.1 million during the three and six months ended June 30, 2020, respectively, and unrealized gains of $0.1 million and $1.5 million during the three and six months ended June 30, 2019, respectively.
The estimated fair values of the Company’s financial instruments are as follows (amounts in thousands):
June 30, 2020December 31, 2019
Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Financial liabilities:
7% Senior Notes due 2023$370,683  $382,943  $370,077  $390,938  
6% Senior Notes due 2025878,869  914,760  879,275  922,031  
6% Senior Notes due 2026583,126  652,782  582,042  662,250  
Term Loan481,762  483,882  490,768  498,127  
Revolving Credit Facility108,000  108,000  —  —  
Lumière Loan246,000  246,000  246,000  246,000  
Other long-term debt2,410  2,410  2,554  2,553  
Three Months Ended March 31,
(In millions)20212020
Stock-based compensation awards4 1 
5% Convertible Notes4 0 
Total anti-dilutive common stock8 1 
Note 13. Earnings per Share12. Stock-Based Compensation and Stockholders’ Equity
Stock-Based Awards
The following table illustratesCompany maintains long-term incentive plans which allow for granting stock-based compensation awards for directors, employees, officers, and consultants or advisers who render services to the reconciliation ofCompany or its subsidiaries, based on Company Common Stock, including performance-based and incentive stock options, restricted stock, restricted stock units (“RSUs”), performance stock units (“PSUs”), market-based performance stock units (“MSUs”), stock appreciation rights, and other stock-based awards or dividend equivalents. Forfeitures are recognized in the numerators and denominators of the basic and diluted net (loss) income per share computations for the three and six months ended June 30, 2020 and 2019 (dollars in thousands, except per share amounts):
Three Months Ended
June 30,		Six Months Ended
June 30,
2020201920202019
Net (loss) income available to common stockholders$(99,996) $18,936  $(275,634) $57,165  
Shares outstanding:
Weighted average shares outstanding – basic80,053,676  77,682,759  79,009,373  77,625,303  
Effect of dilutive securities:
Stock options—  107,388  —  105,885  
RSUs—  935,142  —  926,364  
Weighted average shares outstanding – diluted80,053,676  78,725,289  79,009,373  78,657,552  
Net (loss) income per common share attributable to common stockholders – basic:$(1.25) $0.24  $(3.49) $0.74  
Net (loss) income per common share attributable to common stockholders – diluted:$(1.25) $0.24  $(3.49) $0.73  

For a period in which they occur.
Total stock-based compensation expense in the accompanying Statements of Operations totaled $23 million and $6 million during the three months ended March 31, 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.
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27
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
2015 Equity Incentive Plan (“2015 Plan”)
During the three months ended March 31, 2021, as part of the annual incentive program, the Company generatedgranted 568 thousand RSUs to employees of the Company with an aggregate fair value of $39 million and a net loss,ratable vesting period of three years. Each RSU represents the weighted average shares outstanding - basicright to receive payment in respect of 1 share of the Company’s Common Stock.
During the three months ended March 31, 2021, the Company also granted 79 thousand PSUs that are scheduled to vest in three years. On the vesting date, recipients will receive between 0% and 200% of the target number of PSUs granted, in the form of CEI common stock, based on the achievement of specified performance and service 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 three months ended March 31, 2021 was used$7 million.
In addition, during the three months ended March 31, 2021, the Company granted 146 thousand MSUs that are scheduled to cliff vest in calculating diluted loss per share becausethree years. On the vesting date, recipients will receive between 0% and 200% of the target number of MSUs granted, in the form of Company Common Stock, based on the achievement of specified market and service conditions. The grant date fair value of the MSUs was determined using diluted shares would have been anti-dilutive to loss per share. As such,a Monte-Carlo simulation model. Key assumptions for the weighted average shares outstanding - diluted calculation above excludes 79,759Monte-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. The aggregate value of MSUs granted during the three months ended March 31, 2021 was $15 million.
During the three months ended March 31, 2021, there were 0 grants of stock options and 266,52313 thousand stock options were exercised. In addition, 407 thousand, 143 thousand and 100 thousand of RSUs, PSUs and MSUs, respectively, vested under the 2015 plan.
Outstanding at End of Period
March 31, 2021December 31, 2020
Quantity
Wtd-Avg (a)
Quantity
Wtd-Avg (a)
Stock options147,481$22.97 176,724$22.57 
Restricted stock units2,565,75146.11 2,414,11142.55 
Performance stock units (b)
436,08962.12 500,48248.32 
Market-based stock units491,22466.10 446,08749.37 
____________________
(a)Represents the weighted-average exercise price for stock options, weighted-average grant date fair value for RSUs, weighted-average grant date fair value for PSUs where the grant date has been achieved, the price of CEI common stock as of the balance sheet date for PSUs where a grant date has not been achieved, and the fair value of the MSUs determined using the Monte-Carlo simulation model.
(b)PSUs were presented with RSUs as of December 31, 2020 in the 2020 Annual Report.
Share Repurchase Program
In November 2018, the Company’s Board of Directors 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 March 31, 2021, the Company has acquired 223,823 shares of common stock under the Share Repurchase Program at an aggregate value of $9 million and an average of $40.80 per share. NaN shares were repurchased during the three months ended March 31, 2021 and 2020.
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28
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Note 13. Income Taxes
Income Tax Allocation
Three Months Ended March 31,
(In millions)20212020
Loss from continuing operations before income taxes$(510)$(213)
Benefit for income taxes79 37 
Effective tax rate15.5 %17.4 %
We classify accruals for uncertain tax positions within Other long-term liabilities on the Balance Sheets separate from any related income tax payable which is reported within Accrued other liabilities. The accrual amounts relate to any potential income tax liabilities resulting from uncertain tax positions as well as potential interest or penalties associated with those liabilities.
Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. 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 a result of the Merger, the Company acquired $770 million of additional net deferred tax liabilities net of necessary valuation allowances, plus $24 million in additional accruals for uncertain tax positions. The income tax expense for the three months ended June 30, 2020, and excludes 93,456 stock options and 446,910 RSUsMarch 31, 2021 differed from the expected income tax benefit based on the federal tax rate of 21% primarily due to nondeductible expenses related to the convertible notes liability. The income tax expense for the sixthree months ended June 30, 2020.
Note 14. CommitmentsMarch 31, 2020 differed from the expected income tax expense based on the federal tax rate of 21% primarily due to goodwill impairments and Contingencies
Litigationchanges in the valuation allowance, offset by the true-up of certain state tax benefits and state and local income taxes.
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 its consolidated group. The Company is a partysubject to exam by various legal proceedings. Such proceedings can be costly, time consumingstate and unpredictable and, therefore, no assurance can be given that the final outcome of such proceedings will not materially impact the Company’s consolidated financial condition or results of operations. Whileforeign tax authorities. With few exceptions, the Company maintains insurance coverage that
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the Company believes is adequateno longer subject to mitigate the risks of such proceedings, no assurance can be givenexaminations by tax authorities for years before 2017, and it is possible that the amount or scope of existing insurance coverage will be sufficient to cover losses arising from such matters.
General
In addition, the Company is a party to various legal and administrative proceedings, which have arisen in the normal course of its business. Estimated losses are accrued for these proceedings when the loss is probable and can be estimated. The current liability for unrecognized tax benefits could change during the estimated losses associated with these proceedings is not material to the Company’s consolidated financial condition and those estimated losses are not expected to have a material impact on the Company’s results of operations.next 12 months.
Note 15.14. Related Affiliates
REI
As of June 30, 2020,March 31, 2021, Recreational Enterprises, Inc. (“REI”) owned approximately 8.7%4.1% 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 former Senior Vice President of Regional Operations, 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. As such, the Carano family has the ability to significantly influence the affairs of the Company. During the sixthree months ended June 30,March 31, 2021 and 2020, and 2019, there were 0 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. RentAnnual rent pursuant to the CSY Lease is currently $0.6 million, annually and paid quarterly duringquarterly. Annual rent is subject to periodic rent escalations through the year.term of the lease. As of June 30, 2020March 31, 2021 and December 31, 2019,2020, there were 0 amounts due to or from CSY.
Transactions with Horseshoe Baltimore
The Company holds an interest in Horseshoe Baltimore of approximately 44.3% which is accounted for as an equity method investment and is considered to be a related party. These related party transactions include items such as casino management fees, reimbursement of various costs incurred on behalf of Horseshoe Baltimore, and the allocation of other general corporate expenses. A summary of the transactions with Horseshoe Baltimore is provided in the table below.
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29
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(In millions)Three Months Ended
March 31, 2021
Transactions with Horseshoe Baltimore
Management fees$2 
Due from/to Affiliates
Amounts due from or to affiliates for each counterparty represent the net receivable or payable as of the end of the reporting period primarily resulting from the transactions described above and settled on a net basis by each counterparty in accordance with the legal and contractual restrictions governing transactions by and among the Company’s consolidated entities.
As of March 31, 2021 and December 31, 2020, Due from affiliates, net was $48 million and $44 million, respectively, and represented transactions with Horseshoe Baltimore and William Hill.
Note 16.15. 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. ThePrior to the Merger, our principal operating activities occurred in 5 geographic regions and reportable segments: West, Midwest, South, East and Central, in addition to Corporate and Other. Following the Merger, the Company’s principal operating activities occur in 5 geographic regions and3 regionally-focused 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 the regionsCaesars: (1) Las Vegas, (2) Regional, and (3) Managed, International, CIE, in which they operate.addition to Corporate and Other. See Note 1table below for a summary of these segments. Also, see Note 53 and Note 86 for a discussion of the impairment of intangibles and long-lived assets related to certain segments.

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2830
CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The following table sets forth certain information regarding our properties (listed by segment in which each property is reported) as of March 31, 2021:
Las VegasRegionalManaged, International, CIE
Bally’s Las Vegas (a)
Eldorado Resort Casino Reno
Harrah’s Atlantic City (a)
Managed
Caesars Palace Las Vegas (a)
Silver Legacy Resort Casino
Harrah’s Laughlin (a)
Harrah’s Ak-Chin (a)
The Cromwell (a)
Circus Circus Reno
Harrah’s New Orleans (a)
Harrah’s Cherokee (a)
Flamingo Las Vegas (a)
MontBleu Casino Resort & Spa (c)
Hoosier Park (a)
Harrah’s Cherokee Valley River (a)
Harrah’s Las Vegas (a)
Tropicana Laughlin Hotel & Casino
Indiana Grand (a)
Harrah’s Resort Southern California (a)
The LINQ Hotel & Casino (a)
Isle Casino Hotel - Black Hawk
Caesars Atlantic City (a)
Horseshoe Baltimore (a)(h)
Paris Las Vegas (a)
Lady Luck Casino - Black Hawk
Caesars Southern Indiana (a)(b)(e)
Caesars Windsor (a)
Planet Hollywood Resort & Casino (a)
Isle Casino Waterloo
Harrah’s Council Bluffs (a)
Kings & Queens Casino (a)
Rio All-Suite Hotel & Casino (a)
Isle Casino Bettendorf
Harrah’s Gulf Coast (a)
Caesars Dubai (a)
Isle of Capri Casino Boonville
Harrah’s Joliet (a)
International
Isle Casino Racing Pompano Park
Harrah’s Lake Tahoe (a)
Caesars Cairo (a)(b)
Isle of Capri Casino Hotel Lake Charles
Harrah’s Louisiana Downs (a)(b)(g)
Ramses Casino (a)(b)
Belle of Baton Rouge Casino & Hotel(i)
Harrah’s Metropolis (a)
Emerald Casino Resort (a)(b)
Isle of Capri Casino Lula
Harrah’s North Kansas City (a)
Alea Glasgow (a)(b)
Trop Casino Greenville
Harrah’s Philadelphia (a)
Alea Nottingham (a)(b)
Eldorado Gaming Scioto Downs
Harveys Lake Tahoe (a)
The Empire Casino (a)(b)
Tropicana Casino and Resort, Atlantic City
Horseshoe Bossier City (a)
Manchester235 (a)(b)
Grand Victoria Casino
Horseshoe Council Bluffs (a)
Playboy Club London (a)(b)
Lumière Place Casino
Horseshoe Hammond (a)(b)(f)
Rendezvous Brighton (a)(b)
Tropicana Evansville (d)
Horseshoe Tunica (a)
The Sportsman (a)(b)
CIE
Caesars Interactive Entertainment (a)
___________________

(a)These properties were acquired from the Merger on July 20, 2020.
(b)As a result of the Merger, the sales of these properties met the requirements for presentation as discontinued operations as of March 31, 2021.
(c)In April 2020, the Company entered into an agreement to sell MontBleu. The sale of MontBleu closed on April 6, 2021.
(d)On October 27, 2020, the Company entered into an agreement to sell Evansville, which is expected to close mid-2021.
(e)On December 24, 2020, the Company entered into an agreement to sell Caesars Southern Indiana, which is expected to close in the third quarter of 2021.
(f)The Company plans to enter into an agreement to sell Horseshoe Hammond prior to December 31, 2021.
(g)On September 3, 2020, the Company entered into an agreement to sell Harrah’s Louisiana Downs, which is expected to close in the third quarter of 2021.
(h)As of March 31, 2021, Horseshoe Baltimore was 44.3% owned by us and held as an equity-method investment.
(i)On December 1, 2020, the Company entered into an agreement to sell Belle of Baton Rouge, which is expected to close in the third quarter of 2021.
In addition to our properties listed above, other domestic and international properties, including Harrah’s Northern California, are authorized to use the brands and marks of Caesars Entertainment, Inc. Additionally, certain of our properties operate off-track betting locations, including Hoosier Park, which operates Winner’s Circle Indianapolis and Winner’s Circle New Haven, and 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 (the “LINQ”) 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, 2 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.
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CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The following table sets forth, for the periods indicated, certain operating data for the Company’s 53 reportable segments. We recast previously reported segment amounts to conform to the way management assesses results and allocates resources for the current year.
Three Months Ended
June 30,		Six Months Ended
June 30,
2020201920202019
(in thousands)
Revenues and expenses
West:
Net revenues$29,937  $127,727  $135,427  $245,822  
Depreciation and amortization13,299  13,508  27,237  26,651  
Operating (loss) income(12,808) 20,613  (110,265) 31,414  
Midwest:
Net revenues22,787  97,239  83,580  194,026  
Depreciation and amortization4,148  7,714  8,670  16,135  
Operating (loss) income415  29,012  (18,939) 56,845  
South:
Net revenues30,760  116,937  127,812  249,651  
Depreciation and amortization6,786  9,850  13,906  20,865  
Operating (loss) income(9,473) 19,023  (20,667) 46,538  
East:
Net revenues21,226  170,455  129,282  336,688  
Depreciation and amortization11,046  12,240  22,287  24,389  
Operating (loss) income(21,231) 35,213  (10,215) 62,374  
Central:
Net revenues19,848  122,792  119,553  243,264  
Depreciation and amortization11,793  11,480  23,556  22,690  
Operating (loss) income(8,194) 28,033  9,920  55,103  
Corporate and Other:
Net revenues1,912  1,971  3,885  3,493  
Depreciation and amortization1,867  1,741  3,716  3,560  
Operating loss(27,036) (29,344) (51,341) (26,120) 
Total Reportable Segments
Net revenues$126,470  $637,121  $599,539  $1,272,944  
Depreciation and amortization$48,939  $56,533  $99,372  $114,290  
Operating (loss) income$(78,327) $102,550  $(201,507) $226,154  
Reconciliations to consolidated net (loss) income:
Operating (loss) income$(78,327) $102,550  $(201,507) $226,154  
Unallocated (loss) income and expenses:
Interest expense, net(68,136) (71,798) (134,600) (145,308) 
Loss on extinguishment of debt—  —  (158) —  
Unrealized gain (loss) on investments and marketable securities12,806  (1,398) (10,202) (2,858) 
Benefit (provision) for income taxes33,661  (10,418) 70,833  (20,823) 
Net (loss) income$(99,996) $18,936  $(275,634) $57,165  
Three Months Ended March 31,
(In millions)20212020
Las Vegas:
Net revenues$497 $0 
Adjusted EBITDA162 0 
Regional:
Net revenues1,108 471 
Adjusted EBITDA367 111 
Managed, International, CIE:
Net revenues90 0 
Adjusted EBITDA15 0 
Corporate and Other:
Net revenues4 2 
Adjusted EBITDA(39)(8)
Reconciliation of Adjusted EBITDA - By Segment to Net Income (Loss) Attributable to Caesars
Adjusted EBITDA is presented as a measure of the Company’s performance. Adjusted EBITDA is defined as revenues less operating expenses and is comprised of net income (loss) before (i) interest expense, net of interest capitalized and interest income, (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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CAESARS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Three Months Ended March 31,
(In millions)20212020
Adjusted EBITDA by Segment:
Las Vegas$162 $0 
Regional367 111 
Managed, International, CIE15 0 
Corporate and Other(39)(8)
505 103 
Reconciliation to net income (loss) attributable to Caesars:
Net loss attributable to noncontrolling interests1 0 
Net income from discontinued operations7 0 
Benefit for income taxes79 37 
Other loss (a)
(133)(23)
Interest expense, net(563)(67)
Depreciation and amortization(265)(50)
Impairment charges0 (161)
Transaction costs and other operating costs (b)
(20)(8)
Stock-based compensation(23)(6)
Other items (c)
(11)(1)
Net loss attributable to Caesars$(423)$(176)
____________________
(a)Other loss for the three months ended March 31, 2021 primarily represents a loss on the change in fair value of the derivative liability related to the 5% Convertible Notes slightly offset by a gain on foreign currency exchange and investments held. Other (income) loss for the three months ended March 31, 2020 primarily represents change in fair value of the Company’s investments in William Hill PLC.
(b)Transaction costs and other operating costs for the three months ended March 31, 2021 and 2020primarily represent costs related to the William Hill Acquisition and the Merger, various contract or license termination exit costs, professional services, other acquisition costs and severance costs.
(c)Other items primarily represent certain consulting and legal fees, rent for non-operating assets, relocation expenses, and business optimization expenses.

