What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-09 compared with 2020-08-06 · 649 added, 582 removed, 112 unchanged (92% of the section changed)

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Caesars Entertainment, Inc., a Delaware corporation formerly known as Eldorado Resorts, Inc.

(“ERI” or “Eldorado”), is referred to as the “Company,” or the “Registrant,” and together with its subsidiaries may also be referred to as “we,” “us” or “our.”

We are a geographically diversified gaming and hospitality company with 23 gaming facilities in 11 states as of June 30, 2020.

As of June 30, 2020, our properties were located in Colorado, Florida, Illinois, Indiana, Iowa, Mississippi, Missouri, Louisiana, Nevada, New Jersey and Ohio, and featured approximately 23,900 slot machines, video lottery terminals (“VLTs”) and e-tables, approximately 660 table games and approximately 11,300 hotel rooms.

On July 20, 2020, we completed the merger in which a wholly-owned subsidiary of the Company merged with and into Caesars Entertainment Corporation (“Former Caesars”) with Former Caesars surviving as a wholly-owned subsidiary of the Company (the “Merger”) pursuant to the Agreement and Plan of Merger dated as of June 24, 2019 (as amended by Amendment No.

1 to Agreement and Plan of Merger, dated as of August 15, 2019, the “Merger Agreement”).

As a result of the Merger, we currently own an aggregate of 54 domestic properties in 16 states with approximately 60,400 slot machines, VLTs and e-tables, approximately 3,350 table games and approximately 51,200 hotel rooms, which includes international operations in five countries outside of the U.S.

Our primary source of revenue is generated by gaming operations, and we utilize our hotels, restaurants, bars, entertainment, racing, sportsbook offerings, retail shops and other services to attract customers to our properties.

We were founded in 1973 by the Carano family with the opening of the Eldorado Hotel Casino in Reno, Nevada and in 1993 partnered with MGM Resorts International to build Silver Legacy Resort Casino in Reno, Nevada.

Beginning in 2005, we grew through a series of acquisitions, including the acquisition of Eldorado Shreveport in 2005, MTR Gaming Group, Inc.

(“ERI” or “Eldorado”), is referred to as the “Company,” “CEI,” “Caesars,” or the “Registrant,” and together with its subsidiaries may also be referred to as “we,” “us” or “our.”

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.

We partnered with MGM Resorts International to build Silver Legacy Resort Casino in Reno, Nevada in 1993 and, beginning in 2005, we grew through a series of acquisitions, including the acquisition of Eldorado Shreveport in 2005, MTR Gaming Group, Inc.

in 2014, Circus Circus Reno (“Circus Reno”) and the 50% membership interest in the Silver Legacy that was owned by MGM Resorts International in 2015, Isle of Capri Casinos, Inc.

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(“Tropicana”) in 2018.

As of June 30, 2020, we owned 18 of our casinos and leased five casinos that are subject to a master lease with GLP Capital, L.P., the operating partnership of Gaming and Leisure Properties, Inc.

(“GLPI”), that we entered into in connection with the Tropicana Acquisition on October 1, 2018 (as amended, the “GLPI Master Lease”).

See full description under the “GLPI Master Lease”.

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”).

As a result of the Merger, we currently own, lease or manage an aggregate of 56 domestic properties in 16 states with approximately 67,200 slot machines, video lottery terminals (“VLTs”) and e-tables, approximately 3,500 table games and approximately 48,800 hotel rooms as of September 30, 2020.

We also have international operations in five countries outside of the U.S.

In addition, we have other domestic and international properties that are authorized to use the brands and marks of Caesars Entertainment, Inc., as well as other non-gaming properties.

Upon completion of our previously announced sales, or expected sales, of certain gaming properties, we expect that we will continue to own, lease or manage 51 properties.

In connection with the Merger, Caesars Entertainment Corporation changed its name to “Caesars Holdings, Inc.” and Eldorado Resorts, Inc.

converted into a Delaware corporation and changed its name to “Caesars Entertainment, Inc.” In addition, effective as of July 21, 2020 our ticker symbol on the NASDAQ Stock Market changed from “ERI” to “CZR”.

In connection with the execution of the Merger Agreement, we also entered into a Master Transaction Agreement (the “MTA”) with VICI Properties L.P., a Delaware limited partnership (“VICI”), pursuant to which, among other things, we agreed to consummate certain sale and leaseback transactions and amend certain lease agreements with VICI and/or its affiliates, with respect to certain property described in the MTA.

We periodically divest of assets in order to raise capital.

We also divested certain assets, and will be required to divest additional assets, in connection with obtaining required regulatory approvals in preparation of the Merger.

A summary of recently completed and planned divestitures of our properties as of June 30, 2020 is as follows:

Segment Property Date Sold State

East Presque Isle Downs & Casino (“Presque”) January 11, 2019 Pennsylvania

East Lady Luck Casino Nemacolin (“Nemacolin”) March 8, 2019 Pennsylvania

East Mountaineer Casino, Racetrack and Resort (“Mountaineer”) December 6, 2019 West Virginia

Midwest Isle Casino Cape Girardeau (“Cape Girardeau”) December 6, 2019 Missouri

Midwest Lady Luck Casino Caruthersville (“Caruthersville”) December 6, 2019 Missouri

Midwest Isle of Capri Casino Kansas City (“Kansas City”) July 1, 2020 (a) Missouri

South Lady Luck Casino Vicksburg (“Vicksburg”) July 1, 2020 (a) Mississippi

South Eldorado Resort Casino Shreveport (“Eldorado Shreveport”) N/A (b) Louisiana

West MontBleu Casino Resort & Spa (“MontBleu”) N/A (b) Nevada

Central Tropicana Evansville (“Evansville”) N/A (c) Indiana

(a) On July 10, 2019, we entered into a definitive agreement to sell Kansas City and Vicksburg to Twin River Worldwide Holdings, Inc.

(“Twin River”) for cash consideration of approximately $230 million, subject to a working capital adjustment.

The transaction closed on July 1, 2020.

Kansas City and Vicksburg met the requirements for presentation as assets held for sale as of June 30, 2020 and December 31, 2019 .

(b) On April 24, 2020, we entered into a definitive purchase agreement with Twin River to sell the equity interests of Eldorado Resort Casino Shreveport Joint Venture and Columbia Properties Tahoe, LLC, the entities that hold Eldorado Shreveport and MontBleu for aggregate consideration of $155 million and terminated the prior agreement to sell those assets.

The agreement is subject to regulatory approvals and is expected to close in the first quarter of 2021.

Eldorado Shreveport and MontBleu met the requirements for presentation as assets held for sale under generally accepted accounting principles as of June 30, 2020.

In conjunction with the classification of MontBleu’s operations as assets held for sale as a result of the announced sale, an impairment charge totaling $45.6 million was recorded during the six months ended June 30, 2020 due to the carrying value exceeding the estimated net sales proceeds.

(c) In connection with its review of the Merger, the Indiana Gaming Commission determined on July 16, 2020 that we will be required to divest three properties within the state of Indiana in order to avoid undue economic concentrations as conditions to the Indiana Gaming Commission’s approval of the Merger.

As a result, we plan to enter into agreements to divest of Evansville, as well as two additional properties that we acquired as a result of the Merger, prior to December 31, 2020.

In connection with the Merger, we also entered into a Master Transaction Agreement (the “MTA”) with VICI Properties L.P., a Delaware limited partnership (“VICI”), pursuant to which, among other things, we agreed to consummate certain sale and leaseback transactions and amend certain lease agreements with VICI and/or its affiliates, with respect to certain property described in the MTA.

As of September 30, 2020, we owned 23 of our casinos and leased 28 casinos in the U.S.

We have leases with GLP Capital, L.P., the operating partnership of Gaming and Leisure Properties, Inc.

(“GLPI”), including our Master Lease that we entered into in connection with the Tropicana Acquisition on October 1, 2018 (as amended, the “GLPI Master Lease”) and our Lumiere lease.

Six of the leased casinos are subject to leases with GLPI, and we lease an additional 22 casinos from other third parties, including VICI.

See descriptions under the “GLPI Master Lease” and “VICI Leases”.

We periodically divest of assets in order to raise capital or as a result of a determination that the assets are not core to our business.

We also divested certain assets, and are required to divest additional assets, in connection with regulatory approvals related to closing of the Merger.

A summary of recently completed and planned divestitures of our properties as of September 30, 2020 is as follows:

Segment Property Date Sold Location

Regional Presque Isle Downs & Casino (“Presque”) January 11, 2019 Pennsylvania

Regional Lady Luck Casino Nemacolin (“Nemacolin”) March 8, 2019 Pennsylvania

Regional Mountaineer Casino, Racetrack and Resort (“Mountaineer”) December 6, 2019 West Virginia

Regional Isle Casino Cape Girardeau (“Cape Girardeau”) December 6, 2019 Missouri

Regional Lady Luck Casino Caruthersville (“Caruthersville”) December 6, 2019 Missouri

Regional Isle of Capri Casino Kansas City (“Kansas City”) July 1, 2020 (a) Missouri

Regional Lady Luck Casino Vicksburg (“Vicksburg”) July 1, 2020 (a) Mississippi

Regional Eldorado Resort Casino Shreveport (“Eldorado Shreveport”) N/A (b) Louisiana

Regional MontBleu Casino Resort & Spa (“MontBleu”) N/A (b) Nevada

Regional Tropicana Evansville (“Evansville”) N/A (c) Indiana

Discontinued operations (d):

Regional Harrah’s Reno September 30, 2020 (e) Nevada

Regional Bally’s Atlantic City N/A (f) New Jersey

Regional Harrah’s Louisiana Downs Casino, Racing & Entertainment (“Harrah’s Louisiana Downs”) N/A (g) Louisiana

Regional Caesars Southern Indiana N/A (c) Indiana

Regional Horseshoe Hammond N/A (c) Indiana

Managed, International, CIE Emerald Resort & Casino N/A South Africa

Managed, International, CIE Caesars Entertainment UK N/A United Kingdom

(a) We closed the sales of Kansas City and Vicksburg on July 1, 2020 and recorded a gain of approximately $8 million during the quarter ended September 30, 2020.

(b) On April 24, 2020, we entered into a definitive purchase agreement with Twin River Worldwide Holdings, Inc.

(“Twin River”) and certain of its affiliates for the sale of the equity interests of Eldorado Resort Casino Shreveport Joint Venture and Columbia Properties Tahoe, LLC, the entities that hold Eldorado Shreveport and MontBleu for aggregate consideration of $155 million, subject to a working capital adjustment.

The definitive agreement provides that the consummation of the sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and Eldorado Shreveport and MontBleu are expected to close in the first quarter of 2021.

Eldorado Shreveport and MontBleu met the requirements for presentation as assets held for sale under generally accepted accounting principles as of September 30, 2020.

In conjunction with the classification of MontBleu’s operations as assets held for sale as a result of the announced sale, an impairment charge totaling $45 million was recorded during the nine months ended September 30, 2020 due to the carrying value exceeding the estimated net sales proceeds.

(c) In connection with its review of the Merger, the Indiana Gaming Commission determined on July 16, 2020 that we are required to divest three properties within the state of Indiana in order to avoid undue economic concentrations as conditions to the Indiana Gaming Commission’s approval of the Merger.

On October 27, 2020, the Company entered into an agreement to sell Evansville to GLPI and Twin River for $480 million in cash, subject to a customary working capital adjustment.

The sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in mid-2021.

In addition, we plan to enter into agreements to divest of Caesars Southern Indiana, and Horseshoe Hammond prior to December 31, 2020.

Evansville met the requirements for presentation as assets held for sale under generally accepted accounting principles as of September 30, 2020.

See (d) below for Caesars Southern Indiana, and Horseshoe Hammond.

(d) These Former Caesars properties met, or are expected to meet within a short period of time, held for sale criteria as of the acquisition date.

The sales of these properties have or are expected to close within one year from the date of the closing of the Merger and the properties are classified as discontinued operations.

