Caesars Entertainment Corporation
CAESARS ENTERTAINMENT Corp (Form: 10-K, Received: 02/29/2016 06:05:30)


SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
  FORM 10-K  
(Mark One)
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED December 31, 2015
OR
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 1-10410
 
CAESARS ENTERTAINMENT CORPORATION
(Exact name of registrant as specified in its charter)
 
Delaware
 
62-1411755
(State of incorporation)
 
(I.R.S. Employer Identification No.)
 
 
 
One Caesars Palace Drive, Las Vegas, Nevada
 
89109
(Address of principal executive offices)
 
(Zip code)
Registrant’s telephone number, including area code:
(702) 407-6000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class                  Name of each exchange on which registered     
Common stock, $0.01 par value             NASDAQ Global Select Market

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes   o     No   x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes   o     No   x
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   x     No   o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).  Yes   x     No   o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer    o
Accelerated filer   x
Non-accelerated filer   o
Smaller reporting company   o
 
 
(Do not check if a smaller
reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes   o     No   x
The aggregate market value of common stock held by non-affiliates of the registrant as of June 30, 2015 was $351 million .
As of February 15, 2016 , the registrant had 145,143,581 shares of Common Stock outstanding.




CAESARS ENTERTAINMENT CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS  
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 







PART I

In this filing, the name “CEC” refers to the parent holding company, Caesars Entertainment Corporation, exclusive of its consolidated subsidiaries and variable interest entities, unless otherwise stated or the context otherwise requires. The words “Company,” “Caesars,” “Caesars Entertainment,” “we,” “our,” and “us” refer to Caesars Entertainment Corporation, inclusive of its consolidated subsidiaries and variable interest entities, unless otherwise stated or the context otherwise requires.
We also refer to (i) our Consolidated Financial Statements as our “Financial Statements,” (ii) our Consolidated Statements of Operations and Comprehensive Income as our “Statements of Operations,” and (iii) our Consolidated Balance Sheets as our “Balance Sheets.” References to numbered “Notes” refer to Notes to our Consolidated Financial Statements included in Item 8.
ITEM 1.
Business
Overview
Caesars Entertainment is a casino-entertainment and hospitality services provider. CEC is primarily a holding company with no independent operations of its own. It owns Caesars Entertainment Resort Properties, LLC (“CERP”) and an interest in Caesars Growth Partners, LLC (“CGP”). CEC also holds a majority interest in Caesars Entertainment Operating Company, Inc. (“CEOC”); however, as described in Note 3 , the results of CEOC and its subsidiaries are no longer consolidated with Caesars subsequent to CEOC’s voluntarily filing for reorganization under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) on January 15, 2015.
The Caesars portfolio of properties, including the properties owned and operated by CEOC, represents the world’s most diversified casino-entertainment portfolio with entertainment facilities in more areas throughout the United States than any other participant in the gaming industry. We have established a rich history of industry-leading growth and expansion since we commenced operations in 1937. Our facilities typically include gaming offerings, food and beverage outlets, hotel and convention space, and non-gaming entertainment options. In addition to our brick and mortar assets, we operate an online gaming business that provides social and mobile games offerings that utilize virtual currency as well as real money games in certain jurisdictions.

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Organizational Structure
The following diagram illustrates the key entities and subsidiaries in the Caesars Entertainment organizational structure. This diagram does not include all legal entities and subsidiaries.
____________________________
(1)  
CEOC filed for bankruptcy protection under Chapter 11 of the US Bankruptcy Code on January 15, 2015 and was no longer consolidated within CEC as a result. See Note 3 .
(2)  
CAC is party to the series of transactions that formed CGP and owns 100% of the voting membership units in CGP. Caesars owns 100% of the non-voting membership units in CGP and consolidates CGP as a variable interest entity. See Note 2 . See information about Caesars’ announced merger with CAC in Note 1 .
(3)  
Ownership held by Caesars Growth Properties Holding, LLC (“CGPH”), a subsidiary of CGP.
(4)  
CES is a services joint venture formed by CEOC, CERP, and CGPH. See Note 2 .
(5)  
Our reportable segments include CERP, CGP Casinos, and CIE. CGP Casinos is comprised of all subsidiaries of CGP excluding CIE. CEOC remained a reportable segment until its deconsolidation effective January 15, 2015. See Note 1 and Note 3 .
As of December 31, 2015 , through our consolidated entities, we owned and operated 12 casinos in the United States, with over one million square feet of gaming space and over 23,000 hotel rooms. Our properties are concentrated in Las Vegas, where eight of the twelve are located. See Item 2 for more information about our properties.
Caesars Entertainment Resort Properties, LLC. Operates six casinos in the United States and The LINQ promenade along with leasing Octavius Tower at Caesars Palace Las Vegas (“Octavius Tower”) to CEOC and gaming space at The LINQ promenade to CGP.
Caesars Growth Partners, LLC. Operates six casinos in the United States and, through its subsidiary Caesars Interactive Entertainment, Inc. (“CIE”), owns and operates (1) an online business providing social and mobile games, (2) regulated online real money gaming and (3) the World Series of Poker (“WSOP”) tournaments and brand.
Caesars Enterprise Services, LLC (“CES”) . As described more fully in Note 1 , CES is a joint venture formed by CERP, CEOC, and CGPH (collectively, the “Members”) that provides certain corporate and administrative services for the Members’ casino properties, including substantially all of the 28 casino properties owned by CEOC, and ten casinos owned by unrelated third parties (including four Indian tribal properties). CES also manages certain enterprise assets and the other assets it owns, licenses or controls, and employs certain of the corresponding employees. (See Note 1 )

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Business Operations
Our consolidated business is composed of five complementary businesses that reinforce, cross-promote, and build upon each other: casino entertainment, food and beverage, rooms and hotel, interactive entertainment, and other business operations.
Casino Entertainment Operations
Our casino entertainment operations include revenues from over 14,000 slot machines and 1,200 table games, as well as other games such as keno, poker, and race and sports books, all of which comprised approximately 43% of our total net revenues in 2015 . Slot revenues generate the majority of our gaming revenue and are a key driver of revenue, particularly in our properties located outside of the Las Vegas market. In addition, we continue to create new, social environments for our diverse guests such as the TAG Lounge and Bar, which opened in 2015.
TAG Lounge and Bar . This sports bar located at The LINQ Hotel & Casino (“The LINQ Hotel”) features an interactive gaming lounge with digital casino games, touchscreen table top gaming units and hologram blackjack table, as well as a selection of over 200 beers and sports streaming from around the world.
Food and Beverage Operations
Our food and beverage operations generate revenues primarily from over 50 buffets, restaurants, bars, nightclubs, and lounges located throughout our casinos, as well as banquets and room service, and represented approximately 16% of our total net revenues in 2015 . Many of our properties include several dining options, ranging from upscale dining experiences to moderately-priced restaurants and buffets. In 2015, we opened a number of new food and beverage offerings, including:
HEXX Kitchen + Bar . Located at Paris Las Vegas, HEXX features American cuisine, an extensive collection of wine, beer, and craft cocktails, as well as Nevada's first bean-to-bar chocolate maker.
Le Central. Featuring a beautiful dome structure and open-air vibe, Le Central is an inviting spot to relax. The 24-hour lounge centrally located at Paris Las Vegas features plush seating to greet guests, signature cocktails, video screens and video games.
Guy Fieri’s El Burro Borracho. Guy Fieri’s newest restaurant at Harrah’s Laughlin offers a taste of signature cuisine, featuring bold flavors and exceptional twists on traditional Mexican dishes.
Rooms and Hotel Operations
Rooms and hotel operations revenue comprised approximately 17% of our total net revenues in 2015 and is primarily generated from hotel stays at our casino properties and our over 23,000 guest rooms and suites.
Our properties operate at various price and service points, allowing us to host a variety of casino guests who are visiting our properties for gaming and other casino entertainment options and non-casino guests who are visiting our properties for other purposes, such as vacation travel or conventions. During 2015, we opened or redeveloped two properties:
Harrah’s Atlantic City Waterfront Conference Center . We opened the largest conference-hotel complex from Baltimore to Boston located adjacent to Harrah’s Atlantic City, which provides access to over 2,500 hotel rooms. The $126 million conference center adds 100,000 square feet of meeting space including two 50,000 square-foot ballrooms that can be configured 200 different ways to accommodate meetings of all sizes. 
The LINQ Hotel & Casino. The LINQ Hotel completed the full room renovation featuring over 2,200 upgraded guest rooms including over 200 suites, two urban loft-style penthouses and 25 poolside cabana guest rooms.
Interactive Entertainment
CIE operates an online games business providing social games on Facebook and other social media websites and mobile application platforms that utilize virtual currency and certain real money gaming in Nevada and New Jersey. CIE also owns the World Series of Poker (“WSOP”) tournaments and brand and licenses WSOP trademarks for a variety of products and businesses related to this brand.
Other Business Operations
We provide a variety of retail and entertainment offerings in our casinos and The LINQ promenade. Our retail stores offer guests a wide range of options from high-end brands and accessories to souvenirs and decorative items. The LINQ promenade is an open-air dining, entertainment, and retail development located between The LINQ Hotel and the Flamingo Las Vegas. Our entertainment

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options are diverse and include concerts, comedy shows, and variety acts featuring many well-known artists and entertainers, as well as The High Roller, our 550-foot observation wheel at The LINQ promenade.
Sales and Marketing
We believe the Caesars portfolio of properties (including the CEOC properties) that operate under the Total Rewards program enable us to capture a larger share of our customers’ entertainment spending when they travel among markets versus that of a standalone property, which is core to our cross-market strategy. We believe that our high concentration of properties in the center of the Las Vegas Strip generates increased revenues and enables us to capture more of our customers’ gaming dollars than in markets where we have single properties competing individually against outside competition.
We believe the Total Rewards program, in conjunction with this distribution system, allows us to capture a growing share of our customers’ entertainment spending and compete more effectively. Members earn Reward Credits at all Caesars-affiliated properties in the United States and Canada for on-property entertainment expenses, including gaming, hotel, dining, and retail shopping. Members may also earn Reward Credits through the Total Rewards Visa credit card and can redeem Reward Credits with our many partners, including Starwood Hotels and Resorts and Norwegian Cruise Line. Total Rewards members can redeem Reward Credits for amenities or other items such as merchandise, gift cards, and travel. Total Rewards is structured in tiers (designated as Gold, Platinum, Diamond or Seven Stars), each with increasing member benefits and privileges.
Members are also provided promotional offers and rewards based on their engagement with Caesars-affiliated properties, aspects of their casino gaming play, and their preferred spending choices outside of gaming. Member information is also used for marketing promotions, including direct mail campaigns, electronic mail, our website, mobile devices, social media, and interactive slot machines.
Intellectual Property
The development of intellectual property is part of our overall business strategy. We regard our intellectual property to be an important element of our success. While our business as a whole is not substantially dependent on any one patent, trademark, copyright or combination of several of our intellectual property rights, we seek to establish and maintain our proprietary rights in our business operations and technology through the use of patents, trademarks, copyrights, and trade secret laws. We file applications for and obtain patents, trademarks, and copyrights in the United States and foreign countries where we believe filing for such protection is appropriate, including United States and foreign patent applications covering certain proprietary technology of CEOC and CIE. We also seek to maintain our trade secrets and confidential information by nondisclosure policies and through the use of appropriate confidentiality agreements. CEOC’s United States patents have varying expiration dates, the last of which is 2032.
We have not applied for the registration of all of our trademarks, copyrights, proprietary technology or other intellectual property rights, as the case may be, and may not be successful in obtaining all intellectual property rights for which we have applied. Despite our efforts to protect our proprietary rights, parties may infringe upon our intellectual property and use information that we regard as proprietary, and our rights may be invalidated or unenforceable. The laws of some foreign countries do not protect proprietary rights or intellectual property to as great an extent as do the laws of the United States. In addition, others may independently develop substantially equivalent intellectual property.
We own or have the right to use proprietary rights to a number of trademarks that we consider, along with the associated name recognition, to be valuable to our business, including the following:
CEOC’s marks include Caesars, Harrah’s, Horseshoe, Bally’s, and Total Rewards;
CERP’s marks include Rio, Flamingo, and Paris;
CIE’s marks include World Series of Poker, Playtika, Slotomania, House of Fun Slots, and Bingo Blitz; and
CGP holds a license for the Planet Hollywood mark used in connection with the Planet Hollywood Resort & Casino in Las Vegas.
Omnibus License and Enterprise Services Agreement
The Members of CES entered into an Omnibus License and Enterprise Services Agreement (the “Omnibus Agreement”) in May 2014, which granted various licenses to the Members through CES and allowed the Members to continue to use the intellectual property each of the properties owned or managed by the Members used in their associated businesses, including Total Rewards. See Note 1 for a complete discussion of CES and the Omnibus Agreement. Under the terms of the CES joint venture and the Omnibus License and Enterprise Services Agreement, we believe that Caesars and its other operating subsidiaries will continue to have access

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to the services historically provided to us by CEOC and its employees, trademarks, and programs despite the CEOC bankruptcy filing.
Competition
Casinos
The casino entertainment business is highly competitive. The industry is comprised of a diverse group of competitors that vary considerably in size and geographic diversity, quality of facilities and amenities available, marketing and growth strategies, and financial condition. In most markets, we compete directly with other casino facilities operating in the immediate and surrounding areas. Our Las Vegas Strip hotels and casinos also compete, in part, with each other. We also compete with other non-gaming resorts and vacation areas, various other entertainment businesses, and other forms of gaming, such as state lotteries, on-and off-track wagering, and card parlors. Our non-gaming offerings also compete with other retail facilities, amusement attractions, and food and beverage offerings.
In recent years, many casino operators, including us, have been reinvesting in existing facilities, developing new facilities, and acquiring established facilities. These reinvestment and expansion efforts combined with aggressive marketing strategies by us and many of our competitors have resulted in increased competition in many markets.
The expansion of casino entertainment into new markets also presents competitive issues for us that have had a negative impact on our financial results. Atlantic City, in particular, has seen a decline of more than 50% compared with 2006 levels, primarily due to the addition of gaming and room capacity associated with the expansion of gaming in Maryland, New York, and Pennsylvania. This has resulted in several casino closings in recent years, including CEOC’s Showboat Atlantic City casino and three competitor casinos in 2014.
Interactive Entertainment
The social and mobile games industry is intensely competitive and rapidly evolving. Casino-themed games have become one of the most competitive social and mobile games sectors due to their attractive underlying qualities, including, among others, high average revenue per user, familiar game mechanics, and longer than average game life spans. CIE faces significant competition in all aspects of this business. Specifically, CIE competes for the leisure time, attention, and discretionary spending of its players with other social and mobile games developers on the basis of a number of factors, including, among others, the quality of player experience, brand awareness, reputation, and access to distribution channels. However, other developers of social and mobile casino-themed games could develop more compelling content that competes with CIE's games and adversely affect CIE's ability to attract and retain players and their entertainment time. These and other competitors may take advantage of social networks and access to a large user base to grow rapidly. We also compete with developers of other non-casino themed mobile games.
See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” See also Exhibit 99.1, “Gaming Overview,” to this Form 10-K. In addition, for a summary of key developments in 2015, see “ Summary of 2015 Events and Key Drivers of Annual Performance ” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Governmental Regulation
The gaming industry is highly regulated, and we must maintain our licenses and pay gaming taxes to continue our operations. Each of our casinos is subject to extensive regulation under the laws, rules, and regulations of the jurisdiction in which it is located. These laws, rules, and regulations generally concern the responsibility, financial stability, and character of the owners, managers, and persons with financial interests in the gaming operations. Violations of laws in one jurisdiction could result in disciplinary action in other jurisdictions. A more detailed description of the regulations to which we are subject is contained in Exhibit 99.1, “Gaming Overview,” to this Form 10-K.
Our businesses are subject to various foreign, federal, state, and local laws and regulations, in addition to gaming regulations. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages, smoking, environmental matters, employees, currency transactions, taxation, zoning and building codes, construction, land use, and marketing and advertising. We also deal with significant amounts of cash in our operations and are subject to various reporting and anti-money laundering regulations. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. Material changes, new laws or regulations, or material differences in interpretations by courts or governmental authorities could adversely affect our operating results. See Item 1A, “Risk Factors” for additional discussion.

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Employee Relations
We have approximately 33,000 employees throughout our organization. Approximately 16,000 of our employees are covered by collective bargaining agreements with certain of our subsidiaries, relating to certain casino, hotel, and restaurant employees. The majority of these employees are covered by the following agreements:
Employee Group
 
Approximate Number of Active Employees Represented
 
Union
 
Date on which Collective Bargaining Agreement Becomes Amendable
Las Vegas Culinary Employees
 
8,500
 
Culinary Workers Union, Local 226
 
May 2018
Atlantic City Food & Beverage and Hotel employees
 
1,400
 
UNITE HERE, local 54
 
March 2015 and continuing on a month to month basis
Las Vegas Bartenders
 
1,200
 
Bartenders Union, Local 165
 
May 2018
Las Vegas Dealers
 
1,100
 
Transport Workers Union of America
 
February 2019
Corporate Social Responsibility and Sustainability

Our Board of Directors and senior executives are committed to maintaining Caesars’ position as an industry leader in corporate citizenship and sustainability. In 2015, we established a CEO-level external environmental sustainability advisory board with experts representing non-governmental organizations, business strategy, academia, and investors.
Code of Commitment

For 15 years, our Code of Commitment has guided our approach to responsible and ethical business, compliance and anti-corruption. Training events reinforce our expectations of all employees.