Three Months Ended March 31,
(In millions)20212020
Capital Expenditures, Net
Las Vegas$15 $0 
Regional
46 22 
Managed, International, CIE0 0 
Corporate and Other4 1 
Total$65 $23 
Six Months Ended June 30,
20202019
(in thousands)
Capital Expenditures, Net
West$15,699  $49,450  
Midwest2,732  9,443  
South7,707  10,098  
East6,735  19,857  
Central3,561  5,308  
Corporate4,580  2,958  
Total$41,014  $97,114  
Balance Sheet as of
June 30, 2020December 31, 2019
(in thousands)
Total Assets
West$1,231,649  $1,385,982  
Midwest1,061,521  1,157,884  
South1,034,363  1,132,707  
East1,533,568  1,588,308  
Central1,491,265  1,522,023  
Corporate, Other and Eliminations(203,919) (1,146,351) 
Total$6,148,447  $5,640,553  
(In millions)March 31, 2021December 31, 2020
Total Assets
Las Vegas$21,454 $21,464 
Regional13,918 13,732 
Managed, International, CIE443 548 
Corporate and Other204 641 
Total$36,019 $36,385 
33

ITEMItem 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion together with theThe accompanying consolidated condensed financial statements includinginclude the related notes and the other financial information, contained in this Quarterly Report on Form 10-Q.
accounts of Caesars Entertainment, Inc., a Delaware corporation, formerly known as Eldorado Resorts, Inc. (“ERI” or “Eldorado”), isand its consolidated subsidiaries which may be referred to as the “Company,” “CEI,” “Caesars,” “we,” “our,” or “us” within these financial statements.
The following discussion and analysis of the “Registrant,financial position and operating results of Caesars for the three months ended March 31, 2021 and 2020 should be read in conjunction with the unaudited consolidated condensed financial statements and the notes thereto and other financial information included elsewhere in this Form 10-Q as well as our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (“2020 Annual Report”). Capitalized terms used but not defined in this Form 10-Q have the same meanings as in the 2020 Annual Report.
We also refer to (i) our Consolidated Condensed Financial Statements as our “Financial Statements,” (ii) our Consolidated Condensed Balance Sheets as our “Balance Sheets,” (iii) our Consolidated Condensed Statements of Operations and Consolidated Condensed Statements of Comprehensive Loss as our “Statements of Operations,” and together(iv) our Consolidated Condensed Statements of Cash Flows as our “Statements of Cash Flows.” References to numbered “Notes” refer to Notes to Consolidated Condensed Financial Statements included in Item 1, “Unaudited Financial Statements.”
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 “CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS” in 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 its subsidiaries may alsothe 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 referredanalyzed; and (iii) to as “we,” “us” or “our.”
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 with 23 gaming facilities in 11 states as of June 30, 2020. As of June 30, 2020, our properties were located in Colorado, Florida, Illinois, Indiana, Iowa, Mississippi, Missouri, Louisiana, Nevada, New Jersey and Ohio, and featured approximately 23,900 slot machines, video lottery terminals (“VLTs”) and e-tables, approximately 660 table games and approximately 11,300 hotel rooms. On July 20, 2020, we completed the merger in which a wholly-owned subsidiary of the Company merged with and into Caesars Entertainment Corporation (“Former Caesars”) with Former Caesars surviving as a wholly-owned subsidiary of the Company (the “Merger”) pursuant to the Agreement and Plan of Merger dated as of June 24, 2019 (as amended by Amendment No. 1 to Agreement and Plan of Merger, dated as of August 15, 2019, the “Merger Agreement”). As a result of the Merger, we currently own an aggregate of 54 domestic properties in 16 states with approximately 60,400 slot machines, VLTs and e-tables, approximately 3,350 table games and approximately 51,200 hotel rooms, which includes international operations in five countries outside of the U.S. Our primary source of revenue is generated by gaming operations, and we utilize our hotels, restaurants, bars, entertainment, racing, sportsbook offerings, retail shops and other services to attract customers to our properties.
We werethat was founded in 1973 by the Carano family with the opening of the Eldorado Hotel Casino in Reno, Nevada and in 1993Nevada. We partnered with MGM Resorts International to build Silver Legacy Resort Casino in Reno, Nevada. BeginningNevada in 1993 and, beginning in 2005, we grew through a series of acquisitions, including the acquisition of Eldorado Resort Casino Shreveport (“Eldorado Shreveport”) in 2005, MTR Gaming Group, Inc. in 2014, Circus Circus Reno (“Circus Reno”) and the 50% membership interest in the Silver Legacy that was owned by MGM Resorts International in 2015, Isle of Capri Casinos, Inc. (“Isle” or “Isle of Capri”) in 2017 and Grand Victoria Casino (“Elgin”) and Tropicana Entertainment, Inc. (“Tropicana”) in 2018.
As of June 30,On July 20, 2020, we owned 18completed the merger with Caesars Entertainment Corporation (“Former Caesars”) pursuant to which Former Caesars became our wholly-owned subsidiary (the “Merger”).
We own, lease or manage an aggregate of 54 domestic properties in 16 states with approximately 54,600 slot machines, video lottery terminals (“VLTs”) and e-tables, approximately 3,200 table games and approximately 47,700 hotel rooms as of March 31, 2021. We also have international operations in five countries outside of the U.S. 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. Upon completion of our previously announced sales, or expected sales, of certain gaming properties, we expect that we will continue to own, lease or manage 48 properties. Our primary source of revenue is generated by gaming operations, and we utilize our hotels, restaurants, bars, entertainment, racing, sportsbook offerings, retail shops and other services to attract customers to our properties.
We own 20 of our casinos and leased fivelease 28 casinos that are subjectin the U.S. We lease 20 casinos from VICI Properties L.P., a Delaware limited partnership (“VICI”) pursuant to a masterregional lease, witha Las Vegas lease and a Joliet lease. In addition, we lease seven casinos from GLP Capital, L.P., the operating partnership of Gaming and Leisure Properties, Inc. (“GLPI”), that we entered into in connection with the Tropicana Acquisition on October 1, 2018 pursuant to a Master Lease (as
34

amended, the “GLPI Master Lease”). See full description under and a Lumière lease. Additionally, we lease the “GLPI Master Lease”.
In connection with the Merger, Caesars Entertainment Corporation changed its name to “Caesars Holdings, Inc.” and Eldorado Resorts, Inc. converted intoRio All-Suite Hotel & Casino from a Delaware corporation and changed its name to “Caesars Entertainment, Inc.” In addition, effective as of July 21, 2020 our ticker symbol on the NASDAQ Stock Market changed from “ERI” to “CZR”. In connection with the execution of the Merger Agreement, we also entered into a Master Transaction Agreement (the “MTA”) with VICI Properties L.P., a Delaware limited partnership (“VICI”), pursuant to which, among other things, we agreed to consummate certain sale and leaseback transactions and amend certain lease agreements with VICI and/or its affiliates, with respect to certain property described in the MTA.separate third party.
We periodically divest of assets in order to raise capital.capital or as a result of a determination that the assets are not core to our business. We also divested certain assets, and will beare required to divest additional assets, in connection with obtaining required regulatory approvals in preparationrelated to closing of the Merger. A summary of recently completed and planned divestitures of our properties as of June 30, 2020March 31, 2021 is as follows:
SegmentPropertyDate SoldStateLocation
EastPresque Isle Downs & Casino (“Presque”)January 11, 2019Pennsylvania
EastLady Luck Casino Nemacolin (“Nemacolin”)March 8, 2019Pennsylvania
EastMountaineer Casino, Racetrack and Resort (“Mountaineer”)December 6, 2019West Virginia
MidwestIsle Casino Cape Girardeau (“Cape Girardeau”)December 6, 2019Missouri
MidwestLady Luck Casino Caruthersville (“Caruthersville”)December 6, 2019Missouri
MidwestRegionalIsle of Capri Casino Kansas City (“Kansas City”)July 1, 2020 (a)Missouri
SouthRegionalLady Luck Casino Vicksburg (“Vicksburg”)July 1, 2020 (a)Mississippi
SouthRegionalEldorado Resort Casino Shreveport (“Eldorado Shreveport”)
N/A (b)December 23, 2020 (a)
Louisiana
WestRegionalMontBleu Casino Resort & Spa (“MontBleu”)
N/A (b)April 6, 2021 (a)
Nevada
CentralRegionalTropicana Evansville (“Evansville”)
N/A (c) (b)
Indiana
RegionalBelle of Baton Rouge Casino & Hotel (“Baton Rouge”)
N/A (c)
Louisiana
Discontinued operations(d):
RegionalHarrah’s Louisiana Downs
N/A (e)
Louisiana
RegionalCaesars Southern Indiana
N/A (b)(f)
Indiana
RegionalHorseshoe Hammond
N/A (b)
Indiana
Managed, International, CIEEmerald Resort & CasinoN/ASouth Africa
Managed, International, CIECaesars Entertainment UKN/AUnited Kingdom
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___________________
(a)On July 10, 2019, we entered into a definitive agreement to sell Kansas City and Vicksburg to Twin River Worldwide Holdings, Inc. (“Twin River”) for cash consideration of approximately $230 million, subject to a working capital adjustment. The transaction closed on July 1, 2020. Kansas City and Vicksburg met the requirements for presentation as assets held for sale as of June 30, 2020 and December 31, 2019.
(b)On April 24, 2020, we entered into a definitive purchase agreement with Bally’s Corporation (formerly Twin River to sellWorldwide Holdings, Inc.) and certain of its affiliates for the sale of the equity interests of Eldorado Resort Casino Shreveport Joint Venture and Columbia Properties Tahoe, LLC, the entities that hold Eldorado Shreveport and MontBleu for aggregate consideration of $155 million, and terminated the prior agreement to sell those assets. The agreement is subject to regulatory approvals and is expected to close in the first quartera customary working capital adjustment. The sale of 2021. Eldorado Shreveport closed on December 23, 2020 and the sale of MontBleu closed on April 6, 2021. MontBleu met the requirements for presentation as assets held for sale under generally accepted accounting principles asand its results of June 30, 2020. In conjunction withoperations are included in income from continuing operations in the classification of MontBleu’s operations as assets held for sale asperiods presented. As a result of the announced sale,agreement to sell MontBleu, an impairment charge totaling $45.6$45 million was recorded during the sixthree months ended June 30,March 31, 2020 due to the carrying value exceeding the estimated net sales proceeds.proceeds from the sale.
(c)(b)In connection with its review of the Merger, the Indiana Gaming Commission determined on July 16, 2020 that, as a condition to their approval of the Merger, we will beare required to divest three properties within the state of Indiana in order to avoid undue economic concentrations asconcentration. On October 27, 2020, the Company entered into an agreement to sell Evansville to GLPI and Bally’s Corporation for $480 million in cash, subject to a customary working capital adjustment. The sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in mid-2021. In addition, on December 24, 2020, the Company entered into an agreement to divest of Caesars Southern Indiana Gaming Commission’s approval of the Merger. As a result, we plan(see (f) below). We expect to enter into agreementsan agreement to divest of Evansville, as well as two additional properties that we acquired as a result of the Merger,sell Horseshoe Hammond prior to December 31, 2020.2021. Evansville met the requirements for presentation as assets held for sale as of March 31, 2021.
(c)On December 1, 2020, the Company entered into an agreement to sell the Baton Rouge to CQ Holding Company, Inc. Pursuant to the terms of the GLPI Master Lease, Baton Rouge will be removed from the GLPI Master Lease, and the rent payments to GLPI will remain unchanged. The transaction is expected to close in the third quarter of 2021 and is subject to regulatory approvals and other customary closing conditions.
(d)These Former Caesars properties met held for sale criteria as of the acquisition date. The sales of these properties have or are expected to close within one year and the properties are classified as discontinued operations as of March 31, 2021.
(e)On September 3, 2020, we and VICI entered into agreement with Rubico Acquisition Corp. to sell Harrah’s Louisiana Downs for $22 million, subject to a customary working capital adjustment, where the proceeds will be split between us and VICI. The sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in the third quarter of 2021.
(f)On December 24, 2020, the Company entered into agreement to sell Caesars Southern Indiana to the Eastern Band of Cherokee Indians (“EBCI”) for $250 million, subject to a customary working capital adjustment. Caesar’s annual payments to VICI under the regional lease will decline by $33 million upon closing of the transaction. Additionally, effective as of the closing of the transaction, Caesars and EBCI are expected to enter into a long-term agreement for the continued use of the Caesars brand and Caesars Rewards loyalty program at Caesars Southern Indiana. The sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in the third quarter of 2021.
35

Merger Related Activities
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
•The largest and most diversifiedDiversification of the Company’s domestic footprint
•IconicAccess to iconic brands, rewards programprograms and new gaming opportunities expected to enhance customer experience
•Realization of significant identified synergies
Based onAs described above, following the closing priceMerger our domestic and international footprint has expanded as we own, lease or manage an aggregate of $38.00 per share of Company common stock, par value $0.00001 per share (“Company Common Stock”), reported on NASDAQ on July 17, 2020, the aggregate implied value54 domestic properties in 16 states and have international operations in five countries outside of the aggregate mergerU.S. as of March 31, 2021. We also 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 total purchase consideration paid to former holders offor Former Caesars common stock in connection with the Merger was approximately $8.46 billion, including approximately $2.37 billion in Company Common Stock and approximately $6.09 billion in cash.$10.9 billion. The aggregate merger consideration transferred also included the repayment of certain outstanding debt balances of Former Caesars and the replacement of equity awards of certain employees attributable to services provided prior to the Merger.
The cash consideration paid in the Merger was $12.41 per share (inclusive of the applicable ticking fee) of Former Caesars common stock for which cash consideration was payable and the stock consideration per share of Former Caesars common stock for which stock consideration was payable was 0.3085 shares of Company Common Stock, with a value equal to approximately $12.41 in cash (based on the volume weighted average price per share of Company Common Stock for the 10 trading days ending on July 16, 2020). Following the consummation of the Merger, Eldorado’s and Former Caesars’ stockholders hold approximately 56% and 44%, respectively, of the outstanding shares of Company Common Stock.
The major classes of assets acquired through the Merger include cash, cash equivalents and restricted cash, accounts receivable, including receivables from affiliates, property and equipment, goodwill and intangible assets, and other assets. The major classes of liabilities assumed through the Merger include accounts payable, accrued expenses, contract liabilities, financing obligations and long-term debt, which includes $1.1 billion in aggregate principal amount of 5% convertible notes due 2024 that are convertible into the weighted average of the number of shares of Company Common Stock and amount of cash actually received by holders of common stock of Former Caesars that made elections forestimated purchase consideration in the Merger.
Given the short period of time from the Merger completionacquisition was determined with reference to its acquisition date and the date of these consolidated financial statements and the size and complexity of the transaction, the initial accounting for the business combination is incomplete at this time. We are not able to provide the valuation of certain components of consideration transferred or provide the allocation of consideration paid to the assets acquired or liabilities assumed. Supplemental pro forma revenue and earnings of the combined company are predicated on the completion of the business combination accounting and allocation of consideration.fair value.
We recognized acquisition-related transaction costs of $12.7$12 million and $22.0$9 million for the three and six months ended June 30,March 31, 2021 and 2020, respectively, and $4.5 million for the three and six months ended June 30, 2019.
32