(e) On September 30, 2020, we and VICI completed the sale of Harrah’s Reno to an affiliate of CAI Investments for $42 million, which proceeds were split between us and VICI.

We received approximately $8 million of net proceeds.

(f) On April 24, 2020, Former Caesars reached an agreement with VICI to sell Bally’s Atlantic City Hotel & Casino to Twin River for approximately $25 million.

Caesars will receive approximately $6 million from the sale.

In addition, on October 9, 2020, we reached an agreement to sell the Bally’s brand to Twin River for $20 million, while retaining the right to use the brand within Bally’s Las Vegas into perpetuity.

(g) On September 3, 2020, we and VICI entered into agreement to sell Harrah’s Louisiana Downs with Rubico Acquisition Corp.

for $22 million, subject to a customary working capital adjustment, where the proceeds will be split between us and VICI.

The sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in the first half of 2021.

Merger Related Activities

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• Creation of the largest owner, operator and manager of domestic gaming assets

• The largest and most diversified domestic footprint

• Iconic brands, rewards program and new gaming opportunities expected to enhance customer experience

• Diversification of the Company’s domestic footprint

• Access to iconic brands, rewards programs and new gaming opportunities expected to enhance customer experience

• Realization of significant identified synergies

Based on the closing price of $38.00 per share of Company common stock, par value $0.00001 per share (“Company Common Stock”), reported on NASDAQ on July 17, 2020, the aggregate implied value of the aggregate merger consideration paid to former holders of Former Caesars common stock in connection with the Merger was approximately $8.46 billion, including approximately $2.37 billion in Company Common Stock and approximately $6.09 billion in cash.

The aggregate merger consideration transferred also included the repayment of certain outstanding debt balances of Former Caesars and the replacement of equity awards of certain employees attributable to services provided prior to the Merger.

The cash consideration paid in the Merger was $12.41 per share (inclusive of the applicable ticking fee) of Former Caesars common stock for which cash consideration was payable and the stock consideration per share of Former Caesars common stock for which stock consideration was payable was 0.3085 shares of Company Common Stock, with a value equal to approximately $12.41 in cash (based on the volume weighted average price per share of Company Common Stock for the 10 trading days ending on July 16, 2020).

Following the consummation of the Merger, Eldorado’s and Former Caesars’ stockholders hold approximately 56% and 44%, respectively, of the outstanding shares of Company Common Stock.

The major classes of assets acquired through the Merger include cash, cash equivalents and restricted cash, accounts receivable, including receivables from affiliates, property and equipment, goodwill and intangible assets, and other assets.

The major classes of liabilities assumed through the Merger include accounts payable, accrued expenses, contract liabilities, financing obligations and long-term debt, which includes $1.1 billion in aggregate principal amount of 5% convertible notes due 2024 that are convertible into the weighted average of the number of shares of Company Common Stock and amount of cash actually received by holders of common stock of Former Caesars that made elections for consideration in the Merger.

Given the short period of time from the Merger completion date and the date of these consolidated financial statements and the size and complexity of the transaction, the initial accounting for the business combination is incomplete at this time.

We are not able to provide the valuation of certain components of consideration transferred or provide the allocation of consideration paid to the assets acquired or liabilities assumed.

Supplemental pro forma revenue and earnings of the combined company are predicated on the completion of the business combination accounting and allocation of consideration.

We recognized acquisition-related transaction costs of $12.7 million and $22.0 million for the three and six months ended June 30, 2020, respectively, and $4.5 million for the three and six months ended June 30, 2019.

Debt and Financing Activity

On July 6, 2020, a wholly-owned subsidiary of ours issued $3.4 billion aggregate principal amount of 6.250% Senior Secured Notes due 2025 (the “2025 Secured Notes”) and $1.8 billion aggregate principal amount of 8.125% Senior Notes due 2027 (the “2027 Senior Notes”).

We assumed the obligations under the 2025 Secured Notes and 2027 Senior Notes upon consummation of the Merger.

In addition, Caesars Resort Collection (“CRC”), a subsidiary of Former Caesars, issued $1.0 billion aggregate principal amount of 5.750% Senior Secured Notes due 2025 (the “CRC Secured Notes”).

On July 20, 2020, in connection with the closing of the Merger, we entered into a new credit agreement which provides a five-year senior secured revolving credit facility for an aggregate principal amount of $1.0 billion (the “ERI Revolving Credit Facility”) and an additional revolving credit facility commitment under the ERI Revolving Credit Facility in an aggregate principal amount equal to $185 million, and CRC entered into an incremental agreement to its existing credit agreement dated as of December 22, 2017 for an aggregate principal amount of $1.8 billion of incremental term loan and an additional $25 million of revolving credit facility commitments.

The additional capacities of $185 million under the ERI Revolving Credit Facility and $25 million under the existing CRC revolving credit facility are subject to approval from certain gaming authorities which we expect to receive in the third quarter of 2020.

In addition, the borrowing capacity and obligations under CRC’s existing $1.0 billion revolving credit facility remain outstanding following the consummation of the Merger.

A portion of the proceeds from these arrangements, as well as our cash on hand, was used (a) to fund a portion of the cash consideration of the Merger, (b) to prepay in full the loans outstanding and terminate all commitments under our existing Credit Agreement, dated as of April 17, 2017, (c) to satisfy and discharge our 6% Senior Notes due 2025, the Senior Notes due 2026 and the 7% Senior Notes due 2023, (d) to repay $975 million of the outstanding amount under CRC’s existing revolving credit facility, (e) to repay in full the loans outstanding and terminate all commitments under the CEOC, LLC Credit Agreement, dated as of October 6, 2017, (f) to pay fees and expenses related to the financing arrangements, and (g) for general corporate use.

VICI Transactions

In connection with the closing of the Merger on July 20, 2020, we consummated a series of transactions with VICI in accordance with the Master Transaction Agreement (“MTA”) entered on June 24, 2019 and the Purchase and Sales Agreement entered on September 26, 2019.

We consummated the sale leaseback transactions related to Harrah’s New Orleans, Harrah’s Laughlin and Harrah’s Resort Atlantic City, including the Harrah’s Atlantic City Waterfront Conference Center, for approximately $1.82 billion of net proceeds.

Additionally, we received a one-time payment from VICI of approximately $1.38 billion for amendments to VICI lease agreements.

The Caesars Palace Las Vegas (“CPLV”) Lease with VICI was amended to include Harrah’s Las Vegas (“HLV”) under the CPLV lease and increased HLV’s annual rent by $15 million and CPLV’s annual rent by $84 million.

In addition, Harrah’s New Orleans, Harrah’s Laughlin, Harrah’s Resort Atlantic City and the Harrah’s Atlantic City Waterfront Conference Center were added to the Non-CPLV lease with VICI, with an increase in total aggregate annual rent for these properties of $154 million.

The CPLV, Non-CPLV and Joliet lease agreements, as well as the Golf Course Use Agreement, were extended such that there will be 15 years remaining until the expiration of the initial term.

The amendment also contains a put-call agreement related to the Centaur properties pursuant to which CRC may require VICI or its applicable affiliate to purchase and lease back (as lessor) to the Company or its applicable affiliate(s) the real estate components of the gaming and racetrack facilities of Hoosier Park Racing & Casino (“Hoosier Park”) and Indiana Grand Racing & Casino (“Indiana Grand”) and VICI or its applicable affiliate may require CRC to sell to VICI or its affiliate(s) and lease back (as lessee) the real estate components of such gaming and racetrack facilities.

On June 15, 2020, we entered into a non-binding letter of intent with VICI to borrow a new 5-year, $400 million mortgage loan (the “Convention Center Mortgage Loan”) and sell to VICI approximately 23 acres of land in the vicinity of, or adjacent to, The LINQ, Bally’s Paris and Planet Hollywood in Las Vegas, Nevada and commonly known as the Eastside Land (the “Eastside Land Sale”).

The Convention Center Mortgage Loan and the Eastside Land Sale are expected to close concurrently and are subject to customary closing conditions, including completion of due diligence, and negotiation of definitive documents and receipt of regulatory approvals.

These transactions are expected to close in the third quarter of 2020.

Partnerships and Development Opportunities

In September 2018, we entered into a 25-year agreement, which became effective January 2019, with William Hill PLC and William Hill US, its U.S.

subsidiary (together, “William Hill”) pursuant to which we (i) granted to William Hill the right to conduct betting activities in retail channels and under our first skin and third skin for online channels with respect to our current and future properties located in the United States and the territories and possessions of the United States, including Puerto Rico and the U.S.

Virgin Islands and (ii) agreed that William Hill will have the right to conduct real money online

gaming activities utilizing our second skin available with respect to properties in such territories .

Based on the closing price of $38.24 per share of the Company’s common stock, par value $0.00001 per share (“Company Common Stock”), reported on NASDAQ on July 20, 2020, the aggregate implied value of the aggregate merger consideration paid to former holders of Former Caesars common stock in connection with the Merger was approximately $8.5 billion, including approximately $2.4 billion in the Company Common Stock and approximately $6.1 billion in cash.

The aggregate merger consideration transferred also included approximately $2.4 billion related to the repayment of certain outstanding debt balances of Former Caesars and approximately $48 million of other consideration paid, which includes $19 million related to a transaction success fee, for the benefit of Former Caesars, and $29 million for the replacement of equity awards of certain employees attributable to services provided prior to the Merger.

Pursuant to the Merger, each share of Former Caesars common stock was converted into the right to receive, at the election of the holder thereof and subject to proration, approximately $12.41 of cash consideration or approximately 0.3085 shares of Company Common Stock, with a value equal to approximately $12.41 in cash (based on the volume weighted average price per share of Company Common Stock for the 10 trading days ending on July 16, 2020).

Following the consummation of the Merger, stockholders of the Company and stockholders of Former Caesars held approximately 61% and 39%, respectively, of the outstanding shares of Company Common Stock.

We recognized acquisition-related transaction costs of $107 million and $129 million for the three and nine months ended September 30, 2020, respectively, and $13 million and $17 million for the three and nine months ended September 30, 2019, respectively.

Partnerships and Acquisition Opportunities

In September 2018, we entered into a 25-year agreement, which became effective January 2019, with William Hill plc and William Hill U.S.

(“William Hill US”), its U.S.

subsidiary (together, “William Hill”) pursuant to which we (i) granted to William Hill the right to conduct betting activities, including operating sportsbooks, in retail channels and under our first skin and third skin for online channels with respect to our current and future properties located in the United States and the territories and possessions of the United States, including Puerto Rico and the U.S.

Virgin Islands and (ii) agreed that William Hill will have the right to conduct real money online gaming activities utilizing our second skin available with respect to properties in such territories .

Pursuant to the terms of the agreement, we received a 20% ownership interest in William Hill US valued at approximately $129 million as well as 13 million ordinary shares of William Hill plc with an initial value of approximately $27 million upon closing of the transaction in January 2019.

Our profit and losses attributable to William Hill US are included in income (loss) from unconsolidated affiliates on the Consolidated Statements of Operations.

Our profit and losses attributable to William Hill US are included in Transaction costs and other operating costs on the Consolidated Condensed Statements of Operations.

We granted William Hill the right to the use of certain skins in exchange for an equity method investment.

The fair value of the William Hill US and William Hill plc shares received has been deferred and is recognized as revenue on a straight-line basis over the 25-year agreement term.

The amortization of deferred revenues associated with our equity interests is included in other revenue within our Corporate and Other segment.

Additionally, we receive a profit share from the operations of betting and other gaming activities associated with our properties, which is included in other revenue at the respective property.

Additionally, we receive a profit share from the operations of betting and other gaming activities associated with our properties.

On September 30, 2020, we announced that we had reached an agreement with William Hill plc on the terms of a recommended cash acquisition pursuant to which we would acquire the entire issued and to be issued share capital (other than shares owned by us or held in treasury) of William Hill plc, in an all-cash transaction of approximately £2.9 billion, or $3.7 billion .

