For the fiscal year ended December 31, 2021
Business
Overview
We are a geographically diversified gaming and hospitality company that was founded in 1973 by the Carano family with the opening of the Eldorado Hotel Casino in Reno, Nevada. Beginning in 2005, we grew through a series of acquisitions, including the acquisition of MTR Gaming Group, Inc. in 2014, Isle of Capri Casinos, Inc. (“Isle” or “Isle of Capri”) in 2017 and Tropicana Entertainment, Inc. in 2018.
hospitality : friendly and generous behaviour towards guests / food, drink or services that are provided by an organization for guests, customers, etc.
On July 20, 2020, we completed the merger with Caesars Entertainment Corporation (“Former Caesars”) pursuant to which Former Caesars became our wholly-owned subsidiary (the “Merger”) and we changed the Company’s ticker symbol on the NASDAQ Stock Market from “ERI” to “CZR”. On April 22, 2021, we completed the acquisition of William Hill PLC (the “William Hill Acquisition”).
pursuant : according to or following something, especially a rule or law
Our primary source of revenue is generated by casino properties’ gaming operations, retail and online sports betting, as well as online gaming, and we utilize our hotels, restaurants, bars, entertainment, racing, retail shops and other services to attract customers to our properties.
utilize : to use something, especially for a practical purpose
We lease certain real property assets from third parties, including GLP Capital, L.P., the operating partnership of Gaming and Leisure Properties, Inc. (“GLPI”) and VICI Properties L.P., a Delaware limited partnership (“VICI”).
lease : a legal agreement that allows you to use a building, a piece of equipment or some land for a period of time, usually in return for rent
As of December 31, 2021, we own, lease or manage an aggregate of 52 domestic properties in 16 states with approximately 55,700 slot machines, video lottery terminals and e-tables, approximately 2,900 table games and approximately 47,700 hotel rooms.
aggregate : [countable] a total number or amount made up of smaller amounts that are collected together / [uncountable, countable] (specialist) sand or broken stone that is used to make concrete or for building roads, etc.
We also operate and conduct sports wagering across 21 states and domestic jurisdictions, 14 of which are mobile for sports betting, and operate regulated online real money gaming in five states. We continue to expand into additional markets as jurisdictions legalize forms of retail and online sports betting.
wager : [intransitive, transitive] to bet money / used to say that you are so confident that something is true or will happen that you would be willing to bet money on it
jurisdiction : the authority that an official organization has to make legal decisions about somebody/something / an area or a country in which a particular system of laws has authority
In addition, we have other domestic and international properties that are authorized to use the brands and marks of Caesars Entertainment, Inc., as well as other non-gaming properties. See Item 2, “Properties,” for more information about our properties.
Significant Transactions in 2021
On September 30, 2020, the Company announced that it had reached an agreement with William Hill PLC on the terms of a recommended cash acquisition pursuant to which the Company would acquire the entire issued and to be issued share capital (other than shares owned by the Company or held in treasury) of William Hill PLC, in an all-cash transaction.
On April 22, 2021, the Company completed the acquisition of William Hill PLC for £2.9 billion, or approximately $3.9 billion.
In connection with the William Hill Acquisition, on April 22, 2021, a newly formed subsidiary of the Company (the “Bridge Facility Borrower”) entered into a Credit Agreement (the “Bridge Credit Agreement”) with certain lenders party thereto and Deutsche Bank AG, London Branch, as administrative agent and collateral agent, pursuant to which the lenders party thereto provided the Debt Financing (as defined below).
collateral : property or something valuable that you promise to give to somebody if you cannot pay back money that you borrow
The Bridge Credit Agreement provides for (a) a 540-day £1.0 billion asset sale bridge facility, (b) a 60-day £503 million cash confirmation bridge facility and (c) a 540-day £116 million revolving credit facility (collectively, the “Debt Financing”).