We were awarded first in the consumer discretionary category in the 2014 Civic 50, an initiative organized by Points of Light and Bloomberg that recognizes companies for their commitment to improving the quality of life in their home communities. Caesars was the first company to develop responsible gaming programs informed by the latest science, evaluated objectively and created in conjunction with leading researchers. In 2015, we published two new positions: Our Stance Against Human Trafficking and our Responsible Supplier Statement to demonstrate our commitment to human rights and ethical business practices of suppliers.
Environmental Stewardship

For the past seven years, we have advanced a strategy to reduce our impact on the environment. Our structured, data-driven CodeGreen program leverages the passion of our employees and engages our guests and suppliers. Since 2007, we have reduced energy consumption across our properties by 21% per air-conditioned sq. ft., greenhouse gas emissions by 23%, and water consumption by nearly 17% since 2008. In 2014, 44% of our total waste was recycled.

Additionally, we have received Green Key Eco-Rated certifications at 30 properties in North America. Caesars earned a perfect 100/100 on the 2015 Carbon Disclosure Project (“CDP”) Climate Disclosure Score and landed a spot on the Climate Disclosure Leadership Index. Caesars is among the top 10% of U.S. companies participating in the CDP process.

Diversity and Inclusion

We create a dynamic and innovative working culture where individual growth is rewarded, recognized and celebrated. Caesars is the only company in the casino entertainment industry to receive nine consecutive perfect scores on the Human Rights Campaign Corporate Equality Index, including 2016. We encourage diversity and the advancement of women, and in 2014, 57% of our employees belonged to minority groups and 41% of our managers were women.

Caesars Foundation

Established in 2002, the Caesars Foundation (the “Foundation”) is a private charitable foundation funded by a portion of operating income from our resorts. Since its inception, the Foundation has gifted more than $70 million to support vibrant communities.

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Available Information
Our Internet address is www.caesars.com. We make available free of charge, on or through our website, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the “SEC”). We also make available through our website all filings of our executive officers and directors on Forms 3, 4, and 5 under Section 16 of the Exchange Act. These filings are also available on the SEC’s website at www.sec.gov. Our Code of Business Conduct and Ethics is available on our website under the “Investor Relations” link. We will provide a copy of these documents without charge to any person upon receipt of a written request addressed to Caesars Entertainment Corporation, Attn: Corporate Secretary, One Caesars Palace Drive, Las Vegas, Nevada 89109. Reference in this document to our website address does not constitute incorporation by reference of the information contained on the website.
ITEM 1A.     Risk Factors
Risk Related to the CEC’s Ability to Continue as a Going Concern
If a court were to find in favor of the claimants in the Noteholder Disputes, it would likely have a material adverse effect on our business, financial condition, results of operations and cash flows and, absent an intervening event, a reorganization under Chapter 11 of the Bankruptcy Code would likely be necessary due to the limited resources available at CEC to resolve such matters. The significant amounts CEC has agreed to pay in connection with CEOC’s reorganization raise substantial doubt about CEC’s ability to continue as a going concern. In addition, we also estimate that CEC will require additional sources of funding to meet the ongoing financial commitments of the CEC holding company for amounts other than committed to under the First Lien RSAs.
We are subject to a number of Noteholder Disputes, as described in Note 4 , related to various transactions that CEOC has completed since 2010. Plaintiffs in certain of these actions raise allegations of breach of contract, intentional and constructive fraudulent transfer, and breach of fiduciary duty, among other claims. Although the Delaware First Lien Lawsuit has been subject to a consensual stay pursuant to the First Lien Bond RSA since CEOC’s filing for Chapter 11, and the Delaware Second Lien Lawsuit is not proceeding with respect to fraud or breach of fiduciary duty claims, should a court find in favor of the plaintiffs on such claims in any of the Noteholder Disputes, including the New York First Lien Lawsuit, the New York Second Lien Lawsuit or the Senior Unsecured Lawsuits, the transactions at issue in those lawsuits may be subject to rescission and/or the Company may be required to pay damages to the plaintiffs. In the event of an adverse outcome on one or all of these matters, it is likely that a reorganization under Chapter 11 of the Bankruptcy Code would be necessary due to the limited resources available at CEC to resolve such matters. See Note 4 .
A number of the Noteholder Disputes also involve claims that CEC is liable for all amounts due and owing on certain notes issued by CEOC, based on allegations that provisions in the governing indentures pursuant to which CEC guaranteed CEOC’s obligations under those notes remain in effect (the “Guarantee Claims”). Such Guarantee Claims were most recently raised against Caesars Entertainment in a lawsuit filed on October 20, 2015 by Wilmington Trust, National Association in the United States District Court for the Southern District of New York (the “SDNY Court”). Adverse rulings on the Guarantee Claims in this action or any of the other Noteholder Disputes could negatively affect our position on such Guarantee Claims in other Noteholder Disputes, or with respect to potential claims by other holders of certain other notes issued by CEOC. If the court in any of these Noteholder Disputes were to find in favor of the plaintiffs on the Guarantee Claims, CEC may become obligated to pay all principal, interest, and other amounts due and owing on the notes at issue. If CEC became obligated to pay amounts owed on CEOC’s indebtedness as a result of the Guarantee Claims, it is likely that a reorganization under Chapter 11 of the Bankruptcy Code would be necessary due to the limited resources available at CEC to resolve such matters. Accordingly, as certain of the Guarantee Claims have not been stayed, and given the timing on which these Guarantee Claims are proceeding and the inherent uncertainties of litigation, we have concluded that these matters raise substantial doubt about the Company’s ability to continue as a going concern. The remaining issues in these lawsuits are expected to be tried as early as May 2016. In the event of an adverse outcome on such matters, CEC would likely seek reorganization under Chapter 11 of the Bankruptcy Code soon thereafter.
In addition to the liquidity issues raised as a result of complying with the material commitments we made under the First Lien RSAs described above, we also estimate that CEC will require additional sources of funding to meet the ongoing financial commitments of the CEC holding company for amounts other than committed to under the First Lien RSAs, primarily resulting from significant expenditures made to (1) defend the Company against the matters disclosed in Note 1 under “Litigation” and (2) support CEOC’s plan of reorganization (the “Restructuring”). As a result of the foregoing, there is substantial doubt about CEC's ability to continue as a going concern. See Note 1.

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Risks Related to the Bankruptcy Proceedings
CEOC and a substantial majority of its wholly owned subsidiaries filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code, and we and they are subject to the risks and uncertainties associated with bankruptcy proceedings.
As a result of CEOC’s highly-leveraged capital structure and the general decline in its gaming results since 2007, on January 15, 2015, CEOC and certain of its U.S. subsidiaries (collectively, the “Debtors”) voluntarily filed for reorganization under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. Because CEOC is under the control of the Bankruptcy Court, CEC deconsolidated this subsidiary effective January 15, 2015 (see Note 3 ).
We and they are subject to a number of risks and uncertainties associated with the Chapter 11 proceedings, which may lead to potential adverse effects on our liquidity, results of operations, or business prospects. We cannot assure you of the outcome of the Chapter 11 proceedings. Risks associated with the Chapter 11 proceedings include the following:
the ability of the Debtors to continue as a going concern;
the ability of the Debtors to obtain bankruptcy court approval with respect to motions in the Chapter 11 proceedings and the outcomes of bankruptcy court rulings of the proceedings in general;
risks associated with involuntary bankruptcy proceedings filed in the United States Bankruptcy Court for the District of Delaware and now pending in the Bankruptcy Court;
the ability of the Debtors to comply with and to operate under the cash collateral order and any cash management orders entered by the Bankruptcy Court from time to time;
the length of time the Debtors will operate under the Chapter 11 proceedings and their ability to successfully emerge, including with respect to obtaining any necessary regulatory approvals;
the ability of the Debtors to negotiate, confirm and consummate a plan of reorganization with respect to the Chapter 11 proceedings and Caesars Entertainment’s role in any final plan of reorganization;
the likelihood of Caesars Entertainment losing control over the operation of the Debtors as a result of the restructuring process;
risks associated with third party motions, proceedings and litigation in the Chapter 11 proceedings, which may interfere with the Debtors’ plan of reorganization;
our and CEOC’s ability to maintain sufficient liquidity throughout the Chapter 11 proceedings;
increased costs being incurred by Caesars Entertainment and CEOC related to the bankruptcy proceeding and other litigation;
our and the Debtors’ ability to manage contracts that are critical to our operation, and to obtain and maintain appropriate credit and other terms with customers, suppliers and service providers;
our and the Debtors’ ability to attract, retain and motivate key employees;
our ability to fund and execute our business plan;
whether our non-Debtor subsidiaries continue to operate their business in the normal course;
the disposition or resolution of all pre-petition claims against us and the Debtors; and
our ability to maintain existing customers and vendor relationships and expand sales to new customers.
The Chapter 11 proceedings may disrupt our business and may materially and adversely affect our operations.
We have attempted to minimize the adverse effect of the Debtors’ Chapter 11 proceedings on our relationships with our employees, suppliers, customers and other parties. Nonetheless, our relationships with our customers, suppliers, and employees may be adversely impacted by negative publicity or otherwise and our operations could be materially and adversely affected. In addition, the Chapter 11 proceedings could negatively affect our ability to attract new employees and retain existing high performing employees or executives, which could materially and adversely affect our operations.

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The Chapter 11 proceedings limit the flexibility of our management team in running the Debtors’ business.
While the Debtors’ operate their businesses as debtors-in-possession under supervision by the Bankruptcy Court, the Bankruptcy Court approval is required with respect to the Debtors’ business, and in some cases certain holders of claims in respect of claims under CEOC’s first lien notes and first lien bank debt who have entered into the First Lien RSAs (defined below), prior to engaging in activities or transactions outside the ordinary course of business. Bankruptcy Court approval of non-ordinary course activities entails preparation and filing of appropriate motions with the Bankruptcy Court, negotiation with various parties-in-interest, including the statutory committees appointed in the Chapter 11 proceedings, and one or more hearings. Such committees and parties-in-interest may be heard at any Bankruptcy Court hearing and may raise objections with respect to these motions. This process could delay major transactions and limit the Debtors ability to respond quickly to opportunities and events in the marketplace. Furthermore, in the event the Bankruptcy Court does not approve a proposed activity or transaction, the Debtors could be prevented from engaging in non-ordinary course activities and transactions that they believe are beneficial to them.
Additionally, the terms of the final cash collateral order entered by the Bankruptcy Court will limit the Debtors’ ability to undertake certain business initiatives. These limitations may include, among other things, the Debtors’ ability to:
sell assets outside the normal course of business;
consolidate, merge, sell or otherwise dispose of all or substantially all of the Debtors’ assets;
grant liens;
incur debt for borrowed money outside the ordinary course of business;
prepay prepetition obligations; and
finance the Debtors’ operations, investments or other capital needs or to engage in other business activities that would be in the Debtors’ interests.
We cannot assure you that any reorganization of the Debtors will be on terms contemplated by the First Lien RSAs or otherwise on terms acceptable to Caesars Entertainment.
We and CEOC entered into the Fifth Amended and Restated Restructuring Support and Forbearance Agreement, dated as of October 7, 2015, with certain holders of claims in respect of CEOC’s first lien notes (the “First Lien Bond RSA”) and also entered into the Restructuring Support and Forbearance Agreement, dated as of August 21, 2015, with certain holders of claims in respect of CEOC’s first lien bank debt (the “Bank RSA” and, together with the First Lien Bond RSA, the “First Lien RSAs”), pursuant to which, among other things, CEOC agreed to file a plan of reorganization in accordance with the terms of the First Lien RSAs (the “Plan”), which was filed October 7, 2015. The creditors party to the First Lien RSAs have agreed to vote in favor of the Plan when properly solicited to do so, but there are certain material conditions CEOC must satisfy under the First Lien RSAs, including the timely satisfaction of milestones in the Chapter 11 proceedings such as obtaining orders from the Bankruptcy Court with respect to the use of cash collateral, approval of the disclosure statement and confirmation of the Plan. On February 15, 2016, certain milestones were not met by CEOC under the First Lien RSAs and, as a result, the consenting creditors currently have the ability to terminate the First Lien RSAs. We, CEOC, and CEOC’s creditors continue to negotiate terms of the restructuring and have not received written notice of the consenting creditors’ intent to terminate. The Debtors’ ability to timely complete the milestones established under the First Lien RSAs is subject to risks and uncertainties that may be beyond our control. If the Debtors breach or otherwise default under the First Lien RSAs and the creditors party to the First Lien RSAs are not required to vote in favor of the Plan, the Plan may not be confirmed, in which case there could be an alternative plan of reorganization that may or may not be acceptable to Caesars Entertainment.
We cannot assure you that we will have sufficient liquidity to complete the Plan if it is approved by the Bankruptcy Court.
Because of the material commitments we made under the First Lien RSAs described above, we estimate that CEC will require additional sources of funding to meet its commitments even if the previously announced merger of Caesars and CAC is successfully completed. Because of these factors, we are evaluating additional sources of liquidity to enable CEC to meet its commitments, but we have not yet secured additional funding and there can be no assurance that we will be able to successfully obtain such financing. Furthermore, if the merger with CAC is not completed for any reason, CEC would still be liable for these payments.
The Debtors may not be able to obtain Bankruptcy Court confirmation of the Plan or may have to modify the terms of the Plan.
Even if approved by each class of holders of claims and interests entitled to vote (a “Voting Class”), the Bankruptcy Court may, as a court of equity, exercise substantial discretion and could choose not to confirm the Plan. Bankruptcy Code Section 1129

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requires, among other things, a showing that confirmation of the Plan will not be followed by liquidation or the need for further financial reorganization for the Debtors, and that the value of distributions to dissenting holders of claims and interests will not be less than the value such holders would receive if the Debtors liquidated under Chapter 7 of the Bankruptcy Code. Although we believe that the Plan will satisfy such tests, there can be no assurance that the Bankruptcy Court will reach the same conclusion.
Confirmation of the Plan will also be subject to certain conditions. These conditions may not be met, and there can be no assurance that we and a requisite amount of the applicable creditors under the First Lien RSAs will agree to modify or waive such conditions. Further, changed circumstances may necessitate changes to the Plan. Any such modifications could result in less favorable treatment of any non-accepting class, as well as any classes junior to such non-accepting class, than the treatment that will currently be provided in the Plan in accordance with the First Lien RSAs. Such less favorable treatment could include a distribution of property (including new securities) to the class affected by the modification of a lesser value than what the First Lien RSAs contemplate will be provided in the Plan or no distribution of property whatsoever under the Plan. In addition, any changes to the Plan, including any changes that would result in Caesars Entertainment no longer controlling the ownership or operations of CEOC, could have an adverse effect on Caesars Entertainment and its remaining operations. Changes to the Plan may also delay the confirmation of the Plan and the Debtors’ emergence from bankruptcy.
If the Plan contemplated by the First Lien RSAs is confirmed, CEC will be required to invest and pay significant amounts of cash in connection with the restructuring of CEOC, which may have a negative impact on Caesars’ business and operating condition.
If the Bankruptcy Court approves the Plan, in connection with the Debtors’ emergence from Chapter 11, Caesars Entertainment will guarantee (i) the two leases between the restructured operating company (“OpCo”) and the restructured property companies (“CPLV PropCo” and “Non-CPLV PropCo”, collectively “PropCo”) and (ii) OpCo’s senior secured credit facilities and first lien notes and second lien notes received by the Debtors’ creditors under the Plan (the “OpCo Take-Back Debt”). Pursuant to the leases, CPLV PropCo and Non-CPLV PropCo will lease properties to OpCo: (1) for the Caesars Palace Las Vegas (“CPLV”) property (the “CPLV Lease”) and (2) for certain properties currently owned by CEOC other than CPLV (the “Non-CPLV PropCo Lease” and, together with the CPLV Lease, the “Leases”). Under the terms of a proposed management lease support agreement, Caesars Entertainment will guarantee the payment and performance of all monetary obligations of OpCo under the Leases. Under the terms of the guarantees of the OpCo Take-Back Debt, Caesars Entertainment will provide a full guarantee of the OpCo Take-Back Debt, secured by a first-priority pledge of substantially all of the material assets of Caesars Entertainment, subject to certain exceptions. If OpCo is unable to meet its monetary obligations under the Leases or the OpCo Take-Back Debt, Caesars Entertainment may be subject to significant obligations, which could materially and adversely affect Caesars Entertainment’s business and operating conditions.
The merger with CAC is subject to various closing conditions, including governmental approvals, and other uncertainties and there can be no assurances as to whether and when it may be completed.
On December 21, 2014, Caesars Entertainment entered into the Merger Agreement with CAC, under which CAC will merge with and into Caesars Entertainment, with Caesars Entertainment continuing as the surviving corporation. The consummation of the merger is subject to a number of closing conditions, many of which are not within Caesars Entertainment’s control, and failure to satisfy such conditions may prevent, delay or otherwise materially adversely affect the completion of the transaction. These conditions include, among other things, (a) obtaining any necessary licenses, consents or other approvals, including from gaming authorities, to effect the merger, (b) the Plan having been confirmed by the Bankruptcy Court, (c) minimum cash conditions for each of (i) CGP and its subsidiaries and (ii) Caesars Entertainment and CERP, (d) receipt of certain tax opinions or rulings regarding certain tax aspects of the restructuring of CEOC and (e) a threshold amount of tax costs to Caesars Entertainment related to certain aspects of the restructuring of CEOC. It also is possible that a change, event, fact, effect or circumstance that could lead to a material adverse effect on Caesars Entertainment may occur, which may result in CAC not being obligated to complete the merger. We cannot predict with certainty whether and when any of the required closing conditions will be satisfied or if an uncertainty resulting in a material adverse effect on Caesars Entertainment may arise. If the merger does not receive, or timely receive, the required regulatory approvals and clearances, or if another event occurs delaying or preventing the merger, such delay or failure to complete the merger may cause uncertainty or other negative consequences that may materially and adversely affect Caesars Entertainment’s business, financial performance and operating results and the price per share for Caesar Entertainment’s common stock.
In the event that the pending merger with CAC is not completed, the trading price of our common stock and our future business and financial results may be negatively impacted.
As noted above, the conditions to the completion of the merger with CAC may not be satisfied, and even if the Plan is confirmed, under certain circumstances the exchange ratio between shares of CAC Class A common stock and CEC common stock may be adjusted or the merger agreement may be terminated. If the merger with CAC is not completed for any reason, we would still be