The transaction is conditioned on, among other things, the approval of William Hill plc shareholders and receipt of required regulatory approvals.

To provide liquidity to fund the cash purchase price for the proposed acquisition, we entered into various

financing transactions.

On September 25, 2020, we borrowed $900 million under the CEI Revolving Credit Facility (defined below), which was repaid subsequent to September 30, 2020.

On September 28, 2020, we deposited $2.1 billion, which included borrowings under the CEI Revolving Credit Facility, into an escrow account related to the William Hill offer.

As of September 30, 2020, these funds in escrow were classified as restricted cash until certain regulatory approvals were received.

In addition, on October 1, 2020, we raised an additional $1.9 billion through a public offering of Company Common Stock.

In connection with the proposed acquisition of William Hill plc, on September 29, 2020, the Company entered into a debt financing commitment letter pursuant to which the lenders party thereto have committed to arrange and provide a newly formed subsidiary of the Company with (a) a £1.0 billion senior secured 540-day bridge loan facility, (b) a £116 million senior secured 540-day revolving credit facility and (c) a £503 million senior secured 60-day bridge loan facility (collectively, the "Debt Financing").

The proceeds of the Debt Financing will be used (i) to pay a portion of the cash consideration for the proposed acquisition, (ii) to refinance certain of William Hill plc's and its subsidiaries' existing debt, (iii) to pay fees and expenses related to the acquisition and related transactions and (iv) for working capital and general corporate purposes.

In order to manage the risk of appreciation of the GBP denominated purchase price the Company has entered into foreign exchange forward contracts.

In connection with the Debt Financing on October 6, 2020, our newly formed subsidiary entered into a £1.5 billion Interim Facilities Agreement with Deutsche Bank AG, London Branch and JPMorgan Chase Bank, N.A.

(a) a 540-day £1.0 billion asset sale bridge facility and (b) a 60-day £503 million cash confirmation bridge facility.

Upon receipt of regulatory approvals, the restriction on the $2.1 billion funded as of September 30, 2020 was released and we transferred $1.4 billion of cash into our operating accounts and the outstanding balance of the CEI Revolving Credit Facility was repaid in full.

Approximately $598 million of cash remains in an unrestricted account.

The Stars Group/Flutter Entertainment

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(“TSG”) pursuant to which we agreed to provide TSG with options to obtain access to our second skin for online sports wagering and third skin for real money online gaming and poker, in each case with respect to our properties in the United States.

Under the terms of the agreement, we will receive a revenue share from the operation of the applicable verticals by TSG under our licenses.

Pursuant to the terms of the TSG agreement, we received 1.1 million TSG common shares valued at approximately $18.6 million and an additional $5.0 million in TSG common shares became payable to us upon TSG’s exercise of its first option, which shares we received in the fourth quarter of 2019.

In December 2019, we sold approximately 0.5 million of our TSG common shares at the request of William Hill and remitted the proceeds to them in accordance with the terms of our William Hill agreement.

We may also receive additional TSG common shares in the future based on TSG net gaming revenue generated in our markets.

Upon entry into the TSG agreement, we recorded deferred revenue associated with the shares received and recognize revenue, which is included in other revenue within our corporate and other segment.

Under the terms of the agreement, we received 1 million TSG common shares.

The fair value of the shares received has been deferred and is recognized as revenue on a straight-line basis over the 20-year agreement term.

All shares are subject to a one year restriction on transfer from the date they are received.

On May 5, 2020, Flutter Entertainment PLC (“Flutter”) completed the acquisition of all of the issued and outstanding common shares of TSG in exchange for 0.2253 Flutter shares per common share of TSG.

Pompano Joint Venture

In April 2018, we entered into a joint venture with Cordish Companies (“Cordish”) to master plan and develop a mixed-use entertainment and hospitality destination expected to be located on unused land adjacent to the casino and racetrack at our Pompano property.

As the managing member, Cordish will operate the business and manage the development, construction, financing, marketing, leasing, maintenance and day-to-day operation of the various phases of the project.

Additionally, Cordish will be responsible for the development of the master plan for the project with our input and will submit it for our review and approval.

We have made cash contributions totaling $1.0 million and have agreed to contribute a total of approximately 130 to 200 acres of land to the joint venture for the project.

As of June 30, 2020, we have contributed approximately 20 acres to the joint venture at an approximate fair value of $6.6 million.

While we hold a 50% variable interest in the joint venture, we are not the primary beneficiary;

as such, the investment in the joint venture is accounted for using the equity method.

We participate evenly with Cordish in the profits and losses of the joint venture, which is included in income (loss) from unconsolidated affiliates on the Consolidated Statements of Operations.

In addition, we will receive a revenue share from the operation of the applicable verticals by TSG under our licenses.

Reportable Segments

The following table sets forth certain information regarding our properties (listed by segment in which each property is reported) as of June 30, 2020:

Segment Property Date Acquired State

West Eldorado Resort Casino Reno (“Eldorado Reno”) (a) Nevada

Silver Legacy Resort Casino (“Silver Legacy”) (a) Nevada

Circus Circus Reno (“Circus Reno”) (a) Nevada

MontBleu Casino Resort & Spa (“MontBleu”) October 1, 2018 (c) Nevada

Tropicana Laughlin Hotel & Casino (“Laughlin”) October 1, 2018 Nevada

Isle Casino Hotel - Blackhawk (“Isle Black Hawk”) May 1, 2017 Colorado

Lady Luck Casino - Black Hawk (“Lady Luck Black Hawk”) May 1, 2017 Colorado

Midwest (b) Isle Casino Waterloo (“Waterloo”) May 1, 2017 Iowa

Isle Casino Bettendorf (“Bettendorf”) May 1, 2017 Iowa

Isle of Capri Casino Boonville (“Boonville”) May 1, 2017 Missouri

Isle of Capri Casino Kansas City (“Kansas City”) May 1, 2017 (c) Missouri

South Isle Casino Racing Pompano Park (“Pompano”) May 1, 2017 Florida

Eldorado Resort Casino Shreveport (“Eldorado Shreveport”) (a) (c) Louisiana

Isle of Capri Casino Hotel Lake Charles (“Lake Charles”) May 1, 2017 Louisiana

Belle of Baton Rouge Casino & Hotel (“Baton Rouge”) October 1, 2018 Louisiana

Isle of Capri Casino Lula (“Lula”) May 1, 2017 Mississippi

Lady Luck Casino Vicksburg (“Vicksburg”) May 1, 2017 (c) Mississippi

Trop Casino Greenville (“Greenville”) October 1, 2018 Mississippi

East (b) Eldorado Gaming Scioto Downs (“Scioto Downs”) (a) Ohio

Tropicana Casino and Resort, Atlantic City (“Trop AC”) October 1, 2018 New Jersey

Central Grand Victoria Casino (“Elgin”) August 7, 2018 Illinois

Lumière Place Casino (“Lumière”) October 1, 2018 Missouri

Tropicana Evansville (“Evansville”) October 1, 2018 (c) Indiana

(a) Property was aggregated into segment prior to January 1, 2016.

(b) Presque was sold on January 11, 2019, Nemacolin was sold on March 8, 2019 and Mountaineer was sold on December 6, 2019.

All three properties were previously reported in the East segment.

Cape Girardeau and Caruthersville were sold on December 6, 2019.

Both properties were previously reported in the Midwest segment.

The Kansas City and Vicksburg sales closed on July 1, 2020.

The Eldorado Shreveport and MontBleu sales are expected to close in the first quarter of 2021.

We plan to reach an agreement to divest of Evansville prior to December 31, 2020.

The executive decision maker of our Company reviews operating results, assesses performance and makes decisions on a “significant market” basis.

The following table sets forth certain information regarding our properties (listed by segment in which each property is reported) as of September 30, 2020:

Las Vegas Regional Managed, International, CIE

Bally’s Las Vegas Eldorado Resort Casino Reno (a)

Harrah’s Atlantic City International

The Cromwell Silver Legacy Resort Casino (a)

Harrah’s Laughlin (a)

Caesars Cairo

Flamingo Las Vegas Circus Circus Reno (a)

Harrah’s New Orleans (a)

Ramses Casino

The LINQ Hotel & Casino MontBleu Casino Resort & Spa (c)

Hoosier Park (f)

Emerald Casino Resort (b)

Paris Las Vegas Tropicana Laughlin Hotel & Casino (a)

Indiana Grand (g)

Alea Glasgow (b)

Planet Hollywood Resort & Casino Isle Casino Hotel - Blackhawk (a)

Bally’s Atlantic City (b)

Alea Nottingham (b)

Caesars Palace Las Vegas Lady Luck Casino - Black Hawk (a)

Caesars Atlantic City (a)

The Empire Casino (b)

Harrah’s Las Vegas Isle Casino Waterloo (a)

Caesars Southern Indiana (e)(b)

Manchester235 (b)

Rio All-Suite Hotel & Casino Isle Casino Bettendorf (a)

Harrah’s Council Bluffs (a)

Playboy Club London (b)

Isle of Capri Casino Boonville (a)

Harrah’s Gulf Coast (a)

Rendezvous Brighton (b)

Isle of Capri Casino Kansas City (d)

Harrah’s Joliet (a)

Rendezvous Southend-on-Sea (j)(b)

Isle Casino Racing Pompano Park (a)

Harrah’s Lake Tahoe (a)

The Sportsman (b)

Eldorado Resort Casino Shreveport (c)

Harrah’s Louisiana Downs (h)(b)

Isle of Capri Casino Hotel Lake Charles (a)

Harrah’s Metropolis (a)

Harrah’s Ak-Chin

Belle of Baton Rouge Casino & Hotel (a)

Harrah’s North Kansas City (a)

Harrah’s Cherokee

Isle of Capri Casino Lula (a)

Harrah’s Philadelphia (a)

Harrah’s Cherokee Valley River

Lady Luck Casino Vicksburg (d)

Harrah’s Reno (i)(b)

Harrah’s Resort Southern California

Trop Casino Greenville (a)

Harveys Lake Tahoe (a)

Horseshoe Baltimore (k)

Eldorado Gaming Scioto Downs (a)

Horseshoe Bossier City (a)

Caesars Windsor

Tropicana Casino and Resort, Atlantic City (a)

Horseshoe Council Bluffs (a)

Kings & Queens Casino

Grand Victoria Casino (a)

Horseshoe Hammond (e)(b)

Caesars Dubai

Lumière Place Casino (a)

Horseshoe Tunica CIE

Tropicana Evansville (e)

Caesars Interactive Entertainment

___________________

(a) These properties were acquired from the Merger with Former Caesars on July 20, 2020.

(b) As a result of the Merger, the sales of these properties met the requirements for presentation as discontinued operations as of September 30, 2020.

(c) In April 2020, the Company entered into an agreement to sell Eldorado Shreveport and MontBleu, which are expected to close in the first quarter of 2021.

As of September 30, 2020, the properties’ assets and liabilities were classified as held for sale.

(d) Kansas City and Vicksburg were sold on July 1, 2020.

(e) On October 27, 2020, the Company entered into an agreement to sell Evansville, which is expected to close mid-2021.

In addition, the Company plans to enter into an agreement to divest of Caesars Southern Indiana, and Horseshoe Hammond prior to December 31, 2020.

As of September 30, 2020, Evansville’s assets and liabilities were classified as held for sale.

(f) Hoosier Park includes operations of our off-track betting locations, Winner’s Circle Indianapolis and Winner’s Circle New Haven.

(g) Indiana Grand includes operations of our off-track betting location, Winner’s Circle Clarksville.

(h) On September 3, 2020, the Company entered into an agreement to sell Harrah’s Louisiana Downs, which is expected to close in the in the first half of 2021.

(i) Harrah’s Reno was sold on September 30, 2020.

(j) Rendezvous Southend-on-Sea permanently closed in June 2020 following the recent closure due to the COVID-19 public health emergency.