Debt and Financing Activity
On July 6, 2020, a wholly-owned subsidiary of ours issued $3.4 billion aggregate principal amount of 6.250% Senior Secured Notes due 2025 (the “2025 Secured Notes”) and $1.8 billion aggregate principal amount of 8.125% Senior Notes due 2027 (the “2027 Senior Notes”). We assumed the obligations under the 2025 Secured Notes and 2027 Senior Notes upon consummation of the Merger. In addition, Caesars Resort Collection (“CRC”), a subsidiary of Former Caesars, issued $1.0 billion aggregate principal amount of 5.750% Senior Secured Notes due 2025 (the “CRC Secured Notes”).
On July 20, 2020, in connection with the closing of the Merger, we entered into a new credit agreement which provides a five-year senior secured revolving credit facility for an aggregate principal amount of $1.0 billion (the “ERI Revolving Credit Facility”) and an additional revolving credit facility commitment under the ERI Revolving Credit Facility in an aggregate principal amount equal to $185 million, and CRC entered into an incremental agreement to its existing credit agreement dated as of December 22, 2017 for an aggregate principal amount of $1.8 billion of incremental term loan and an additional $25 million of revolving credit facility commitments. The additional capacities of $185 million under the ERI Revolving Credit Facility and $25 million under the existing CRC revolving credit facility are subject to approval from certain gaming authorities which we expect to receive in the third quarter of 2020. In addition, the borrowing capacity and obligations under CRC’s existing $1.0 billion revolving credit facility remain outstanding following the consummation of the Merger.
A portion of the proceeds from these arrangements, as well as our cash on hand, was used (a) to fund a portion of the cash consideration of the Merger, (b) to prepay in full the loans outstanding and terminate all commitments under our existing Credit Agreement, dated as of April 17, 2017, (c) to satisfy and discharge our 6% Senior Notes due 2025, the Senior Notes due 2026 and the 7% Senior Notes due 2023, (d) to repay $975 million of the outstanding amount under CRC’s existing revolving credit facility, (e) to repay in full the loans outstanding and terminate all commitments under the CEOC, LLC Credit Agreement, dated as of October 6, 2017, (f) to pay fees and expenses related to the financing arrangements, and (g) for general corporate use. See Note 11.
VICI Transactions
In connection with the closing of the Merger on July 20, 2020, we consummated a series of transactions with VICI in accordance with the Master Transaction Agreement (“MTA”) entered on June 24, 2019 and the Purchase and Sales Agreement entered on September 26, 2019. We consummated the sale leaseback transactions related to Harrah’s New Orleans, Harrah’s Laughlin and Harrah’s Resort Atlantic City, including the Harrah’s Atlantic City Waterfront Conference Center, for approximately $1.82 billion of net proceeds. Additionally, we received a one-time payment from VICI of approximately $1.38 billion for amendments to VICI lease agreements. The Caesars Palace Las Vegas (“CPLV”) Lease with VICI was amended to include Harrah’s Las Vegas (“HLV”) under the CPLV lease and increased HLV’s annual rent by $15 million and CPLV’s annual rent by $84 million. In addition, Harrah’s New Orleans, Harrah’s Laughlin, Harrah’s Resort Atlantic City and the Harrah’s Atlantic City Waterfront Conference Center were added to the Non-CPLV lease with VICI, with an increase in total aggregate annual rent for these properties of $154 million. The CPLV, Non-CPLV and Joliet lease agreements, as well as the Golf Course Use Agreement, were extended such that there will be 15 years remaining until the expiration of the initial term. The amendment also contains a put-call agreement related to the Centaur properties pursuant to which CRC may require VICI or its applicable affiliate to purchase and lease back (as lessor) to the Company or its applicable affiliate(s) the real estate components of the gaming and racetrack facilities of Hoosier Park Racing & Casino (“Hoosier Park”) and Indiana Grand Racing & Casino (“Indiana Grand”) and VICI or its applicable affiliate may require CRC to sell to VICI or its affiliate(s) and lease back (as lessee) the real estate components of such gaming and racetrack facilities.
On June 15, 2020, we entered into a non-binding letter of intent with VICI to borrow a new 5-year, $400 million mortgage loan (the “Convention Center Mortgage Loan”) and sell to VICI approximately 23 acres of land in the vicinity of, or adjacent to, The LINQ, Bally’s Paris and Planet Hollywood in Las Vegas, Nevada and commonly known as the Eastside Land (the “Eastside Land Sale”). The Convention Center Mortgage Loan and the Eastside Land Sale are expected to close concurrently and are subject to customary closing conditions, including completion of due diligence, and negotiation of definitive documents and receipt of regulatory approvals. These transactions are expected to close in the third quarter of 2020.
respectively.
Partnerships and DevelopmentAcquisition Opportunities
William Hill
In September 2018, weWe entered into a 25-year agreement, which became effective January 29, 2019, with William Hill PLC and William Hill US,U.S. Holdco, Inc. (“William Hill US”), its U.S. subsidiary (together, “William Hill”) pursuant to which we (i) granted to William Hill the right to conduct betting activities, including operating certain of our sportsbooks, in retail channels and under our first skin and third skincertain skins for online channels with respect to our current and future properties, located in the United States and the territories and possessions of the United States, including Puerto Rico and the U.S. Virgin Islands and (ii) agreed that William Hill will have the right to conduct real money online
33

gaming activities utilizing our second skin available with respect to properties in such territories. Pursuant to the terms of the agreement, weactivities. We received a 20% ownership interest in William Hill US initially valued at approximately $128.9 million as well as 13.4$129 million. We also received 13 million ordinary shares of William Hill PLC, which were subject to restrictions on timing of sale, with an initial value of approximately $27.3$27 million upon closing of the transaction in January 2019. The time restrictions on approximately 6 million shares expire within the next twelve months and are classified as current. Our profit and losses attributable to William Hill US are included in income (loss) from unconsolidated affiliatesTransaction costs and other operating costs on the Consolidated Statements of Operations. We granted William Hill the right to the use of certain skins in exchange for an equity method investment. The fair value of the William Hill US and William Hill PLC shares received has been deferred and is recognized as revenue on a straight-line basis over the 25-year agreement term. The amortization of deferred revenues associated with our equity interests is included in other revenue within our corporateCorporate and otherOther segment. Additionally, we receive a profit share from the operations of sports betting and other gaming activities associated with our properties,properties.
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 of approximately £2.9 billion (the “William Hill Acquisition”).In order to manage the risk of appreciation of the GBP denominated purchase price the Company entered into foreign exchange forward contracts. On March 25, 2021, the remaining outstanding forward contract was settled, for which the Company received $41 million in proceeds and recorded a net gain of $1 million during the three months ended March 31, 2021.
On September 29, 2020, the Company entered into a debt financing commitment letter pursuant to which the lenders party thereto committed to arrange and provide a newly formed subsidiary of the Company with (a) a £1.0 billion senior secured 540-day bridge loan facility, (b) a £116 million senior secured 540-day revolving credit facility and (c) a £503 million senior secured 60-day bridge loan facility (collectively, the “Debt Financing”), which commitment letter was amended and restated on December 11, 2020 in order to join additional lenders as parties thereto.
Pending negotiation of the definitive loan agreement for the Debt Financing, on October 6, 2020, a newly formed subsidiary of the Company entered into a £1.5 billion Interim Facilities Agreement (the “Interim Facilities Agreement”) with Deutsche Bank AG, London Branch and JPMorgan Chase Bank, N.A. to provide: (a) a 90-day £1.0 billion interim asset sale bridge facility and (b) a 90-day £503 million interim cash confirmation bridge facility, which Interim Facilities Agreement was amended and restated on December 11, 2020 in order to join additional lenders as parties thereto.
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On April 20, 2021, a UK Court sanctioned the William Hill Acquisition and on April 22, 2021, the Company completed the acquisition for approximately £2.9 billion, or approximately $4.0 billion.
In connection with the William Hill Acquisition, on April 22, 2021, a newly formed subsidiary of the Company entered into a Credit Agreement (the “Bridge Credit Agreement”) with certain lenders party thereto and Deutsche Bank AG, London Branch, as administrative agent and collateral agent, pursuant to which the lenders party thereto provided the Debt Financing. The Bridge Credit Agreement provides for (a) a 540-day £1.0 billion asset sale bridge facility, (b) a 60-day £503 million cash confirmation bridge facility and (c) a 540-day £116 million revolving credit facility. The proceeds of the bridge loan facilities provided under the Bridge Credit Agreement were used (i) to pay a portion of the cash consideration for the acquisition and (ii) to pay fees and expenses related to the acquisition and related transactions. The proceeds of the revolving credit facility under the Bridge Credit Agreement will be used for working capital and general corporate purposes. The Interim Facilities Agreement was terminated upon the execution of the Bridge Credit Agreement for the Debt Financing. The Bridge Credit Agreement is included within William Hill’s non-U.S. operations which is included in other revenue at the respective property.expected to be divested.
The Stars Group/Flutter Entertainment
In November 2018, we entered into a 20-year agreement with The Stars Group Inc., which was subsequently acquired by Flutter Entertainment PLC (“TSG”Flutter”) pursuant to which we agreed to provide TSG with options to obtain access to our second skin for online sports wagering and third skin for real money online gaming and poker in each case with respect to our properties in the United States.U.S. Under the terms of the agreement, we will receivereceived common shares, as a revenue share from the operationcertain operations of the applicable verticals by TSGFlutter under our licenses. Pursuant to the termsThe fair value of the TSG agreement, we received 1.1 million TSG common shares valued at approximately $18.6 million and an additional $5.0 million in TSG common shares became payable to us upon TSG’s exercise of its first option, which shares we received in the fourth quarter of 2019. In December 2019, we sold approximately 0.5 million of our TSG common shares at the request of William Hill and remitted the proceeds to them in accordance with the terms of our William Hill agreement. We may also receive additional TSG common shares in the future based on TSG net gaming revenue generated in our markets. Upon entry into the TSG agreement, we recorded deferred revenue associated with the shares received has been deferred and recognizeis recognized as revenue whichon a straight-line basis over the 20-year agreement term.
As of March 31, 2021 and December 31, 2020, the fair value of shares held was $10 million and is included in other revenue within our corporatePrepayments and other segment. On May 5,current assets on the Balance Sheets. The Company recorded an unrealized gain of less than a million during the three months ended March 31, 2021, and an unrealized loss of $3 million during the three months ended March 31, 2020, Flutter Entertainment PLC (“Flutter”) completedwhich were included in Other income (loss) on the acquisitionStatements of all of the issued and outstanding common shares of TSG in exchange for 0.2253 Flutter shares per common share of TSG.Operations.
Pompano Joint Venture
In April 2018, we entered into a joint venture with Cordish Companies (“Cordish”) to master 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 will be responsible for the development of the master plan for the project with our input and will submit it for our review and approval. We have made cash contributions totaling $1.0$1 million and have agreed to contribute a total of approximately 130 to 200contributed land. On February 12, 2021, we contributed an additional 186 acres of land to the joint venture for the project. As of June 30, 2020, we have contributed approximately 20 acres to the joint venture at an approximatea fair value of $6.6$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 as of March 31, 2021. We entered into a lease agreement in February 2021 to lease back a portion of the land from the joint venture.
While we hold a 50% variable interest in the joint venture, we are not the primary beneficiary; asbeneficiary. 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 isare included in income (loss) fromTransaction costs and other operating costs on the Statements of Operations. Our investment in the joint venture is recorded in Investment in and advances to unconsolidated affiliates on the Consolidated Statements of Operations.Balance Sheets.
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Reportable Segments
The following table sets forth certain information regarding our properties (listed by segment in which each property is reported) as of June 30, 2020:March 31, 2021:
SegmentLas VegasPropertyRegionalDate AcquiredStateManaged, International, CIE
WestBally’s Las Vegas (a)
Eldorado Resort Casino Reno (“Eldorado Reno”)
Harrah’s Atlantic City (a)
NevadaManaged
Caesars Palace Las Vegas (a)
Silver Legacy Resort Casino (“Silver Legacy”)
Harrah’s Laughlin (a)
NevadaHarrah’s Ak-Chin (a)
The Cromwell (a)
Circus Circus Reno (“Circus Reno”)
Harrah’s New Orleans (a)
NevadaHarrah’s Cherokee (a)
Flamingo Las Vegas (a)
MontBleu Casino Resort & Spa (“MontBleu”)(c)
October 1, 2018 (c)Hoosier Park (a)
NevadaHarrah’s Cherokee Valley River (a)
Harrah’s Las Vegas (a)
Tropicana Laughlin Hotel & Casino (“Laughlin”)
October 1, 2018Indiana Grand (a)
NevadaHarrah’s Resort Southern California (a)
The LINQ Hotel & Casino (a)
Isle Casino Hotel - Blackhawk (“Isle Black Hawk”)Hawk
May 1, 2017Caesars Atlantic City (a)
ColoradoHorseshoe Baltimore (a)(h)
Paris Las Vegas (a)
Lady Luck Casino - Black Hawk (“Lady Luck Black Hawk”)
May 1, 2017Caesars Southern Indiana (a)(b)(e)
ColoradoCaesars Windsor (a)
Midwest (b)Planet Hollywood Resort & Casino (a)
Isle Casino Waterloo (“Waterloo”)
May 1, 2017Harrah’s Council Bluffs (a)
IowaKings & Queens Casino (a)
Rio All-Suite Hotel & Casino (a)
Isle Casino Bettendorf (“Bettendorf”)
May 1, 2017Harrah’s Gulf Coast (a)
IowaCaesars Dubai (a)
Isle of Capri Casino Boonville (“Boonville”)
May 1, 2017Harrah’s Joliet (a)
MissouriInternational
Isle of Capri Casino Kansas City (“Kansas City”)May 1, 2017 (c)Missouri
SouthIsle Casino Racing Pompano Park (“Pompano”)
May 1, 2017Harrah’s Lake Tahoe (a)
FloridaCaesars Cairo
Eldorado Resort Casino Shreveport (“Eldorado Shreveport”)(a) (c)(b)Louisiana
Isle of Capri Casino Hotel Lake Charles (“Lake Charles”)
May 1, 2017Harrah’s Louisiana Downs (a)(b)(g)
LouisianaRamses Casino (a)(b)
Belle of Baton Rouge Casino & Hotel (“Baton Rouge”)(i)
October 1, 2018Harrah’s Metropolis (a)
LouisianaEmerald Casino Resort (a)(b)
Isle of Capri Casino Lula (“Lula”)
May 1, 2017Harrah’s North Kansas City (a)
MississippiAlea Glasgow
Lady Luck Casino Vicksburg (“Vicksburg”)(a)(b)May 1, 2017 (c)Mississippi
Trop Casino Greenville (“Greenville”)
October 1, 2018Harrah’s Philadelphia (a)
MississippiAlea Nottingham (a)(b)
East (b)Eldorado Gaming Scioto Downs (“Scioto Downs”)
Harveys Lake Tahoe (a)
OhioThe Empire Casino (a)(b)
Tropicana Casino and Resort, Atlantic City (“Trop AC”)
October 1, 2018Horseshoe Bossier City (a)
Manchester235 (a)(b)
Grand Victoria Casino
New JerseyHorseshoe Council Bluffs (a)
Playboy Club London (a)(b)
Lumière Place Casino
Horseshoe Hammond (a)(b)(f)
Rendezvous Brighton (a)(b)
Tropicana Evansville (d)
Horseshoe Tunica (a)
The Sportsman (a)(b)
CIE
CentralCaesars Interactive Entertainment
Grand Victoria Casino (“Elgin”)(a)August 7, 2018Illinois
Lumière Place Casino (“Lumière”)October 1, 2018Missouri
Tropicana Evansville (“Evansville”)October 1, 2018 (c)Indiana
___________________
(a)Property was aggregated into segment prior to January 1, 2016.These properties were acquired from the Merger on July 20, 2020.
(b)Presque was sold on January 11, 2019, Nemacolin was sold onAs a result of the Merger, these properties met the requirements for presentation as discontinued operations as of March 8, 2019 and Mountaineer was sold on December 6, 2019. All three properties were previously reported in the East segment. Cape Girardeau and Caruthersville were sold on December 6, 2019. Both properties were previously reported in the Midwest segment.31, 2021.
(c)WeIn April 2020, the Company entered into agreementsan agreement to sell Kansas City, Vicksburg, Eldorado Shreveport and MontBleu. The Kansas City and Vicksburg salessale of MontBleu closed on July 1, 2020. The Eldorado Shreveport and MontBleu sales areApril 6, 2021.
(d)On October 27, 2020, the Company entered into an agreement to sell Evansville, which is expected to close mid-2021.
(e)On December 24, 2020, the Company entered into an agreement to sell Caesars Southern Indiana, which is expected to close in the firstthird quarter of 2021. We plan
(f)The Company plans to reachenter into an agreement to divest of Evansvillesell Horseshoe Hammond prior to December 31, 2020.2021.
(g)On September 3, 2020, the Company entered into an agreement to sell Harrah’s Louisiana Downs, which is expected to close in the third quarter of 2021.
(h)As of March 31, 2021, Horseshoe Baltimore was 44.3% owned by us and held as an equity-method investment.
(i)On December 1, 2020, the Company entered into an agreement to sell Belle of Baton Rouge, which is expected to close in the third quarter of 2021.
The executive decision maker of ourthe Company reviews operating results, assesses performance and makes decisions on a “significant market” basis. Management views each of our 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. OurPrior to the Merger, our principal operating activities occuroccurred in five geographic regions and reportable segments.segments: West, Midwest, South, East and Central, in addition to Corporate and Other. Following the Merger, our principal operating activities occur in three regionally-focused reportable segments: (1) Las Vegas, (2) Regional, and (3) Managed, International, CIE, in addition to Corporate and Other. 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 the regions in which they operate: West, Midwest, South, East, and Central. See the table above for a listingCaesars.
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Presentation of Financial Information
The financial information included in this Item 2 for the period after our acquisition of Former Caesars on July 20, 2020 is not fully comparable to the periods prior to the acquisition. In addition, the presentation of financial information herein for the periods after ourthe Company’s sales of Presque and Nemacolin on January 11, 2019 and March 8, 2019, respectively, and our sales of Mountaineer, Cape Girardeau and Caruthersville on December 6, 2019various properties are not fully comparable to the periods prior to their respective sale dates. See Note 5.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)&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 these factors and the changing competitive landscape in each of our markets, as well as by factors discussed elsewhere herein. We recommend that you read
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this MD&A in conjunction with our unaudited consolidated condensed financial statements and the notes to those statements included in this Quarterly Report on Form 10-Q.
Reclassifications
Certain reclassifications of prior year presentations have been made to conform to the current period presentation. Marketing and promotions expense previously disclosed for the three months ended March 31, 2020 has been reclassified to Casino and pari-mutuel commissions expense and General and administrative expense based on the nature of the expense.
Key Performance Metrics
Our primary source of revenue is generated by our gaming operations, but we use our hotels, restaurants, bars, entertainment venues, retail shops, racing and sportsbook offerings 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. Key performance metrics include volume indicators such as table games drop and slot 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. In addition, hotel occupancy and price per room designated by average daily rate (“ADR”) are key indicators for our hotel business. Our calculation of ADR consists of the average price of occupied rooms per day including the impact of resort fees and complimentary rooms. Complimentary room rates are determined based on an analysis of retail or cash rates for each customer segment and each type of room product to estimate complimentary rates which are consistent with retail rates. Complimentary rates are reviewed at least annually and on an interim basis if there are significant changes in market conditions. Complimentary rooms are treated as occupied rooms in our calculation of hotel occupancy.
Recent Developments and Significant Factors Impacting Financial Results
The following summary highlights recent developments and significant factors impacting our financial results for the three and six months ended June 30, 2020March 31, 2021 and 2019.2020.
•COVID-19 Public Health Emergency – In January 2020, an outbreak of a new strain of coronavirus (“COVID-19”) was identified and has since spread throughout much of the world, including the United States.U.S. All of our casino properties were temporarily closed for the period from mid-March 2020 through mid-May 2020 due to orders issued by various state government agencies and tribal bodies as part of certain precautionary measures intended to help slow the spread of the COVID-19 public health emergency. On May 18, 2020, we began reopening our properties andWe have resumed certain operations at substantially all of our properties as of June 30, 2020,March 31, 2021, with the exception of ElginIsle of Capri Casino Hotel Lake Charles (“Lake Charles”) which was severely damaged by Hurricane Laura (as described below), and Trop AC which reopened on July 1 and July 2, 2020, respectively. As a resultmany of the temporary closures, the COVID-19 public health emergency has had a material adverse effect on our business, financial condition and results of operations for the three and six months ended June 30, 2020. international properties.
We continued to pay our full-time employees through April 10, 2020, including tips and tokens. Effective April 11, 2020, we furloughed approximately 90% of our employees, implemented salary reductions and committed to continue to provide benefits to our employees through June 30, 2020. Subsequently, the benefit coverage forduring their furloughed employees was extended through August 31, 2020.period. A portion of theour workforce has returned to service as the properties have resumed with limited capacities and in compliance with operating restrictions in accordance withimposed by governmental or tribal orders, directives, and guidelines. AsDue to a result of these payroll changes combined with other cost saving measures, our daily operating expenses were reduced significantly. On June 15, 2020, in order to address the effects of the property closurestriggering event resulting from the ongoing COVID-19 public health emergency, we obtained waiversrecognized impairment charges of $116 million related to goodwill and trade names (described below) during the three months ended March 31, 2020.
The COVID-19 public health emergency has had, and continues to have, a material adverse effect on the Company’s business, financial condition and results of operations for the three months ended March 31, 2021 and 2020. As a result, the terms of our debt arrangements provide that the financial covenant measurement period is not effective through September 30, 2021, so long as we comply with a minimum liquidity requirement. In addition, on our existing credit facility agreements and GLPI Master Lease. The amendment to our GLPI Master Lease is subjectMarch 19, 2021, the Company filed a lawsuit against its insurance carriers for losses attributed to the receiptCOVID-19 public health emergency.
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The extent of the ongoing and future effects of the COVID-19 public health emergency on our business and the casino resort industry generally is uncertain, but we expect that it will continue to have a significant impact on our business, results of operations and financial condition. The extent and duration of the impact of the COVID-19 public health emergency will ultimately depend on future developments, including but not limited to, the duration and severity of the outbreak, varying levels of restrictions on operations imposed by governmental authorities, the potential for authorities reimposing stay at home orders or additional restrictions in response to continued developments with the COVID-19 public health emergency, our ability to adapt to evolving operating procedures, the impact on consumer demand and discretionary spending, the length of time it takes for demand to return, the efficacy and availability of vaccines, and our ability to adjust our cost structures for the duration of the outbreak’s impacteffect on our operations.
•Caesars Acquisition – The Merger closed on July 20, 2020.2020 and, as a result, we own, lease or manage an aggregate of 54 domestic properties in 16 states and have international operations in five countries outside of the U.S. as of March 31, 2021. We also 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. See “Reportable Segments” above for a description of our revised segments following the Merger. Transaction costs related to our acquisition of Former Caesars totaled $12.7$12 million and $22.0$9 million for the three and six months ended June 30,March 31, 2021 and 2020, respectively,respectively.
•Discontinued Operations – As result of the Merger, Former Caesars properties, including Harrah’s Louisiana Downs, Caesars Southern Indiana, Horseshoe Hammond, and $4.5the Caesars UK group, including Emerald Resort & Casino, have met held for sale criteria as of the date of the closing of the Merger. The sales of these properties are expected to close within one year and the properties are classified as discontinued operations.
•William Hill Acquisition – On April 22, 2021, the Company consummated its previously announced 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 approximately £2.9 billion or approximately $4.0 billion (the “William Hill Acquisition”). We recognized acquisition-related transaction costs of approximately $5 million for the three and six months ended June 30, 2019. Pursuant to the MTA with VICI, we are required to reimburse VICI for 50% of any prepayment penalties in connection with VICI’s payoff related to its CPLV loan, regardless of whether the Merger closing occurs. As of June 30, 2020 and
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DecemberMarch 31, 2019, our proportionate share of VICI’s prepayment penalty paid in 2019 was accrued and totaled approximately $55.4 million.2021.
•Presque and Nemacolin Divestitures - The– In the previous twelve months we completed several divestitures including the sales of PresqueKansas City and Nemacolin did not meetVicksburg, Eldorado Shreveport, and discontinued operations of Harrah’s Reno and Bally’s Atlantic City. The properties that have been sold as of March 31, 2021, are collectively referred to as “Divestitures.” The results of operations of the requirements for presentationdivested entities, other than those identified as discontinued operations, and are included in income from continuing operations for the periods prior to their respective closing dates for the six months ended June 30, 2019. We closed the sales of Presque and Nemacolin on January 11, 2019 and March 8, 2019, respectively, and recorded a net gain of $22.2 million.
•Mountaineer, Cape Girardeau and Caruthersville Divestitures – The sales of Mountaineer, Cape Girardeau and Caruthersville did not meet the requirements for presentation as discontinued operations and are included in income from continuing operations for the periods prior to their closing date for the three and six months ended June 30, 2019. We closed the sales of these properties on December 6, 2019 and recorded a net gain of $28.6 million during the fourth quarter of 2019.
•Eldorado Shreveport and MontBleu Divestitures - The sales of Eldorado Shreveport and MontBleu did not meet the requirements for presentation as discontinued operations and are included in income from continuing operations. In conjunction with the classification of MontBleu’s operations as assets held for sale as a result of the announced sale, an impairment charge totaling $45.6 million was recorded during the six months ended June 30, 2020 due to the carrying value exceeding the estimated net sales proceeds.dates.
•Impairment Charges – As a result of declines in recent performance and the expected impact on future cash flows as a result of the COVID-19 public health emergency, we recognized impairment charges in our Regional segment related to goodwill and trade names totaling $99.5$100 million and $15.6$16 million, respectively, during the sixthree months ended June 30,March 31, 2020. In addition, as a result of entering the agreement to sell MontBleu in our Regional segment, impairment charges totaling $45 million were recorded during the three months ended March 31, 2020 due to the carrying value exceeding the estimated net sales proceeds. No impairment charge was recorded during the three months ended March 31, 2021.
•Weather and Construction Disruption - All of– In late August 2020, our segments were negatively impacted by severe weather, including flooding, during the first quarter of 2019 compared to the same current year period. Additionally, our WestRegional segment was negatively impacted by disruptionHurricane Laura, causing severe damage to ourLake Charles, which will remain closed until 2022 when construction of a new land-based casino flooris expected to be complete. During the three months ended March 31, 2021, we received insurance proceeds of approximately $26 million related to damaged fixed assets and hotel availability associated with renovation projects at our Black Hawk properties duringremediation costs. The Company also recorded a gain of approximately $8 million as proceeds received were in excess of the construction periodlosses incurred and the net book value of the damaged property.
•Post-Merger Synergies –We continue to identify operating and cost efficiencies, including savings from January to June 2019.
The divestituresthe purchasing power of Presque, Nemacolinthe combined Caesars organization and Mountaineer, Cape Girardeau and Caruthersville in January, March and December 2019, respectively, are collectively referred totargeted integrated marketing strategies, as well as the “Divestitures.”elimination of redundant costs such as accounting and professional expenses, certain payroll costs, and other corporate costs. As a result, we have seen margin improvements in our results of operations, throughout our segments.
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Results of Operations
The following table highlights the results of our operations (dollars in thousands):operations:
Three Months Ended
June 30,		Six Months Ended
June 30,
20202019Change20202019Change
Net revenues$126,470  $637,121  (80.1)%$599,539  $1,272,944  (52.9)%
Operating (loss) income(78,327) 102,550  (176.4)%(201,507) 226,154  (189.1)%
Net (loss) income(99,996) 18,936  (628.1)%(275,634) 57,165  (582.2)%
Three Months Ended March 31,
(Dollars in millions)20212020
Net revenues:
Las Vegas$497 $— 
Regional1,108 471 
Managed, International, CIE90 — 
Corporate and Other (a)
4 2 
Total$1,699 $473 
Net loss$(424)$(176)
Adjusted EBITDA (b):
Las Vegas$162 $— 
Regional367 111 
Managed, International, CIE15 — 
Corporate and Other (a)
(39)(8)
Total$505 $103 
Net income (loss) margin(25.0)%(37.2)%
Adjusted EBITDA margin29.7 %21.8 %
___________________