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liable for significant transaction costs and the focus of our management would have been diverted from seeking other potential opportunities without realizing any benefits of the completed merger. If we do not complete the merger, certain litigation against us will remain outstanding and not be released. If we do not complete the merger, the price of our common stock may decline significantly from the current market price, which may reflect a market assumption that the merger will be completed.
CEOC may have insufficient liquidity for its business operations during the Chapter 11 proceedings.
Although we believe that CEOC will have sufficient liquidity to operate its businesses during the pendency of the Chapter 11 proceedings, there can be no assurance that the revenue generated by CEOC’s business operations and cash made available to CEOC under the cash collateral order or otherwise in its restructuring process will be sufficient to fund its operations, especially as we expect CEOC to incur substantial professional and other fees related to its restructuring. CEOC has not made arrangements for financing in the form of a debtor-in-possession credit facility, or DIP facility. In the event that revenue flows and other available cash are not sufficient to meet CEOC’s liquidity requirements, CEOC may be required to seek additional financing. There can be no assurance that such additional financing would be available or, if available, offered on terms that are acceptable. If, for one or more reasons, CEOC is unable to obtain such additional financing, CEOC could be required to seek a sale of the company or certain of its material assets or its businesses and assets may be subject to liquidation under Chapter 7 of the Bankruptcy Code, and CEOC may cease to continue as a going concern, which could harm our business.
Any plan of reorganization that the Debtors may implement will be based in large part upon assumptions and analyses developed by CEOC. If these assumptions and analyses prove to be incorrect, the Debtors’ plan may be unsuccessful in its execution, which could adversely affect Caesars Entertainment.
Any plan of reorganization that the Debtors may implement could affect both the Debtors’ capital structure and the ownership, structure and operation of the Debtors’ businesses and will reflect assumptions and analyses based on CEOC’s experience and perception of historical trends, current conditions and expected future developments, as well as other factors that CEOC considers appropriate under the circumstances. Whether actual future results and developments will be consistent with CEOC’s expectations and assumptions depends on a number of factors, including but not limited to (i) CEOC’s ability to substantially change the Debtors’ capital structure; (ii) CEOC’s ability to restructure the Debtors as a separate operating company and property company, with a real estate investment trust directly or indirectly owning and controlling the property company, (iii) the ability of the Debtors to obtain adequate liquidity and financing sources; (iv) our ability to maintain customers’ confidence in our viability as a continuing entity and to attract and retain sufficient business from them; (v) the Debtors’ ability to retain key employees; and (vi) the overall strength and stability of general economic conditions in the U.S. and in global markets. The failure of any of these factors could materially adversely affect the successful reorganization of the Debtors’ businesses.
In addition, any plan of reorganization will rely upon financial projections, including with respect to revenues; earnings before interest, taxes, depreciation and amortization (“EBITDA”), capital expenditures, debt service, and cash flow. Financial forecasts are necessarily speculative, and it is likely that one or more of the assumptions and estimates that are the basis of these financial forecasts will not be accurate. The forecasts for the Debtors will be even more speculative than normal, because they may involve fundamental changes in the nature of the Debtors’ capital structure and corporate structure. Accordingly, CEOC expects that its actual financial condition and results of operations will differ, perhaps materially, from what CEOC has anticipated. Consequently, there can be no assurance that the results or developments contemplated by any plan of reorganization implemented by the Debtors will occur or, even if they do occur, that they will have the anticipated effects on the Debtors and their subsidiaries or businesses or operations. The failure of any such results or developments to materialize as anticipated could materially adversely affect the successful execution of any plan of reorganization.
If the Plan contemplated by the First Lien RSAs is approved and consummated, CEC will own CEOC (and guarantee substantial payments by CEOC) and, accordingly, unsuccessful implementation of the Plan could have an adverse effect on Caesars Entertainment.
As a result of the Chapter 11 proceedings, our historical financial information will not be indicative of our future financial performance.
Our capital structure and our corporate structure will likely be significantly altered under any plan of reorganization ultimately confirmed by the Bankruptcy Court. As of the Petition Date, CEOC was deconsolidated from our financial statements. Consequently, our results of operations following the deconsolidation will not be comparable to the financial condition and results of operations reflected in our historical financial statements for periods prior to the deconsolidation.

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Risks Related to our Business
Our substantial indebtedness and the fact that a significant portion of our cash flow is used to make interest payments could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from making debt service payments.
Caesars Entertainment is a highly-leveraged company and had $7.1 billion in debt outstanding as of December 31, 2015 . As a result, a significant portion of our liquidity needs are for debt service, including significant interest payments. Our estimated debt service (including principal and interest) is $767 million for 2016 and $9.5 billion thereafter to maturity. See Note 13 for details of our debt outstanding and related restrictive covenants.
Our substantial indebtedness and the restrictive covenants under the agreements governing such indebtedness could:
limit our ability to borrow money for our working capital, capital expenditures, development projects, debt service requirements, strategic initiatives or other purposes;
make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under the agreements governing our indebtedness;
require us to dedicate a substantial portion of our cash flow from operations to the payment of interest and repayment of our indebtedness thereby reducing funds available to us for other purposes;
limit our flexibility in planning for, or reacting to, changes in our operations or business;
make us more highly-leveraged than some of our competitors, which may place us at a competitive disadvantage;
make us more vulnerable to downturns in our business or the economy;
restrict us from making strategic acquisitions, developing new gaming facilities, introducing new technologies or exploiting business opportunities;
affect our ability to renew gaming and other licenses;
limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds or dispose of assets; and
expose us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, prospects and ability to satisfy our outstanding debt obligations.
We may be unable to generate sufficient cash to service all of our indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness that may not be successful.
We may be unable to generate sufficient cash flow from operations, or may be unable to draw under our senior secured credit facilities or otherwise, in an amount sufficient to fund our liquidity needs. Our operating cash inflows are typically used for operating expenses, debt service costs, working capital needs, and capital expenditures in the normal course of business. Our operating cash flow was negative $735 million in 2014 and $120 million in 2015. Our estimated debt service (including principal and interest) is $767 million for 2016 and $9.5 billion thereafter to maturity. See Note 13 for details of our debt outstanding.
We may incur significantly more debt, which could adversely affect our ability to pursue certain opportunities.
We and our subsidiaries may be able to incur substantial indebtedness at any time, and from time to time, including in the near future. Although the terms of the agreements governing our indebtedness contain restrictions on our ability to incur additional indebtedness, these restrictions are subject to a number of important qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial.
For example, as of December 31, 2015 , CERP had $190 million of additional borrowing capacity available under its senior secured revolving credit facility. CGP had $115 million of additional borrowing capacity available under its senior secured revolving credit facility. None of our existing indebtedness limits the amount of debt that may be incurred by Caesars Entertainment.

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Our subsidiary debt agreements allow for one or more future issuances of additional secured notes or loans, which may include, in each case, indebtedness secured on a pari passu basis with the obligations under CGP’s or CERP's credit facilities and first lien notes. This indebtedness could be used for a variety of purposes, including financing capital expenditures, refinancing or repurchasing our outstanding indebtedness, including existing unsecured indebtedness, or for general corporate purposes. We have raised and expect to continue to raise debt, including secured debt, to directly or indirectly refinance our outstanding unsecured debt on an opportunistic basis, as well as development and acquisition opportunities.
Our debt agreements contain restrictions that limit our flexibility in operating our business.
Our debt agreements contain, and any future indebtedness of ours would likely contain, a number of covenants that impose significant operating and financial restrictions, including restrictions on the issuer of the debt’s ability to, among other things:
incur additional debt or issue certain preferred shares;
pay dividends on or make distributions in respect of our capital stock or make other restricted payments;
make certain investments;
sell certain assets;
create liens on certain assets;
consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
enter into certain transactions with our affiliates; and
designate our subsidiaries as unrestricted subsidiaries.
As a result of these covenants, we are limited in the manner in which we conduct our business, and we may be unable to engage in favorable business activities or finance future operations or capital needs.
We have pledged and will pledge a significant portion of our assets as collateral under our subsidiaries’ debt agreements. If any of our lenders accelerate the repayment of borrowings, there can be no assurance that we will have sufficient assets to repay our indebtedness.
We are required to satisfy and maintain specified financial ratios under our debt agreements. See Note 13 for further information. Our ability to meet the financial ratios under our debt agreements can be affected by events beyond our control, and there can be no assurance that we will be able to continue to meet those ratios.
A failure to comply with the covenants contained in the agreements that govern our indebtedness could result in an event of default under the facilities or the existing agreements, which, if not cured or waived, could have a material adverse effect on our business, financial condition and results of operations. In the event of any default under the indebtedness of CERP or CGP, the lenders thereunder:
will not be required to lend any additional amounts to such borrowers;
could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be due and payable and terminate all commitments to extend further credit; or
require such borrowers to apply all of our available cash to repay these borrowings.
Such actions by the lenders under CERP’s or CGP’s indebtedness could cause cross defaults under the other indebtedness of CERP and CGP, respectively. For instance, if CERP were unable to repay those amounts, the lenders under CERP’s credit facilities and the holders of CERP’s secured notes could proceed against the collateral granted to them to secure that indebtedness.
If the indebtedness under CERP’s or CGP’s credit facilities, or other indebtedness were to be accelerated, there can be no assurance that their assets would be sufficient to repay such indebtedness in full.
Repayment of our subsidiaries’ debt is dependent on cash flow generated by our subsidiaries.
Our subsidiaries currently own a significant portion of our assets and conduct a significant portion of our operations. Accordingly, repayment of our subsidiaries’ indebtedness is dependent, to a significant extent, on the generation of cash flow by our subsidiaries and their ability to make such cash available by dividend, debt repayment or otherwise. Our subsidiaries do not have any obligation

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to pay amounts due on our other subsidiaries’ indebtedness or to make funds available for that purpose. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our other subsidiaries’ indebtedness. Each subsidiary is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries.
We are or may become involved in legal proceedings that, if adversely adjudicated or settled, could have a material adverse effect on our business, financial condition, results of operations, and prospects.
In addition to the Noteholder Disputes discussed above, we are also defendants from time to time in various lawsuits or other legal proceedings relating to matters incidental to our business. The nature of our business subjects us to the risk of lawsuits filed by customers, past and present employees, competitors, business partners, Indian tribes and others in the ordinary course of business. As with all legal proceedings, no assurance can be provided as to the outcome of these matters and in general, legal proceedings can be expensive and time consuming. For example, we may have potential liability arising from a class action lawsuit against Hilton Hotels Corporation relating to employee benefit obligations. We may not be successful in the defense or prosecution of these lawsuits, which could result in settlements or damages that could significantly impact our business, financial condition and results of operations.
The loss of the services of key personnel could have a material adverse effect on our business.
We believe that the leadership of our executive officers has been a critical element of our success. Any unforeseen loss of our chief executive officer’s services, or any negative market or industry perception with respect to him or arising from his loss, could have a material adverse effect on our businesses. Our other executive officers and other members of senior management have substantial experience and expertise in our businesses that we believe will make significant contributions to our growth and success. The unexpected loss of services of one or more of these individuals could also adversely affect us. We do not have key man or similar life insurance policies covering members of our senior management. We have employment agreements with our executive officers, but these agreements do not guarantee that any given executive will remain with us, and there can be no assurance that any such officers will remain with us.
If we cannot attract, retain and motivate employees, we may be unable to compete effectively, and lose the ability to improve and expand our businesses.
Our success and ability to grow depend, in part, on our ability to hire, retain, and motivate sufficient numbers of talented people with the increasingly diverse skills needed to serve clients and expand our business, in many locations around the world. We face intense competition for highly qualified, specialized technical, managerial, and consulting personnel. Recruiting, training, retention and benefit costs place significant demands on our resources. Additionally, our substantial indebtedness and CEOC’s Chapter 11 proceedings have made recruiting executives to our businesses more difficult, which may become even more difficult as the CEOC Chapter 11 proceedings progress. The inability to attract qualified employees in sufficient numbers to meet particular demands or the loss of a significant number of our employees could have an adverse effect on us.
We may sell or divest different properties or assets as a result of our evaluation of our portfolio of businesses. Such sales or divestitures could affect our costs, revenues, profitability and financial position.
From time to time, we evaluate our properties and our portfolio of businesses and may, as a result, sell or attempt to sell, divest or spin-off different properties or assets. For example, CEOC closed Harrah’s Tunica and Showboat Atlantic City in 2014. In addition, in 2014, CGP acquired from CEOC The Cromwell, The LINQ Hotel, Bally’s Las Vegas, and Harrah’s New Orleans as well as a financial stake in the management fee stream for all of those properties.
These sales or divestitures affect our costs, revenues, profitability, financial position, liquidity and our ability to comply with our debt covenants. Divestitures have inherent risks, including possible delays in closing transactions (including potential difficulties in obtaining regulatory approvals), the risk of lower-than-expected sales proceeds for the divested businesses, and potential post-closing claims for indemnification. In addition, current economic conditions and relatively illiquid real estate markets may result in fewer potential bidders and unsuccessful sales efforts. Expected costs savings, which are offset by revenue losses from divested properties, may also be difficult to achieve or maximize due to our fixed cost structure.
Reduction in discretionary consumer spending resulting from a downturn in the national economy, the volatility and disruption of the capital and credit markets, adverse changes in the global economy and other factors could negatively impact our financial performance and our ability to access financing.
Changes in discretionary consumer spending or consumer preferences are driven by factors beyond our control, such as perceived or actual general economic conditions; high energy, fuel and other commodity costs; the cost of travel; the potential for bank failures; a soft job market; an actual or perceived decrease in disposable consumer income and wealth; increases in payroll taxes;

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increases in gaming taxes or fees; fears of recession and changes in consumer confidence in the economy; and terrorist attacks or other global events. Our business is particularly susceptible to any such changes because our casino properties offer a highly discretionary set of entertainment and leisure activities and amenities. Gaming and other leisure activities we offer represent discretionary expenditures and participation in such activities may decline if discretionary consumer spending declines, including during economic downturns, during which consumers generally earn less disposable income. The economic downturn that began in 2008 and adverse conditions in the local, regional, national and global markets negatively affected our business and results of operations and may negatively affect our operations in the future. During periods of economic contraction, our revenues may decrease while most of our costs remain fixed and some costs even increase, resulting in decreased earnings. While economic conditions have improved, our revenues may decrease. For example, while the gaming industry has partially recovered from 2006, there are no assurances that the gaming industry will continue to grow as a result of economic downturn or other factors. Any decrease in the gaming industry could adversely affect consumer spending and adversely affect our operations.
Additionally, key determinants of our revenues and operating performance include hotel average daily rate (“ADR”), number of gaming trips and average spend per trip by our customers. Given that 2007 was the peak year for our financial performance and the gaming industry in the United States in general, we may not attain those financial levels in the near term, or at all. If we fail to increase ADR or any other similar metric in the near term, our revenues may not increase and, as a result, we may not be able to pay down our existing debt, fund our operations, fund planned capital expenditures or achieve expected growth rates, all of which could have a material adverse effect on our business, financial condition, results of operations and cash flow. Even an uncertain economic outlook may adversely affect consumer spending in our gaming operations and related facilities, as consumers spend less in anticipation of a potential economic downturn. Furthermore, other uncertainties, including national and global economic conditions, terrorist attacks or other global events, could adversely affect consumer spending and adversely affect our operations.
Growth in consumer demand for non-gaming offerings could negatively impact our gaming revenue.
Although recent trends have indicated a growing shift in customer demand for gambling over non-gaming offerings when visiting Las Vegas, there are no assurances that this trend will continue and that demand for non-gaming offerings will not increase. According to Las Vegas Convention and Visitors Authority, 47% of Las Vegas visitors in 2014 indicated that their primary reason to visit was for vacation or pleasure as opposed to solely for gambling as the main attraction, up from 41% of visitors in 2013, but down from 50% of visitors in 2011. To the extent the demand for non-gaming offerings replaces demand for gambling, our gaming revenues will decrease, which could have an adverse impact on our business and results of operations.
We are subject to extensive governmental regulation and taxation policies, the enforcement of which could adversely impact our business, financial condition, and results of operations.
We are subject to extensive gaming regulations and political and regulatory uncertainty. Regulatory authorities in the jurisdictions where we operate have broad powers with respect to the licensing of casino operations and may revoke, suspend, condition or limit our gaming or other licenses, impose substantial fines and take other actions, any one of which could adversely impact our business, financial condition and results of operations. For example, revenues and income from operations were negatively impacted during July 2006 in Atlantic City by a three-day government-imposed casino shutdown. Furthermore, in many jurisdictions where we operate, licenses are granted for limited durations and require renewal from time to time. For example, in Iowa, our ability to continue our gaming operations is subject to a referendum every eight years or at any time upon petition of the voters in the county in which we operate; the most recent referendum which approved our ability to continue to operate our casinos occurred in November 2010. In Maryland, we will have to reapply for our license in July 2017. There can be no assurance that continued gaming activity will be approved in any referendum in the future. If we do not obtain the requisite approval in any future referendum, we will not be able to operate our gaming operations in Iowa, which would negatively impact our future performance.
From time to time, individual jurisdictions have also considered legislation or referendums, such as bans on smoking in casinos and other entertainment and dining facilities, which could adversely impact our operations. For example, the City Council of Atlantic City passed an ordinance in 2007 requiring that we segregate at least 75% of the casino gaming floor as a nonsmoking area, leaving no more than 25% of the casino gaming floor as a smoking area. Illinois also passed the Smoke Free Illinois Act which became effective January 1, 2008, and bans smoking in nearly all public places, including bars, restaurants, work places, schools and casinos. The Smoke Free Illinois Act also bans smoking within 15 feet of any entrance, window or air intake area of these public places. In January 2015, the City of New Orleans passed a ban on indoor smoking and use of electronic cigarettes, which became effective in April 2015. These smoking bans have adversely affected revenues and operating results at our properties. The likelihood or outcome of similar legislation in other jurisdictions and referendums in the future cannot be predicted, though any smoking ban would be expected to negatively impact our financial performance.
Furthermore, because we are subject to regulation in each jurisdiction in which we operate, and because regulatory agencies within each jurisdiction review our compliance with gaming laws in other jurisdictions, it is possible that gaming compliance issues in