(k) As of September 30, 2020, Horseshoe Baltimore was 44.3% owned and held as an equity-method investment.

The executive decision maker of the Company reviews operating results, assesses performance and makes decisions on a “significant market” basis.

Management views each of our casinos as an operating segment.

Operating segments are aggregated based on their similar economic characteristics, types of customers, types of services and products provided, and their management and reporting structure.

Our principal operating activities occur in five geographic regions and reportable segments.

The reportable segments are based on the similar characteristics of the operating segments within the regions in which they operate:

Prior to the Merger, our principal operating activities occurred in five geographic regions and reportable segments:

West, Midwest, South, East and Central.

See the table above for a listing of properties included in each segment.

Following the Merger, our principal operating activities occur in three regionally-focused reportable segments.

The reportable segments continue to be based on the similar characteristics of the operating segments within the regions in which they operate and align with the way management assesses these results and allocates resources.

The Company’s reportable segments are:

(1) Las Vegas, (2) Regional, and (3) Managed, International, CIE, in addition to Corporate and Other.

Presentation of Financial Information

The financial information included in this Item 2 for periods after our sales of Presque and Nemacolin on January 11, 2019 and March 8, 2019, respectively, and our sales of Mountaineer, Cape Girardeau and Caruthersville on December 6, 2019 are not fully comparable to the periods prior to their respective sale dates.

The financial information included in this Item 2 for the period after our acquisition of Former Caesars on July 20, 2020 is not fully comparable to the periods prior to the acquisition.

In addition, the presentation of financial information herein for the periods after our sales of Presque and Nemacolin on January 11, 2019 and March 8, 2019, respectively, our sales of Mountaineer, Cape Girardeau and Caruthersville on December 6, 2019, and our sales of Kansas City and Vicksburg on July 1, 2020 are not fully comparable to the periods prior to their respective sale dates.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide information to assist in better understanding and evaluating our financial condition and results of operations.

Our historical operating results may not be indicative of our future results of operations because of these factors and the changing competitive landscape in each of our markets, as well as by factors discussed elsewhere herein.

We recommend that you read

this MD&A in conjunction with our unaudited consolidated financial statements and the notes to those statements included in this Quarterly Report on Form 10-Q.

We recommend that you read this MD&A in conjunction with our unaudited consolidated condensed financial statements and the notes to those statements included in this Quarterly Report on Form 10-Q.

Key Performance Metrics

3 unchanged sentences

The amount of volume we retain, which is not fully controllable by us, is recognized as casino revenues and is referred to as our win or hold.

In addition, hotel occupancy and price per room designated by average daily rate (“ADR”) are key indicators for our hotel business.

Our calculation of ADR consists of the average price of occupied rooms per day including the impact of resort fees and complimentary rooms.

Complimentary room rates are determined based on an analysis of retail or cash rates for each customer segment and each type of room product to estimate complimentary rates which are consistent with retail rates.

Complimentary rates are reviewed at least annually and on an interim basis if there are significant changes in market conditions.

Complimentary rooms are treated as occupied rooms in our calculation of hotel occupancy.

Recent Developments and Significant Factors Impacting Financial Results

The following summary highlights recent developments and significant factors impacting our financial results for the three and six months ended June 30, 2020 and 2019.

• COVID-19 Public Health Emergency – In January 2020, an outbreak of a new strain of coronavirus was identified and has since spread throughout much of the world, including the United States.

All of our casino properties were temporarily closed for the period from mid-March 2020 through mid-May 2020 due to orders issued by various state government agencies as part of certain precautionary measures intended to help slow the spread of the COVID-19 public health emergency.

On May 18, 2020, we began reopening our properties and have resumed certain operations at all of our properties as of June 30, 2020, with the exception of Elgin and Trop AC which reopened on July 1 and July 2, 2020, respectively.

As a result of the temporary closures, the COVID-19 public health emergency has had a material adverse effect on our business, financial condition and results of operations for the three and six months ended June 30, 2020.

Other Recent Developments and Significant Factors Impacting Financial Results

The following summary highlights recent developments and significant factors impacting our financial results for the three and nine months ended September 30, 2020 and 2019.

• COVID-19 Public Health Emergency – In January 2020, an outbreak of a new strain of coronavirus (“COVID-19”) was identified and has since spread throughout much of the world, including the United States.

All of our casino properties were temporarily closed for the period from mid-March 2020 through mid-May 2020 due to orders issued by various government agencies and tribal bodies as part of certain precautionary measures intended to help slow the spread of the COVID-19 public health emergency.

On May 15, 2020, we began reopening our properties and have resumed certain operations at all of our properties as of September 30, 2020, with the exception of The Cromwell, Planet Hollywood Resort and Casino (“Planet Hollywood”), Rio All-Suite Hotel & Casino (“Rio”), and Caesars Windsor.

Planet Hollywood and Caesars Windsor reopened on October 8, 2020 and The Cromwell reopened on October 29, 2020.

The COVID-19 public health emergency has had a material adverse effect on our business, financial condition and results of operations for the three and nine months ended September 30, 2020.

We continued to pay our full-time employees through April 10, 2020, including tips and tokens.

Effective April 11, 2020, we furloughed approximately 90% of our employees, implemented salary reductions and committed to continue to provide benefits to our employees through June 30, 2020.

Subsequently, the benefit coverage for furloughed employees was extended through August 31, 2020.

A portion of the workforce has returned to service as the properties have resumed with limited capacities and in compliance with operating restrictions in accordance with governmental orders, directives and guidelines.

As a result of these payroll changes combined with other cost saving measures, our daily operating expenses were reduced significantly.

On June 15, 2020, in order to address the effects of the property closures resulting from the ongoing COVID-19 public health emergency, we obtained waivers on the financial covenant on our existing credit facility agreements and GLPI Master Lease.

The amendment to our GLPI Master Lease is subject to the receipt of applicable gaming regulatory approvals, the provision of applicable gaming regulatory notices and the expiration of applicable gaming regulatory advance notice periods.

As of June 30, 2020, the amendment was not effective.

Effective April 11, 2020, we furloughed approximately 90% of our employees, implemented salary reductions and committed to continue to provide benefits to our employees through September 30, 2020.

Subsequently, the benefit coverage for furloughed employees was extended indefinitely.

A portion of our workforce has returned to service as the properties have resumed with limited capacities and in compliance with operating restrictions imposed by governmental or tribal orders, directives, and guidelines.

Due to the impact of the ongoing COVID-19 public health emergency on our results of operations, we obtained waivers on the financial covenants in our former credit facility agreement and the GLPI Master Lease.

Furthermore, we obtained waivers from VICI in relation to annual capital expenditure requirements under the leases with VICI.

The extent of the ongoing and future effects of the COVID-19 public health emergency on our business and the casino resort industry generally is uncertain, but we expect that it will continue to have a significant impact on our business, results of operations and financial condition.

The extent and duration of the impact of COVID-19 will ultimately depend on future developments, including but not limited to, the duration and severity of the outbreak, varying levels of restrictions on operations imposed by governmental authorities, the potential for authorities reimposing stay at home orders or additional restrictions in response to continued developments with the COVID-19 public health emergency, our ability to adapt to evolving operating procedures, the impact on consumer demand and discretionary spending, the length of time it takes for demand to return and our ability to adjust our cost structures for the duration of the outbreak’s impact on our operations.

The extent and duration of the impact of COVID-19 will ultimately depend on future developments, including but not limited to, the duration and severity of the outbreak, restrictions on operations imposed by governmental authorities, the potential for authorities reimposing stay at home orders or additional restrictions in response to continued developments with the COVID-19 public health emergency, our ability to adapt to evolving operating procedures, the impact on consumer demand and discretionary spending, the length of time it takes for demand to return and our ability to adjust our cost structures for the duration of the outbreak’s effect on our operations.

• Caesars Acquisition – The Merger closed on July 20, 2020.

Transaction costs related to our acquisition of Caesars totaled $12.7 million and $22.0 million for the three and six months ended June 30, 2020, respectively, and $4.5 million for the three and six months ended June 30, 2019.

Pursuant to the MTA with VICI, we are required to reimburse VICI for 50% of any prepayment penalties in connection with VICI’s payoff related to its CPLV loan, regardless of whether the Merger closing occurs.

As of June 30, 2020 and

December 31, 2019, our proportionate share of VICI’s prepayment penalty paid in 2019 was accrued and totaled approximately $55.4 million.

• Presque and Nemacolin Divestitures - The sales of Presque and Nemacolin did not meet the requirements for presentation as discontinued operations and are included in income from continuing operations for the periods prior to their respective closing dates for the six months ended June 30, 2019.

Transaction costs related to our acquisition of Former Caesars totaled $107 million and $129 million for the three and nine months ended September 30, 2020, respectively, and $13 million and $17 million for the three and nine months ended September 30, 2019, respectively.

• Discontinued Operations – As result of the Merger, Former Caesars properties including Harrah’s Louisiana Downs, Caesars Southern Indiana, Horseshoe Hammond, Harrah’s Reno, Caesars UK group including Emerald Resort & Casino, and Bally’s Atlantic City have met, or are expected to meet within a short period of time, held for sale criteria as of the date of the closing of the Merger.

The sales of these properties have or are expected to close within one year from the date of the closing of the Merger and the properties are classified as discontinued operations.

Additionally, we closed the sale of Harrah’s Reno on September 30, 2020.

• Proposed William Hill Acquisition – On September 30, 2020, we announced that we had reached an agreement with William Hill plc on the terms of a recommended cash acquisition pursuant to which we would acquire the entire issued and to be issued share capital (other than shares owned by us or held in treasury) of William Hill plc, in an all-cash transaction of approximately £2.9 billion, or $3.7 billion.

The transaction is conditioned on, among other things, the approval of William Hill plc shareholders and receipt of required regulatory approvals.

• ESPN Agreement – On September 10, 2020, we entered into a multi-year agreement with ESPN including link integrations from ESPN’s website and app to sportsbooks with our sports betting partner, William Hill.

• Divestitures – We closed the sales of Kansas City and Vicksburg on July 1, 2020 and recorded a gain of approximately $8 million during the quarter ended September 30, 2020.

We closed the sales of Presque and Nemacolin on January 11, 2019 and March 8, 2019, respectively, and recorded a net gain of $22 million.

• Mountaineer, Cape Girardeau and Caruthersville Divestitures – The sales of Mountaineer, Cape Girardeau and Caruthersville did not meet the requirements for presentation as discontinued operations and are included in income from continuing operations for the periods prior to their closing date for the three and six months ended June 30, 2019.

We closed the sales of these properties on December 6, 2019 and recorded a net gain of $28.6 million during the fourth quarter of 2019.

• Eldorado Shreveport and MontBleu Divestitures - The sales of Eldorado Shreveport and MontBleu did not meet the requirements for presentation as discontinued operations and are included in income from continuing operations.

• Impairment Charges – As a result of declines in recent performance and the expected impact on future cash flows as a result of COVID-19, we recognized impairment charges related to goodwill and trade names totaling $99.5 million and $15.6 million, respectively, during the six months ended June 30, 2020.

• Weather and Construction Disruption - All of our segments were negatively impacted by severe weather, including flooding, during the first quarter of 2019 compared to the same current year period.

Additionally, our West segment was negatively impacted by disruption to our casino floor and hotel availability associated with renovation projects at our Black Hawk properties during the construction period from January to June 2019.

The divestitures of Presque, Nemacolin and Mountaineer, Cape Girardeau and Caruthersville in January, March and December 2019, respectively, are collectively referred to as the “Divestitures.”

We closed the sales of Mountaineer, Cape Girardeau and Caruthersville on December 6, 2019 and recorded a net gain of $29 million during the fourth quarter of 2019.

The properties that have been sold are collectively referred to as the “Divestitures.” In conjunction with the classification of MontBleu’s operations as assets held for sale as a result of the announced sale, an impairment charge totaling $45 million was recorded during the nine months ended September 30, 2020 due to the carrying value exceeding the estimated net sales proceeds.