The proceeds of the bridge loan facilities provided under the Bridge Credit Agreement were used (i) to pay a portion of the cash consideration for the acquisition and (ii) to pay fees and expenses related to the acquisition and related transactions.
The proceeds of the revolving credit facility under the Bridge Credit Agreement may be used for working capital and general corporate purposes. The £1.5 billion Interim Facilities Agreement (the “Interim Facilities Agreement”) entered into on October 6, 2020 with Deutsche Bank AG, London Branch and JPMorgan Chase Bank, N.A., and amended on December 11, 2020, was terminated upon the execution of the Bridge Credit Agreement.
revolving credit facility : an arrangement between a bank and a business that allows the business to borrow a particular amount of money, and then to borrow more money if part of the original loan is paid back
amend : to change a law, document, statement, etc. slightly in order to correct a mistake or to improve it
On May 12, 2021, we repaid the £503 million cash confirmation bridge facility. On June 14, 2021, the Company drew down the full £116 million from the revolving credit facility and the proceeds, in addition to excess Company cash, were used to make a partial repayment of the asset sale bridge facility in the amount of £700 million.
Outstanding borrowings under the Bridge Credit Agreement are expected to be repaid upon the sale of William Hill’s non-U.S. operations including the UK and international online divisions and the retail betting shops (collectively, “William Hill International”), all of which are held for sale as of the date of the closing of the William Hill Acquisition and reflected within discontinued operations. Certain investments acquired have been excluded from the held for sale asset group.
discontinue : to stop doing, using or providing something, especially something that you have been doing, using or providing regularly / to stop making a product
exclude : to deliberately not include something in what you are doing or considering / to prevent somebody/something from entering a place or taking part in something
On September 8, 2021, the Company entered into an agreement to sell William Hill International to 888 Holdings Plc for approximately £2.2 billion. After repayment of the outstanding debt under the Bridge Credit Agreement, described above, the Company expects to receive approximately £835 million, or $1.2 billion, subject to any permitted leakage, which is customary for sale transactions in the UK.
leakage : an amount of liquid or gas escaping through a hole in something; an occasion when there is a leak
customary : it is what people usually do in a particular place or situation / typical of a particular person
In order to manage the risk of changes in the GBP denominated sales price and expected proceeds, the Company has entered into foreign exchange forward contracts. The sale is subject to satisfaction of customary conditions, including receipt of the approval of shareholders of 888 Holdings Plc and regulatory approvals, and is expected to close in the second quarter of 2022.
On April 6, 2021, the Company consummated the sale of the equity interests of MontBleu Casino Resort & Spa (“MontBleu”) to Bally’s Corporation for $15 million, subject to a customary working capital adjustment, resulting in a gain of less than $1 million.
consummate : to make a marriage or a relationship complete by having sex / to make something complete or perfect
The purchase price for MontBleu is due no later than the first anniversary of the consummation of the transaction. MontBleu was within the Regional segment.
On June 3, 2021, the Company consummated the sale of the real property and equity interests of Tropicana Evansville (“Evansville”) to GLPI and Bally’s Corporation (formerly “Twin River” or Twin River Worldwide Holdings, Inc.), respectively, for $480 million, resulting in a gain of $12 million. Evansville was within the Regional segment.
On September 3, 2021, the Company consummated the sale of Caesars Southern Indiana to the Eastern Band of Cherokee Indians (“EBCI”) for $250 million, subject to a customary working capital adjustment, resulting in a gain of $12 million.
In connection with the transaction, the Company’s annual base rent payments to VICI Properties under the Regional Master Lease (as defined below) were reduced by $33 million. Additionally, the Company and EBCI extended their existing relationship by entering into a 10-year brand license agreement, with cancellation rights in exchange for a termination fee at the buyer’s discretion following the fifth anniversary of the agreement, for the continued use of the Caesars brand and Caesars Rewards loyalty program at Caesars Southern Indiana.