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one jurisdiction may lead to reviews and compliance issues in other jurisdictions. We cannot assure you that existing or future jurisdictions would not raise similar questions with respect to our suitability arising out of the Bureau’s report, or with respect to matters that may arise in the future, and we cannot assure you that such issues will not adversely affect us or our financial condition.
Our stockholders are subject to extensive governmental regulation and if a stockholder is found unsuitable by the gaming authority, that stockholder would not be able to beneficially own our common stock directly or indirectly.
In many jurisdictions, gaming laws can require any of our stockholders to file an application, be investigated, and qualify or have his, her or its suitability determined by gaming authorities. Gaming authorities have very broad discretion in determining whether an applicant should be deemed suitable. Subject to certain administrative proceeding requirements, the gaming regulators have the authority to deny any application or limit, condition, restrict, revoke or suspend any license, registration, finding of suitability or approval, or fine any person licensed, registered or found suitable or approved, for any cause deemed reasonable by the gaming authorities. For additional information on the criteria used in making determinations regarding suitability, see “Governmental Regulation.”
For example, under Nevada gaming laws, each person who acquires, directly or indirectly, beneficial ownership of any voting security, or beneficial or record ownership of any non-voting security or any debt security, in a public corporation which is registered with the Nevada Gaming Commission, or the Gaming Commission, may be required to be found suitable if the Gaming Commission has reason to believe that his or her acquisition of that ownership, or his or her continued ownership in general, would be inconsistent with the declared public policy of Nevada, in the sole discretion of the Gaming Commission. Any person required by the Gaming Commission to be found suitable shall apply for a finding of suitability within 30 days after the Gaming Commission's request that he or she should do so and, together with his or her application for suitability, deposit with the Nevada Gaming Control Board, or the Control Board, a sum of money which, in the sole discretion of the Control Board, will be adequate to pay the anticipated costs and charges incurred in the investigation and processing of that application for suitability, and deposit such additional sums as are required by the Control Board to pay final costs and charges. Additionally, under Ohio law, an institutional investor, which is broadly defined and includes any corporation that holds any amount of our stock, will be required to apply for and obtain a waiver of suitability determination.
Furthermore, any person required by a gaming authority to be found suitable, who is found unsuitable by the gaming authority, may not hold directly or indirectly the beneficial ownership of any voting security or the beneficial or record ownership of any nonvoting security or any debt security of any public corporation which is registered with the gaming authority beyond the time prescribed by the gaming authority. A violation of the foregoing may constitute a criminal offense. A finding of unsuitability by a particular gaming authority impacts that person's ability to associate or affiliate with gaming licensees in that particular jurisdiction and could impact the person's ability to associate or affiliate with gaming licensees in other jurisdictions.
Many jurisdictions also require any person who acquires beneficial ownership of more than a certain percentage of voting securities of a gaming company and, in some jurisdictions, non-voting securities, typically 5%, to report the acquisition to gaming authorities, and gaming authorities may require such holders to apply for qualification or a finding of suitability, subject to limited exceptions for “institutional investors” that hold a company's voting securities for investment purposes only. Under Maryland gaming laws, we may not sell or otherwise transfer more than 5% of the legal or beneficial interest in Horseshoe Baltimore without the approval of the Maryland Lottery and Gaming Control Commission, or the Maryland Commission, after the Maryland Commission determines that the transferee is qualified or grants the transferee an institutional investor waiver.
Some jurisdictions may also limit the number of gaming licenses in which a person may hold an ownership or a controlling interest. In Indiana, for example, a person may not have an ownership interest in more than two Indiana riverboat owner's licenses, and in Maryland an individual or business entity may not own an interest in more than one video lottery facility.
If we are unable to effectively compete against our competitors, our profits will decline.
The gaming industry is highly competitive and our competitors vary considerably in size, quality of facilities, number of operations, brand identities, marketing and growth strategies, financial strength and capabilities, and geographic diversity. We also compete with other non-gaming resorts and vacation areas, and with various other entertainment businesses. Our competitors in each market that we participate may have greater financial, marketing, or other resources than we do, and there can be no assurance that they will not engage in aggressive pricing action to compete with us. Although we believe we are currently able to compete effectively in each of the various markets in which we participate, we cannot ensure that we will be able to continue to do so or that we will be capable of maintaining or further increasing our current market share. Our failure to compete successfully in our various markets could adversely affect our business, financial condition, results of operations, and cash flow.
In recent years, many casino operators, including us, have been reinvesting in existing markets to attract new customers or to gain market share, thereby increasing competition in those markets. As companies have completed new expansion projects, supply has

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typically grown at a faster pace than demand in some markets, including Las Vegas, our largest market, and competition has increased significantly. For example, CityCenter, a large development of resorts and residences, opened in December 2009, SLS Las Vegas opened in August 2014, and the Genting Group has announced plans to develop a casino called Resorts World Las Vegas, which is expected to open in 2017. Also, in response to changing trends, Las Vegas operators have been focused on expanding their non-gaming offerings, including upgrades to hotel rooms, new food and beverage offerings, and new entertainment offerings. MGM is developing The Park, which includes a new retail and dining development on the land between New York-New York and Monte Carlo, a renovation of the Strip-front facades of both resorts and a new 20,000 seat indoor arena for sporting events and concerts operated by AEG. Construction of The Park began in 2015 and the arena is expected to be complete in the first half of 2016. There have also been proposals for other large scale non-gaming development projects in Las Vegas by various other developers, however, there are no details as to when or if these projects will be completed. The expansion of existing casino entertainment properties, the increase in the number of properties and the aggressive marketing strategies of many of our competitors have increased competition in many markets in which we operate, and this intense competition is expected to continue. These competitive pressures have and are expected to continue to adversely affect our financial performance in certain markets, including Atlantic City.
In particular, our business may be adversely impacted by the additional gaming and room capacity in Nevada. In addition, our operations located in New Jersey may be adversely impacted by the expansion of gaming in Maryland, New York and Pennsylvania, and our operations located in Nevada may be adversely impacted by the expansion of gaming in California.
Theoretical win rates for our casino operations depend on a variety of factors, some of which are beyond our control.
The gaming industry is characterized by an element of chance. Accordingly, we employ theoretical win rates to estimate what a certain type of game, on average, will win or lose in the long run. In addition to the element of chance, theoretical win rates are also affected by the spread of table limits and factors that are beyond our control, such as a player's skill and experience and behavior, the mix of games played, the financial resources of players, the volume of bets placed and the amount of time players spend gambling. As a result of the variability in these factors, the actual win rates at the casino may differ from theoretical win rates and could result in the winnings of our gaming customers exceeding those anticipated. The variability of these factors, alone or in combination, have the potential to negatively impact our actual win rates, which may adversely affect our business, financial condition, results of operations and cash flows.
We face the risk of fraud and cheating.
Our gaming customers may attempt or commit fraud or cheat in order to increase winnings. Acts of fraud or cheating could involve the use of counterfeit chips or other tactics, possibly in collusion with our employees. Internal acts of cheating could also be conducted by employees through collusion with dealers, surveillance staff, floor managers or other casino or gaming area staff. Failure to discover such acts or schemes in a timely manner could result in losses in our gaming operations. In addition, negative publicity related to such schemes could have an adverse effect on our reputation, potentially causing a material adverse effect on our business, financial condition, results of operations and cash flows.
Use of the “Caesars” brand name, or any of our other brands, by entities other than us could damage the brands and our operations and adversely affect our business and results of operations.
The “Caesars” brand remains the most recognized casino brand in the world and our operations benefit from the global recognition and reputation generated by our brands. Generally, we are actively pursuing gaming and non-gaming management, branding, and development opportunities in Asia and other parts of the world where our brands and reputation are already well-recognized assets. In addition, we will continue to expand our World Series of Poker tournaments to international jurisdictions where we believe there is a likelihood of legalization of online gaming, in order to grow the brand’s awareness. In connection with such opportunities, we intend to grant third parties licenses to use our brands. Our business and results of operations may be adversely affected by the management or the enforcement of the “Caesars” and the “World Series of Poker” brand names, or any of our other brands, by third parties outside of our exclusive control.
Any failure to protect our trademarks could have a negative impact on the value of our brand names and adversely affect our business.
The development of intellectual property is part of our overall business strategy, and we regard our intellectual property to be an important element of our success. While our business as a whole is not substantially dependent on any one trademark or combination of several of our trademarks or other intellectual property, we seek to establish and maintain our proprietary rights in our business operations and technology through the use of patents, copyrights, trademarks and trade secret laws. Despite our efforts to protect our proprietary rights, parties may infringe our trademarks and use information that we regard as proprietary and our rights may

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be invalidated or unenforceable. The unauthorized use or reproduction of our trademarks could diminish the value of our brand and our market acceptance, competitive advantages or goodwill, which could adversely affect our business.
We extend credit to a portion of our customers and we may not be able to collect gaming receivables from our credit players.
We conduct our gaming activities on a credit and cash basis at many of our properties. Any such credit we extend is unsecured. Table games players typically are extended more credit than slot players, and high-stakes players typically are extended more credit than customers who tend to wager lower amounts. High-end gaming is more volatile than other forms of gaming, and variances in win-loss results attributable to high-end gaming may have a significant positive or negative impact on cash flow and earnings in a particular quarter. We extend credit to those customers whose level of play and financial resources warrant, in the opinion of management, an extension of credit. These large receivables could have a significant impact on our results of operations if deemed uncollectible. While gaming debts evidenced by a credit instrument, including what is commonly referred to as a “marker,” and judgments on gaming debts are enforceable under the current laws of the jurisdictions in which we allow play on a credit basis and judgments in such jurisdictions on gaming debts are enforceable in all states under the Full Faith and Credit Clause of the U.S. Constitution, other jurisdictions may determine that enforcement of gaming debts is against public policy. Although courts of some foreign nations will enforce gaming debts directly and the assets in the U.S. of foreign debtors may be reached to satisfy a judgment, judgments on gaming debts from U.S. courts are not binding on the courts of many foreign nations.
The acquisition, development and construction of new hotels, casinos and gaming and non-gaming venues and the expansion of existing ones could have an adverse effect on our business, financial condition and results of operations due to various factors including delays, cost overruns and other uncertainties.
We intend to develop, construct and open or acquire new hotels, casinos and other gaming venues, and develop and manage non-gaming venues, in response to opportunities that may arise. Future development projects and acquisitions may require significant capital commitments, the incurrence of additional debt, guarantees of third party debt, the incurrence of contingent liabilities and an increase in depreciation and amortization expense, which could have an adverse effect upon our business, financial condition, results of operations and cash flow. The development and construction of new hotels, casinos and gaming venues and the expansion of existing ones, such as the redevelopment of The Cromwell in Las Vegas, the development and construction of Horseshoe Baltimore, and the redevelopment of The LINQ Hotel & Casino, are susceptible to various risks and uncertainties, such as:
the existence of acceptable market conditions and demand for the completed project;
general construction risks, including cost overruns, change orders and plan or specification modification, shortages of equipment, materials or skilled labor, labor disputes, unforeseen environmental, engineering or geological problems, work stoppages, fire and other natural disasters, construction scheduling problems, and weather interferences;
changes and concessions required by governmental or regulatory authorities;
the ability to finance the projects, especially in light of our substantial indebtedness;
delays in obtaining, or inability to obtain, all licenses, permits and authorizations required to complete and/or operate the project; and
disruption of our existing operations and facilities.
Moreover, our development and expansion projects are sometimes jointly pursued with third parties or by licensing our brands to third parties. These joint development, expansion projects or license agreements are subject to risks, in addition to those disclosed above, as they are dependent on our ability to reach and maintain agreements with third parties.
Our failure to complete any new development or expansion project, or consummate any joint development, expansion projects or projects where we license our brands, as planned, on schedule, within budget or in a manner that generates anticipated profits, could have an adverse effect on our business, financial condition, results of operations and cash flow.
We may not realize all of the anticipated benefits of current or potential future acquisitions.
Our ability to realize the anticipated benefits of acquisitions will depend, in part, on our ability to integrate the businesses of such acquired company with our businesses. The combination of two independent companies is a complex, costly and time consuming process. This process may disrupt the business of either or both of the companies, and may not result in the full benefits expected. The difficulties of combining the operations of the companies include, among others:
coordinating marketing functions;

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undisclosed liabilities; unanticipated issues in integrating information, communications and other systems;
unanticipated incompatibility of purchasing, logistics, marketing and administration methods;
retaining key employees;
consolidating corporate and administrative infrastructures;
the diversion of management's attention from ongoing business concerns; and
coordinating geographically separate organizations.
We may be unable to realize in whole or in part the benefits anticipated for any current or future acquisitions.
The risks associated with our existing and potential future international operations could reduce our profits.
Some of our properties are located outside the United States, and we are currently pursuing additional international opportunities. International operations are subject to inherent risks including:
political and economic instability;
variation in local economies;
currency fluctuation;
greater difficulty in accounts receivable collection;
trade barriers; and
burden of complying with a variety of international laws.
For example, the political instability in Egypt due to the uprising in January 2011 has negatively affected our properties there.
Any violation of the Foreign Corrupt Practices Act or other similar laws and regulations could have a negative impact on us.
We are subject to risks associated with doing business outside of the United States, which exposes us to complex foreign and U.S. regulations inherent in doing business cross-border and in each of the countries in which it transacts business. We are subject to requirements imposed by the Foreign Corrupt Practices Act (“FCPA”) and other anti-corruption laws that generally prohibit U.S. companies and their affiliates from offering, promising, authorizing or making improper payments to foreign government officials for the purpose of obtaining or retaining business. Violations of the FCPA and other anti-corruption laws may result in severe criminal and civil sanctions and other penalties and the SEC and U.S. Department of Justice have increased their enforcement activities with respect to the FCPA. Policies and procedures and employee training and compliance programs that we have implemented to deter prohibited practices may not be effective in prohibiting our employees, contractors or agents from violating or circumventing our policies and the law. If our employees or agents fail to comply with applicable laws or company policies governing our international operations, we may face investigations, prosecutions and other legal proceedings and actions which could result in civil penalties, administrative remedies and criminal sanctions. Any determination that we have violated any anti-corruption laws could have a material adverse effect on our financial condition. Compliance with international and U.S. laws and regulations that apply to our international operations increases our cost of doing business in foreign jurisdictions. We also deal with significant amounts of cash in our operations and are subject to various reporting and anti-money laundering regulations. Any violation of anti-money laundering laws (“AML”) or regulations, on which in recent years, governmental authorities have been increasingly focused, with a particular focus on the gaming industry, by any of our resorts could have a negative effect on our results of operations.
Acts of terrorism, war, natural disasters, severe weather and political, economic and military conditions may impede our ability to operate or may negatively impact our financial results.
Terrorist attacks and other acts of war or hostility have created many economic and political uncertainties. For example, a substantial number of the customers of our properties in Las Vegas use air travel. As a result of terrorist acts that occurred on September 11, 2001, domestic and international travel was severely disrupted, which resulted in a decrease in customer visits to our properties in Las Vegas. We cannot predict the extent to which disruptions in air or other forms of travel as a result of any further terrorist act, security alerts or war, uprisings, or hostilities in places such as Iraq, Afghanistan and/or Syria or other countries throughout the world will continue to directly or indirectly impact our business and operating results. For example, our operations in Cairo, Egypt were negatively affected from the uprising there in January 2011. As a consequence of the threat of terrorist attacks and