None of the sales listed met requirements for presentation as discontinued operations and are included in income from continuing operations for the periods prior to their respective closing dates.

• Impairment Charges – As a result of declines in recent performance and the expected impact on future cash flows as a result of COVID-19, we recognized impairment charges in our Regional segment related to goodwill and trade names totaling $100 million and $16 million, respectively, during the nine months ended September 30, 2020.

• Weather and Construction Disruption – Our Regional segment was negatively impacted by severe weather, including flooding, during the first quarter of 2019 compared to the same current year period.

Additionally, our Regional segment was negatively impacted by disruption to our casino floor and hotel availability associated with renovation projects at our Black Hawk properties during the construction period from January to June 2019.

In late August 2020, our Regional segment was negatively impacted by Hurricane Laura, causing severe damage to Isle of Capri Casino Hotel Lake Charles (“Lake Charles”), which remains temporarily closed.

We recorded an insurance receivable of $31 million, of which $15 million related to fixed asset impairments and $16 million related to remediation costs and repairs that have been incurred in the three months ended September 30, 2020 .

Results of Operations

The following table highlights the results of our operations (dollars in thousands):

The following table highlights the results of our operations:

Three Months Ended

June 30, Six Months Ended

2020 2019 Change 2020 2019 Change

September 30, Nine Months Ended

September 30,

(Dollars in millions) 2020 2019 2020 2019

Net revenues:

Operating (loss) income (78,327) 102,550 (176.4) % (201,507) 226,154 (189.1) %

Net (loss) income (99,996) 18,936 (628.1) % (275,634) 57,165 (582.2) %

Operating Results .

Net revenues declined $510.7 million and $673.4 million, or 80.1% and 52.9%, for the three and six months ended June 30, 2020, respectively, compared to the same prior year periods.

Excluding the impact of the Divestitures, net revenues decreased $455.0 million and $555.1 million, or 78.2% and 48.1%, for the three and six months ended June 30, 2020, respectively, compared to the same prior year periods.

The decline in net revenues was primarily due to the negative impact of COVID-19 and the resulting closure of our properties in mid-March 2020, which began reopening mid-May 2020 based on state orders and restrictions.

Operating (loss) income declined $180.9 million and $427.7 million, or 176.4% and 189.1%, for the three and six months ended June 30, 2020, respectively, compared to the same prior year periods.

Excluding the impact of the Divestitures, operating (loss) income decreased $170.6 million and $408.2 million, or 184.9% and 197.5%, for the three and six months ended June 30, 2020, respectively.

The changes in operating (loss) income were mainly due to the negative impact of COVID-19 on net revenues in addition to transaction costs associated with the acquisition of Caesars and impairment charges totaling $160.8 million recorded during the six months ended June 30, 2020.

Net (loss) income decreased $118.9 million and $332.8 million, or 628.1% and 582.2%, for the three and six months ended June 30, 2020, respectively, compared to the same prior year periods.

Excluding the impact of the Divestitures, net (loss) income decreased $111.1 million and $317.7 million or 1001.5% and 755.5% for the three and six months ended June 30, 2020, respectively.

The changes to net (loss) income, including Divestitures, were principally due to the same factors impacting operating (loss) income, offset by the benefit for income taxes totaling $33.7 million for the three months ended June 30, 2020 as compared to a provision of $10.4 million for the comparative period and a benefit of $70.8 million for six months ended June 30, 2020 as compared to a provision of $20.8 million for the comparative period.

Net Revenues and Net (Loss) Income

The following tables highlight our net revenues and net (loss) income by reportable segment (in thousands):

Net Revenues for the

Three Months Ended June 30, Net (Loss) Income for the

Three Months Ended June 30,

2020 2019 2020 2019

West $ 29,937 $ 127,727 $ (12,711) $ 11,348

Midwest 22,787 97,239 1,378 21,435

South 30,760 116,937 (10,912) 12,747

East 21,226 170,455 (30,456) 15,981

Central 19,848 122,792 (20,452) 13,070

Corporate and Other 1,912 1,971 (26,843) (55,645)

Las Vegas $ 304 $ — $ 304 $ —

Regional 1,000 661 1,596 1,930

Managed, International, CIE 69 — 69 —

Corporate and Other (a)

Total $ 1,377 $ 663 $ 1,977 $ 1,936

Net Revenues for the

Six Months Ended June 30, Net (Loss) Income for the

Six Months Ended June 30,

Net (loss) income $ (925) $ 37 $ (1,201) $ 94

Adjusted EBITDA (b) :

Las Vegas $ 43 $ — $ 43 $ —

Regional 331 205 439 569

Managed, International, CIE 18 — 18 —

Corporate and Other (a)

(41) (8) (59) (27)

West $ 135,427 $ 245,822 $ (104,011) $ 15,665

Midwest 83,580 194,026 (15,239) 43,590

South 127,812 249,651 (24,910) 32,956

East 129,282 336,688 (32,647) 27,149

Central 119,553 243,264 (15,728) 25,948

Corporate and Other 3,885 3,493 (83,099) (88,143)

Total $ 351 $ 197 $ 441 $ 542

Three Months Ended June 30, 2020 Compared to the Three Months Ended June 30, 2019

Net revenues and operating expenses were as follows (dollars in thousands):

Three Months Ended

June 30, Percent

2020 2019 Variance

Gaming and Pari-Mutuel Commissions:

West $ 15,276 $ 55,493 $ (40,217) (72.5) %

Midwest 21,119 85,223 (64,104) (75.2) %

South 27,303 94,871 (67,568) (71.2) %

East 19,777 124,052 (104,275) (84.1) %

Central 18,004 97,523 (79,519) (81.5) %

Total Gaming and Pari-Mutuel Commissions 101,479 457,162 (355,683) (77.8) %

West 14,661 72,234 (57,573) (79.7) %

Midwest 1,668 12,016 (10,348) (86.1) %

South 3,457 22,066 (18,609) (84.3) %

East 1,449 46,403 (44,954) (96.9) %

Central 1,844 25,269 (23,425) (92.7) %

Corporate and Other 1,912 1,971 (59) (3.0) %

Total Non-gaming 24,991 179,959 (154,968) (86.1) %

Total Net Revenues 126,470 637,121 (510,651) (80.1) %

Gaming and Pari-Mutuel Commissions:

West 5,314 20,862 (15,548) (74.5) %

Midwest 8,355 34,176 (25,821) (75.6) %

South 13,319 45,377 (32,058) (70.6) %

East 12,839 59,057 (46,218) (78.3) %

Central 3,527 43,768 (40,241) (91.9) %

Total Gaming and Pari-Mutuel Commissions 43,354 203,240 (159,886) (78.7) %

West 7,029 38,634 (31,605) (81.8) %

Midwest 1,092 6,323 (5,231) (82.7) %

South 2,427 13,624 (11,197) (82.2) %

East 2,557 23,884 (21,327) (89.3) %

Central 2,170 12,891 (10,721) (83.2) %

Total Non-gaming 15,275 95,356 (80,081) (84.0) %

Marketing and promotions 5,105 32,080 (26,975) (84.1) %

General and administrative 64,862 117,431 (52,569) (44.8) %

Corporate 13,050 21,051 (8,001) (38.0) %

Depreciation and amortization 48,939 56,533 (7,594) (13.4) %

Total Operating Expenses $ 190,585 $ 525,691 $ (335,106) (63.7) %

Gaming Revenues and Pari-Mutuel Commissions.

For the three months ended June 30, 2020 compared to the same prior year period, gaming revenues and pari-mutuel commissions declined 77.8%.

Excluding the impact of the Divestitures, gaming revenues and pari-mutuel commissions decreased 75.2% for the three months ended June 30, 2020 compared to the same prior year period mainly due to reductions in casino volume and pari-mutuel commissions associated with the impact of COVID-19 and the related closures of our properties and race tracks in mid-March 2020 until reopening of properties starting mid-May 2020.

Non-gaming Revenues .

Non-gaming revenues decreased 86.1% for the three months ended June 30, 2020 compared to the same prior year period.

Excluding the impact of the Divestitures, non-gaming revenues declined 85.5% for the three months ended June 30, 2020 compared to the same prior year period mainly due to the impact of COVID-19 and the related closures of our properties, including hotels, restaurants and entertainment venues in mid-March 2020 until reopening of hotels and restaurants starting mid-May 2020 based on government reopening guidelines.

Gaming Expenses and Pari-Mutuel Commissions .

Gaming expenses and pari-mutuel commissions declined 78.7% for the three months ended June 30, 2020 compared to the same prior year period.

Excluding the impact of the Divestitures, gaming expenses and pari-mutuel commissions decreased 75.4% for the three months ended June 30, 2020 compared to the same prior year period in conjunction with the previously discussed decrease in gaming revenues and pari-mutuel commissions.

Non-gaming Expenses .

Non-gaming expenses declined 84.0% for the three months ended June 30, 2020 compared to the same prior year period.

Excluding the impact of the Divestitures, non-gaming expenses decreased 83.2% for the three months ended June 30, 2020 compared to the same prior year period in conjunction with the previously discussed decrease in non-gaming revenues.

Marketing and Promotions Expenses .

Marketing and promotions expenses declined 84.1% for the three months ended June 30, 2020 compared to the same prior year period.

Excluding the impact of the Divestitures, marketing and promotions expense decreased 83.2% for the three months ended June 30, 2020 compared to the same prior year period.

This decline was primarily due to the reduction or elimination of marketing and promotions expenses during the closure of our properties from mid-March 2020 through mid-May 2020.

General and Administrative Expenses .

General and administrative expenses declined 44.8% for the three months ended June 30, 2020 compared to the same prior year period.

Excluding the impact of the Divestitures, general and administrative expenses decreased 40.4% for the three months ended June 30, 2020 compared to the same prior year period mainly due to the reduction of general and administrative expenses, including utilities and payroll expenses, following the closure of our properties in mid-March 2020 until reopening started in mid-May 2020.

Corporate Expenses .

For the three months ended June 30, 2020 compared to the same prior year period, corporate expenses decreased 38.0% primarily due to reductions in salaries and wages due to the COVID-19 impact and a decrease in stock compensation expense for the three months ended June 30, 2020 compared to the same prior year period.

Depreciation and Amortization Expense .

For the three months ended June 30, 2020 compared to the same prior year period, depreciation and amortization expense declined 13.4% mainly due to ceasing depreciation and amortization expense on assets held for sale.

Excluding the impact of the Divestitures, depreciation and amortization expense decreased 7.6% for the three months ended June 30, 2020 compared to the same prior year period mainly due to many assets becoming fully depreciated in 2019.

Six Months Ended June 30, 2020 Compared to the Six Months Ended June 30, 2019

Net revenues and operating expenses were as follows (dollars in thousands):

Six Months Ended

June 30, Percent

2020 2019 Variance

Gaming and Pari-Mutuel Commissions:

$ 60,253 $ 108,899 $ (48,646) (44.7) %

Midwest 74,432 170,392 (95,960) (56.3) %

106,955 204,221 (97,266) (47.6) %

East 99,708 249,003 (149,295) (60.0) %

99,880 195,333 (95,453) (48.9) %

Total Gaming and Pari-Mutuel Commissions 441,228 927,848 (486,620) (52.4) %

75,174 136,923 (61,749) (45.1) %

9,148 23,634 (14,486) (61.3) %

20,857 45,430 (24,573) (54.1) %

29,574 87,685 (58,111) (66.3) %

19,673 47,931 (28,258) (59.0) %

Corporate and Other 3,885 3,493 392 11.2 %

Total Non-gaming

158,311 345,096 (186,785) (54.1) %

Total Net Revenues

599,539 1,272,944 (673,405) (52.9) %

Gaming and Pari-Mutuel Commissions:

25,723 41,910 (16,187) (38.6) %

31,261 68,656 (37,395) (54.5) %

55,066 95,318 (40,252) (42.2) %

49,875 120,343 (70,468) (58.6) %

40,585 87,319 (46,734) (53.5) %

Total Gaming and Pari-Mutuel Commissions

202,510 413,546 (211,036) (51.0) %

44,162 77,796 (33,634) (43.2) %

5,855 12,828 (6,973) (54.4) %

15,249 28,100 (12,851) (45.7) %

20,919 46,358 (25,439) (54.9) %

Net (loss) income margin (c)

(67.2) % 5.6 % (60.7) % 4.9 %

Total Non-gaming

Adjusted EBITDA margin 25.5 % 29.7 % 22.3 % 28.0 %

___________________

Marketing and promotions

(a) Corporate and Other includes revenues related to certain licensing revenue and various revenue sharing agreements.