Caesars Southern Indiana was previously reported within the Regional segment and subsequent to the sale, as a result of the license agreement relating to the continued use of the Caesars brand and Caesars Rewards loyalty program at Caesars Southern Indiana, is reported within the Managed and Branded segment.
subsequent : happening or coming after something else
On November 1, 2021, the Company and VICI consummated the sale of Harrah’s Louisiana Downs Casino, Racing & Entertainment (“Harrah’s Louisiana Downs”) to Rubico Acquisition Corp. for $22 million, subject to a customary working capital adjustment. The proceeds from the sale were split between the Company and VICI. The annual base rent payments under the Regional Lease between Caesars and VICI remain unchanged.
split : to divide, or to make something divide, into two or more parts / to divide something into two or more parts and share it between different people, activities, etc.
On August 26, 2021, the Company increased its ownership interest in CBAC Borrower, LLC (“Horseshoe Baltimore”), a property which it also manages, to approximately 75.8%. Caesars was subsequently determined to have a controlling financial interest in Horseshoe Baltimore and we began to consolidate the results of operations of the property following our change in ownership.
Our previously held investment was remeasured as of the date of our change in ownership and the Company recognized a gain of $40 million during the year ended December 31, 2021.
Management fees received prior to the consolidation event have been presented within our Managed and Branded segment. Following the increase in ownership, the operations of Horseshoe Baltimore are presented within the Regional segment.
consolidation : the act or process of making a position of power or success stronger so that it is more likely to continue / the act or process of joining things together into one or of being joined into one
On December 1, 2020, the Company entered into an agreement to sell the operations of Belle of Baton Rouge Casino & Hotel (“Baton Rouge”) to CQ Holding Company, Inc. The transaction has received regulatory approvals and is expected to close in the first quarter of 2022, subject to other customary closing conditions.
Business Operations
Our consolidated business is composed of five complementary businesses that reinforce, cross-promote, and build upon each other: casino, which includes our online sports betting and iGaming, food and beverage, hotel, casino management services, retail and entertainment and other business operations.
complementary : two people or things that are complementary are different but together form a useful or attractive combination of skills, qualities or physical features
reinforce : to make a feeling, an idea, etc. stronger
Casino Operations
Our casino operations generate revenues from approximately 55,700 slot machines and 2,900 table games, including poker, as well as other games such as keno, and race and online sportsbooks, all of which comprised approximately 61% of our total net revenues in 2021. Slot revenues generate the majority of our casino revenues.
comprise : not used in the progressive tenses / to have somebody/something as parts or members
Online Sports Betting and iGaming
We previously entered into a 25-year agreement with William Hill PLC’s U.S. subsidiary, William Hill U.S. Holdco, Inc. (“William Hill US” and together with William Hill PLC, “William Hill”), which became effective January 29, 2019, and granted to William Hill the right to conduct betting activities, including operating sportsbooks, in retail channels and under certain skins for online channels with respect to our current and future properties and conduct certain real money online gaming activities.
On April 22, 2021, we consummated our previously announced acquisition of William Hill PLC in an all-cash transaction. Prior to the transaction, we accounted for our investment in William Hill PLC as an investment in equity securities we accounted for our investment in William Hill US as an equity method investment.
Prior to the acquisition, William Hill operated 37 sportsbooks at our properties in eight states. Subsequent to the William Hill Acquisition, we operate and conduct sports wagering across 21 U.S. states and domestic jurisdictions as of December 31, 2021. Additionally, we operate regulated online real money gaming businesses in five states and continue to leverage the World Series of Poker (“WSOP”) brand, and license the WSOP trademarks for a variety of products and services.
Players in markets such as New Jersey can play hundreds of casino games including slots, table games, and video poker and we expect to similarly increase product offerings in Pennsylvania, Michigan and additional states as iGaming is legalized.
Extensive usage of digital platforms, continued legalization in additional states, and growing bettor demand are driving the market for online sports betting platforms in the United States and the William Hill Acquisition positioned us to address this growing market.