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other acts of war or hostility in the future, premiums for a variety of insurance products have increased, and some types of insurance are no longer available. If any such event were to affect our properties, we would likely be adversely impacted.
In addition, natural and man-made disasters such as major fires, floods, hurricanes, earthquakes and oil spills could also adversely impact our business and operating results. Such events could lead to the loss of use of one or more of our properties for an extended period of time and disrupt our ability to attract customers to certain of our gaming facilities. If any such event were to affect our properties, we would likely be adversely impacted. Harrah's Atlantic City was closed during a busy summer weekend in August 2011 due to Hurricane Irene and was closed for five days in October and November 2012 due to Hurricane Sandy. Our results of operations were significantly impacted by the closure due to Hurricane Sandy. In addition, Hurricane Sandy substantially impacted tourism in New Jersey, including Atlantic City, and the level of tourism has not yet recovered.
In most cases, we have insurance that covers portions of any losses from a natural disaster, but it is subject to deductibles and maximum payouts in many cases. Although we may be covered by insurance from a natural disaster, the timing of our receipt of insurance proceeds, if any, is out of our control. In some cases, however, we may receive no proceeds from insurance, such as our August 2011 closing and October and November 2012 closings in Atlantic City.
Additionally, a natural disaster affecting one or more of our properties may affect the level and cost of insurance coverage we may be able to obtain in the future, which may adversely affect our financial position.
As our operations depend in part on our customers' ability to travel, severe or inclement weather can also have a negative impact on our results of operations.
We may incur impairments to goodwill, indefinite-lived intangible assets, or long-lived assets, which could negatively affect our future profits.
We perform our annual impairment assessment of goodwill as of October 1, or more frequently if impairment indicators exist. We determine the estimated fair value of each reporting unit based on a combination of EBITDA and estimated future cash flows discounted at rates commensurate with the capital structure and cost of capital of comparable market participants, giving appropriate consideration to the prevailing borrowing rates within the casino industry in general. We also evaluate the aggregate fair value of all of our reporting units and other non-operating assets in comparison to our aggregate debt and equity market capitalization at the test date. Both EBITDA multiples and discounted cash flows are common measures used to value and buy or sell businesses in our industry.
We will also perform an annual impairment assessment of other non-amortizing intangible assets as of October 1, or more frequently if impairment indicators exist. We determine the estimated fair value of our non-amortizing intangible assets by primarily using the Relief From Royalty Method and Excess Earnings Method under the income approach.
We review the carrying value of our long-lived assets whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. When performing this assessment, we consider current operating results, trends and prospects, as well as the effect of obsolescence, demand, competition, and other economic, legal, and regulatory factors.
Significant negative industry or economic trends, reduced estimates of future cash flows, disruptions to our business, slower growth rates or lack of growth in our business have resulted in impairment charges during the years ended December 31, 2014 and 2013. If one or more of such events occurs in the future, additional impairment charges may be required in future periods. If we are required to record additional impairment charges, this could have a material adverse impact on our consolidated financial statements.
We may be required to pay our future tax obligation on our deferred cancellation of debt income.
Under the American Recovery and Reinvestment Act of 2009, or the ARRA, we received temporary federal tax relief under the Delayed Recognition of Cancellation of Debt Income, or CODI, rules. The ARRA contains a provision that allows for a deferral for tax purposes of CODI for debt reacquired in 2009 and 2010, followed by recognition of CODI ratably from 2014 through 2018. In connection with the debt that we reacquired in 2009 and 2010, we have deferred related CODI of $499 million remaining for tax purposes. We are required to include one-third of the remaining deferred CODI in taxable income each year from 2016 through 2018. Alternatively, the deferred CODI could be accelerated into taxable income in a year an impairment transaction occurs. To the extent that our federal taxable income exceeds our available federal net operating loss carry forwards in those years, we will have a cash tax obligation.
The amount above has decreased from prior annual reports due to the deconsolidation of the CEOC in 2015 and the 2014 and 2015 recognition of the CODI into taxable income.

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Our business is particularly sensitive to energy prices and a rise in energy prices could harm our operating results.
We are a large consumer of electricity and other energy and, therefore, higher energy prices may have an adverse effect on our results of operations. Accordingly, increases in energy costs may have a negative impact on our operating results. Additionally, higher electricity and gasoline prices which affect our customers may result in reduced visitation to our resorts and a reduction in our revenues. We may be indirectly impacted by regulatory requirements aimed at reducing the impacts of climate change directed at up-stream utility providers, as we could experience potentially higher utility, fuel, and transportation costs.
CGP’s interests may conflict with our interests.
The interests of CGP could conflict with our interests. CGP is in a similar business to us and is required to first provide any potential development opportunities to us. However, we may decide to decline the opportunity for the Company’s business and permit CGP to pursue the development opportunity. A committee of our board of directors comprised of disinterested directors will consider potential development opportunities provided to us by CGP. If the committee declines an opportunity, that opportunity will be available to CGP and will not be available to our businesses. As a result, our business and growth prospects could be negatively impacted. Furthermore, the consideration of business opportunities may create potential or perceived conflicts of interests between our and CGP's businesses. While we may retain a portion of the financial stake in any management fee to be received in connection with an opportunity provided to CGP, there can be no assurances that such opportunity will be successful or that we will receive the expected fees from any opportunity.
Corporate expenses that are not allocated to the properties directly are allocated by CES to CEOC, CERP, and CGPH according to their allocation percentages (initially 70.0%, 24.6% and 5.4%, respectively), subject to annual review. As a result of an annual review undertaken in September 2015 but effective July 2015, the allocation percentages were revised to 65.4%, 21.8% and 12.8%, respectively. CGPH has notified CES, CEOC and CERP that it objects to the new expense allocation but will pay the revised expense allocations under protest and reserves all rights.
Although certain employees of affiliates of Apollo Global Management, LLC (together with such affiliates, “Apollo”) and affiliates of TPG Capital, LP (together with such affiliates, “TPG” and, together with Apollo, the “Sponsors”) are on the boards of directors of Caesars Entertainment and CAC, the certificates of incorporation of both companies provide that neither the Sponsors nor directors have any obligation to present any corporate opportunity to Caesars Entertainment or CAC. Accordingly, the Sponsors may pursue gaming, entertainment or other activities outside of Caesars Entertainment or CAC and have no obligation to present such opportunity to Caesars Entertainment or CAC.
Work stoppages and other labor problems could negatively impact our future profits.
Some of our employees are represented by labor unions and, accordingly, we are subject to the risk of work stoppages or other labor disruptions from time to time. We have 25 collective bargaining agreements covering various employees in Las Vegas expiring in 2016. In addition, several collective bargaining agreements covering most of our union employees in Atlantic City will expire on February 29, 2016, subject to automatic extension unless one party gives 30 days’ prior notice of intent to terminate. No such notice has been given. We intend to negotiate renewal agreements for all collective bargaining agreements expiring and are hopeful that we will be able to reach agreements with the respective unions without any work stoppage. Work stoppages and other labor disruptions could have a material adverse impact on our operations. From time to time, we have experienced attempts by labor organizations to organize certain of our non-union employees. These efforts have achieved some success to date. We cannot provide any assurance that we will not experience additional and successful union activity in the future. The impact of this union activity is undetermined and could negatively impact our profits.
We may be subject to material environmental liability, including as a result of unknown environmental contamination.
The casino properties business is subject to certain federal, state and local environmental laws, regulations and ordinances which govern activities or operations that may have adverse environmental effects, such as emissions to air, discharges to streams and rivers and releases of hazardous substances and pollutants into the environment, as well as handling and disposal from municipal/non-hazardous waste, and which also apply to current and previous owners or operators of real estate generally. Federal examples of these laws include the Clean Air Act, the Clean Water Act, the Resource Conservation Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act and the Oil Pollution Act of 1990. Certain of these environmental laws may impose cleanup responsibility and liability without regard to whether the owner or operator knew of or caused particular contamination or release of hazardous substances. Should unknown contamination be discovered on our property, or should a release of hazardous substances occur on our property, we could be required to investigate and remediate the contamination and could also be held responsible to a governmental entity or third parties for property damage, personal injury or investigation and remediation costs incurred in connection with the contamination or release, which may be substantial. Moreover, such contamination may also impair our ability to use the affected property. Such liability could be joint and several in nature, regardless of fault, and

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could affect us even if such property is vacated. The potential for substantial costs and an inability to use the property could adversely affect our business.
Our insurance coverage may not be adequate to cover all possible losses we could suffer, and, in the future, our insurance costs may increase significantly or we may be unable to obtain the same level of insurance coverage.
We may suffer damage to our property caused by a casualty loss (such as fire, natural disasters and acts of war or terrorism) that could severely disrupt our business or subject it to claims by third parties who are injured or harmed. Although we maintain insurance (including property, casualty, terrorism and business interruption), it may be inadequate or unavailable to cover all of the risks to which our business and assets may be exposed. In several cases we maintain extremely high deductibles or self-insure against specific losses. Should an uninsured loss (including a loss which is less than our deductible) or loss in excess of insured limits occur, it could have a significant adverse impact on our operations and revenues.
We generally renew our insurance policies on an annual basis. If the cost of coverage becomes too high, we may need to reduce our policy limits or agree to certain exclusions from our coverage in order to reduce the premiums to an acceptable amount. Among other factors, homeland security concerns, other catastrophic events or any change in the current U.S. statutory requirement that insurance carriers offer coverage for certain acts of terrorism could adversely affect available insurance coverage and result in increased premiums on available coverage (which may cause us to elect to reduce our policy limits) and additional exclusions from coverage. Among other potential future adverse changes, in the future we may elect to not, or may be unable to, obtain any coverage for losses due to acts of terrorism.
The success of third parties adjacent to our properties is important to our ability to generate revenue and operate our business and any deterioration to their success could materially adversely affect our revenue and result of operations.
In certain cases, we do not own the businesses and amenities adjacent to our properties. However, the adjacent third-party businesses and amenities stimulate additional traffic through our complexes, including the casinos, which are our largest generators of revenue. Any decrease in the popularity of, or the number of customers visiting, these adjacent businesses and amenities may lead to a corresponding decrease in the traffic through our complexes, which would negatively affect our business and operating results. Further, if newly opening properties, such as The Cromwell, are not as popular as expected, we will not realize the increase in traffic through our properties that we expect as a result of their opening, which would negatively affect our business projections.
Compromises of our information systems or unauthorized access to confidential information or our customers' personal information could materially harm our reputation and business.
We collect and store confidential, personal information relating to our customers for various business purposes, including marketing and financial purposes, and credit card information for processing payments. For example, we handle, collect and store personal information in connection with our customers staying at our hotels and enrolling in our Total Rewards program. We may share this personal and confidential information with vendors or other third parties in connection with processing of transactions, operating certain aspects of our business or for marketing purposes. Our collection and use of personal data are governed by state and federal privacy laws and regulations as well as the applicable laws and regulations in other countries in which we operate. Privacy law is an area that changes often and varies significantly by jurisdiction. We may incur significant costs in order to ensure compliance with the various applicable privacy requirements. In addition, privacy laws and regulations may limit our ability to market to our customers.
We assess and monitor the security of collection, storage and transmission of customer information on an ongoing basis. We utilize commercially available software and technologies to monitor, assess and secure our network. Further, the systems currently used for transmission and approval of payment card transactions, and the technology utilized in payment cards themselves, all of which can put payment card data at risk, are determined and controlled by the payment card industry, not us. Although we have taken steps designed to safeguard our customers' confidential personal information and important internal company data, our network and other systems and those of third parties, such as service providers, could be compromised, damaged, or disrupted by a third party breach of our system security or that of a third-party provider or as a result of purposeful or accidental actions of third parties, our employees or those employees of a third party, power outages, computer viruses, system failures, natural disasters or other catastrophic events. Our third-party information system service providers face risks relating to cybersecurity similar to ours, and we do not directly control any of such parties’ information security operations. Advances in computer and software capabilities and encryption technology, new tools and other developments may increase the risk of a security breach. As a result of any security breach, customer information or other proprietary data may be accessed or transmitted by or to a third party. Despite these measures, there can be no assurance that we are adequately protecting our information.
Any loss, disclosure or misappropriation of, or access to, customers' or other proprietary information, or other breach of our information security could result in legal claims or legal proceedings, including regulatory investigations and actions, or liability

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for failure to comply with privacy and information security laws, including for failure to protect personal information or for misusing personal information, which could disrupt our operations, damage our reputation and expose us to claims from customers, financial institutions, regulators, payment card associations, employees and other persons, any of which could have an adverse effect on our financial condition, results of operations and cash flow.
Our obligation to fund multi-employer pension plans to which we contribute may have an adverse impact on us.
We contribute to and participate in various multi-employer pension plans for employees represented by certain unions. We are required to make contributions to these plans in amounts established under collective bargaining agreements. We do not administer these plans and, generally, are not represented on the boards of trustees of these plans. The Pension Protection Act enacted in 2006, or the PPA, requires under-funded pension plans to improve their funding ratios. Based on the information available to us, some of the multi-employer plans to which we contribute are either “critical” or “endangered” as those terms are defined in the PPA. Specifically, the Pension Plan of the UNITE HERE National Retirement Fund is less than 65% funded. We cannot determine at this time the amount of additional funding, if any, we may be required to make to these plans. However, plan assessments could have an adverse impact on our results of operations or cash flows for a given period. Furthermore, under current law, upon the termination of a multi-employer pension plan, due to the withdrawal of all its contributing employers (a mass withdrawal), or in the event of a withdrawal by us, which we consider from time to time, we would be required to make payments to the plan for our proportionate share of the plan's unfunded vested liabilities, that would have a material adverse impact on our consolidated financial condition, results of operations and cash flows.
In January 2015, the Trustees of the National Retirement Fund (“NRF”), a multi-employer defined benefit pension plan, voted to expel the CEC controlled group (“CEC Group”) from the plan. NRF claims that CEOC’s bankruptcy presents an “actuarial risk” to the plan purportedly permitting such expulsion. The CEC affiliates that are included in NRF are Caesars Atlantic City, Bally’s Atlantic City, and Harrah’s Philadelphia (all of which are owned by CEOC and are not included in CEC’s results), as well as Harrah’s Atlantic City and the Las Vegas laundry. NRF has advised the CEC Group that its expulsion has triggered withdrawal liability with a present value of approximately $360 million , payable in 80 quarterly payments of about $6 million .
The CEC Group disputes NRF’s authority to take such action. Prior to NRF’s vote, the CEC Group reiterated its commitment to remain in the plan and not seek rejection of any collective bargaining agreement in which the obligation to contribute to NRF exists. CEOC is current with respect to pension contributions. The CEC Group is pursuing several litigation strategies to challenge NRF’s action. There can be no assurance that our strategies will have a successful outcome, and the CEC Group may become liable for the withdrawal liability, which would have an adverse impact on us.
The implementation of CES contemplated activities may be subject to regulatory and other approvals in certain jurisdictions, which may be delayed or which we may not receive.
In May 2014, we, together with CEOC, CERP and CGPH formed CES, a services joint venture. CES manages certain enterprise assets and the other assets it owns, licenses or controls and employs the corresponding employees and other employees who provide services to CEOC, CERP and CGP, their affiliates and their respective properties and systems under each property's corresponding property management agreement. CES manages certain enterprise-wide assets of ours, including the intellectual property that CEOC and its affiliates currently license to CGP and other subsidiaries of CEC. In addition, certain of CEOC’s subsidiaries' property management agreements have been assigned to CES and others may be assigned in the future. While CES has attained certain key regulatory approvals, before CES can commence all activities in all jurisdictions, it may be required to obtain additional regulatory approvals in certain jurisdictions. For example, employees employed by CES are, in the limited purpose of the services they provide to properties in Ohio, Pennsylvania, Missouri and Ontario, Canada, employed jointly by CES and CEOC in respect of such services and will be so jointly employed until CES obtains the necessary regulatory approvals in each of the aforementioned jurisdictions. CES intends to file for all regulatory approvals in jurisdictions in which such approval is required, but we cannot be sure when, or if, we will receive such approvals or that CES will be able to be implemented in all intended jurisdictions.
Due to the participation of CEOC, CGPH, and CERP in CES, we may not control CES and our interests may not align with the interests of the other members of CES.
CEOC, CGPH, and CERP are members of CES, and each relies on CES to provide it and its subsidiaries with intellectual property licenses and property management services, among other services. CEOC, CGPH and CERP are each required to contribute as necessary to fund CES’ operating costs and capital requirements in proportion to their respective ownership interest in CES. The members of CES are required to fund its capital expenditures in agreed portions on an annual basis. The amount each member will be required to fund in future years will be subject to the review and approval of the CES steering committee. CEOC, CGPH and CERP, together, control CES through the CES steering committee, which is comprised of one representative from each of CEOC, CGPH and CERP. Conflicts of interest may arise between Caesars Entertainments’ subsidiaries. Most decisions by CES require the consent of two of the three steering committee members. To the extent we are unable to control the consent of at least

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two of the three steering committee members, we will be unable to cause CES to take actions that our in our interest. In addition, certain decisions by CES may not be made without unanimous consent of the members, including consent by CGPH, which we do not control. These actions include any decision with respect to liquidation or dissolution of CES, merger, consolidation or sale of all or substantially all the assets of CES, usage of CES assets in a manner inconsistent with the purposes of CES, material amendment to CES’ operating agreement, admission of new investors to CES and filing of any bankruptcy or similar action by CES. Thus, CGPH may block certain actions by CES that are in our interest.
We are controlled by the Sponsors, whose interests may not be aligned with ours.
The members of Hamlet Holdings LLC (“Hamlet Holdings”) are comprised of individuals affiliated with Apollo Global Management, LLC (“Apollo”) and affiliates of TPG Capital LP (“TPG”) (collectively, the “Sponsors”). As of December 31, 2015 , Hamlet Holdings beneficially owned a majority of our common stock pursuant to an irrevocable proxy providing Hamlet Holdings with sole voting and sole dispositive power over those shares, and, as a result, the Sponsors have the power to elect all of our directors. Moreover, Hamlet Holdings has the ability to vote on any transaction that requires the approval of our board of directors or our stockholders, including the approval of significant corporate transactions such as mergers and the sale of all or substantially all of our assets. As a result, Hamlet Holdings is in a position to exert a significant influence over us, and the direction of our business and results of operations. The interests of the Sponsors could conflict with or differ from the interests of other holders of our securities. For example, the concentration of ownership held by the Sponsors could delay, defer or prevent a change of control of us or impede a merger, takeover or other business combination which another stockholder may otherwise view favorably. Additionally, the Sponsors are in the business of making or advising on investments in companies they hold, and may from time to time in the future acquire interests in or provide advice to businesses that directly or indirectly compete with certain portions of our business or are suppliers or customers of ours. One or both of the Sponsors may also pursue acquisitions that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. A sale of a substantial number of shares of stock in the future by funds affiliated with the Sponsors or their co-investors could cause our stock price to decline. So long as Hamlet Holdings continues to hold the irrevocable proxy, they will continue to be able to strongly influence or effectively control our decisions.
In addition, we have an executive committee that serves at the discretion of our board of directors and is authorized to take such actions as it reasonably determines appropriate. Currently, the executive committee may act by a majority of its members, provided that at least one member affiliated with TPG and Apollo must approve any action of the executive committee.
Future sales or the possibility of future sales of a substantial amount of our common stock, including in connection with the merger with CAC or the restructuring of CEOC, may depress the price of shares of our common stock.
Future sales or the availability for sale of substantial amounts of our common stock in the public market could adversely affect the prevailing market price of our common stock and could impair our ability to raise capital through future sales of equity securities.
As of December 31, 2015 , there were 145 million shares outstanding, all of which are the same class of voting common stock. All of the outstanding shares of our common stock will be eligible for resale under Rule 144 or Rule 701 of the Securities Act of 1933, as amended (“Securities Act”), subject to volume limitations, applicable holding period requirements or other contractual restrictions. The Sponsors have the ability to cause us to register the resale of its shares, and our management members who hold shares will have the ability to include their shares in such registration.
We sold 7 million shares of our common stock in 2014 and 11 million shares in 2013. In connection with the merger with CAC, we expect to issue a significant number of shares of our common stock and, in connection with the restructuring of CEOC, we expect to issue a significant amount of notes convertible into shares of our common stock. In addition, we may issue shares of common stock or other securities from time to time as consideration for future acquisitions and investments or for any other reason that our board of directors deems advisable. If any such acquisition or investment is significant, the number of shares of our common stock, or the number or aggregate principal amount, as the case may be, of other securities that we may issue may in turn be substantial. We may also grant registration rights covering those shares of common stock or other securities in connection with any such acquisitions and investments.
We cannot predict the size of future issuances of our common stock or other securities or the effect, if any, that future issuances and sales of our common stock or other securities, including future sales by the Sponsors, will have on the market price of our common stock. Sales of substantial amounts of common stock (including shares of common stock issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices for our common stock.