(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.
Operating Results(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 definition of Adjusted EBITDA and a reconciliation of net income (loss) to Adjusted EBITDA.
Consolidated comparison of the three months ended March 31, 2021 and 2020
Net Revenues
Net revenues declined $510.7 million and $673.4 million, or 80.1% and 52.9%,were as follows:
Three Months Ended March 31,Percent
Change
(Dollars in millions)20212020Variance
Casino and pari-mutuel commissions$1,140 $340 $800 *
Food and beverage166 56 110 196.4 %
Hotel215 48 167 *
Other178 29 149 *
Net Revenues$1,699 $473 $1,226 *
___________________
*    Not meaningful.
Consolidated revenues increased for the three and six months ended June 30,March 31, 2021 as a result of the Merger on July 20, 2020. This was offset by a decline in revenues associated with the COVID-19 public health emergency and, to a lesser extent, divestitures of certain properties discussed earlier. All of our properties were temporarily closed for the period from mid-March 2020 respectively, comparedthrough mid-May 2020 due to orders issued by various government agencies and tribal bodies as part of certain precautionary measures intended to help slow the same prior year periods. Excludingspread of the COVID-19 public health emergency. As of March 31, 2021, substantially all of our properties have resumed certain operations, with the exception of Lake Charles which was severely damaged by Hurricane Laura, and many of our international properties. Due to the impact of the Divestitures, net revenues decreased $455.0 millionCOVID-19 public health emergency, including local and $555.1 million, or 78.2% and 48.1%, for the three and six months ended June 30, 2020, respectively, compared to the same prior year periods. The decline in net revenues was primarily due to the negative impact of COVID-19state regulations and the resulting closureimplementation of social distancing and health and safety protocols, our properties in mid-March 2020, which began reopening mid-May 2020 based on state ordersare subject to reduced gaming capacity and restrictions.
Operating (loss) income declined $180.9 millionhotel occupancy, limited operation of food and $427.7 million, or 176.4%beverage outlets, live entertainment events and 189.1%, for the three and six months ended June 30, 2020, respectively, compared to the same prior year periods. Excluding the impact of the Divestitures, operating (loss) income decreased $170.6 million and $408.2 million, or 184.9% and 197.5%, for the three and six months ended June 30, 2020, respectively. The changes in operating (loss) income were mainly due to the negative impact of COVID-19 on net revenues in addition to transaction costs associated with the acquisition of Caesars and impairment charges totaling $160.8 million recorded during the six months ended June 30, 2020.conventions.
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Our diversified portfolio has yielded mixed results as the properties have reopened under the conditions noted above. Net (loss) income decreased $118.9 million and $332.8 million,revenues for properties which have historically relied on a local customer base, not dependent on air travel or 628.1% and 582.2%, for the three and six months ended June 30, 2020, respectively,convention business, showed an increase as compared to the samethree months ended March 31, 2020 results. These properties’ gaming and hotel revenues have historically been the largest portion of their total revenue. Net revenues for properties in destination markets such as Las Vegas, Atlantic City and New Orleans, which have historically relied on a broader regional and national customer base or convention business have declined from the prior year periods. Excluding the impactperiod. These properties have historically relied on a broader mix of the Divestitures, net (loss) income decreased $111.1 millionrevenue sources including conventions, entertainment, and $317.7 million or 1001.5%food and 755.5% for the threebeverage offerings. As a result of reduced visitation, an overall reduction in air travel, state and six months ended June 30, 2020, respectively. The changeslocal restrictions on capacity, and social distancing, safety and health protocols, these sources of revenue have been materially reduced as compared to net (loss) income, including Divestitures,prior periods.
Operating Expenses
Operating expenses were as follows:
Three Months Ended March 31,Percent
Change
(Dollars in millions)20212020Variance
Casino and pari-mutuel commissions$541 $179 $362 *
Food and beverage106 53 53 100.0 %
Hotel81 22 59 *
Other68 9 59 *
General and administrative366 98 268 *
Corporate66 16 50 *
Impairment charges— 161 (161)(100.0)%
Depreciation and amortization265 50 215 *
Transaction costs and other operating costs20 8 12 150.0 %
Total operating expenses$1,513 $596 $917 153.9 %
___________________
*    Not meaningful.
Casino and pari-mutuel commissions expense consists primarily of salaries and wages associated with our gaming operations, marketing and promotions and gaming taxes. Food and beverage expense consists principally due to the same factors impacting operating (loss) income, offset by the benefit for income taxes totaling $33.7 millionof salaries and wages and costs of goods sold associated with our food and beverage operations. Hotel expense consists principally of salaries, wages and supplies 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 and pari-mutuel commissions, food and beverage, hotel, and other expenses for the three months ended June 30, 2020March 31, 2021 increased year over year as compareda result of the Merger. This was partially offset by reopening with restrictions under the public health guidelines of reduced gaming and hotel capacity and limited food and beverage options. As such, our properties are operating with a reduced workforce, which resulted in decreased salaries and wages. In addition, our properties have reduced marketing and promotional spend, resulting in further declines in gaming expenses.
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 and internal audit, and property taxes. Property, general and administrative expenses also include stock-based compensation expense for certain property executives, sports sponsorships and other marketing expenses not directly related to a provision of $10.4 millionour gaming and non-gaming operations.
General and administrative expenses for the comparative period and a benefit of $70.8 million for sixthree months ended June 30, 2020March 31, 2021 increased year over year as comparedthe result of the Merger. This was offset by the actions taken to a provision of $20.8 million for the comparative period.
Net Revenuesreduce our cost structure while our properties were temporarily closed and Net (Loss) Income
The following tables highlight our net revenues and net (loss) income by reportable segment (in thousands):
Net Revenues for the
Three Months Ended June 30,		Net (Loss) Income for the
Three Months Ended June 30,
2020201920202019
West$29,937  $127,727  $(12,711) $11,348  
Midwest22,787  97,239  1,378  21,435  
South30,760  116,937  (10,912) 12,747  
East21,226  170,455  (30,456) 15,981  
Central19,848  122,792  (20,452) 13,070  
Corporate and Other1,912  1,971  (26,843) (55,645) 
Total$126,470  $637,121  $(99,996) $18,936  
Net Revenues for the
Six Months Ended June 30,		Net (Loss) Income for the
Six Months Ended June 30,
2020201920202019
West$135,427  $245,822  $(104,011) $15,665  
Midwest83,580  194,026  (15,239) 43,590  
South127,812  249,651  (24,910) 32,956  
East129,282  336,688  (32,647) 27,149  
Central119,553  243,264  (15,728) 25,948  
Corporate and Other3,885  3,493  (83,099) (88,143) 
Total$599,539  $1,272,944  $(275,634) $57,165  

38

Three Months Ended June 30, 2020 Comparedreduced operations due to the Three Months Ended June 30, 2019impact of the COVID-19 public health emergency.
Net revenues and operating expenses were as follows (dollars in thousands):
Three Months Ended
June 30,		Percent
Change
20202019Variance
Revenues:
Gaming and Pari-Mutuel Commissions:
West$15,276  $55,493  $(40,217) (72.5)%
Midwest21,119  85,223  (64,104) (75.2)%
South27,303  94,871  (67,568) (71.2)%
East19,777  124,052  (104,275) (84.1)%
Central18,004  97,523  (79,519) (81.5)%
Total Gaming and Pari-Mutuel Commissions101,479  457,162  (355,683) (77.8)%
Non-gaming:
West14,661  72,234  (57,573) (79.7)%
Midwest1,668  12,016  (10,348) (86.1)%
South3,457  22,066  (18,609) (84.3)%
East1,449  46,403  (44,954) (96.9)%
Central1,844  25,269  (23,425) (92.7)%
Corporate and Other1,912  1,971  (59) (3.0)%
Total Non-gaming24,991  179,959  (154,968) (86.1)%
Total Net Revenues126,470  637,121  (510,651) (80.1)%
Expenses:
Gaming and Pari-Mutuel Commissions:
West5,314  20,862  (15,548) (74.5)%
Midwest8,355  34,176  (25,821) (75.6)%
South13,319  45,377  (32,058) (70.6)%
East12,839  59,057  (46,218) (78.3)%
Central3,527  43,768  (40,241) (91.9)%
Total Gaming and Pari-Mutuel Commissions43,354  203,240  (159,886) (78.7)%
Non-gaming
West7,029  38,634  (31,605) (81.8)%
Midwest1,092  6,323  (5,231) (82.7)%
South2,427  13,624  (11,197) (82.2)%
East2,557  23,884  (21,327) (89.3)%
Central2,170  12,891  (10,721) (83.2)%
Total Non-gaming15,275  95,356  (80,081) (84.0)%
Marketing and promotions5,105  32,080  (26,975) (84.1)%
General and administrative64,862  117,431  (52,569) (44.8)%
Corporate13,050  21,051  (8,001) (38.0)%
Depreciation and amortization48,939  56,533  (7,594) (13.4)%
Total Operating Expenses$190,585  $525,691  $(335,106) (63.7)%
39