Expenses incurred for corporate activities that are directly attributable to a property or are otherwise incurred to support a property are allocated to each property.

The Other category also includes corporate overhead costs, which consist of certain expenses, such as:

payroll, professional fees, travel expenses and other general and administrative expenses that do not directly relate to or have not otherwise been allocated to a property.

(b) See the “Supplemental Unaudited Presentation of Consolidated Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”)” discussion later in this MD&A for a definition of Adjusted EBITDA and a reconciliation of net (loss) income to Adjusted EBITDA related margins.

Consolidated comparison of the three and nine months ended September 30, 2020 and 2019

Net revenues were as follows:

Three Months Ended

September 30, Percent

Change Nine Months Ended

September 30, Percent

(Dollars in millions) 2020 2019 Variance 2020 2019 Variance

Net Revenues:

Casino and pari-mutuel commissions $ 919 $ 458 $ 461 100.7 % $ 1,360 $ 1,386 $ (26) (1.9) %

Food and beverage 125 78 47 60.3 % 188 229 (41) (17.9) %

Hotel 200 94 106 112.8 % 257 237 20 8.4 %

Other 133 33 100 * 172 84 88 104.8 %

Net Revenues $ 1,377 $ 663 $ 714 107.7 % $ 1,977 $ 1,936 $ 41 2.1 %

___________________

* Not meaningful.

Consolidated revenues increased for the three and nine months ended September 30, 2020 as a result of our acquisition of Former Caesars on July 20, 2020.

This was offset by a decline in revenues associated with the COVID-19 public health emergency and, to a lesser extent, divestitures of certain properties discussed earlier.

Both we and Former Caesars began temporarily closing our properties from mid-March 2020.

We began reopening our properties on May 15, 2020.

Former Caesars began opening properties on May 18, 2020.

As of September 30, 2020, all but The Cromwell, Planet Hollywood, Rio and Caesars Windsor were reopened.

Due to the impact of the COVID-19 public health emergency, including local and state regulations and the implementation of social distancing and health and safety protocols, our properties are subject to reduced gaming capacity and hotel occupancy, limited operation of food and beverage outlets, live entertainment events and group business.

As a result, gaming revenue represents a larger portion of our total revenues following the reopening of our properties as compared to earlier periods, which we expect to continue until at least such time that social distancing and safety and health protocols, along with governmental capacity or other restrictions, are relaxed or no longer necessary.

Our diversified portfolio has yielded mixed results as the properties have reopened under the conditions noted above.

Net revenues for properties which have historically relied on a local customer base, not dependent on air travel or convention business, showed a smaller decrease as compared to the three months ended September 30, 2019 results.

These properties’ gaming and hotel revenues have historically been the largest portion of their total revenue.

Properties in destination markets such as Las Vegas, Atlantic City, Northern Nevada and New Orleans, which have historically relied on a broader regional and national customer base or convention business have declined significantly from the prior year period.

These properties have historically relied on a broader mix of revenue sources including convention, entertainment, and food and beverage offerings.

As a result of reduced visitation, state and local restrictions on capacity, and social distancing and safety and health protocols, these sources of revenue have been materially reduced as compared to prior periods.

Operating Expenses

Operating expenses were as follows:

Three Months Ended

September 30, Percent

Change Nine Months Ended

September 30, Percent

(Dollars in millions) 2020 2019 Variance 2020 2019 Variance

Operating Expenses:

Casino and pari-mutuel commissions $ 461 $ 229 $ 232 101.3 % 685 693 $ (8) (1.2) %

Food and beverage 91 60 31 51.7 % 153 180 (27) (15.0) %

Hotel 63 27 36 133.3 % 91 76 15 19.7 %

Other 52 12 40 * 62 34 28 82.4 %

General and administrative 330 130 200 153.8 % 495 381 114 29.9 %

156,537 237,319 (80,782) (34.0) %

29,532 37,805 (8,273) (21.9) %

Corporate 90 13 77 * 120 51 69 135.3 %

Impairment charges — — — * 161 1 160 *

160,758 958 159,800 16,680.6 %

Depreciation and amortization 223 53 170 * 322 167 155 92.8 %

99,372 114,290 (14,918) (13.1) %

Transaction costs and other operating costs 219 14 205 * 242 2 240 *

Total operating expenses $ 1,529 $ 538 $ 991 184.2 % $ 2,331 $ 1,585 $ 754 47.6 %

___________________

Gaming Revenues and Pari-Mutuel Commissions.

For the six months ended June 30, 2020 compared to the same prior year period, gaming revenues and pari-mutuel commissions declined 52.4%.

Excluding the impact of the Divestitures, gaming revenues and pari-mutuel commissions decreased 46.5% for the six months ended June 30, 2020 compared to the same prior year period mainly due to reductions in casino volume and pari-mutuel commissions associated with the impact of COVID-19 and the related closures of our properties and race tracks in mid-March 2020 until reopening of properties starting mid-May 2020.

Non-gaming Revenues .

Non-gaming revenues decreased 54.1% for the six months ended June 30, 2020 compared to the same prior year period.

Excluding the impact of the Divestitures, non-gaming revenues declined 52.0% for the six months ended June 30, 2020 compared to the same prior year period mainly due to the impact of COVID-19 and the related closures of our properties, including hotels, restaurants and entertainment venues in mid-March 2020 until reopening of hotels and restaurants starting mid-May 2020 based on government reopening guidelines.

Gaming Expenses and Pari-Mutuel Commissions .

Gaming expenses and pari-mutuel commissions declined 51.0% for the six months ended June 30, 2020 compared to the same prior year period.

Excluding the impact of the Divestitures, gaming expenses and pari-mutuel commissions decreased 42.9% for the six months ended June 30, 2020 compared to the same prior year period in conjunction with the previously discussed decrease in gaming revenues and pari-mutuel commissions.

Non-gaming Expenses .

Non-gaming expenses declined 47.6% for the six months ended June 30, 2020 compared to the same prior year period.

Excluding the impact of the Divestitures, non-gaming expenses decreased 44.9% for the six months ended June 30, 2020 compared to the same prior year period in conjunction with the previously discussed decrease in non-gaming revenues.

Marketing and Promotions Expenses .

Marketing and promotions expenses declined 53.3% for the six months ended June 30, 2020 compared to the same prior year period.

Excluding the impact of the Divestitures, marketing and promotions expense decreased 50.1% for the six months ended June 30, 2020 compared to the same prior year period.

This decline was primarily due to savings achieved via the termination of certain marketing contracts, reductions in direct mail costs and continued company-wide changes in marketing and promotional activity.

Additionally, to the extent possible, marketing and promotions expenses were reduced or eliminated during the closure of our properties from mid-March 2020 through mid-May 2020.

General and Administrative Expenses .

General and administrative expenses declined 34.0% for the six months ended June 30, 2020 compared to the same prior year period.

Excluding the impact of the Divestitures, general and administrative expenses decreased 28.5% for the six months ended June 30, 2020 compared to the same prior year period mainly due to the centralization of certain services provided to our properties and realized savings achieved through the continued consolidation of purchasing programs.

Additionally, general and administrative expenses, including utilities and payroll expenses, were reduced following the closure of our properties in mid-March 2020 until reopening started in mid-May 2020.

Corporate Expenses .

For the six months ended June 30, 2020 compared to the same prior year period, corporate expenses decreased 21.9% primarily due to reductions in salaries and wages, stock compensation expense, corporate bonus expense, captive insurance expense, certain professional fees and travel costs due to the COVID-19 impact for the six months ended June 30, 2020 compared to the same prior year period.

Depreciation and Amortization Expense .

For the six months ended June 30, 2020 compared to the same prior year period, depreciation and amortization expense declined 13.1% mainly due to ceasing depreciation and amortization expense on assets held for sale.

Excluding the impact of the Divestitures, depreciation and amortization expense decreased 6.7% for the six months ended June 30, 2020 compared to the same prior year period mainly due to many assets becoming fully depreciated in 2019.

Supplemental Unaudited Presentation of Consolidated Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA for the Three and Six Months Ended June 30, 2020 and 2019

Adjusted EBITDA (defined below), a non-GAAP financial measure, has been presented as a supplemental disclosure because it is a widely used measure of performance and basis for valuation of companies in our industry and we believe that this non-GAAP supplemental information will be helpful in understanding our ongoing operating results.

Management has historically used Adjusted EBITDA when evaluating operating performance because we believe that the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide a full understanding of our core operating results and as a means to evaluate period-to-period results.

Adjusted EBITDA represents net (loss) income before interest expense, (benefit) provision for income taxes, unrealized (gain) loss on investments and marketable securities, depreciation and amortization, stock-based compensation, impairment charges, transaction expenses, severance expense, selling costs associated with the divestitures of properties, equity in income (loss) of unconsolidated affiliates, (gain) loss on the sale or disposal of property and

equipment, and (gain) loss related to divestitures.

Adjusted EBITDA also excludes the expense associated with our GLPI Master Lease as the transaction was accounted for as a financing obligation and the associated expense is included in interest expense.

Adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with accounting principles generally accepted in the United States (“US GAAP”), is unaudited and should not be considered an alternative to, or more meaningful than, net income (loss) as an indicator of our operating performance.

Uses of cash flows that are not reflected in Adjusted EBITDA include capital expenditures, interest payments, income taxes, debt principal repayments, payments under our GLPI Master Lease and certain regulatory gaming assessments, which can be significant.

As a result, Adjusted EBITDA should not be considered as a measure of our liquidity.

Other companies that provide EBITDA information may calculate EBITDA differently than we do.

The definition of Adjusted EBITDA may not be the same as the definitions used in any of our debt agreements.

The following table summarizes our Adjusted EBITDA for our operating segments for the three and six months ended June 30, 2020 and 2019, respectively, in addition to reconciling net (loss) income to Adjusted EBITDA in accordance with US GAAP (unaudited, in thousands):

Three Months Ended June 30, 2020

West Midwest South East Central Corporate and Other Total

Net (loss) income $ (12,711) $ 1,378 $ (10,912) $ (30,456) $ (20,452) $ (26,843) $ (99,996)

* Not meaningful.

Casino and pari-mutuel expenses consist primarily of salaries and wages associated with our gaming operations, marketing and promotions and gaming taxes.

Hotel expenses consist principally of salaries, wages and supplies associated with our hotel operations.

Food and beverage expenses consist principally of salaries and wages and costs of goods sold associated with our food and beverage operations.

Other expenses consist principally of salaries and wages and costs of goods sold associated with our retail, entertainment and other operations.

Casino and pari-mutuel, hotel, food and beverage, and other expenses for the three and nine months ended September 30, 2020 increased year over year as a result of our acquisition of Former Caesars.

This was offset as a result of the temporary closures of all of our properties due to the COVID-19 public health emergency, which reduced our salaries and wages, gaming taxes, costs of goods sold, and other expenses.

As discussed above, our reopened properties are operating with reduced gaming and hotel capacity and limited food and beverage options.

As such, our properties are operating with a reduced workforce, which resulted in decreased salaries and wages.

In addition, our properties have reduced marketing and promotional spend, resulting in further declines in gaming expenses.