24



The price and trading volume of our common stock may fluctuate significantly.
The market price of our common stock may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume of our common stock may fluctuate and cause significant price variations to occur. Volatility in the market price of our common stock may prevent a holder of our common stock from being able to sell their shares. The market price for our common stock could fluctuate significantly for various reasons, including:
our operating and financial performance and prospects;
our quarterly or annual earnings or those of other companies in our industry;
news or developments related to CEOC's ongoing Bankruptcy proceedings and negotiations with its creditors;
conditions that impact demand for our products and services;
the public's reaction to our press releases, other public announcements and filings with the SEC;
changes in earnings estimates or recommendations by securities analysts who track our common stock;
market and industry perception of our success, or lack thereof, in pursuing our growth strategy;
strategic actions by us or our competitors, such as acquisitions or restructurings;
changes in government and environmental regulation, including gaming taxes;
changes in accounting standards, policies, guidance, interpretations or principles;
arrival and departure of key personnel;
changes in our capital structure;
sales of common stock by us or members of our management team;
issuance of common stock in connection with the merger with CAC;
the expiration of contractual lockup agreements; and
changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events.
In addition, the stock market experiences significant price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies, including companies in the gaming, lodging, hospitality and entertainment industries. The changes frequently appear to occur without regard to the operating performance of the affected companies. Hence, the price of our common stock could fluctuate based upon factors that have little or nothing to do with us, and these fluctuations could materially reduce our share price.
Because we have not paid dividends since being acquired by the Sponsors in 2008 and do not anticipate paying dividends on our common stock in the foreseeable future, holders of our common stock should not expect to receive dividends on shares of our common stock.
We have no present plans to pay cash dividends to our stockholders and, for the foreseeable future, intend to retain all of our earnings for use in our business. The declaration of any future dividends by us is within the discretion of our Board and will be dependent on our earnings, financial condition and capital requirements, as well as any other factors deemed relevant by our board of directors.
We are a “controlled company” within the meaning of the NASDAQ rules and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements.
Hamlet Holdings controls a majority of our voting common stock. As a result, we are a “controlled company” within the meaning of NASDAQ corporate governance standards. Under the NASDAQ rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and we have elected not to comply with certain NASDAQ corporate governance requirements, including:
the requirement that a majority of the board of directors consists of independent directors;

25



the requirement that we have a nominating/corporate governance committee that is composed entirely of independent directors;
the requirement that we have a compensation committee that is composed entirely of independent directors; and
the requirement for an annual performance evaluation of the nominating/corporate governance and compensation committees.
As a result of these exemptions, we do not have a majority of independent directors nor do our nominating/corporate governance and compensation committees consist entirely of independent directors and we are not required to have an annual performance evaluation of the nominating/corporate governance and compensation committees. Accordingly, a holder of our common stock will not have the same protections afforded to stockholders of companies that are subject to all of the NASDAQ corporate governance requirements.
Our bylaws and certificate of incorporation contain provisions that could discourage another company from acquiring us and may prevent attempts by our stockholders to replace or remove our current management.
Provisions of our bylaws and our certificate of incorporation may delay or prevent a merger or acquisition that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace or remove our directors. These provisions include:
establishing a classified board of directors;
establishing limitations on the removal of directors;
permitting only an affirmative vote of at least two-thirds of the Board to fix the number of directors;
prohibiting cumulative voting in the election of directors;
empowering only the board of directors to fill any vacancy on the board of directors, whether such vacancy occurs as a result of an increase in the number of directors or otherwise;
authorizing the issuance of “blank check” preferred stock without any need for action by stockholders;
eliminating the ability of stockholders to call special meetings of stockholders;
prohibiting stockholders from acting by written consent if less than 50.1% of our outstanding common stock is controlled by the Sponsors;
prohibiting amendments to the bylaws without the affirmative vote of at least two-thirds of the board of directors or the affirmative vote of at least two-thirds of the total voting power of the outstanding shares entitled to vote;
prohibiting amendments to the certificate of incorporation relating to stockholder meetings, amendments to the bylaws or certificate of incorporation, or the election or classification of the board of directors without the affirmative vote of two-thirds of the shares entitled to vote on any matter; and
establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings.
Our issuance of shares of preferred stock could delay or prevent a change of control of us. Our board of directors has the authority to cause us to issue, without any further vote or action by the stockholders, shares of preferred stock, par value $0.01 per share, in one or more series, to designate the number of shares constituting any series, and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, voting rights, rights and terms of redemption, redemption price or prices and liquidation preferences of such series. The issuance of shares of preferred stock may have the effect of delaying, deferring or preventing a change in control of our company without further action by the stockholders, even where stockholders are offered a premium for their shares.
Together, these charter and statutory provisions could make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our common stock. Furthermore, the existence of the foregoing provisions, as well as the significant common stock controlled by Hamlet Holdings, could limit the

26



price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our company, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition.
PRIVATE SECURITIES LITIGATION REFORM ACT
This Form 10-K contains or may contain “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. We have based these forward-looking statements on our current expectations about future events. Further, statements that include words such as “may,” “will,” “project,” “might,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,” “continue,” “present,” “preserve,” or “pursue,” or the negative of these words or other words or expressions of similar meaning may identify forward-looking statements. These forward-looking statements are found at various places throughout the report. These forward-looking statements, including, without limitation, those relating to future actions, new projects, strategies, future performance, the outcome of contingencies such as legal proceedings, the restructuring of CEOC and future financial results, wherever they occur in this report, are necessarily estimates reflecting the best judgment of our management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. These forward-looking statements should, therefore, be considered in light of various important factors set forth above and from time to time in our filings with the Securities and Exchange Commission.
In addition to the risk factors set forth above, important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include without limitation:
the outcome of currently pending or threatened litigation and demands for payment by certain creditors and by the National Retirement Fund against CEC;
the effects of CEOC’s bankruptcy on CEOC and its subsidiaries and affiliates, including Caesars Entertainment, and the interest of various creditors, equity holders and other constituents;
the ability to retain key employees during the restructuring of CEOC;
the event that the First Lien RSAs may not be consummated in accordance with their terms, or persons not party to an First Lien RSA may successfully challenge the implementation thereof;
the length of time CEOC will operate in the Chapter 11 cases or CEOC’s ability to comply with the milestones provided by the First Lien RSAs;
risks associated with third party motions in the Chapter 11 cases, which may hinder or delay CEOC’s ability to consummate the restructuring as contemplated by the First Lien RSAs;
adverse effects of the Chapter 11 proceedings and related litigation on Caesars Entertainment’s liquidity or results of operations;
the effects of local and national economic, credit and capital market conditions on the economy, in general, and on the gaming industry, in particular;
the financial results of our consolidated businesses;
the impact of our substantial indebtedness and the restrictions in our debt agreements;
access to available and reasonable financing on a timely basis, including the ability of the Company to refinance its indebtedness on acceptable terms;
the ability of our customer tracking, customer loyalty, and yield management programs to continue to increase customer loyalty and same-store or hotel sales;
changes in laws, including increased tax rates, smoking bans, regulations or accounting standards, third-party relations and approvals, and decisions, disciplines and fines of courts, regulators and governmental bodies;
our ability to recoup costs of capital investments through higher revenues;
abnormal gaming holds (“gaming hold” is the amount of money that is retained by the casino from wagers by customers);

27



the effects of competition, including locations of competitors, competition for new licenses, and operating and market competition;
the ability to timely and cost-effectively integrate companies that we acquire into our operations;
the potential difficulties in employee retention and recruitment as a result of our substantial indebtedness or any other factor;
construction factors, including delays, increased costs of labor and materials, availability of labor and materials, zoning issues, environmental restrictions, soil and water conditions, weather and other hazards, site access matters, and building permit issues;
litigation outcomes and judicial and governmental body actions, including gaming legislative action, referenda, regulatory disciplinary actions, and fines and taxation;
acts of war or terrorist incidents, severe weather conditions, uprisings or natural disasters, including losses therefrom, losses in revenues and damage to property, and the impact of severe weather conditions on our ability to attract customers to certain of our facilities, such as the amount of losses and disruption to our company as a result of Hurricane Sandy in late October 2012;
the effects of environmental and structural building conditions relating to our properties;
access to insurance on reasonable terms for our assets; and
the impact, if any, of unfunded pension benefits under multi-employer pension plans.
You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. We undertake no obligation to publicly update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Form 10-K or to reflect the occurrence of unanticipated events, except as required by law.
ITEM 1B.
Unresolved Staff Comments
None.
ITEM 2.
Properties
As of December 31, 2015 , we owned the following casino properties. All amounts are approximations.
Property
Location
Casino
Space–
Sq. Ft.
 
Slot
Machines
 
Table
Games
 
Hotel
Rooms and
Suites
Bally’s Las Vegas
Las Vegas, Nev.
66,200

 
1,000

 
70

 
2,810

The Cromwell
Las Vegas, Nev.
40,000

 
410

 
50

 
190

Flamingo Las Vegas
Las Vegas, Nev.
72,300

 
1,140

 
120

 
3,460

Harrah’s Atlantic City
Atlantic City, N.J.
154,800

 
2,170

 
180

 
2,590

Harrah’s Las Vegas
Las Vegas, Nev.
90,600

 
1,290

 
90

 
1,980

Harrah’s Laughlin
Laughlin, Nev.
56,000

 
930

 
40

 
1,510

Harrah’s New Orleans
New Orleans, La.
125,100

 
1,720

 
150

 
450

Horseshoe Baltimore
Baltimore, Md.
122,000

 
2,200

 
180

 

The LINQ Hotel & Casino
Las Vegas, Nev.
62,200

 
780

 
70

 
2,250

Paris Las Vegas
Las Vegas, Nev.
95,300

 
1,040

 
100

 
2,920

Planet Hollywood Resort & Casino
Las Vegas, Nev.
64,500

 
1,090

 
110

 
2,500

Rio All-Suites Hotel & Casino
Las Vegas, Nev.
117,300

 
1,060

 
80

 
2,520

On January 15, 2015, CEOC and certain of its U.S. subsidiaries voluntarily filed for reorganization under Chapter 11 of the Bankruptcy Code. Because CEOC is deemed to be under the control of the United States Bankruptcy Court, the Company deconsolidated this subsidiary effective January 15, 2015 (see Note 3 ).

28



ITEM 3.
Legal Proceedings
We are subject to a number of Noteholder Disputes related to various transactions that CEOC has completed since 2010, as well as certain other litigation. See Note 4 for fu ll details of the matters outlined below.
Noteholder Disputes
Litigation commenced by Wilmington Savings Fund Society, FSB on August 4, 2014 (the “Delaware Second Lien Lawsuit”)
Litigation commenced by parties on September 3, 2014 and October 2, 2014 (the “Senior Unsecured Lawsuits”)
Litigation commenced by UMB Bank on November 25, 2014 (the “Delaware First Lien Lawsuit”)
Demands for payment made by Wilmington Savings Fund Society, FSB on February 13, 2015 (the “February 13 Notice”)
Demands for payment made by BOKF, N.A., on February 18, 2015 (the “February 18 Notice”)
Litigation commenced by BOKF, N.A. on March 3, 2015 (the “New York Second Lien Lawsuit”)
Litigation commenced by UMB Bank on June 15, 2015 (the “New York First Lien Lawsuit”)
Litigation commenced by Wilmington Trust, National Association on October 20, 2015 (the “New York Senior Notes Lawsuit”)
Other Litigation
Litigation commenced by Nicholas Koskie on December 30, 2014 (the “Merger Lawsuit”)
Litigation commenced by Hilton on December 24, 2014 (the “Hilton Lawsuit”)
Litigation commenced by Trustees of the National Retirement Fund in January 2015 (“NRF Litigation”)
ITEM 4.
Mine Safety Disclosures
Not applicable.

29



PART II

ITEM 5.
Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock trades on the NASDAQ under the ticker symbol “CZR.” The following table sets forth the high and low sales prices for our common stock on the NASDAQ for each quarter during 2015 and 2014 .
 
2015
 
2014
 
High
 
Low
 
High
 
Low
First Quarter
$
16.00

 
$
8.78

 
$
26.74

 
$
18.86

Second Quarter
12.48

 
5.95

 
23.00

 
17.05

Third Quarter
10.61

 
3.30

 
18.54

 
11.21

Fourth Quarter
9.17

 
5.75

 
17.39

 
8.51

As of February 15, 2016 , there were 145,143,581 shares of common stock issued and outstanding that were held by 128 stockholders of record.
To date, we have not paid a cash dividend. Certain of our borrowings have covenants and requirements restricting or limiting the ability of CEC and its subsidiaries to, among other things, pay dividends on or make distributions in respect of their capital stock or make other restricted payments. See Note 13 for additional information on our covenants and restrictions.
There have not been any sales by CEC of equity securities during the years ended December 31, 2015 , 2014 , or 2013 , that have not been registered under the Securities Act. In addition, CEC did not repurchase shares of its common stock during the three months ended December 31, 2015 .
Performance Graph
The graph depicted below compares the cumulative total stockholder return on our common stock with the cumulative total return on the Standard & Poor's 500 Stock Index (“S&P 500”) and the Dow Jones U.S. Gambling Total Stock Market Index (“Dow Jones U.S. Gambling”) for the period beginning on February 8, 2012 (the date our common stock commenced trading on the NASDAQ Global Select Market) and ending on December 31, 2015 . NASDAQ OMX furnished the data. The performance graph assumes a $100 investment in our stock and each of the two indices, respectively, on February 8, 2012, and that all dividends were reinvested. Stock price performance, presented for the period from February 8, 2012 to December 31, 2015, is not necessarily indicative of future results.


30



 
 
 
As of December 31,
 
2/8/2012
 
2012
 
2013
 
2014
 
2015
CZR
$
100.00

 
$
44.96

 
$
139.96

 
$
101.95

 
$
51.27

S&P 500 Index
100.00

 
107.85

 
142.78

 
162.33

 
116.41

Dow Jones U.S. Gambling
100.00

 
98.69

 
168.43

 
139.72

 
164.57

The performance graph should not be deemed filed or incorporated by reference into any other of our filings under the Securities Act or the Exchange Act, unless we specifically incorporate the performance graph by reference therein.
Equity Compensation Plan Information
We maintain various long-term incentive plans for management, other personnel, and key service providers. The plans allow for granting stock-based compensation awards, including time-based and performance-based stock options, restricted stock units, restricted stock awards, stock grants, or a combination of awards. See Note 16 for a description of our stock-based compensation plans.
Equity compensation plans approved by security holders
 
Number of securities to be
issued upon exercise of
outstanding options or
vesting of restricted stock units
 
Weighted-average exercise
price of outstanding options
 
Number of securities
remaining available for
future issuance under equity
compensation plans
(2)
Stock options   (1)
 
10,638,219

 
$
12.90

 
5.218592

Restricted stock units
 
6,329,435

 
N/A

 
N/A

____________________
(1)  
The weighted average remaining contractual life for the options set forth in this row is 6.8 years.
(2)  
Under the 2012 Incentive Plan, the type and form of awards that can be granted includes, but is not limited to, stock options, stock appreciation rights, restricted stock awards, and restricted stock units.