Gaming Revenues and Pari-Mutuel Commissions.For the three months ended June 30, 2020 compared to the same prior year period, gaming revenues and pari-mutuel commissions declined 77.8%. Excluding the impact of the Divestitures, gaming revenues and pari-mutuel commissions decreased 75.2% for the three months ended June 30, 2020 compared to the same prior year period mainly due to reductions in casino volume and pari-mutuel commissions associated with the impact of COVID-19 and the related closures of our properties and race tracks in mid-March 2020 until reopening of properties starting mid-May 2020.
Non-gaming Revenues. Non-gaming revenues decreased 86.1% for the three months ended June 30, 2020 compared to the same prior year period. Excluding the impact of the Divestitures, non-gaming revenues declined 85.5% for the three months ended June 30, 2020 compared to the same prior year period mainly due to the impact of COVID-19 and the related closures of our properties, including hotels, restaurants and entertainment venues in mid-March 2020 until reopening of hotels and restaurants starting mid-May 2020 based on government reopening guidelines.
Gaming Expenses and Pari-Mutuel Commissions.Gaming expenses and pari-mutuelcommissions declined78.7% for the three months ended June 30, 2020 compared to the same prior year period. Excluding theimpactof the Divestitures, gaming expenses and pari-mutuelcommissions decreased75.4% for the three months endedJune 30, 2020compared to thesame prior year periodin conjunction with the previously discussed decrease in gaming revenues and pari-mutuel commissions.
Non-gaming Expenses. Non-gaming expenses declined 84.0% for the three months ended June 30, 2020 compared to the same prior year period. Excluding the impact of the Divestitures, non-gaming expenses decreased 83.2% for the three months ended June 30, 2020 compared to the same prior year period in conjunction with the previously discussed decrease in non-gaming revenues.
Marketing and Promotions Expenses. Marketing and promotions expenses declined 84.1% for the three months ended June 30, 2020 compared to the same prior year period. Excluding the impact of the Divestitures, marketing and promotions expense decreased 83.2% for the three months ended June 30, 2020 compared to the same prior year period. This decline was primarily due to the reduction or elimination of marketing and promotions expenses during the closure of our properties from mid-March 2020 through mid-May 2020.
General and Administrative Expenses. General and administrative expenses declined 44.8% for the three months ended June 30, 2020 compared to the same prior year period. Excluding the impact of the Divestitures, general and administrative expenses decreased 40.4% for the three months ended June 30, 2020 compared to the same prior year period mainly due to the reduction of general and administrative expenses, including utilities and payroll expenses, following the closure of our properties in mid-March 2020 until reopening started in mid-May 2020.
Corporate Expenses. For the three months ended June 30, 2020March 31, 2021 compared to the same prior year period, corporate expenses decreased 38.0%increased primarily due to the Merger, and have been offset by reductions in salaries and wages due to reductions in workforce implemented as a result of the impact of the COVID-19 impact and a decrease in stock compensation expense forpublic health emergency.
42

As described above, we recorded impairment charges of $116 million due to the effects of the COVID-19 public health emergency during the three months ended June 30, 2020 comparedMarch 31, 2020. In addition, $45 million of additional impairment charges related to the same prior year period.sale of MontBleu were recorded during the three months ended March 31, 2020. No impairment charges were recorded during the three months ended March 31, 2021.
Depreciation and Amortization Expense. For the three months ended June 30, 2020March 31, 2021 compared to the same prior year period, depreciation and amortization expense declined 13.4%increased mainly due to the Merger, offset by ceasing depreciation and amortization expense on certain assets held for sale. Excludingsale and the impact of the Divestitures, depreciation and amortization expense decreased 7.6% forDivestitures.
For the three months ended June 30, 2020March 31, 2021 compared to the same prior year period, mainlytransaction costs and other operating costs increased primarily due to many assets becoming fully depreciatedthe acquisition of Former Caesars, as well as, costs or fees incurred related to the William Hill Acquisition, various project exit fees and related write offs, and higher severance expense related to the Merger.
Other income (expenses)
Other income (expenses) were as follows:
Three Months Ended March 31,Percent
Change
(Dollars in millions)20212020Variance
Interest expense, net$(563)$(67)$(496)*
Other loss(133)(23)(110)*
Benefit for income taxes79 37 42 113.5 %
___________________
*    Not meaningful.
For the three months ended March 31, 2021, interest expense, net increased year over year as a result of the Merger. Outstanding debt assumed, additional debt raised, and assumed financing obligations resulted in 2019.the increase in interest expense.
For the three months ended March 31, 2021, other loss increased year over year due to an unrealized loss on the change in fair value of the derivative liability related to the 5% Convertible Notes, offset by a gain on the foreign currency exchange rate associated with restricted cash held in GBP.
The income tax expense for the three months ended March 31, 2021 differed from the expected income tax benefit based on the federal tax rate of 21% primarily due to nondeductible expenses related to the convertible notes liability. The income tax expense for the three months ended March 31, 2020 differed from the expected income tax expense based on the federal tax rate of 21% primarily due to goodwill impairments and changes in the valuation allowance, offset by the true-up of certain state tax benefits and state and local income taxes.
43

Six Months Ended June 30,Segment comparison of the three months ended March 31, 2021 and 2020 Compared
Las Vegas Segment
Three Months Ended March 31,Percent
Change
(Dollars in millions)20212020Variance
Revenues:
Casino and pari-mutuel commissions$226 $— $226 *
Food and beverage84 — 84 *
Hotel115 — 115 *
Other72 — 72 *
Net Revenues$497 $— $497 *
Adjusted EBITDA$162 $— $162 *
Adjusted EBITDA margin32.6 %— %32.6 pts
Net loss attributable to Caesars$(67)$— $(67)*
___________________
*    Not meaningful.
Las Vegas segment’s net revenues and Adjusted EBITDA increased as a result of the Merger. As of March 31, 2021, all of our Las Vegas properties reopened with reduced gaming and hotel capacity with limited food and beverage and entertainment offerings. As of March 31, 2021, convention venues have not reopened due to capacity limitations.
During the three months ended March 31, 2021, all of our reopened properties in the Las Vegas segment experienced a decline in net revenues and Adjusted EBITDA compared to Former Caesars’ prior year results for the same properties due to the Six Months Ended June 30, 2019
Netgeneral weakness in the economic environment resulting from reduced visitation and travel to Las Vegas resulting from the COVID-19 public health emergency. Adjusted EBITDA margins for our Las Vegas properties were negatively impacted by greater declines in revenue than our Regional segment as well as rent expense associated with our Rio lease in our Las Vegas segment. As restrictions related to the COVID-19 public health emergency have begun to ease, net revenues, net income and operating expenses were as follows (dollars in thousands):
Six Months Ended
June 30,		Percent
Change
20202019Variance
Revenues:
Gaming and Pari-Mutuel Commissions:
West$60,253  $108,899  $(48,646) (44.7)%
Midwest74,432  170,392  (95,960) (56.3)%
South106,955  204,221  (97,266) (47.6)%
East99,708  249,003  (149,295) (60.0)%
Central99,880  195,333  (95,453) (48.9)%
Total Gaming and Pari-Mutuel Commissions441,228  927,848  (486,620) (52.4)%
Non-gaming:
West75,174  136,923  (61,749) (45.1)%
Midwest9,148  23,634  (14,486) (61.3)%
South20,857  45,430  (24,573) (54.1)%
East29,574  87,685  (58,111) (66.3)%
Central19,673  47,931  (28,258) (59.0)%
Corporate and Other3,885  3,493  392  11.2 %
Total Non-gaming158,311  345,096  (186,785) (54.1)%
Total Net Revenues599,539  1,272,944  (673,405) (52.9)%
Expenses:
Gaming and Pari-Mutuel Commissions:
West25,723  41,910  (16,187) (38.6)%
Midwest31,261  68,656  (37,395) (54.5)%
South55,066  95,318  (40,252) (42.2)%
East49,875  120,343  (70,468) (58.6)%
Central40,585  87,319  (46,734) (53.5)%
Total Gaming and Pari-Mutuel Commissions202,510  413,546  (211,036) (51.0)%
Non-gaming
West44,162  77,796  (33,634) (43.2)%
Midwest5,855  12,828  (6,973) (54.4)%
South15,249  28,100  (12,851) (45.7)%
East20,919  46,358  (25,439) (54.9)%
Central13,794  25,558  (11,764) (46.0)%
Total Non-gaming99,979  190,640  (90,661) (47.6)%
Marketing and promotions30,058  64,381  (34,323) (53.3)%
General and administrative156,537  237,319  (80,782) (34.0)%
Corporate29,532  37,805  (8,273) (21.9)%
Impairment charges160,758  958  159,800  16,680.6 %
Depreciation and amortization99,372  114,290  (14,918) (13.1)%
Total Operating Expenses$778,746  $1,058,939  $(280,193) (26.5)%

41

Gaming Revenues and Pari-Mutuel Commissions. ForAdjusted EBITDA have shown positive trends during the sixthree months ended June 30, 2020March 31, 2021.
Regional Segment
Three Months Ended March 31,Percent
Change
(Dollars in millions)20212020Variance
Revenues:
Casino and pari-mutuel commissions$890 $340 $550 161.8 %
Food and beverage81 56 25 44.6 %
Hotel100 48 52 108.3 %
Other37 27 10 37.0 %
Net Revenues$1,108 $471 $637 135.2 %
Adjusted EBITDA$367 $111 $256 *
Adjusted EBITDA margin33.1 %23.6 %9.5 pts
Net income (loss) attributable to Caesars$65 $(135)$200 148.1 %
___________________
*    Not meaningful.
Regional segment’s net revenues, Adjusted EBITDA and margin increased for the three months ended March 31, 2021 compared to the same prior year period gaming revenues and pari-mutuel commissions declined 52.4%. Excluding the impactas a result of the Divestitures, gamingacquisition of Former Caesars. As of March 31, 2021, all of our properties in our Regional segment have reopened, with the exception of Lake Charles due to the closures from the weather disruption described above. However, all of our properties within the Regional segment are subject to reduced capacities and limited food and beverage offerings.
44

In our Regional segment, net revenues and pari-mutuel commissions decreased 46.5% for the six months ended June 30, 2020were flat compared to the same prior year period mainlyacross all properties, including Former Caesars’. Similarly, Adjusted EBITDA and Adjusted EBITDA margin for these properties were also higher as compared to prior year due to reductions in casino volumeworkforce and pari-mutuel commissions associated withmarketing costs, synergies from the impactpurchasing power of COVID-19the combined Caesars organization, and limitations on certain lower margin food and beverage offerings.
Managed, International & CIE Segment
Three Months Ended March 31,Percent
Change
(Dollars in millions)20212020Variance
Revenues:
Casino and pari-mutuel commissions$24 $— $24 *
Food and beverage1 — 1 *
Other65 — 65 *
Net Revenues$90 $— $90 *
Adjusted EBITDA$15 $— $15 *
Adjusted EBITDA margin16.7 %— %16.7 pts
Net income attributable to Caesars$3 $— $3 *
___________________
*    Not meaningful.
Managed, International, CIE segment’s net revenues and Adjusted EBITDA increased as a result of the related closuresacquisition of Former Caesars. All of our managed properties and race tracks in mid-March 2020 until reopeninghave reopened as of properties starting mid-May 2020.March 31, 2021 except for many of our international properties.
Non-gaming Revenues. Non-gaming revenues decreased 54.1% forFor the sixthree months ended June 30, 2020March 31, 2021, net revenues for Managed, International and CIE declined as compared to the sameFormer Caesars’ prior year period. Excluding the impact of the Divestitures, non-gaming revenues declined 52.0% for the six months ended June 30, 2020 compared to the same prior year period mainly due to the impactabsence of COVID-19reimbursed management costs related to Caesars Windsor remaining closed throughout the quarter. Excluding that, net revenues increased primarily related to increased revenue in our CIE business. Adjusted EBITDA for Managed, International and the related closures of our properties, including hotels, restaurants and entertainment venues in mid-March 2020 until reopening of hotels and restaurants starting mid-May 2020 based on government reopening guidelines.CIE increased as compared to Former Caesars’ prior period.
Corporate & Other
Three Months Ended March 31,Percent
Change
(Dollars in millions)20212020Variance
Revenues:
Other$4 $2 $2 100.0 %
Net Revenues$4 $2 $2 100.0 %
Adjusted EBITDA$(39)$(8)$(31)*
___________________
*    Not meaningful.
Gaming Expenses and Pari-Mutuel Commissions.Gaming expenses and pari-mutuelcommissions declined51.0% for the six months ended June 30, 2020 compared to the same prior year period. Excluding theimpactof the Divestitures, gaming expenses and pari-mutuelcommissions decreased42.9% for the six months endedJune 30, 2020compared to thesame prior year periodin conjunction with the previously discussed decrease in gaming revenues and pari-mutuel commissions.
Non-gaming Expenses. Non-gaming expenses declined 47.6% for the six months ended June 30, 2020 compared to the same prior year period. Excluding the impact of the Divestitures, non-gaming expenses decreased 44.9% for the six months ended June 30, 2020 compared to the same prior year period in conjunction with the previously discussed decrease in non-gaming revenues.
Marketing and Promotions Expenses. Marketing and promotions expenses declined 53.3% for the six months ended June 30, 2020 compared to the same prior year period. Excluding the impact of the Divestitures, marketing and promotions expense decreased 50.1% for the six months ended June 30, 2020 compared to the same prior year period. This decline was primarily due to savings achieved via the termination of certain marketing contracts, reductions in direct mail costs and continued company-wide changes in marketing and promotional activity. Additionally, to the extent possible, marketing and promotions expenses were reduced or eliminated during the closure of our properties from mid-March 2020 through mid-May 2020.
General and Administrative Expenses. General and administrative expenses declined 34.0% for the six months ended June 30, 2020 compared to the same prior year period. Excluding the impact of the Divestitures, general and administrative expenses decreased 28.5% for the six months ended June 30, 2020 compared to the same prior year period mainly due to the centralization of certain services provided to our properties and realized savings achieved through the continued consolidation of purchasing programs. Additionally, general and administrative expenses, including utilities and payroll expenses, were reduced following the closure of our properties in mid-March 2020 until reopening started in mid-May 2020.
Corporate Expenses. For the six months ended June 30, 2020 compared to the same prior year period, corporate expenses decreased 21.9% primarily due to reductions in salaries and wages, stock compensation expense, corporate bonus expense, captive insurance expense, certain professional fees and travel costs due to the COVID-19 impact for the six months ended June 30, 2020 compared to the same prior year period.
Depreciation and Amortization Expense. For the six months ended June 30, 2020 compared to the same prior year period, depreciation and amortization expense declined 13.1% mainly due to ceasing depreciation and amortization expense on assets held for sale. Excluding the impact of the Divestitures, depreciation and amortization expense decreased 6.7% for the six months ended June 30, 2020 compared to the same prior year period mainly due to many assets becoming fully depreciated in 2019.
Supplemental Unaudited Presentation of Consolidated Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) and Adjusted EBITDA for the Three and Six Months Ended June 30,March 31, 2021 and 2020 and 2019
Adjusted EBITDA (defined(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) income before interest expense, (benefit) provision for income taxes, unrealized (gain) loss on investments and marketable securities, depreciation and amortization, stock-based compensation, impairment charges, transaction expenses, severance expense, selling costs associated with the divestitures of properties, 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 certain non-recurring expenses such as
45

equipment,sign-on and (gain) loss related to divestitures.retention bonuses, business optimization expenses and transformation expenses, certain litigation awards and settlements, losses on inventory associated with properties temporarily closed as a result of the COVID-19 public health emergency, contract exit or termination costs, and certain regulatory settlements. Adjusted EBITDA also excludes the expense associated with certain of our GLPI Master Leaseleases as the transaction wasthese transactions were accounted for as a financing obligationobligations and the associated expense is included in interest expense. Adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with accounting principles generally accepted in the United States (“US GAAP”),GAAP. It 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 GLPI Master Leaseand VICI Properties, Inc. 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 our operating segments for the three and six months ended June 30,March 31, 2021 and 2020, and 2019, respectively, in addition to reconciling net income (loss) income to Adjusted EBITDA in accordance with US GAAP (unaudited, in thousands)(unaudited):
Three Months Ended June 30, 2020
WestMidwestSouthEastCentralCorporate and OtherTotal
Net (loss) income$(12,711) $1,378  $(10,912) $(30,456) $(20,452) $(26,843) $(99,996) 
Interest expense, net5,295  (32) 4,196  12,842  13,505  32,330  68,136  
Benefit for income taxes(5,392) (931) (2,757) (3,617) (1,247) (19,717) (33,661) 
Unrealized gain on investments and marketable securities—  —  —  —  —  (12,806) (12,806) 
Depreciation and amortization13,299  4,148  6,786  11,046  11,793  1,867  48,939  
Stock-based compensation—  1  1  —  —  4,227  4,229  
Transaction expenses (1)—  —  —  —  —  12,697  12,697  
Other (2)243  84  210  237  (6) 1,311  2,079  
Adjusted EBITDA$734  $4,648  $(2,476) $(9,948) $3,593  $(6,934) $(10,383) 
Three Months Ended March 31, 2021
(In millions)CEI
Add:
Disc. Ops (d)
Total (f)
Net loss attributable to Caesars$(423)$— $(423)
Net loss attributable to noncontrolling interests(1)— (1)
Discontinued operations, net of income taxes(7)7 — 
(Benefit) provision for income taxes(79)4 (75)
Other loss (a)
133 — 133 
Interest expense, net563 32 595 
Depreciation and amortization265 — 265 
Transaction costs and other operating costs (b)
20 — 20 
Stock-based compensation expense23 — 23 
Other items (c)
11 — 11 
Adjusted EBITDA$505 $43 $548 