General and administrative expenses include items such as compliance, facility maintenance, utilities, property and liability insurance, expenses for administrative departments such as accounting, purchasing, human resources, legal and internal audit, and property taxes.

Property, general and administrative expenses also include stock-based compensation expense for certain property executives, sports sponsorships and other marketing expenses not directly related to our gaming operations.

General and administrative expenses for the three and nine months ended September 30, 2020 increased year over year as the result of our acquisition of Former Caesars.

This was offset by actions taken to reduce our cost structure while our properties were temporarily closed and during the period of reduced operations due to the impact of the COVID-19 public health emergency, which are discussed above and implemented.

For the three and nine months ended September 30, 2020 compared to the same prior year period, corporate expenses increased primarily due to the acquisition of Former Caesars offset by reductions in salaries and wages due to reductions in workforce implemented as a result of the impact of the COVID-19 public health emergency.

For the three and nine months ended September 30, 2020 compared to the same prior year period, depreciation and amortization expense increased mainly due to the acquisition of Former Caesars offset by ceasing depreciation and amortization expense on assets held for sale and the Divestitures.

For the three and nine months ended September 30, 2020 compared to the same prior year period, transaction costs and other operating costs increased primarily due to costs or fees incurred related to the Merger, various project exit fees and related write offs, and higher severance expense related to synergies with the Merger.

Other income (expenses)

Other income (expenses) were as follows:

Three Months Ended

September 30, Percent

Change Nine Months Ended

September 30, Percent

(Dollars in millions) 2020 2019 Variance 2020 2019 Variance

Other income (expenses)

Interest expense, net $ (473) $ (72) $ (401) * $ (608) $ (217) $ (391) (180.2) %

Benefit for income taxes (5,392) (931) (2,757) (3,617) (1,247) (19,717) (33,661)

Unrealized gain on investments and marketable securities

Loss on extinguishment of debt (173) (1) (172) * (173) (1) (172) *

Other (loss) income 9 3 6 200.0 % (1) — (1) *

Provision for income taxes (135) (18) (117) * (64) (39) (25) (64.1) %

___________________

Depreciation and amortization 13,299 4,148 6,786 11,046 11,793 1,867 48,939

Stock-based compensation — 1 1 — — 4,227 4,229

Transaction expenses (1) — — — — — 12,697 12,697

* Not meaningful.

For the three and nine months ended September 30, 2020, interest expense, net increased year over year as a result of our acquisition of Former Caesars.

Outstanding debt assumed, additional debt raised, and assumed financing obligations resulted in the increase in interest expense.

For the three and nine months ended September 30, 2020, the loss on extinguishment of debt increased year over year due to the payment of outstanding debt as a result of our acquisition of Former Caesars.

Segment comparison of the three and nine months ended September 30, 2020 and 2019

Las Vegas Segment

Three Months Ended

September 30, Percent

Change Nine Months Ended

September 30, Percent

(Dollars in millions) 2020 2019 Variance 2020 2019 Variance

Casino and pari-mutuel commissions $ 122 $ — $ 122 * $ 122 $ — $ 122 *

Food and beverage 52 — 52 * 52 — 52 *

Hotel 79 — 79 * 79 — 79 *

Other 51 — 51 * 51 — 51 *

Net Revenues $ 304 $ — $ 304 * $ 304 $ — $ 304 *

Adjusted EBITDA $ 43 $ — $ 43 * $ 43 $ — $ 43 *

Three Months Ended June 30, 2019

West Midwest South East Central Corporate and Other Total

Includes Divestitures:

Net (loss) income $ 11,348 $ 21,435 $ 12,747 $ 15,981 $ 13,070 $ (55,645) $ 18,936

Interest expense, net 4,982 (1) 4,353 12,691 13,306 36,467 71,798

(Benefit) provision for income taxes 4,283 7,578 1,923 6,541 1,657 (11,564) 10,418

Unrealized loss on investments and marketable securities

Adjusted EBITDA margin 14.1 % — % 14.1 pts 14.1 % — % 14.1 pts

Net loss attributable to Caesars $ (162) $ — $ (162) * $ (162) $ — $ (162) *

___________________

Depreciation and amortization 13,508 7,714 9,850 12,240 11,480 1,741 56,533

Stock-based compensation — 10 — — — 6,499 6,509

Transaction expenses (1) — — — — — 7,292 7,292

* Not meaningful.

Las Vegas segment’s net revenues and Adjusted EBITDA increased as a result of the acquisition of Former Caesars.

As of September 30, 2020, all of our Las Vegas properties other than The Cromwell, Planet Hollywood and Rio were reopened.

Planet Hollywood opened on October 8, 2020 and The Cromwell reopened on October 29, 2020.

All of our properties within the Las Vegas segment reopened with reduced gaming and hotel capacity and with limited food and beverage offerings.

As of September 30, 2020, entertainment and convention venues have not reopened due to capacity limitations.

During the third quarter of 2020 or in the period between properties reopening and September 30, 2020, all of our reopened properties in the Las Vegas segment experienced a significant decline in net revenues and Adjusted EBITDA compared to Former Caesars’ prior year results for the same properties due to the general weakness in the economic environment resulting from reduced visitation and travel to Las Vegas resulting from the COVID-19 public health emergency.

Adjusted EBITDA margins for our Las Vegas properties were negatively impacted by greater declines in revenue than our Regional segment as well as rent expense associated with our Rio lease in our Las Vegas segment.

Regional Segment

Three Months Ended

September 30, Percent

Change Nine Months Ended

September 30, Percent

(Dollars in millions) 2020 2019 Variance 2020 2019 Variance

Casino and pari-mutuel commissions $ 774 $ 458 $ 316 69.0 % $ 1,215 $ 1,386 $ (171) (12.3) %

Food and beverage 72 78 (6) (7.7) % 135 229 (94) (41.0) %

Hotel 121 94 27 28.7 % 178 237 (59) (24.9) %

Other 33 31 2 6.5 % 68 78 (10) (12.8) %

Net Revenues $ 1,000 $ 661 $ 339 51.3 % $ 1,596 $ 1,930 $ (334) (17.3) %

Adjusted EBITDA $ 331 $ 205 $ 126 61.5 % $ 439 $ 569 $ (130) (22.8) %

Divestitures:

Net income $ — $ 4,737 $ — $ 3,107 $ — $ — $ 7,844

Provision for income taxes — 1,241 — 1,156 — — 2,397

Depreciation and amortization — 1,950 — 1,643 — — 3,593

Stock-based compensation — 4 — — — — 4

Adjusted EBITDA margin 33.1 % 31.0 % 2.1 pts 27.5 % 29.5 % (2) pts

Net (loss) income attributable to Caesars $ 47 $ 117 $ (70) (59.8) % $ (175) 300 $ (475) (158.3) %

Regional segment’s net revenues, Adjusted EBITDA and margin increased for the three months ended September 30, 2020 compared to the same prior year period as a result of the acquisition of Former Caesars.

All of our properties in our Regional segment have reopened as of September 30, 2020.

All of our properties within the Regional segment reopened with reduced gaming and hotel capacity and with limited food and beverage offerings.

During the third quarter of 2020 or in the period between properties reopening and September 30, 2020, our Regional properties experienced a decline in net revenues as compared to the prior year.

However, in the period between reopening and September 30, 2020 for all of our Regional properties other than Atlantic City, Northern Nevada and New Orleans.

Adjusted EBITDA grew as compared to prior year, and Former Caesars’ prior year, for the same properties.

Adjusted EBITDA margin for these properties were higher as compared to prior year due to operating with a reduced workforce, reducing marketing costs, and limiting certain lower margin food and beverage offerings such as buffets.

Properties in Atlantic City, Northern Nevada and New Orleans experienced significant declines in net revenues and Adjusted EBITDA as compared to prior year and Former Caesars’ prior year for the same properties as they were all negatively impacted by reduced visitation and limitations on capacity due to the COVID-19 public health emergency.

Managed, International & CIE Segment

Three Months Ended

September 30, Percent

Change Nine Months Ended

September 30, Percent

(Dollars in millions) 2020 2019 Variance 2020 2019 Variance

Casino and pari-mutuel commissions $ 23 $ — $ 23 * $ 23 $ — $ 23 *

Food and beverage 1 — 1 * 1 — 1 *

Hotel — — — * — — — *

Other 45 — 45 * 45 — 45 *

Total Divestitures (4) $ — $ 7,932 $ — $ 5,904 $ — $ — $ 13,836

Excluding Divestitures:

Net (loss) income $ 11,348 $ 16,698 $ 12,747 $ 12,874 $ 13,070 $ (55,645) $ 11,092

Interest expense, net 4,982 (1) 4,353 12,691 13,306 36,467 71,798

(Benefit) provision for income taxes 4,283 6,337 1,923 5,385 1,657 (11,564) 8,021

Unrealized loss on investments and marketable securities

Net Revenues $ 69 $ — $ 69 * $ 69 $ — $ 69 *

Adjusted EBITDA $ 18 $ — $ 18 * $ 18 $ — $ 18 *

Adjusted EBITDA margin 26.1 % — % 26.1 pts 26.1 % — % 26.1 pts

Net income attributable to Caesars $ 3 $ — $ 3 * $ 3 $ — $ 3 *

___________________

Depreciation and amortization 13,508 5,764 9,850 10,597 11,480 1,741 52,940

Stock-based compensation — 6 — — — 6,499 6,505

Transaction expenses (1) — — — — — 7,292 7,292

* Not meaningful.

Managed, International, CIE segment’s net revenues and Adjusted EBITDA increased as a result of the acquisition of Former Caesars.

All of our managed properties have reopened as of September 30, 2020 except for Caesars Windsor, which opened on October 8, 2020.

Our CIE business was not closed at any point related to the COVID-19 public health emergency.

For the three and nine months ended September 30, 2020, net revenues for Managed, International and CIE declined as compared to Former Caesars’ prior period related to reimbursed management costs related to Caesars Windsor remaining closed throughout the quarter.

Excluding that, net revenues increased primarily related to increased revenue in our CIE business.

Adjusted EBITDA for Managed, International and CIE increased as compared to Former Caesars’ prior period.

Corporate & Other

Three Months Ended

September 30, Percent

Change Nine Months Ended

September 30, Percent

(Dollars in millions) 2020 2019 Variance 2020 2019 Variance

Other $ 4 $ 2 $ 2 100.0 % $ 8 $ 6 $ 2 33.3 %

Total Excluding Divestitures (5) $ 34,305 $ 28,821 $ 29,109 $ 41,514 $ 39,602 $ (8,526) $ 164,825

Six Months Ended June 30, 2020

West Midwest South East Central Corporate and Other Total

Net loss $ (104,011) $ (15,239) $ (24,910) $ (32,647) $ (15,728) $ (83,099) $ (275,634)

Interest expense, net 10,466 (42) 8,529 25,661 26,933 63,053 134,600

Benefit for income taxes (16,720) (3,658) (4,286) (3,229) (1,285) (41,655) (70,833)

Loss on extinguishment of debt — — — — — 158 158

Unrealized loss on investments and marketable securities

Net Revenues $ 4 $ 2 $ 2 100.0 % $ 8 $ 6 $ 2 33.3 %

Adjusted EBITDA $ (41) $ (8) $ (33) * $ (59) $ (27) $ (32) (118.5) %

___________________

* Not meaningful.

Supplemental Unaudited Presentation of Consolidated Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA for the Three and Nine Months Ended September 30, 2020 and 2019

Adjusted EBITDA represents net income (loss) before interest expense, (benefit) provision for income taxes, unrealized (gain) loss on investments and marketable securities, depreciation and amortization, stock-based compensation, impairment charges, transaction expenses, severance expense, selling costs associated with the divestitures of properties, equity in income (loss) of unconsolidated affiliates, (gain) loss on the sale or disposal of property and equipment, (gain) loss related to divestitures, changes in the fair value of certain derivatives and certain non-recurring expenses such as sign-on and retention bonuses, business optimization expenses and transformation expenses, litigation awards and settlements, losses on inventory associated with properties temporarily closed as a result of the COVID-19 public health emergency, contract exit or termination costs, and regulatory settlements.