31



ITEM 6.
Selected Financial Data
The following selected financial data should be read in conjunction with the consolidated financial statements and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of this Form 10-K.
(In millions, except per share data)
2015 (1)
 
2014
 
2013
 
2012
 
2011
OPERATING DATA
 
 
 
 
 
 
 
 
 
Net revenues
$
4,654

 
$
8,516

 
$
8,220

 
$
8,186

 
$
8,161

Impairment of goodwill

 
695

 
104

 
195

 
3

Impairment of intangible and tangible assets (2)
1

 
299

 
2,727

 
430

 
30

Income/(loss) from operations
573

 
(452
)
 
(2,026
)
 
134

 
794

Interest expense
684

 
2,670

 
2,252

 
2,100

 
2,121

Deconsolidation and restructuring of CEOC and other
6,115

 
(95
)
 
28

 
162

 
73

Income/(loss) from continuing operations, net of income taxes
6,059

 
(2,674
)
 
(2,733
)
 
(1,103
)
 
(734
)
Net income/(loss)
6,052

 
(2,866
)
 
(2,940
)
 
(1,503
)
 
(704
)
Net income/(loss) attributable to Caesars
5,920

 
(2,783
)
 
(2,948
)
 
(1,508
)
 
(725
)
COMMON STOCK DATA
 
 
 
 
 
 
 
 
 
Basic earnings/(loss) per share from:
 
 
 
 
 
 
 
 
 
Continuing operations
$
40.92

 
$
(18.18
)
 
$
(21.32
)
 
$
(8.83
)
 
$
(6.04
)
Discontinued operations
(0.04
)
 
(1.35
)
 
(1.61
)
 
(3.21
)
 
0.24

Net income/(loss)
$
40.88

 
$
(19.53
)
 
$
(22.93
)
 
$
(12.04
)
 
$
(5.80
)
Diluted earnings/(loss) per share from:
 
 
 
 
 
 
 
 
 
Continuing operations
$
40.30

 
$
(18.18
)
 
$
(21.32
)
 
$
(8.83
)
 
$
(6.04
)
Discontinued operations
(0.04
)
 
(1.35
)
 
(1.61
)
 
(3.21
)
 
0.24

Net income/(loss)
$
40.26

 
$
(19.53
)
 
$
(22.93
)
 
$
(12.04
)
 
$
(5.80
)
 
 
 
 
 
 
 
 
 
 
FINANCIAL POSITION DATA
 
 
 
 
 
 
 
 
 
Total assets
$
12,195

 
$
23,328

 
$
24,485

 
$
27,669

 
$
28,101

Current portion of long-term debt
187

 
15,779

 
197

 
880

 
40

Long-term debt   (3)
6,777

 
7,230

 
20,715

 
20,305

 
19,500

Noncontrolling interests (1)(4)
1,246

 
255

 
1,218

 
80

 
47

Stockholders’ equity/(deficit)
987

 
(4,997
)
 
(3,122
)
 
(412
)
 
1,007

____________________
(1)  
2015 reflects the deconsolidation of CEOC(see Note 3 ).
(2)  
See Note 8 and Note 9 for information about impairments.
(3)  
See Note 13 for information about debt.
(4)  
The decrease in 2014 was primarily due to the sale and grant of CEOC shares in May 2014, which reduced CEC’s ownership to approximately 89%. The increase in 2013 was primarily due to the formation of CGP (see Note 2 ).



32



ITEM 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
In this filing, the name “CEC” refers to the parent holding company, Caesars Entertainment Corporation, exclusive of its consolidated subsidiaries and variable interest entities, unless otherwise stated or the context otherwise requires. The words “Company,” “Caesars,” “Caesars Entertainment,” “we,” “our,” and “us” refer to Caesars Entertainment Corporation, inclusive of its consolidated subsidiaries and variable interest entities, unless otherwise stated or the context otherwise requires.
We also refer to (i) our Consolidated Financial Statements as our “Financial Statements,” (ii) our Consolidated Statements of Operations and Comprehensive Income as our “Statements of Operations,” and (iii) our Consolidated Balance Sheets as our “Balance Sheets.” Note references are to the notes to consolidated financial statements included in Item 8.
The following discussion should be read in conjunction with, and is qualified in its entirety by, the audited consolidated financial statements and the notes thereto and other financial information included elsewhere in this Form 10-K.
The statements in this discussion regarding our expectations regarding our future performance, liquidity and capital resources, and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties. Our actual results may differ materially from those contained in or implied by any forward-looking statements. See Item 1A, “Risk Factors—PRIVATE SECURITIES LITIGATION REFORM ACT” of this report.
Overview

As summarized below, we deconsolidated CEOC from our results following of its bankruptcy filing in January 2015, and therefore, our 2015 results are not comparable with 2014. However, the reportable segments that remained as part of the consolidated entity subsequent to the deconsolidation of CEOC combined to contribute a $575 million increase in net revenues and a $706 million increase in income from operations. These improvements were primarily driven by (a) the benefit of full-year results from the properties that opened in 2014; (b) improved gaming results from our comparable Las Vegas properties; and (c) continued growth in our social and mobiles games segment. In addition, impairments were only $1 million during 2015, after previously recognizing impairments of $994 million and $2.8 billion in 2014 and 2013, respectively.
In 2016, we expect to begin experiencing inflationary cost increases, including salary and benefits, and will be focused on offsetting these increases through enhanced productivity efforts. Additionally, we continue to experience elevated expenses across numerous parts of our business due to restructuring efforts as we navigate CEOC’s bankruptcy process, which may accelerate over time.
Our business is operated through CEC, which is primarily a holding company with no independent operations of its own, and our three reportable segments, which include the properties below: (1)  
CERP (2)
 
CGP Casinos  (3)
 
CIE  (4)
Flamingo Las Vegas
 
Bally’s Las Vegas
 
Social and Mobile Games
Harrah’s Atlantic City
 
The Cromwell
 
Real-Money Online Gaming
Harrah’s Las Vegas
 
Harrah’s New Orleans
 
World Series of Poker
Harrah’s Laughlin
 
Horseshoe Baltimore
 
 
Paris Las Vegas
 
The LINQ Hotel & Casino
 
 
Rio All-Suites Hotel & Casino
 
Planet Hollywood Resort & Casino
 
 
___________________
(1)  
Caesars Entertainment Operating Company (“CEOC”) remained a reportable segment until its deconsolidation effective January 15, 2015 (see Note 3 ).
(2)  
Caesars Entertainment Resort Properties (“CERP”) also owns with The LINQ promenade and Octavius Tower at Caesars Palace Las Vegas (“Octavius Tower”).
(3)  
Caesars Growth Partners Casino Properties and Developments (“CGP Casinos”) is comprised of all subsidiaries of our consolidated variable interest entity, Caesars Growth Partners, LLC (“CGP”) excluding Caesars Interactive Entertainment (“CIE”).
(4)  
CIE is comprised of the subsidiaries that operate CGP’s social and mobile games business and the World Series of Poker.

33



Summary of 2015 Events and Key Drivers of Annual Performance

The following are the significant events of 2015 and the key drivers of our performance. Accordingly, these key drivers are described here, and the remainder of the discussion and analysis of results should be read in conjunction with these explanations.
CEOC
CEOC Chapter 11 Reorganization
As described more fully in Note 3 , on January 15, 2015 (the “Petition Date”), CEOC and certain of its United States subsidiaries (the “Debtors”) voluntarily filed for reorganization under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for Northern District of Illinois in Chicago (the “Bankruptcy Court”) in order to implement a restructuring plan for balance sheet deleveraging. As a result, the results of CEOC and its subsidiaries are no longer consolidated with Caesars subsequent to the Petition Date, and we recognized a gain of $7.1 billion related to the deconsolidation. All Caesars Entertainment properties, and those owned by CEOC, are continuing to operate in the ordinary course.
As described more fully in Note 1 and summarized below, we made material commitments under CEOC’s plan of reorganization (the “Restructuring”), and we are a defendant in litigation, including the Noteholder Disputes, and other noteholder disputes relating to certain CEOC transactions dating back to 2010. The circumstances described in Note 1 under “ CEC Liquidity ” raise substantial doubt as to CEC’s ability to continue as a going concern without securing additional funding to meet its ongoing obligations and its commitments under the Restructuring. Additionally, in each of the litigation matters disclosed in Note 1 under “ Litigation ,” claims have been made or could be made against CEC that, if resolved against us, raise substantial doubt about CEC’s ability to continue as a going concern. Under the terms of the Restructuring, all such litigation should be resolved. However, in the event of a material adverse ruling on one or all of the litigation matters disclosed in Note 1 , it is likely that a CEC reorganization under Chapter 11 of the Bankruptcy Code would be necessary.
The Restructuring is subject to approval by the Bankruptcy Court and the receipt of required gaming regulatory approvals. Because more than a majority of the first lienholders has approved the First Lien RSAs, we believe it is probable that the contingent obligations will be paid and, therefore, we have recorded the items below in Deconsolidation and Restructuring of CEOC and Other in the statements of operations:
Description (in millions)
 
Amount
Fixed payments (1)
 
$
406

Additional consideration (2)
 
163

Upfront payments (3)
 
63

Bank Guaranty Settlement (4)
 
386

Total accrued restructuring and support expenses
 
$
1,018

____________________
(1)  
$86 million was paid in fourth quarter of 2015
(2)  
For the purposes of determining this amount, the Effective Date (as defined in Note 1 ) is estimated to be in the third quarter of 2016; however this date is outside of our control and is highly subject to change.  
(3)  
$61 million was paid in fourth quarter of 2015
(4)  
The liability is primarily based on the terms of the settlement agreement for creditors that have agreed to the settlement. A portion of the liability was estimated for creditors who have not yet agreed, based on the assumption their settlement will be substantially equivalent to those who have agreed to the settlement.
CERP
Harrah’s Atlantic City Waterfront Conference Center
In the third quarter of 2015, CERP completed construction of the Harrah’s Atlantic City Waterfront Conference Center (the “Atlantic City Conference Center”) located adjacent to Harrah’s Atlantic City. The conference center adds 100,000 square feet of meeting space, including two 50,000 square-foot ballrooms that can be configured 200 different ways to accommodate meetings of all sizes. The conference center generated $4 million in food and beverage revenue primarily during the fourth quarter.

34



CGP Casinos
Horseshoe Baltimore
CGP Casinos benefited from a full year of operations from Horseshoe Baltimore, which opened in the third quarter of 2014. Horseshoe Baltimore net revenues increased to $310 million in 2015 compared with $108 million in 2014 . The $202 million increase in net revenue was primarily comprised of $189 million in casino revenues and $15 million in food and beverage revenues.
The Cromwell
CGP Casinos benefited from a full-year of operations from The Cromwell in 2015, which opened in the second quarter of 2014, after being closed for renovations since the first quarter of 2013. The Cromwell opening included the addition of Giada’s and Drai’s Beach Club - Nightclub . The Cromwell net revenues increased to $86 million in 2015 compared with $58 million in 2014 . The $28 million increase in net revenue was primarily comprised of $14 million in casino revenues, $10 million in food and beverage revenues, and $5 million in rooms revenues.
The LINQ Hotel & Casino Renovations
We continue to view hotel renovations as an attractive and low risk use of available cash. CGP Casinos completed its room renovations project at The LINQ Hotel & Casino (“The LINQ Hotel”) during the first half of 2015. The increased revenue from the newly-renovated rooms contributed to CGP Casinos’ increase in cash ADR in 2015. This improvement combined with a 32% increase in the number of rooms nights available in 2015 compared with 2014 drove the $37 million increase in rooms revenue attributable to The LINQ Hotel. The higher volume of guests and visitors subsequent to construction also led to increases of $18 million in casino revenues and $13 million in food and beverage revenues.
CIE
Growth in CIE’s Social and Mobile Games Business
CIE net revenues increased to $766 million in 2015 compared with $587 million in 2014 and $317 million in 2013 . CIE has continued to experience strong organic growth in social and mobile games due to the focus on increasing the number of users and the conversion of those users into players who purchase CIE’s virtual currency. CIE also realized a full-year benefit in 2015 from the February 2014 acquisition of Pacific Interactive and its first full-year benefit in 2014 of the roll-out of online real-money gaming in Nevada and New Jersey.
Other Key Drivers and Events
Cost Saving Initiatives
In the fourth quarter of 2014, we began implementing various cost saving initiatives across the company. These initiatives have yielded a reduction in variable marketing programs, such as REEL REWARDS, discounts, and free play, that are treated as a reduction in revenue. Additionally, we had a reduction in payroll, which resulted in reductions in casino and other direct expenses. We estimate the benefit from these initiatives was approximately $100 million for those entities that remain in the consolidated Caesars entity as of December 31, 2015.
Favorable Gaming Hold
Gaming hold (defined below) was favorable in 2015 compared with 2014 and contributed approximately $28 million to $35 million to net revenues in 2015 , primarily in Las Vegas. Approximately $15 million to $18 million was related to CERP, and approximately $13 million to $16 million was related to CGP Casinos.
Expansion of Resort Fees
We expanded our resort fee program to all properties in our portfolio, which drove most of the increase in rooms revenue in 2015 . Resort fees were originally initiated in the first quarter of 2013 primarily for our Las Vegas properties.

35



Impairments
Impairments by segment are summarized below. See Notes  8 and 9 for additional information.
 
Years Ended December 31,
(In millions)
2015
 
2014
 
2013
CEOC
$

 
$
559

 
$
1,772

CERP

 
277

 
1,059

CGP Casinos  
1

 
155

 

CIE

 
3

 

Total
$
1

 
$
994

 
$
2,831

Discussion of Operating Results

As described above, we deconsolidated CEOC effective January 15, 2015. Because our operating results for 2015 are not comparable with prior periods as a result of the deconsolidation of CEOC, we have disaggregated our discussion and analysis of results into two components:
CEOC: Section provides discussion and analysis of CEOC, which includes a full year in both 2013 and 2014 and only 15 days in 2015; and
CERP, CGP Casinos and CIE: Sections provide discussion and analysis focusing on the results of operations and key metrics for those entities that remain in the consolidated Caesars entity as of December 31, 2015.
We have then presented an analysis of other factors affecting net income/(loss) and consolidated results of operations by reportable segment for each of the three years ended December 31, 2015, both of which include CEOC as a reportable segment.
Consolidated Operating Results
 
Years Ended December 31,
 
 
 
2015
 
2014
 
 
(A)
 
 
 
 
 
(B)
 
 
 
 
 
(A) vs. (B)
 
CERP, CGP Casinos and CIE   (1)
CEOC   (2)
Consolidated Caesars
CERP, CGP Casinos and CIE   (1)
CEOC  (2)
Consolidated Caesars
 
Fav/(Unfav)
(Dollars in millions)
 
$
 
%
Casino revenues
$
2,139

 
$
118

 
$
2,257

 
$
1,899

 
$
3,495

 
$
5,394

 
$
240

 
12.6
%
Net revenues
4,496

 
158

 
4,654

 
3,921

 
4,595

 
8,516

 
575

 
14.7
%
Income/(loss) from operations
564

 
9

 
573

 
(142
)
 
(310
)
 
(452
)
 
706

 
*

Deconsolidation and restructuring of CEOC and other
6,115

 

 
6,115

 
142

 
(237
)
 
(95
)
 
5,973

 
*

Income/(loss) from continuing operations, net of income taxes
6,137

 
(78
)
 
6,059

 
(333
)
 
(2,341
)
 
(2,674
)
 
6,470

 
*

Loss from discontinued operations, net of income taxes

 
(7
)
 
(7
)
 
(15
)
 
(177
)
 
(192
)
 
15

 
100.0
%
Net income/(loss) attributable to Caesars
6,005

 
(85
)
 
5,920

 
(429
)
 
(2,354
)
 
(2,783
)
 
6,434

 
*

Property EBITDA (3)
1,272

 
31

 
1,303

 
869

 
820

 
1,689

 
403

 
46.4
%
Operating Margin (4)
12.5
%
 
5.7
%
 
12.3
%
 
(3.6
)%
 
(6.7
)%
 
(5.3
)%
 

 
16.1 pts


36



 
 
Year Ended December 31,
 
 
 
 
 
 
2013
 
 
 
 
 
 
(C)
 
 
 
 
 
(B) vs. (C)
 
 
CERP, CGP Casinos and CIE   (1)
CEOC   (2)
Consolidated Caesars
Fav/(Unfav)
(Dollars in millions)
 
$
 
%
Casino revenues
 
$
1,792

 
$
3,735

 
$
5,527

 
$
107

 
6.0
 %
Net revenues
 
3,384

 
4,836

 
8,220

 
537

 
15.9
 %
Income/(loss) from operations
 
(682
)
 
(1,344
)
 
(2,026
)
 
540

 
79.2
 %
Deconsolidation and restructuring of CEOC and other
 
191

 
(163
)
 
28

 
(49
)
 
(25.7
)%
Loss from continuing operations, net of income taxes
 
(622
)
 
(2,111
)
 
(2,733
)
 
289

 
46.5
 %
Loss from discontinued operations, net of income taxes
 

 
(207
)
 
(207
)
 
(15
)
 
(100.0
)%
Net loss attributable to Caesars
 
(626
)
 
(2,322
)
 
(2,948
)
 
197

 
31.5
 %
Property EBITDA   (3)
 
854

 
1,023

 
1,877

 
15

 
1.8
 %
Operating Margin   (4)
 
(20.2
)%
 
(27.8
)%
 
(24.6
)%
 

 
16.6 pts

Casino revenues, net revenues, income from operations, and loss from continuing operations, net of income taxes for all periods presented in the table above exclude the results of our discontinued operations disclosed in Note 7 .
___________________
*
Not meaningful
(1)  
Includes CERP, CGP Casinos, and CIE segments and associated parent company and elimination adjustments
(2)  
Includes CEOC segment and associated eliminations of intercompany transactions and other consolidating adjustments
(3)  
See the “Reconciliation of Non-GAAP Financial Measures” section below
(4)  
Calculated as income/(loss) from operations divided by net revenues
CEOC Operating Results   (1)  
 
Years Ended December 31,
(Dollars in millions)
2015
 
2014
 
2013
Casino revenues
$
118

 
$
3,495

 
$
3,735

Net revenues
158

 
4,595

 
4,836

Impairments

 
559

 
1,772

Income/(loss) from operations
9

 
(310
)
 
(1,344
)
Interest expense
87

 
2,111

 
1,936

Loss from continuing operations, net of income taxes
(78
)
 
(2,341
)
 
(2,111
)
Loss from discontinued operations, net of income taxes
(7
)
 
(177
)
 
(207
)
Net loss attributable to Caesars
(85
)
 
(2,354
)
 
(2,322
)
Property EBITDA (2)
31

 
820

 
1,023

Operating margin (3)
5.7
%
 
(6.7
)%
 
(27.8
)%
___________________
(1)  
Includes CEOC segment and associated eliminations of intercompany transactions and other consolidating adjustments
(2)  
See the “Reconciliation of Non-GAAP Financial Measures” section below
(3)  
Calculated as income/(loss) from operations divided by net revenues
Year Ended December 31, 2014 versus 2013
Revenue
 
Loss from Operations
Experienced unfavorable gaming hold (defined below) at Caesars Palace Las Vegas.
 