43

Three Months Ended March 31, 2020
(In millions)CEI
Less: Divestitures (g)
Pre-Acq.
CEC (e)
Total (h)
Net income (loss) attributable to Caesars$(176)$48 $189 $61 
Net loss attributable to noncontrolling interests— — (1)(1)
(Benefit) provision for income taxes(37)— 54 17 
Other (income) loss (a)
23 — (641)(618)
Interest expense, net67 (4)333 396 
Depreciation and amortization50 (3)256 303 
Impairment charges161 (33)65 193 
Transaction costs and other operating costs (b)
8 — 21 29 
Stock-based compensation expense6 — 10 16 
Other items (c)
1 — 13 14 
Adjusted EBITDA$103 $8 $299 $410 
Three Months Ended June 30, 2019
WestMidwestSouthEastCentralCorporate and OtherTotal
Includes Divestitures:
Net (loss) income$11,348  $21,435  $12,747  $15,981  $13,070  $(55,645) $18,936  
Interest expense, net4,982  (1) 4,353  12,691  13,306  36,467  71,798  
(Benefit) provision for income taxes4,283  7,578  1,923  6,541  1,657  (11,564) 10,418  
Unrealized loss on investments and marketable securities—  —  —  —  —  1,398  1,398  
Depreciation and amortization13,508  7,714  9,850  12,240  11,480  1,741  56,533  
Stock-based compensation—  10  —  —  —  6,499  6,509  
Transaction expenses (1)—  —  —  —  —  7,292  7,292  
Other (3)184  17  236  (35) 89  5,286  5,777  
 Adjusted EBITDA$34,305  $36,753  $29,109  $47,418  $39,602  $(8,526) $178,661  
Divestitures:
Net income$—  $4,737  $—  $3,107  $—  $—  $7,844  
Provision for income taxes—  1,241  —  1,156  —  —  2,397  
Depreciation and amortization—  1,950  —  1,643  —  —  3,593  
Stock-based compensation—  4  —  —  —  —  4  
Other (3)—  —  —  (2) —  —  (2) 
Total Divestitures (4)$—  $7,932  $—  $5,904  $—  $—  $13,836  
Excluding Divestitures:
Net (loss) income$11,348  $16,698  $12,747  $12,874  $13,070  $(55,645) $11,092  
Interest expense, net4,982  (1) 4,353  12,691  13,306  36,467  71,798  
(Benefit) provision for income taxes4,283  6,337  1,923  5,385  1,657  (11,564) 8,021  
Unrealized loss on investments and marketable securities—  —  —  —  —  1,398  1,398  
Depreciation and amortization13,508  5,764  9,850  10,597  11,480  1,741  52,940  
Stock-based compensation—  6  —  —  —  6,499  6,505  
Transaction expenses (1)—  —  —  —  —  7,292  7,292  
Other (3)184  17  236  (33) 89  5,286  5,779  
Total Excluding Divestitures (5)$34,305  $28,821  $29,109  $41,514  $39,602  $(8,526) $164,825  
____________________

(a)Other loss for the three months ended March 31, 2021 primarily represents a loss on the change in fair value of the derivative liability related to the 5% Convertible Notes slightly offset by gains on foreign currency exchange and investments held. Other (income) loss for the three months ended March 31, 2020 primarily represents a gain on the change in fair value of the of the derivative liability related to the 5% Convertible Notes and losses on investments.
Six Months Ended June 30, 2020
WestMidwestSouthEastCentralCorporate and OtherTotal
Net loss$(104,011) $(15,239) $(24,910) $(32,647) $(15,728) $(83,099) $(275,634) 
Interest expense, net10,466  (42) 8,529  25,661  26,933  63,053  134,600  
Benefit for income taxes(16,720) (3,658) (4,286) (3,229) (1,285) (41,655) (70,833) 
Loss on extinguishment of debt—  —  —  —  —  158  158  
Unrealized loss on investments and marketable securities—  —  —  —  —  10,202  10,202  
Depreciation and amortization27,237  8,670  13,906  22,287  23,556  3,716  99,372  
Stock-based compensation—  3  3  —  —  9,965  9,971  
Transaction expenses (1)—  —  —  —  —  21,991  21,991  
Other (2)103,387  36,701  21,986  265  14  (16) 162,337  
Adjusted EBITDA$20,359  $26,435  $15,228  $12,337  $33,490  $(15,685) $92,164  

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Six Months Ended June 30, 2019
WestMidwestSouthEastCentralCorporate and OtherTotal
Includes Divestitures:
Net (loss) income$15,665  $43,590  $32,956  $27,149  $25,948  $(88,143) $57,165  
Interest expense, net10,072  3  8,701  25,530  26,580  74,422  145,308  
(Benefit) provision for income taxes5,677  13,252  4,881  9,695  2,575  (15,257) 20,823  
Unrealized loss on investments and marketable securities—  —  —  —  —  2,858  2,858  
Depreciation and amortization26,651  16,135  20,865  24,389  22,690  3,560  114,290  
Stock-based compensation—  25  9  7  —  11,416  11,457  
Transaction expenses (1)—  —  —  —  —  9,186  9,186  
Other (3)283  72  368  152  132  (16,781) (15,774) 
 Adjusted EBITDA$58,348  $73,077  $67,780  $86,922  $77,925  $(18,739) $345,313  
Divestitures:
Net income$—  $9,887  $—  $5,229  $—  $—  $15,116  
Interest expense, net—  —  —  23  —  —  23  
Provision for income taxes—  2,616  —  1,730  —  —  4,346  
Depreciation and amortization—  4,140  —  3,670  —  —  7,810  
Stock-based compensation—  11  —  7  —  —  18  
Other (3)—  —  —  78  —  —  78  
Total Divestitures (6)$—  $16,654  $—  $10,737  $—  $—  $27,391  
Excluding Divestitures:
Net (loss) income$15,665  $33,703  $32,956  $21,920  $25,948  $(88,143) $42,049  
Interest expense, net10,072  3  8,701  25,507  26,580  74,422  145,285  
(Benefit) provision for income taxes5,677  10,636  4,881  7,965  2,575  (15,257) 16,477  
Unrealized loss on investments and marketable securities—  —  —  —  —  2,858  2,858  
Depreciation and amortization26,651  11,995  20,865  20,719  22,690  3,560  106,480  
Stock-based compensation—  14  9  —  —  11,416  11,439  
Transaction expenses (1)—  —  —  —  —  9,186  9,186  
Other (3)283  72  368  74  132  (16,781) (15,852) 
Total Excluding Divestitures (5)$58,348  $56,423  $67,780  $76,185  $77,925  $(18,739) $317,922  
(1)(b)Transaction expenses costs and other operating costs for the three months ended March 31, 2021 and 2020primarily represent costs related to the pendingWilliam Hill Acquisition and the Merger, various contract or license termination exit costs, professional services, other acquisition of Caesars for the threecosts and six months ended June 30, 2020 and 2019, and costs related to the acquisitions of Elgin and Tropicana for the three and six months ended June 30, 2019.severance costs.
(2)(c)Other items primarily represent certain consulting and legal fees, rent for the threenon-operating assets, relocation expenses, and six months ended June 30, 2020, is comprised of severance expense, (gain) loss on the sale or disposal of property and equipment, equity in loss of unconsolidated affiliate, and selling costs associated with the divestitures of Kansas City, Vicksburg, Shreveport, and MontBleu. For the six months ended June 30, 2020, other is also comprised of impairment charges.business optimization expenses.
(3)(d)Other, for the three and six months ended June 30, 2019, is comprised of severance expense, (gain) loss on the sale or disposal of property and equipment, equity in loss of unconsolidated affiliate,Discontinued operations include Horseshoe Hammond, Caesars Southern Indiana, Harrah’s Louisiana Downs, and the gain associated withCaesars UK group, including Emerald Resorts & Casino. Such figures are based on unaudited internal financial statements and have not been reviewed by the sales of PresqueCompany’s auditors and Nemacolin. For the six months ended June 30, 2019, other is also comprised of impairment charges.
(4)Figures are for Mountaineer, Cape Girardeau and Caruthersville for the three months ended June 30, 2019.do not conform to GAAP.
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(5)(e)TotalPre-acquisition CEC represents results of operations for Former Caesars prior to the Merger. Such figures are based on unaudited internal financial statements and have not been reviewed by the Company’s auditors and, for the 2020 periods, do not conform to GAAP.
(f)Includes results of operations from discontinued operations. Such presentation does not conform to GAAP or the Securities and Exchange Commission rules for pro forma presentation; however, we believe that the additional financial information will be helpful to investors in comparing current results with results of prior periods. This is non-GAAP data and should not be considered a substitute for data prepared in accordance with GAAP, but should be viewed in addition to the results of operations reported by the Company.
(g)Divestitures for the three months ended June 30, 2019 exclude theMarch 31, 2020 include results of operations for Mountaineer, Cape GirardeauEldorado Shreveport, Kansas City, Vicksburg and Caruthersville. Totaldiscontinued operations of Harrah’s Reno and Bally’s Atlantic City. Such figures forare based on unaudited internal financial statements and have not been reviewed by the six months ended June 30, 2019 exclude theCompany’s auditors and do not conform to GAAP.
(h)Excludes results of operations for Presque for the period beginning January 1, 2019from divestitures as detailed in (g) and ending January 11, 2019, Nemacolin for the period beginning January 1, 2019 and ending March 8, 2019, and Mountaineer, Cape Girardeau and Caruthersville for the six months ended June 30, 2019.includes results of operations of Former Caesars, including discontinued operations. Such presentation does not conform to GAAP or the Securities and Exchange Commission rules for pro forma presentation; however, we believe that the additional financial information will be helpful to investors in comparing current results with results of prior periods. This is non-GAAP data and should not be considered a substitute for data prepared in accordance with GAAP, but should be viewed in addition to our reported results of operations.
(6)Figures are for Presque for the period beginning January 1, 2019 and ending January 11, 2019, Nemacolin for the period beginning January 1, 2019 and ending March 8, 2019 and Mountaineer, Cape Girardeau and Caruthersville for the six months ended June 30, 2019.
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 flowflows from our subsidiaries and our ability to raise capital. Our primary sources of liquidity and capital resources have beenare existing cash on hand, cash flowflows from operations, availability of borrowings under our revolving credit facility,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 investments to maintain the quality of our properties. Beginning on May 18,
During 2020, we began reopening our properties and as of June 30, 2020 we have resumed operations at all of our properties, with the exception of Elgin and Trop AC which reopened on July 1 and July 2, 2020, respectively. Inin an effort to mitigate the impacts of the COVID-19 public health emergency on our business and maintain liquidity, we furloughed approximately 90% of our employees beginning on April 11, 2020. We have resumed operations at all of our properties, with the exception of Lake Charles which was severely damaged by Hurricane Laura, and many of our international properties. A portion of the workforce has returned to service as theour properties have resumed operations with limited capacities and in compliance with operating restrictions in accordance withimposed by governmental or tribal orders, directives and guidelines. As a result of these payroll changes combined with other cost saving measures, our operating expenses were reduced significantly.
As of March 31, 2021, our cash on hand and revolving borrowing capacity was as follows:
(In millions)March 31, 2021
Cash and cash equivalents$1,794 
Revolver capacity2,210 
Revolver capacity committed to letters of credit(82)
Available revolver capacity committed as regulatory requirement(48)
Total$3,874 
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 of approximately £2.9 billion. The William Hill Acquisition was consummated on April 22, 2021, for approximately $4.0 billion, based on the GBP:USD exchange rate on the closing date. As of March 31, 2021, we had restricted cash of approximately $2.1 billion which we applied to pay a portion of the purchase price of the acquisition. We entered into a foreign exchange forward contract to hedge the risk of appreciation of the GBP denominated purchase price for the William Hill Acquisition. On March 25, 2021, the forward contract was settled, for which the Company received $41 million in proceeds.
On September 29, 2020, the Company entered into a debt financing commitment letter pursuant to which the lenders party thereto committed to arrange and provide a newly formed subsidiary of the Company with (a) a £1.0 billion senior secured 540-day bridge loan facility, (b) a £116 million senior secured 540-day revolving credit facility and (c) a £503 million senior secured 60-day bridge loan facility (collectively, the “Debt Financing”), which was amended and restated on December 11, 2020 in order to join additional lenders as parties thereto.
Pending negotiations of the definitive loan agreement for the Debt Financing, on October 6, 2020, we entered into a £1.5 billion interim facilities agreement (the “Interim Facilities Agreement”) with Deutsche Bank AG, London Branch and JPMorgan Chase Bank, N.A. to provide: (a) a 90-day £1.0 billion interim asset sale bridge facility and (b) a 90-day £503 million interim cash confirmation bridge facility, which Interim Facilities Agreement was amended and restated on December 11, 2020 in order to join additional lenders as parties thereto.
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In connection with the William Hill Acquisition, on April 22, 2021, a newly formed subsidiary of the Company entered into a Credit Agreement (the “Bridge Credit Agreement”) with certain lenders party thereto and Deutsche Bank AG, London Branch, as administrative agent and collateral agent, pursuant to which the lenders party thereto provided the Debt Financing. The Bridge Credit Agreement provides for (a) a 540-day £1.0 billion asset sale bridge facility, (b) a 60-day £503 million cash confirmation bridge facility and (c) a 540-day £116 million revolving credit facility. The proceeds of the bridge loan facilities provided under the Bridge Credit Agreement were used (i) to pay a portion of the cash consideration for the acquisition and (ii) to pay fees and expenses related to the acquisition and related transactions. The proceeds of the revolving credit facility under the Bridge Credit Agreement will be used for working capital and general corporate purposes. The Interim Facilities Agreement was terminated upon the execution of the Bridge Credit Agreement for the Debt Financing. The Bridge Credit Agreement is included within William Hill’s non-U.S. operations which is expected to be divested.
We expect that our primary capital requirements going forward will relate to the operation and maintenance of our properties, taxes, servicing our outstanding indebtedness, and rent payments under our GLPI Master Lease, the VICI Leasesleases 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 20202021 are expected to significantly increase as a result of the additional properties acquired in the Merger. In addition to our future capital expenditures for the normal course of business, weMerger and new development projects. We funded $400 million to escrow as of the closing of the Merger and willhave begun to utilize those funds in accordance with a three year capital expenditure plan in the state of New Jersey. We will also be required to fund a similarThis amount is currently included in restricted cash. As of March 31, 2021, our restricted cash balance in the escrow account with $25was $376 million for improvements at our racing properties within the state of Indiana. During the remainder of 2020, we plan to spend an estimated $150 million to $175 million onfuture capital expenditures. We expect to use cash on hand and cash generated from operations to meet such obligations.
In an effort to maintain liquidity and provide financial flexibility as the effects of COVID-19 continue to evolve and impact global financial markets, we borrowed $465.0 million under our revolving credit facility on March 16, 2020. We repaid $357.0 million during the second quarter and had $108.0 million outstanding as of June 30, 2020. In addition, we had $372.9 million of available borrowing capacity, after consideration of $19.1 millionexpenditures in outstanding letters of credit, under our Revolving Credit Facility. On July 1, 2020, we utilized proceeds from the sale of our interests in Kansas City and Vicksburg to pay down the remaining $108.0 million on the revolving credit facility.
On June 19, 2020, we completed a public offering of 20,700,000 shares (including the shares sold pursuant to the underwriters’ option) of common stock, at a public offering price of $39.00 per share, with proceeds of $772.4 million, net of fees and estimated expenses of $34.9 million.
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New Jersey.
As a condition of June 30, 2020, our cash on handthe extension of the casino operating contract and revolving borrowing capacity was as follows:
June 30, 2020
(in thousands)
Cash and cash equivalents$950,483 
Revolver capacity392,000 
Revolver capacity committed to letters of credit(19,135)
Total$1,323,348 