On August 2, 2021, we launched our Caesars Sportsbook app on our owned and integrated technology platform we have labeled Liberty (“Liberty”). We have launched a significant marketing campaign with distinguished actors, athletes and media personalities promoting the launch of the Caesars Sportsbook app.
The app offers extensive pre-match and live markets, extensive odds and flexible limits, player props, and same-game parlays. Caesars Sportsbook has partnerships with the NFL, NBA, NHL, MLB, and several individual teams, while being the exclusive odds provider for ESPN and CBS Sports.
odds : the degree to which something is likely to happen / something that makes it seem impossible to do or achieve something
We continue to create new partnerships among collegiate and professional sports teams including the exclusive naming-rights partnership that rebranded the Caesars Superdome. Growth in the Caesars Digital segment continues to be realized with the expansion into new states as jurisdictions legalize retail and online sports betting.
collegiate : relating to a college or its students / divided into a number of colleges
Sports Brand Partnerships — Our strategy includes developing local and national partnerships that align our sportsbooks, casinos, resorts and brands with sports fans. In 2019, we announced high-profile exclusive sports entertainment partnerships with the NFL, making Caesars the first-ever “Official Casino Sponsor” in the history of the league.
align : to arrange something in the correct position, or to be in the correct position, in relation to something else, especially in a straight line / to change something slightly so that it is in the correct relationship to something else
This historic partnership combines the NFL’s legendary events with our properties to bring unique experiences to Caesars patrons. This includes exclusive rights to use NFL trademarks to promote our properties, also enabling Caesars to host exclusive special events and experiences. Caesars will continue to host brand activations at prominent, high-profile NFL events, including the NFL Draft, NFL playoffs, and the Super Bowl during this multi-year partnership.
Food and Beverage Operations
Our food and beverage operations generate revenues from our dining venues, bars, nightclubs, and lounges located throughout our casinos and represented approximately 12% of our total net revenues in 2021. Many of our properties include several dining options, ranging from upscale dining experiences to moderately-priced restaurants, some of which offer pickup or in-room delivery options.
Hotel Operations
Hotel operations generate revenues from hotel stays at our properties in our approximately 47,700 guest rooms and suites worldwide and represented approximately 16% of our total net revenues in 2021.
Our properties operate at various price and service points, allowing us to host a variety of casino guests, who are visiting our properties for gaming and other casino entertainment options, and non-casino guests who are visiting our properties for other purposes, such as vacation travel or conventions.
Management and Branding Arrangements
We earn revenue from fees paid for the management of four domestic casinos. Managed properties represent Caesars-branded properties where we provide staffing and management services under management agreements. In addition, we authorize the use of certain brands and marks of Caesars Entertainment, Inc. We earn revenue from brand license fees received based on the arrangements.
Entertainment and Other Non-Gaming Operations
We provide a variety of retail and entertainment offerings at our properties. We operate various entertainment venues across the United States, including the Colosseum at Caesars Palace and Zappos Theater at Planet Hollywood. These award-winning entertainment venues host or have announced plans to host, prominent headliners, such as Adele, John Legend, Sting, Donny Osmond and Keith Urban.
The LINQ Promenade is an open-air dining, entertainment, and retail development located between The LINQ Hotel & Casino and Flamingo Las Vegas, which features The High Roller, a 550-foot observation wheel, and Fly LINQ, the first and only zipline on the Las Vegas Strip. The retail stores offer guests a wide range of options from high-end brands and accessories to souvenirs and decorative items.
CAESARS FORUM is a 550,000 square-foot conference center located at the center of the Las Vegas Strip. CAESARS FORUM features 300,000 square feet of flexible meeting space, the two largest pillarless ballrooms in the world, LEED silver-rating, and FORUM Plaza, the first 100,000 square-foot outdoor meeting and event space in Las Vegas. Though currently available for use with no restrictions, COVID-19 related restrictions limited our ability to utilize the convention center and meeting space at full capacity during the first half of 2021.
(the rest omitted)
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