Reduction in impairment charges.
Sold controlling interest in Conrad Punta del Este Resort and Casino (the “Conrad”) in Uruguay in 2013.
 
 
 

37



Analysis of Key Drivers of Revenue Performance for CERP, CGP Casinos and CIE
Net Revenues
 
Years Ended December 31,
 
2015 vs. 2014
 
2014 vs. 2013
 
 
Fav/(Unfav)
 
Fav/(Unfav)
(Dollars in millions)
2015
 
2014
 
2013
 
$
 
%
 
$
 
%
Casino
$
2,139

 
$
1,899

 
$
1,792

 
$
240

 
12.6
%
 
$
107

 
6.0
 %
Food and beverage
815

 
774

 
699

 
41

 
5.3
%
 
75

 
10.7
 %
Rooms
860

 
753

 
701

 
107

 
14.2
%
 
52

 
7.4
 %
Interactive entertainment
764

 
585

 
315

 
179

 
30.6
%
 
270

 
85.7
 %
Other
460

 
453

 
377

 
7

 
1.5
%
 
76

 
20.2
 %
Less: casino promotional allowances
(542
)
 
(543
)
 
(500
)
 
1

 
0.2
%
 
(43
)
 
(8.6
)%
Net revenues
$
4,496

 
$
3,921

 
$
3,384

 
$
575

 
14.7
%
 
$
537

 
15.9
 %

Increase/(Decrease) in Net Revenues by Category
Years Ended December 31, 2013 through December 31, 2015

38



Casino Revenues
Casino revenues was $2.1 billion in 2015 compared with $1.9 billion in 2014 and $1.8 billion in 2013 . Our revenues and operating performance are dependent upon the volume and spend behavior of customers at our resort properties, which affects the price we can charge for our hotel rooms and other amenities, and directly impacts our gaming volumes. Gaming hold (“hold”), which represents the amount of money that is retained by the casino from customer wagers, is a key performance indicator used in evaluating gaming revenues for our properties. The following are key drivers of year over year performance.
Year Ended December 31, 2015 versus 2014
 
Year Ended December 31, 2014 versus 2013
 
 
 
 
 
Reduction in variable marketing costs resulted in an increase in casino revenue.
 
Experienced unfavorable gaming hold in Las Vegas.
Higher volume at The LINQ Hotel due to the completion of construction at the property in the current year.
 
Benefitted from opening The Cromwell and Horseshoe Baltimore in the second and third quarters of 2014, respectively.
Benefitted from a full year of operations from properties that opened in 2014.
 
 
Comparable properties in Las Vegas experienced favorable year over year gaming hold.
 
 
 
CERP properties experienced a 3% decline in slot volumes, primarily in Las Vegas.
 
 
 
New Orleans smoking ban enacted in April 2015 contributed to the 16% decline in slot volume at Harrah’s New Orleans.
 
 
 
Food and Beverage Revenues
Food and beverage revenues was $815 million in 2015 compared with $774 million in 2014 and $699 million in 2013 . Our food and beverage revenue is generated primarily from our buffets, restaurants, bars, nightclubs, and lounges located throughout our casinos, as well as banquets and room service. The following are key drivers of year over year performance.
Year Ended December 31, 2015 versus 2014
 
Year Ended December 31, 2014 versus 2013
 
 
 
 
 
Higher volume at The LINQ Hotel due to the completion of construction at the property in the current year.
 
New restaurant offerings at The Cromwell, The LINQ Hotel, and Horseshoe Baltimore, including Giada  and Guy Fieri’s Vegas Kitchen & Bar .
The Atlantic City Conference Center opening generated additional guest volume.
 
 
Benefitted from a full year of operations for new offerings that opened in 2014.
 
 
 
Rooms Revenues
Rooms revenues was $860 million in 2015 compared with $753 million in 2014 and $701 million in 2013 . Rooms revenue is generated primarily from hotel stays at our casino properties. The following are key drivers of year over year performance.
Cash ADR
Years Ended December 31, 2013 , 2014 , and 2015

39



Hotel average daily cash rate (“cash ADR”) is a key indicator by which we evaluate the performance of our properties and is determined by room revenue and rooms occupied.
Year Ended December 31, 2015 versus 2014
 
Year Ended December 31, 2014 versus 2013
 
 
 
 
 
Completion of The LINQ Hotel room renovation increased both available and occupied rooms.
 
Cash ADR improved due to the expansion of the resort fee program in Las Vegas and to other Nevada properties, as well as overall market strength.
The Cromwell operated for a full year in 2015.
 
 
Cash ADR improved due to renovated rooms at The LINQ Hotel and the expansion of our resort fee program to all properties in our portfolio.
 
The Cromwell opened in the second quarter of 2014.
Average occupancy rate for hotels in Las Vegas increased to 93% in 2015 from 92% in 2014 despite a 4.3% decline in visitation.
 
 
 
Interactive Entertainment Revenues
Interactive entertainment revenues was $764 million in 2015 compared with $585 million in 2014 and $315 million in 2013 . CIE operates an online games business providing social games on Facebook and other social media websites and mobile application platforms that utilize virtual currency and certain real money gaming in Nevada and New Jersey. CIE also owns the World Series of Poker (“WSOP”) tournaments and brand and licenses WSOP trademarks for a variety of products and businesses related to this brand.
CIE Key Performance Indicators
Years Ended December 31, 2013 , 2014 , and 2015
Daily Active Users (“DAU”) and Monthly Unique Payers (“MUP”) are key performance indicators used in evaluating CIE’s interactive entertainment revenue. DAU is a measure of audience engagement and represents the number of individuals who played one of CIE’s games during a particular day on a particular platform. MUP is a measure of monetization across all of its players through the sale of virtual goods and represents the number of unique individuals who purchased virtual currency in any of its games on a particular platform in the 30-day period ending with the measurement date.

Year Ended December 31, 2015 versus 2014
 
Year Ended December 31, 2014 versus 2013
 
 
 
 
 
Continued organic revenue growth in social and mobile games.
 
Organic revenue growth in the social and mobile games business.
Full year of operations related to Pacific Interactive compared with 10 months in 2014.
 
Acquired Pacific Interactive in the first quarter of 2014.
 
 
 
Full year of online real-money gaming in Nevada and New Jersey.

40



Other Revenues
Other revenues was $460 million in 2015 compared with $453 million in 2014 and $377 million in 2013 . Other revenue primarily includes revenue from third-party real estate leasing arrangements at our casino properties, revenue from company-operated retail stores, and revenue from our entertainment venues and The High Roller observation wheel. The following are key drivers of year over year performance.
Year Ended December 31, 2015 versus 2014
 
Year Ended December 31, 2014 versus 2013
 
 
 
 
 
Benefitted from a full year of retail and entertainment revenues from properties that opened in 2014.
 
2014 third-party and entertainment revenues benefitted from the opening of The LINQ promenade and The High Roller, as well as Drai’s Beach Club - Nightclub  at The Cromwell.
Completion of The LINQ Hotel room renovation contributed to the increase in retail customer volume.
 
 
 
 
 
Increased entertainment revenue at Planet Hollywood Resort & Casino (“Planet Hollywood”) due to a full year of the Britney Spears residency.
Analysis of Key Drivers of Income/(Loss) from Operations Performance for CERP, CGP Casinos and CIE
Income from operations was $564 million in 2015 compared with losses from operations of $142 million in 2014 and $682 million in 2013 . After net revenues, the key drivers of income/(loss) from operations are primarily casino expense; property, administrative, general and other; impairments; and depreciation and amortization.
Income/(Loss) from Operations
 
Years Ended December 31,
 
2015 vs. 2014
 
2014 vs. 2013
 
 
Fav/(Unfav)
 
Fav/(Unfav)
(Dollars in millions)
2015
 
2014
 
2013
 
$
 
%
 
$
 
%
Net revenues
$
4,496

 
$
3,921

 
$
3,384

 
$
575

 
14.7
 %
 
$
537

 
15.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Casino expense
1,122

 
1,071

 
914

 
(51
)
 
(4.8
)%
 
(157
)
 
(17.2
)%
Platform fees
212

 
166

 
94

 
(46
)
 
(27.7
)%
 
(72
)
 
(76.6
)%
Property, general, administrative, and other (“PGA & O”)
1,278

 
1,219

 
1,001

 
(59
)
 
(4.8
)%
 
(218
)
 
(21.8
)%
Depreciation and amortization
390

 
343

 
317

 
(47
)
 
(13.7
)%
 
(26
)
 
(8.2
)%
Impairments
1

 
435

 
1,059

 
434

 
99.8
 %
 
624

 
58.9
 %
Corporate expense
169

 
95

 
63

 
(74
)
 
(77.9
)%
 
(32
)
 
(50.8
)%
Other operating costs
148

 
139

 
97

 
(9
)
 
(6.5
)%
 
(42
)
 
(43.3
)%
All other operating expenses
612

 
595

 
521

 
(17
)
 
(2.9
)%
 
(74
)
 
(14.2
)%
Total operating expenses
3,932

 
4,063

 
4,066

 
131

 
3.2
 %
 
3

 
0.1
 %
Income/(loss) from operations
$
564

 
$
(142
)
 
$
(682
)
 
$
706

 
*

 
$
540

 
79.2
 %
____________________
*
Not meaningful

41




Increase/(Decrease) in Income/(Loss) from Operations
Years Ended December 31, 2013 through December 31, 2015
Year Ended December 31, 2015 versus 2014
 
Year Ended December 31, 2014 versus 2013
 
 
 
 
 
Renovations at The LINQ Hotel completed in 2015 and full year of operations for The Cromwell and Horseshoe Baltimore.
 
Increased net revenues due to the openings of The Cromwell, Horseshoe Baltimore, The LINQ promenade and The High Roller in 2014.
The Atlantic City Conference Center opened in the third quarter.
 
Decline in depreciation and amortization is due to impairment charges recorded in 2013.

Reduction in impairment charges.
 
Reduction in impairment charges, primarily at CERP.
Property openings increased casino expense and PGA & O.
 
Property openings increased casino expense and PGA & O.
Continued increase in CIE’s social and mobile games revenues was partially offset by the related increase in platform fees.
 
Increase CIE’s social and mobile games revenues was partially offset by related increase in platform fees.
Corporate expense increased due to share-based compensation expense, expenses related to the CEOC bankruptcy proceedings, and litigation costs.
 
Share-based compensation programs increased corporate expenses and property, general, administrative, and other expenses
Increase in depreciation and amortization related to new and renovated properties.
 
Increased corporate expenses in 2014 due to professional fees associated with:
○ volume of corporate transactions and initiatives
○ having multiple SEC registrants
○ registration efforts of CERP and CGPH
Casino expense benefitted from cost savings initiatives.
 
 

42



Other Factors Affecting Net Income/(Loss) (including CEOC)
 
 
 
 
 
 
 
2015 vs. 2014
 
2014 vs. 2013
 
Years Ended December 31,
 
Fav/(Unfav)
 
Fav/(Unfav)
(Dollars in millions)
2015
 
2014
 
2013
 
$
 
%
 
$
 
%
Interest expense
$
684

 
$
2,670

 
$
2,252

 
$
1,986

 
74.4
 %
 
$
(418
)
 
(18.6
)%
Deconsolidation and restructuring of CEOC and other
6,115

 
(95
)
 
28

 
6,210

 
*

 
(123
)
 
*

Income tax benefit
55

 
543

 
1,517

 
(488
)
 
(89.9
)%
 
(974
)
 
(64.2
)%
Loss from discontinued operations, net of income taxes
(7
)
 
(192
)
 
(207
)
 
185

 
96.4
 %
 
15

 
7.2
 %
____________________
*    Not meaningful
Interest expense is primarily attributable to the outstanding debt described in Note 13 . Interest expense decreased $2.0 billion in 2015 compared with 2014 , primarily due to the deconsolidation of CEOC. Excluding the effect of the CEOC deconsolidation, interest expense increased $38 million , which is primarily due to:
a $26 million increase in interest associated with the CGPH Term Loan and CGPH Notes, which provided funding for the four properties CGP acquired from CEOC in May 2014, and the Horseshoe Baltimore Credit and FF&E Facilities after Horseshoe Baltimore construction was completed in the second quarter of 2014;
a $3 million increase in CERP interest due to increased utilization of its revolving credit facility during 2015 and because of the additional interest assessed on the CERP Notes prior to the consummation of the Exchange Offer in the first quarter of 2015, as described in Note 13 ;
a $27 million reduction in capitalized interest due to CERP completing The LINQ promenade in the first quarter of 2014 and CGP completing The Cromwell in the second quarter of 2014 and Horseshoe Baltimore in the third quarter; and
a partially offsetting $6 million increase in capitalized interest associated with CERP’s construction of the Atlantic City Conference Center, which was completed during the third quarter of 2015, and CGP’s renovations of The LINQ Hotel; and
a partially offsetting $15 million reduction related to the Planet Hollywood debt that was repaid in the second quarter of 2014 with proceeds from the CGPH Term Loan.
The $418 million increase in interest expense in 2014 compared with 2013 was primarily comprised of:
a $130 million increase due to higher interest rates as a result the CERP Financing completed in October 2013 (see Note 13 );
a $135 million increase associated with the CGPH Term Loan, which provided funding for the CEOC-CGP Property Transaction (see Note 13 ); and
an $80 million increase due to the Incremental Term Loans obtained by CEOC and the associated refinancing fees (see Note 13 ).
Deconsolidation and Restructuring of CEOC and Other
As described in Note 3 , effective January 15, 2015, we deconsolidated CEOC and recognized a gain of $7.1 billion . As described in Note 1 , we accrued $1.0 billion of expenses associated with the CEOC restructuring.
As described more fully in Note 13 , we recognized losses on extinguishment of debt of $96 million in 2014 and $30 million in 2013 related to various refinancing transactions and debt repurchases.
In 2013, CEOC recognized a gain of $44 million from the sale of the Conrad.
Income Taxes
The effective tax rate for 2015 was negative 0.9% , and for 2014 and 2013 it was 16.9% and 35.7% , respectively. See Note 18 for a detailed discussion of income taxes and the effective tax rate.

43



Loss from Discontinued Operations, Net of Income Taxes
Discontinued operations primarily includes properties owned by CEOC, which was deconsolidated effective January 15, 2015. See Note 7 for additional information.
Summary of Results of Operations by Reportable Segment
These tables summarize our results of operations by each reportable segment, including the results of CEOC until it was deconsolidated January 15, 2015. See the detailed discussion of operating results above on disaggregated basis between (1) the entities that continue to be consolidated subsequent to CEOC’s deconsolidation and (2) CEOC.
Segment results are presented consistent with the way Caesars management assesses the results subsequent to the deconsolidation of CEOC, which is a consolidated view that adjusts for the impact of certain transactions between reportable segments within Caesars for all periods presented. Therefore, the results of certain reportable segments presented in this filing differ from the financial statement information presented in their separate filings.
“Other” includes parent, consolidating, and other adjustments to reconcile to consolidated results.
Net Revenues
 
Years Ended December 31,
 
2015 vs. 2014
 
2014 vs. 2013
 
 
Fav/(Unfav)
 
Fav/(Unfav)
(Dollars in millions)
2015
 
2014
 
2013
 
$
 
%
 
$
 
%
CEOC
$
164

 
$
4,812

 
$
4,985

 
*

 
*

 
$
(173
)
 
(3.5
)%
CERP
2,154

 
2,065

 
1,979

 
89

 
4.3
%
 
86

 
4.3
 %
CGP Casinos  
1,579

 
1,281

 
1,040

 
298

 
23.3
%
 
241

 
23.2
 %
CIE
766

 
587

 
317

 
179

 
30.5
%
 
270

 
85.2
 %
Other  (1)
(9
)
 
(229
)
 
(101
)
 
220

 
96.1
%
 
(128
)
 
(126.7
)%
Total
$
4,654