On July 6, 2020, we issued $3.4 billion of 2025 Secured Notes, $1.8 billion of 2027 Senior Notes and $1.0 billion of CRC Secured Notes in connection with the Merger (collectively, the “Debt Financing”).
On July 20, 2020, in connection with the Merger, we consummated the sale leaseback transactions related toground lease for Harrah’s New Orleans, we are also required to make a capital investment of $325 million in Harrah’s LaughlinNew Orleans by July 15, 2024.
On August 27, 2020, Hurricane Laura made landfall on Lake Charles as a Category 4 storm. The hurricane severely damaged Lake Charles and Harrah’s Resort Atlantic City, including the Harrah’s Atlantic City Waterfront Conference Center, for approximately $1.82 billion of net proceeds. Additionally, we received a one-time payment from VICI of approximately $1.38 billion for amendmentsCompany has begun to VICI Leases. Furthermore, we entered intoreceive insurance proceeds related to, in part, estimated damages and repairs that have been incurred to the ERI Revolving Credit Facility which provides for a five-year senior secured revolving credit facility in an aggregate principal amount of $1.2 billion, including an incremental agreement which is, as discussed below, subject to regulatory approval. In addition, the borrowing capacity and obligations under CRC’s existing $1.0 billion revolving credit facility remain outstanding following the consummation of the Merger.
In connection with the consummation of the Merger, on July 20, 2020, our current and future liquidity significantly changed.property. A portion of the proceeds from our newly issued debt and proceeds we received from VICI, as well as cash on hand generated from our sale of common stock, were used (a) to fund a portion of the cash consideration of the Merger, (b) to prepay in full the loans outstanding and terminate all commitments under our existing Credit Agreement, dated as of April 17, 2017, (c) to satisfy and discharge our Senior Notes, (d) to repay $975 million of the outstanding amount under the existing CRC revolving credit facility, (e) to repay in full the loans outstanding and terminate all commitments under the existing CEOC, LLC Credit Agreement, dated as of October 6, 2017, (f) to pay fees and expenses related to the financing arrangements, and (g) for general corporate use. As a result of these transactions, we may incur a loss on extinguishment of debt during the third quarter of 2020, which could be significant.
Following the completion of the transactions described in conjunction with the closing of the Merger, we estimate our total liquidityis expected to be approximately $4.3 billion, which includes approximately $2.3 billionutilized for the construction of cash on hand, and $2.0 billion of availability on our revolving credit facilities. We expect to obtain an additional $210 million of capacity on our revolving credit facilities upon regulatory approval and generate approximately $500 million of additional proceeds from VICI with a sale of excess land and a new mortgage note duringland-based casino which is expected to be completed in 2022.
Cash spent for capital expenditures totaled $65 million and $23 million for the third quarterthree months ended March 31, 2021 and 2020, respectively. The following table summarizes our capital expenditures for the three months ended March 31, 2021, and an estimated range of 2020.capital expenditures for the remainder of 2021:
Three Months Ended
March 31, 2021		Estimate of Remaining
Capital Expenditures for 2021
(In millions)ActualLowHigh
Atlantic City$12 $165 $215 
Indiana racing operations2 5 15 
Total estimated capital expenditures from restricted cash14 170 230 
Lake Charles12 65 115 
New Orleans3 25 50 
Other growth and maintenance projects36 335 360 
Total estimated capital expenditures from unrestricted cash and insurance proceeds51 425 525 
Total$65 $595 $755 
A significant portion of our liquidity needs are for debt service and payments associated with our leases. In addition to our newly issued debt, our debt obligations increased as a result of outstanding debt of Former Caesars that remained outstanding following the consummation of the Merger. Our estimated debt service (including principal and interest) is $200approximately $610 million for the remainder of 2020. The convertible notes assumed in connection with the Merger are expected to be settled during 2020. The convertible notes are convertible into weighted average of the number of shares of Company Common Stock and amount of cash actually received per share by holders of common stock of Former Caesars that made elections for consideration in the Merger.2021. We currently estimate a cash payment of approximately $1.3 billion to settle the convertible notes during 2020. Wealso lease certain real property assets from third parties, including GLPI and VICI. We estimate our lease payments to be approximately $540$900 million for the remainder of 2020.2021.
The 5% Convertible Notes are convertible at any time at the option of the holders thereof or the Company. We do not intend to exercise our option to cause the conversion of the 5% Convertible Notes prior to maturity. During the three months ended March 31, 2021, conversions have been negligible. At such time as the holders of the 5% Convertible Notes elect to cause conversion, we estimate using cash of $379 million and issuing 4.5 million shares to settle the remaining outstanding 5% Convertible Notes as of March 31, 2021.
The Company periodically divests assets that it does not consider core to its business to raise capital or, in some cases, to comply with conditions, terms, obligations or restrictions imposed by antitrust, gaming and other regulatory entities.
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On April 24,6, 2021, the Company consummated the sale of the equity interests of MontBleu for $15 million, subject to a customary working capital adjustment, resulting in a loss of approximately $2 million. The purchase price is due no later than the first anniversary of the closing of the sale.
On September 3, 2020, wethe Company and VICI entered into a definitive purchase agreement with Twin River to sell Eldorado ShreveportHarrah’s Louisiana Downs with Rubico Acquisition Corp. for $22 million, subject to a customary working capital adjustment, where the proceeds will be split between the Company and MontBleu for aggregate consideration of $155 million.VICI. The agreementsale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in the firstthird quarter of 2021.
On October 27, 2020, the Company entered into an agreement to sell Evansville to GLPI and Bally’s Corporation for $480 million in cash, subject to a customary working capital adjustment. The sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in mid-2021.
On December 1, 2020, the Company entered into a definitive agreement with CQ Holding Company, Inc. to sell the equity interests of Baton Rouge. The definitive agreement provides that the consummation of the sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in the third quarter of 2021.
On December 24, 2020, the Company entered into an agreement to sell the equity interests of Caesars Southern Indiana to the EBCI for $250 million, subject to a customary working capital adjustment. The sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in the third quarter of 2021.
WeIn addition to the agreements above, we also expect to enter into additional agreements to divest three properties in the state of Indiana as required by the Indiana Gaming Commission Horseshoe Hammond prior to December 31, 2020.2021. Further, we expect to divest of several other non-core properties including our international properties within our Caesars UK group, which includes Emerald Resorts Casino.
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 borrowings incurred under the ERI Revolving Credit Facility, the CRC revolving credit facility and Convention Center Mortgage Loan andour current liquidity, cash generatedflows from operations, the equity offering consummated in July 2020availability of borrowings under committed credit facilities and proceeds from the announced asset sales net of associated taxes, will be sufficient to fund our operations, capital requirements and service our outstanding indebtedness for the next twelve months. However, the COVID-19 public health emergency has had, and is expected to continue to have, an adverse effect on our business, financial condition and results of operations and has caused, and may continue to cause, disruption in the financial markets. While we have undertaken efforts to mitigate the impacts of the COVID-19 public health emergency on our business and maintain liquidity, the extent of the ongoing and future effects of the COVID-19 public health
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emergency on our business, results of operations and financial condition is uncertain and may adversely impact our liquidity in the future. Our ability to access additional capital may be adversely affected by the disruption in the financial markets caused by the COVID-19 public health emergency, restrictions on incurring additional indebtedness contained in the agreements governing our indebtedness and the impact of the public health emergency on our business, results of operations and financial condition.
Operating Cash Flows. For the six months ended June 30, 2020, cash flows used by operating activities totaled $80.5 million compared to $127.9 million provided for the same prior year period. Our operating cash flows generally follow trends in operating income, excluding non-cash charges. Changes in the balance sheet accounts and the timing of significant payments, including interest, rent and tax payments will impact our operating cash flows. The decrease in operating cashflowscompared to the same prior year period was primarily due to cash used to continue to pay operating expenses, including rent and interest payments, during the temporary closure of our properties as a result of the COVID-19 public health emergency from mid-March to mid-May 2020.
Investing Cash Flow and Capital Expenditures. Net cash flows used in investing activities totaled $41.4 million for the six months ended June 30, 2020 compared to $75.5 million provided by investing activities in the same prior year period. Our investing cash flows generally fluctuate depending upon the timing of strategic and maintenance capital expenditures in addition to business acquisitions or dispositions. Net cash used in investing activities for the six months ended June 30, 2020 was primarily due to $41.0 million cash used for capital expenditures for various property enhancement and maintenance projects along with equipment purchases. Net cash flows provided by investing activities for the six months ended June 30, 2019 was primarily due to $178.9 million in net proceeds from the sales of Presque Isle Downs and Nemacolin offset by cash used totaling $97.1 million for capital expenditures.
Financing Cash Flow. Net cash provided by financing activities for the six months ended June 30, 2020 totaled $862.7 million compared to $253.2 million used in financing activities for the same prior year period. The cash provided by financing activities for the six months ended June 30, 2020 was principally due to $772.4 million of proceeds from issuance of common stock and $465.0 million of borrowings under the Revolving Credit Facility offset by $357.0 million and $10.0 million of payments under the Revolving Credit Facility and Term Loan, respectively. The cash used in financing activities for the six months ended June 30, 2019 was principally due to net payments under the Revolving Credit Facility partially funded by the proceeds from the sales of Presque and Nemacolin.
Debt and Master Lease Covenant Compliance
The Caesars Resort Collection (“CRC”) Credit Agreement, the CEI Revolving Credit Facility, and the indentures related to the CEI Senior Secured Notes, the CEI Senior Notes, the CRC Senior Secured Notes and the CRC 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 our ability to (among other items) incur additional indebtedness, make investments, make restricted payments, including dividends, grant liens, sell assets and make acquisitions. The indenture for the 5% Convertible Notes contains limited covenants as a result of amendments that became effective in connection with the consummation of the Merger.
The CRC Revolving Credit Facility and CEI Revolving Credit Facility include a maximum first-priority net senior secured leverage ratio financial covenant of 6.35:1, which is applicable solely to the extent that certain testing conditions are satisfied. Failure to comply with such covenants could result in an acceleration of the maturity of indebtedness outstanding under the relevant debt document. Due to the ongoing effects of the COVID-19 public health emergency, our ability to maintain compliance with the financial covenants under ourcurrent terms of the CRC Credit Agreement and the CEI Revolving Credit Facility was negatively impacted. On June 15, 2020, we entered into an amendment to the Credit Facility which provided relief forprovide that the financial covenant requirement under the existing Credit Facility agreementmeasurement period is not effective through September 30, 2021. During2021 so long as CRC and the covenant relief period we were required to maintainCompany, respectively, comply with a minimum liquidity level, including unrestricted cash and unused commitmentsrequirement, which includes any such availability under the Revolving Credit Facility of $200.0 million.applicable revolving credit facilities.
Additionally, ourThe GLPI Master Lease containsand VICI leases contain certain operating, capital expenditure and financial covenants, thereunder,including minimum capital improvement expenditures and our ability to maintain compliance with these covenants was also negatively impacted. On June 15, 2020, we entered into an amendment to the GLPI Master Lease which, among other things, provides certain relief under these covenants in the eventa rent coverage ratio.
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As of June 30, 2020,March 31, 2021, we were in compliance with all of the applicable financial covenants under the 7% Senior Notes due 2023, 6% Senior Notes due 2025, 6% Senior Notes due 2026, and the Lumière Loan.
described above.
Share Repurchase Program
OnIn November 8, 2018, we issued a press release announcing that itsour Board of Directors has 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 June 30, 2020,March 31, 2021, we acquired 223,823 shares of common stock under the program at an aggregate value of $9.1$9 million and an average of $40.80 per share. No shares were repurchased during the sixthree months ended June 30, 2020March 31, 2021 and 2019.2020.
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DebtContractual Obligations and GLPI Master Lease
Term Loan and Revolving Credit Facility
As of June 30, 2020, we were party to a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto dated as of April 17, 2017 (as amended, the “Credit Facility”), consisting of a $1.5 billion term loan facility (the “Term Loan Facility” or “Term Loan”) and a $500.0 million revolving credit facility (the “Revolving Credit Facility”). The Credit Facility provided that our obligations under the Revolving Credit Facility would mature on October 1, 2023 and our obligations under the Term Loan Facility would mature on April 17, 2024.
As of June 30, 2020, we had $488.8 million outstanding on the Term Loan and $108.0 million outstanding under the Revolving Credit Facility. During the six months ended June 30, 2020, we elected to draw down $465.0 million of availability under the Revolving Credit Facility as a precautionary measure to enhance our liquidity and provide financial flexibility as the effects of COVID-19 continue to evolve and impact global financial markets and we repaid $357.0 million of the outstanding balance. We had $372.9 million of available borrowing capacity, after consideration of $19.1 million in outstanding letters of credit under our Revolving Credit Facility, as of June 30, 2020.
The interest rate per annum applicable to loans under the Revolving Credit Facility are, at our option, either LIBOR plus a margin ranging from 1.75% to 2.50% or a base rate plus a margin from 0.75% to 1.50%, the margin is based on our total leverage ratio. The interest rate per annum applicable to the loans under the Term Loan Facility is, at our option, either LIBOR plus 2.25% or a base rate plus 1.25%; provided, however, that in no event will LIBOR be less than zero or the base rate be less than 1.00%. Additionally, we pay a commitment fee on the unused portionCompany assumed various long-term debt arrangements, financing obligations and leases, previously described, associated with Former Caesars as result of the Revolving Credit Facility of 0.50% per annum. As of June 30, 2020, the weighted average interest rates on the Term Loan and Revolving Credit Facility were 3.25% and 3.13%, respectively.
On July 20, 2020, in connection with the Merger, all amounts outstanding under the Credit Facility, including accrued interest and fees, were paid in full, the commitment to extend credit under the Credit Facility were terminated and all guarantees and security interests in respect of the Credit Facility were released.
Senior Notes
6% Senior Notes due 2026
On September 20, 2018, Delta Merger Sub, Inc. (“Escrow Issuer”), a Delaware corporation and a wholly-owned subsidiary of the Company, issued $600 million aggregate principal amount of 6.0% senior notes due 2026 (the “6% Senior Notes due 2026”) pursuant to an indenture, dated as of September 20, 2018 (the “2026 Indenture”), between Escrow Issuer and U.S. Bank, National Association, as Trustee. Interest on the 6% Senior Notes due 2026 will be paid semi-annually in arrears on March 15 and September 15.
The 6% Senior Notes due 2026 were general unsecured obligations of Escrow Issuer’s upon issuance and, upon the assumption of such obligations by the Company and the subsidiary guarantors (the “Guarantors”) upon consummation of the Tropicana Acquisition, became general unsecured obligations of the Company and the Guarantors, ranking senior in right of payment to all of the Company’s existing and future debt that is expressly subordinated in right of payment to the 6% Senior Notes due 2026 and the guarantees, ranking equally in right of payment with all of the applicable obligor’s existing and future senior liabilities, including the obligations under the Company’s existing 7% Senior Notes due 2023 and 6% Senior Notes due 2025, and are effectively subordinated to all of the applicable obligor’s existing and future secured debt, including indebtedness under the Company’s Term Loan and Revolving Credit Facility and the Lumière Note (as defined in the 2026 Indenture), in each case, to the extent of the value of the collateral securing such debt. In addition, the 6% Senior Notes due 2026 and the related guarantees are structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s subsidiaries and other entities in which the Company has an equity interest that do not guarantee the 6% Senior Notes due 2026 (other than indebtedness and liabilities owed to the Company or the Guarantors).
In connection with the Merger, $210 million aggregate principal amount of the 6% Senior Notes due 2026 was redeemed on July 25, 2020 at a redemption price of 106% of such aggregate principal amount, and the remaining and outstanding principal amount of the 6% Senior Notes due 2026 was redeemed on July 26, 2020 at a redemption price of 100% of the aggregate principal amount thereof plus the Applicable Premium as defined in the 2026 Indenture.
6% Senior Notes due 2025
On March 29, 2017, Eagle II issued at par $375.0 million aggregate principal amount of 6.0% senior notes due 2025 (the “6% Senior Notes due 2025”) pursuant to an indenture, dated as of March 29, 2017 (the “2025 Indenture”), between Eagle II and U.S. Bank, National Association, as Trustee. The 6% Senior Notes due 2025 will mature on April 1, 2025, with interest
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payable semi-annually in arrears on April 1 and October 1. In connection with the consummation of the Isle Acquisition on May 1, 2017,Merger. See Note 2 for a description of the Company assumed Eagle II’s obligations under the 6% Senior Notes due 2025Merger and the 2025 Indenturerelated obligations assumed and certain of the Company’s subsidiaries (including Isle and certain of its subsidiaries) executed guarantees of the Company’s obligations under the 6% Senior Notes due 2025.
On September 13, 2017, the Company issued an additional $500.0 million principal amount of its 6% Senior Notes due 2025 at an issue price equal to 105.5% of the principal amount of the 6% Senior Notes due 2025. The additional notes were issued pursuant to the 2025 Indenture that governs the 6% Senior Notes due 2025. The Company used the proceeds of the offering to repay $78.0 million of outstanding borrowings under the previous revolving credit facility and used the remainder to repay $444.5 million outstanding borrowings under the previous term loan facility and related accrued interest.
In connection with the Merger, the 6% Senior Notes due 2025 were redeemed on July 25, 2020 at a redemption price of 104.5% of the aggregate principal amount.
7% Senior Notes due 2023
On July 23, 2015, the Company issued at par $375.0 million in aggregate principal amount of 7.0% senior notes due 2023 (“7% Senior Notes due 2023”) pursuant to an indenture, dated as of July 23, 2015 (the “2023 Indenture”), between the Company and U.S. Bank, National Association, as Trustee. The 7% Senior Notes due 2023 will mature on August 1, 2023, with interest payable semi-annually in arrears on February 1 and August 1 of each year.
In connection with the Merger, the 7% Senior Notes due 2023 were redeemed on July 25, 2020 at a redemption price of 103.5% of the aggregate principal amount.
Lumière Loan
We borrowed $246.0 million from GLPI to fund the purchase price of the real estate underlying Lumière. The Lumière Loan bears interest at a rate equal to (i) 9.09% until October 1, 2019 and (ii) 9.27% until October 1, 2020, and matures on October 1, 2020. The Lumière Loan was secured by a first priority mortgage on the Lumière real property that was released pursuant to its terms on October 1, 2019. On June 24,2020, we received approval from Missouri Gaming Commission to sell Lumière to GLPI and leaseback the property under a long term financing obligation. The loan is scheduled to mature during 2020; however, we have classified the loan balance as long-term debt as of June 30, 2020 as the Lumière real estate will be refinanced under a long-term lease, or financing obligation, during the third quarter of 2020.
GLPI Master Lease
Our GLPI Master Lease is accounted for as a financing obligation and totaled $975.8 million as of June 30, 2020. Additionally, our GLPI Master Lease contains certain operating, capital expenditure and financial covenants thereunder, and our ability to maintain compliance with these covenants was also negatively impacted. On June 15, 2020, we entered into an amendment to the GLPI Master Lease which, among other things, provides certain relief under these covenants in the event of facility closures due to pandemics, governmental restrictions and certain other instances of unavoidable delay. Subsequent to June 30, 2020, the amendment to the GLPI Master Lease became effective as we obtained all necessary approvals and the applicable waiting period expired. See Note 10 to our Consolidated Financial Statements8 for additional information about our GLPI Master Lease and related matters.
Contractual Obligations
contractual obligations. There have been no material changes during the sixthree months ended June 30, 2020March 31, 2021 to our contractual obligations as disclosed in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2019.
Summarized Information of Guarantors
Certain of our wholly-owned subsidiaries have fully and unconditionally guaranteed on a joint and several basis, the payment of all obligations under our 7% Senior Notes due 2023, 6% Senior Notes due 2025, 6% Senior Notes due 2026 and Credit Facility. There were no changes in our wholly-owned subsidiaries serving as guarantors, on a joint and several basis during the six months ended June 30, 2020. Our debt obligations as of June 30, 2020 are considered to be obligations of Eldorado Resorts, Inc., prior to the consummation of the Merger and our subsequent name change.
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The consolidating condensed balance sheet as of June 30, 2020 is as follows:

Obligor GroupNon-ObligorsConsolidating
and Eliminating
Entries		Eldorado
Resorts, Inc.
Consolidated
(in thousands)
Current assets$1,512,907  $21,830  $—  $1,534,737  
Intercompany (payables) receivables(7,831) 7,831  —  —  
Other non-current assets4,609,918  3,792  —  4,613,710  
Current liabilities461,638  14,364  —  476,002  
Non-current liabilities4,057,595  (1,599) —  4,055,996  
The consolidating condensed balance sheet as of December 31, 2019 is as follows:
Obligor GroupNon-ObligorsConsolidating
and Eliminating
Entries		Eldorado
Resorts, Inc.
Consolidated
(in thousands)
Current assets$582,918  $21,725  $—  $604,643  
Intercompany receivables (payables)1,790  (1,790) —  —  
Other non-current assets8,876,547  13,768  (3,854,405) 5,035,910  
Current liabilities673,403  15,043  —  688,446  
Non-current liabilities3,836,939  (2,089) —  3,834,850  
The consolidating condensed statement of operations for the three months ended June 30, 2020 is as follows:
Obligor GroupNon-ObligorsConsolidating and Eliminating EntriesEldorado Resorts, Inc. Consolidated
(in thousands)
Net revenues$125,514  $956  $—  $126,470  
Operating (loss) income(79,253) 926  —  (78,327) 
Interest expense, net(68,280) 144  —  (68,136) 
Net (loss) income(100,845) 849  —  (99,996) 
The consolidating condensed statement of operations for the three months ended June 30, 2019 is as follows:
Obligor GroupNon-ObligorsConsolidating and Eliminating EntriesEldorado Resorts, Inc. Consolidated
(in thousands)
Net revenues$635,597  $1,524  $—  $637,121  
Operating (loss) income101,623  927  —  102,550  
Interest expense, net(71,310) (488) —  (71,798) 
Net (loss) income78,757  198  (60,019) 18,936  
The consolidating condensed statement of operations for the six months ended June 30, 2020 is as follows:
Obligor GroupNon-ObligorsConsolidating
and Eliminating
Entries		Eldorado
Resorts, Inc.
Consolidated
(in thousands)
Net revenues$597,373  $2,166  $—  $599,539  
Operating (loss) income(204,125) 2,618  —  (201,507) 
Interest expense, net(134,954) 354  —  (134,600) 
Net (loss) income(278,167) 2,533  —  (275,634) 
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The consolidating condensed statement of operations for the six months ended June 30, 2019 is as follows:
Obligor GroupNon-ObligorsConsolidating
and Eliminating
Entries		Eldorado
Resorts, Inc.
Consolidated
(in thousands)
Net revenues$1,264,937  $8,007  $—  $1,272,944  
Operating income223,656  2,498  —  226,154  
Interest expense, net(144,575) (733) —  (145,308) 
Net income (loss)188,242  1,196  (132,273) 57,165  
Other Liquidity Matters
We are faced with certain contingencies involving litigation and environmental remediation and compliance. These commitments and contingencies are discussed in “Part II, Item 1. Legal Proceedings” and Note 148 to our unaudited consolidated condensed financial statements, both of which are included elsewhere in this report. In addition, new competition 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 in our Annual Report on Form 10-K for the year ended December 31, 2019 and “Part II, Item IA. Risk Factors” which is included in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.
Critical Accounting Policies
Our critical accounting policies disclosures are included in our Annual Report on Form 10-K for the year ended December 31, 2019. Except as described in Note 1 to the accompanying condensed notes of these consolidated financial statements, we believe there2020. There have been no material changes since December 31, 2019.2020. We have not substantively changed the application of our policies and there have been no material changes in assumptions or estimation techniques used as compared to prior periods.
those described in our Annual Report on Form 10-K for the year ended December 31, 2020.
Off-Balance Sheet Arrangements
We do not currently have any off-balance sheet arrangements.
ITEMItem 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.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 long-term variable-rate debt arrangements.
As of June 30, 2020, interest on borrowings under our Credit Facility was subject to fluctuation based on changes in short-term interest rates.
As of June 30, 2020,March 31, 2021, our long-term variable-rate borrowings totaled $488.8 million$6.3 billion under the Term LoanCRC term loans and $108.0 million wasno amounts were outstanding under the CEI Revolving Credit Facility and CRC Revolving Credit Facility. Long-term variable-rate borrowings under the Term Loan and the Revolving Credit FacilityCRC term loans represented approximately 22%42% of our long-term debt as of June 30, 2020.March 31, 2021. Of our $15.0 billion face value of debt, as of March 31, 2021, we have entered into seven interest rate swap agreements to fix the interest rate on $2.3 billion of variable rate debt, and $4.0 billion of debt remains subject to variable interest rates for the term of the agreement. During the sixthree months ended June 30, 2020,March 31, 2021, the weighted average interest rates on our variable and fixed rate debt were 3.23%3.36% and 6.56%6.40%, respectively.
LIBORThe London Inter-bank Offered Rate (“LIBOR”) is expected to be discontinued after 2021. The interest rate per annum applicable to loans under our credit facilities is, at our option, either LIBOR plus a margin or a base rate plus a margin. We intend to continue monitoring the developments with respect to the potential phasing out of LIBOR after 2021 and work with our lenders to ensure any transition away from LIBOR will have minimal impact on our financial condition, but can provide no assurances regarding the impact of the discontinuation of LIBOR.
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On October 9, 2020, the Company entered into a foreign exchange forward contract to hedge the risk of appreciation of the GBP denominated purchase price related to William Hill PLC, pursuant to which the Company agreed to purchase £536 million at a contracted exchange rate. On March 25, 2021, the forward contract was settled, for which the Company received $41 million in proceeds.
Subsequent to March 31, 2021, the Company entered into foreign exchange swap agreements in order to mitigate the risk of changes in foreign currency exchange rates. We are contracted to purchase £237 million at a contracted rate which we expect to settle in June 2021. We have also contracted to sell £487 million that we expect to settle in December 2021. We may elect to enter into additional such agreements as we continue to mitigate our exposure to changes in foreign currency exchange rates.
We evaluate our exposure to market risk by monitoring interest rates in the marketplace and have, on occasion, utilized derivative financial instruments to help manage this risk. We do not utilize derivative financial instruments for trading purposes. There were no other material quantitative changes in our market risk exposure, or how such risks are managed, for the sixthree months ended June 30, 2020.March 31, 2021.
ITEMItem 4.     CONTROLS AND PROCEDURES.Controls and Procedures
(a)Evaluation of Disclosure Controls and Procedures
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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 our management, including our Chief Executive Officerprincipal executive officer and Chief Financial Officer,principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q are effective to ensure that the information required to be disclosed by us in the reports that we file under the Exchange Act is recorded, processed, summarized, evaluated and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
(b)Changes in Internal Controls
The Company continues to integrate our internal controls over financial reporting following the Merger. As a result of these integration activities, certain controls will be evaluated and may be changed.
There were no changes in our internal control over financial reporting during the three months ended June 30, 2020March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II
- OTHER INFORMATION
ITEMItem 1.     LEGAL PROCEEDINGSLegal Proceedings
We areFor a party to various lawsuits, which have arisen in the normal coursediscussion of our business. Estimated losses are accrued for these lawsuits and claims when the loss is probable and can be estimated. The current liability for the estimated losses associated with those lawsuits is not material“Legal Proceedings,” refer to Note 8 to our consolidated condensed financial condition and those estimated losses are not expected to have a material impactstatements located elsewhere in this Quarterly Report on our results of operations.
Legal matters are discussed in greater detail in “Part I, Item 3. Legal Proceedings”Form 10-Q and Note 1711 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019.2020.
Cautionary Statement Regarding Forward-Looking Information
This report 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 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:
•the impact of the COVID-19 public health emergency on our business and financial condition;
•projections of future results of operations or financial condition;
•our ability to consummate the disposition of MontBleu, Eldorado Shreveport and certain of our other properties, including the planned sale of William Hill’s non-U.S. operations and the required divestitures of certain properties located in Indiana;
•expectations regarding our business and results of operations of our existing casino properties and prospects for future development;
•expectations regarding trends that will affect our market and the gaming industry generally 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, including the development of a mixed-use entertainment and hospitality destination expected to be located on unused land adjacent to the Pompano casino and racetrack, and additional acquisitions and divestitures;
•our ability to realize the anticipated benefits of the acquisition of CaesarsMerger, William Hill Acquisition and future development and acquisition opportunities; 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 may differ materially from any future results, 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
54

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:
•the extent and duration of the impact of the global COVID-19 public health emergency on the Company’s business, financial results and liquidity;
•the duration of closure of our properties, which we cannot predict at this time;
•the impact and cost of new operating procedures expected to be implemented upon re-opening of the Company’s casinos;
•the impact of actions we have undertaken to reduce costs and improve efficiencies to mitigate losses as a result of the COVID-19 public health emergency, which could negatively impact guest loyalty and our ability to attract and retain our employees;
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•the impact of the COVID-19 public health emergency and resulting unemployment and changes in general economic conditions on discretionary consumer spending and customer demand;
•our substantial indebtedness and significant financial commitments, including our obligations under our lease arrangements, could adversely affect our results of operations and our ability to service such obligations, react to changes in our markets and pursue development and acquisition opportunities;
•restrictions and limitations in agreements governing our debt and leased properties could significantly affect our ability to operate our business and our liquidity;
•risks relating to payment of a significant portion of our cash flow as debt service and rent under the GLPI Master Lease;leases of our casino properties with VICI and GLPI;
•financial, operational, regulatory or other potential challenges that may arise as a result of leasing of a number of our properties;
•our facilities operate in very competitive environments and we face increasing competition including through legalization of online betting and gaming;
•uncertainty regarding legalization of betting and online gaming in the jurisdictions in which we operate and conditions applicable to obtaining the licenses required to enable our betting and online gaming partnersus to conduct betting and online gaming activities;
•the ability to identify suitable acquisition opportunities and realize growth and cost synergies from any future acquisitions;
•future maintenance, development or expansion projects will be subject to significant development and construction risks;
•our gaming operations are highly regulated by governmental authorities 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;
•our ability to comply with certain covenants in our debt documents and lease arrangements;
•the effect of disruptions to our information technology and other systems and infrastructure;
•our ability to attract and retain customers;
•weather or road conditions limiting access to our properties;
•the effect of war, terrorist activity, acts of violence, natural disasters, public health emergencies and other catastrophic events;
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•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-K, Form 10-Q and Form 8-K filed with the Securities and Exchange Commission.
In addition, the acquisition of William Hill and the disposition of Evansville, Southern Indiana, Baton Rouge, Harrah’s Louisiana Downs and certain of our other properties, including the planned sale of William Hill’s non-U.S. operations and the required divestitures of certain properties located in Indiana, create additional risks, uncertainties and other important factors, including but not limited to:
•the possibility that we are not able to enter into agreements to sell assets that we intend to divest on terms that are acceptable to us;
•the possibility that post-closing regulatory approvals of the acquisition of William Hill PLC impose conditions or are not obtained;
•the possibility that the proposed transactions are not consummated when expected or at all because required regulatory or other approvals are not received or other conditions to the consummation thereof are not satisfied on a timely basis or at all;
•the possibility that one or more of such transactions do not close on the terms described herein or that we are required to modify aspects of one or more of such transactions to obtain, or otherwise take action to satisfy conditions imposed in connection with, required regulatory approvals;
•risks associated with increased leverage as a result of the William Hill Acquisition;
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•the possibility that the anticipated benefits of the proposed transactions are not realized when expected or at all;
•the incurrence of significant transaction and acquisition-related costs and the possibility that the transactions may be more expensive to complete than expected;
•competitive responses to the proposed transactions;
•legislative, regulatory and economic developments;
•the possibility that our business or William Hill’s business may suffer as a result of the announcement of the acquisition;
•the ability to retain certain of our key employees and William Hills’ key employees;
•the outcome of legal proceedings that may be instituted as a result of the proposed transactions;
•the impact of the proposed transactions, or the failure to consummate the proposed transactions, on our stock price;
•diversion of management’s attention from our ongoing operations; and
•the impact of the announcement or consummation of the proposed transactions on the Company’s relationships with third parties, which may make it more difficult to maintain business relationships.
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.
ITEMItem 1A. RISK FACTORSRisk Factors
A description of our risk factors can be found in “Part I, Item 1A. Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2019.2020. There have been no material changes to those risk factors during the sixthree months ended June 30, 2020, except for the following additional risk factors related to the impact of COVID-19 and the Merger.
The outbreak of COVID-19 has impacted our operations and caused an economic downturn, widespread unemployment and an adverse impact on consumer sentiment. Such negative impacts could continue for an extended period of time and may worsen.
On March 13, 2020, in response to the coronavirus public health emergency the U.S. government declared a national state of emergency. In an effort to help control the spread of COVID-19, public health officials imposed or recommended various measures, including social distancing, quarantine and stay-at- home or shelter-in-place directives, limitations on the size of gatherings, closures of work facilities, schools, public buildings and businesses, and cancellation of events, including sporting events, concerts, conferences and meetings. As a result of orders issued by governmental authorities in the states in which our properties, all of our properties were closed beginning on March 18, 2020. While our properties have reopened, our operations, financial results and cash flows have been affected by social distancing measures, including reduced gaming operations arising from the reconfiguration of our gaming floor, limitations on the number of customers present in our facilities, implementation of additional health and safety measures, restrictions on hotel, food and beverage outlets and limits on concerts, conventions or special events that would otherwise attract customers to our properties. We expect that our operations will continue to be impacted by such restrictions for the foreseeable future. In addition, our operations, financial results and cash flows would be further adversely affected by the implementation or extension of new or existing restrictions, including reinstatement of shelter-in-place requirements or additional restrictions on travel and business operations. The implementation of stay-at-home or additional social distancing and mitigation measures in response to COVID-19 or other public health emergencies could cause future closures of all or a portion of our properties, which would adversely affect operations, financial results and cash flows.
COVID-19 has materially adversely affected the economy and financial markets of the United States and the world and has resulted in widespread unemployment in the United States. Consumer demand for casino hotel and racetrack properties such as ours is particularly sensitive to downturns in the economy, unemployment and the associated impact on discretionary spending on leisure activities which bring demand for casino hotel properties such as ours. Reduced customer demand could result in lower occupancy rates, reduced visitation and additional disruptions in our casino business. The extent of changes in customer demand resulting from the economic downturn, widespread unemployment, reduced consumer confidence and consumer fears on our properties cannot reasonably be determined, but the impact of such factors may be significant and protracted.
As a result of the foregoing, we cannot predict the ultimate scope, duration and impact of the COVID-19 public health emergency, but we expect that it will continue to have a material impact on our business, financial condition, liquidity, results of operations (including revenues and profitability) and stock price for an extended period of time. The impact of the COVID-19 public health emergency may also have the effect of exacerbating many of the other risks described in our Annual Report on Form 10-K for the year ended December 31, 2019.
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We have undertaken aggressive actions to reduce costs and improve efficiencies to mitigate losses as a result of the COVID-19 public health emergency, which could negatively impact guest loyalty and our ability to attract and retain employees.
As a result of the closure of all of our properties and the continued uncertainty regarding the duration and severity of this public health emergency, we have taken steps to reduce operating costs and improve efficiencies, including furloughing approximately 90% our employees while our casinos were closed. Such steps, and further changes we may make in the future to reduce costs, may negatively impact guest loyalty or our ability to attract and retain employees, and our reputation may suffer as a result. While a significant number of our employees returned to work once our casinos reopened, our operations continue to be affected by COVID-19 and our full work force has not returned. If our furloughed employees do not return to work with us when the COVID-19 public health emergency subsides, including because they find new employment during the furlough, we may experience operational challenges that may impact our ability to resume operations in full. We may also face demands or requests from labor unions that represent our employees, whether in the course of our periodic renegotiation of our collective bargaining agreements, for additional health and safety measures, compensation, healthcare benefits or other terms as a result of COVID-19 that could increase costs, and we could experience labor disputes or disruptions as we continue to implement our COVID-19 mitigation plans.2021.
ITEMItem 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSUnregistered Sales of Equity Securities and Use of Proceeds
None.During the quarter ended March 31, 2021, we issued 196 shares of unregistered Company Common Stock to holders of 5% Convertible Notes due 2024 upon conversion of $14 thousand in aggregate principal amount of such notes. For further information regarding such transactions, see Note 7, Fair Value Measurements, of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. The shares of common stock were issued in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended.
ITEMItem 3. DEFAULTS UPON SENIOR SECURITIES.Defaults Upon Senior Securities
None.
ITEMItem 4. MINE SAFETY DISCLOSURES.Mine Safety Disclosures
Not applicable.
ITEMItem 5. OTHER INFORMATION.Other Information
None.
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ITEMItem 6. EXHIBITS.Exhibits
Exhibit
Number
Description of ExhibitMethod of Filing
10.13.1Previously filed on Form 8-K filed on June 15, 2020.
10.2Previously filed on Form 8-K filed on June 15, 2020.
10.3Previously filed on Form 8-K filed on June 15, 2020.
10.4Previously filed on Form 8-K filed on June 15,July 21, 2020.
3.2Previously filed on Form 8-K filed on July 21, 2020.
†10.1Filed herewith.
31.1Filed herewith.
31.2Filed herewith.
32.1Filed herewith.
32.2Filed herewith.
99.1Filed herewith.
101.1Inline XBRL Instance DocumentFiled herewith.
101.2Inline XBRL Taxonomy Extension Schema DocumentFiled herewith.
101.3Inline XBRL Taxonomy Extension Calculation Linkbase DocumentFiled herewith.
101.4Inline XBRL Taxonomy Extension Definition Linkbase DocumentFiled herewith.
101.5Inline XBRL Taxonomy Extension Label Linkbase DocumentFiled herewith.
101.6Inline XBRL Taxonomy Extension Presentation Linkbase DocumentFiled herewith.
104Cover Page Interactive Data File (embedded within the Inline XBRL document)Filed herewithherewith.
†Denotes a management contract or compensatory plan or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CAESARS ENTERTAINMENT, INC.
Date: August 6, 2020May 4, 2021/s/ Thomas R. Reeg
Thomas R. Reeg
Chief Executive Officer (Principal Executive Officer)
 
Date: August 6, 2020May 4, 2021/s/ Bret Yunker
Bret Yunker
Chief Financial Officer (Principal Financial Officer)
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