Adjusted EBITDA also excludes the expense associated with certain of our leases as these transactions were accounted for as financing obligations and the associated expense is included in interest expense.

Adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with GAAP, is unaudited and should not be considered an alternative to, or more meaningful than, net income (loss) as an indicator of our operating performance.

Uses of cash flows that are not reflected in Adjusted EBITDA include capital expenditures, interest payments, income taxes, debt principal repayments, payments under our leases with affiliates of GLPI and VICI Properties Inc.

and certain regulatory gaming assessments, which can be significant.

As a result, Adjusted EBITDA should not be considered as a measure of our liquidity.

Other companies that provide EBITDA information may calculate Adjusted EBITDA differently than we do.

The definition of Adjusted EBITDA may not be the same as the definitions used in any of our debt agreements.

The following table summarizes our Adjusted EBITDA for our operating segments for the three and nine months ended September 30, 2020 and 2019, respectively, in addition to reconciling net (loss) income to Adjusted EBITDA in accordance with US GAAP (unaudited):

Three Months Ended September 30, 2020

(In millions) CEI Add:

Net (loss) income attributable to Caesars $ (926) $ — $ (173) $ (1,099)

Net income (loss) attributable to noncontrolling interests 1 — (62) (61)

Net loss from discontinued operations 1 2 — 3

Interest expense, net 473 26 72 571

Provision (benefit) for income taxes 135 4 (51) 88

Other loss (a) 164 — 67 231

Impairment charges — — 124 124

Depreciation and amortization 223 2 53 278

Stock-based compensation 45 1 3 49

Transaction expenses (1) — — — — — 21,991 21,991

Other (2) 103,387 36,701 21,986 265 14 (16) 162,337

Transaction costs and other operating costs (b) 219 3 22 244

Other items (c) 16 — 19 35

Adjusted EBITDA $ 351 $ 38 $ 74 $ 463

Six Months Ended June 30, 2019

West Midwest South East Central Corporate and Other Total

Includes Divestitures:

Net (loss) income $ 15,665 $ 43,590 $ 32,956 $ 27,149 $ 25,948 $ (88,143) $ 57,165

Three Months Ended September 30, 2019

(In millions) CEI Less:

Divestitures (g)

Net income (loss) attributable to Caesars $ 37 $ 14 $ (359) $ (336)

Net loss attributable to noncontrolling interests — — (1) (1)

Provision (benefit) for income taxes 18 5 (22) (9)

Other income (a) (2) — (27) (29)

Interest expense, net 72 1 341 412

(Benefit) provision for income taxes 5,677 13,252 4,881 9,695 2,575 (15,257) 20,823

Unrealized loss on investments and marketable securities

— — — — — 2,858 2,858

Depreciation and amortization 53 1 255 307

Stock-based compensation — 25 9 7 — 11,416 11,457

Transaction expenses (1) — — — — — 9,186 9,186

Other (3) 283 72 368 152 132 (16,781) (15,774)

Impairment charges — — 380 380

Transaction costs and other operating costs (b) 14 — 33 47

Stock-based compensation expense 4 — 19 23

Other items (c) 1 1 16 16

Adjusted EBITDA $ 197 $ 22 $ 635 $ 810

Divestitures:

Net income $ — $ 9,887 $ — $ 5,229 $ — $ — $ 15,116

Nine Months Ended September 30, 2020

(In millions) CEI Less:

Net loss attributable to Caesars $ (1,202) $ (11) $ (1,059) $ (2,250)

Net income (loss) attributable to noncontrolling interests 1 — (67) (66)

Net loss (income) from discontinued operations 1 (2) — 3

Interest expense, net 608 (23) 750 1,381

Provision for income taxes — 2,616 — 1,730 — — 4,346

Provision (benefit) for income taxes 64 (4) (224) (156)

Other loss (income) (a) 174 — (45) 129

Impairment charges 161 — 189 350

Depreciation and amortization 322 — 559 881

Stock-based compensation 55 (1) 26 82

Other (3) — — — 78 — — 78

Total Divestitures (6) $ — $ 16,654 $ — $ 10,737 $ — $ — $ 27,391

Excluding Divestitures:

Net (loss) income $ 15,665 $ 33,703 $ 32,956 $ 21,920 $ 25,948 $ (88,143) $ 42,049

Transaction costs and other operating costs (b) 242 (1) 71 314

Other items (c) 15 1 54 68

Adjusted EBITDA $ 441 $ (41) $ 254 $ 736

Nine Months Ended September 30, 2019

(In millions) CEI Less:

Divestitures (g)

Net income (loss) attributable to Caesars $ 94 $ 33 $ (891) $ (830)

Net loss attributable to noncontrolling interests — — (2) (2)

Provision (benefit) for income taxes 39 11 (111) (83)

Other loss (a) 1 — 412 413

Interest expense, net 217 2 1,033 1,248

(Benefit) provision for income taxes 5,677 10,636 4,881 7,965 2,575 (15,257) 16,477

Unrealized loss on investments and marketable securities

— — — — — 2,858 2,858

Depreciation and amortization 167 13 743 897

Stock-based compensation — 14 9 — — 11,416 11,439

Transaction expenses (1) — — — — — 9,186 9,186

Other (3) 283 72 368 74 132 (16,781) (15,852)

Total Excluding Divestitures (5) $ 58,348 $ 56,423 $ 67,780 $ 76,185 $ 77,925 $ (18,739) $ 317,922

(1) Transaction expenses primarily represent costs related to the pending acquisition of Caesars for the three and six months ended June 30, 2020 and 2019, and costs related to the acquisitions of Elgin and Tropicana for the three and six months ended June 30, 2019.

(2) Other, for the three and six months ended June 30, 2020, is comprised of severance expense, (gain) loss on the sale or disposal of property and equipment, equity in loss of unconsolidated affiliate, and selling costs associated with the divestitures of Kansas City, Vicksburg, Shreveport, and MontBleu.

For the six months ended June 30, 2020, other is also comprised of impairment charges.

(3) Other, for the three and six months ended June 30, 2019, is comprised of severance expense, (gain) loss on the sale or disposal of property and equipment, equity in loss of unconsolidated affiliate, and the gain associated with the sales of Presque and Nemacolin.

For the six months ended June 30, 2019, other is also comprised of impairment charges.

(4) Figures are for Mountaineer, Cape Girardeau and Caruthersville for the three months ended June 30, 2019.

(5) Total figures for the three months ended June 30, 2019 exclude the results of operations for Mountaineer, Cape Girardeau and Caruthersville.

Total figures for the six months ended June 30, 2019 exclude the results of operations for Presque for the period beginning January 1, 2019 and ending January 11, 2019, Nemacolin for the period beginning January 1, 2019 and ending March 8, 2019, and Mountaineer, Cape Girardeau and Caruthersville for the six months ended June 30, 2019.

Impairment charges 1 — 430 431

Transaction costs and other operating costs (b) 2 — 86 88

Stock-based compensation expense 16 — 62 78

Other items (c) 5 1 66 70

Adjusted EBITDA $ 542 $ 60 $ 1,828 $ 2,310

____________________

(a) Other loss (income) for the three and nine months ended September 30, 2020 primarily represent loss on early repayment of debt in connection with the consummation of the Merger and unrealized loss on the change in fair value of the derivative liability related to CEC’s 5% convertible notes, slightly offset by gain on William Hill UK and Flutter stock and realized gain on conversion of CEC’s 5% convertible notes.

Other loss (income) for the three and nine months ended September 30, 2019 primarily represent unrealized loss on the change in fair value of the derivative liability related to CEC’s 5% convertible notes.

(b) Transaction costs and other operating costs for the three and nine months ended September 30, 2020 primarily represent costs related to the Merger with Former Caesars, various contract or license termination exit costs, and severance costs.

(d) Discontinued operations include Horseshoe Hammond, Caesars Southern Indiana, Harrah’s Louisiana Downs, Caesars UK group including Emerald Resorts & Casino, and Bally’s Atlantic City.

(e) Pre-acquisition CEC represents results of operations for Former Caesars for the period from July 1, 2020 and January 1, 2020 to July 20, 2020, the date on which the Merger was consummated, for the three and nine months ended September 30, 2020, respectively, and for the three and nine months ended September 30, 2019.

Additionally, certain corporate overhead costs which were historically charged to properties within the segments have been reclassified to the Corporate and Other.

These costs primarily include centralized marketing expenses, redundant executive and management payroll and benefits expenses, centralized contract labor expenses, and corporate rent expenses.

Such figures are based on unaudited internal financial statements and have not been reviewed by the Company’s auditors and, for the 2020 periods, do not conform to GAAP.

(f) 2020 Total for the three months ended September 30, 2020 includes results of operations from discontinued operations and from Former Caesars prior to July 20, 2020, the date on which the Merger was consummated.

Such presentation does not conform to GAAP or the Securities and Exchange Commission rules for pro forma presentation;

however, we believe that the additional financial information will be helpful to investors in comparing current results with results of prior periods.

This is non-GAAP data and should not be considered a substitute for data prepared in accordance with GAAP, but should be viewed in addition to the results of operations reported by the Company.

(g) Divestitures for the three and nine months ended September 30, 2019 include results of operations for Mountaineer, Cape Girardeau, Caruthersville, Kansas City, and Vicksburg for the three and nine months ended September 30, 2019.

Divestitures for the nine months ended September 30, 2020 include results of operations for Kansas City and Vicksburg for the period beginning January 1, 2020 to July 1, 2020.

Such figures are based on unaudited internal financial statements and have not been reviewed by the Company’s auditors and do not conform to GAAP.

(h) 2019 Total for the three and nine months ended September 30, 2019 excludes results of operations from divestitures as detailed in (g) and includes results of operations of Former Caesars, including discontinued operations, for the relevant period.

Such presentation does not conform to GAAP or the Securities and Exchange Commission rules for pro forma presentation;

however, we believe that the additional financial information will be helpful to investors in comparing current results with results of prior periods.

This is non-GAAP data and should not be considered a substitute for data prepared in accordance with GAAP, but should be viewed in addition to our reported results of operations.

(6) Figures are for Presque for the period beginning January 1, 2019 and ending January 11, 2019, Nemacolin for the period beginning January 1, 2019 and ending March 8, 2019 and Mountaineer, Cape Girardeau and Caruthersville for the six months ended June 30, 2019.

(i) 2020 Total for the nine months ended September 30, 2020 excludes divestitures as detailed in (g) and includes results of operations from discontinued operations and from Former Caesars prior to July 20, 2020, the date on which the Merger was consummated.

Such presentation does not conform to GAAP or the Securities and Exchange Commission rules for pro forma presentation;

however, we believe that the additional financial information will be helpful to investors in comparing current results with results of prior periods.

This is non-GAAP data and should not be considered a substitute for data prepared in accordance with GAAP, but should be viewed in addition to our reported results of operations.

Liquidity and Capital Resources

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Our ability to fund our obligations depends on existing cash on hand, contracted asset sales, cash flow from our subsidiaries and our ability to raise capital.

Our primary sources of liquidity and capital resources have been existing cash on hand, cash flow from operations, borrowings under our revolving credit facility, proceeds from the issuance of debt and equity securities and proceeds from completed asset sales.

Our primary sources of liquidity and capital resources have been existing cash on hand, cash flow from operations, borrowings under our revolving credit facilities, proceeds from the issuance of debt and equity securities and proceeds from completed asset sales and lease transactions.

Our cash requirements fluctuate significantly depending on our decisions with respect to business acquisitions or divestitures and strategic capital investments to maintain the quality of our properties.

Beginning on May 18, 2020, we began reopening our properties and as of June 30, 2020 we have resumed operations at all of our properties, with the exception of Elgin and Trop AC which reopened on July 1 and July 2, 2020, respectively.

In an effort to mitigate the impacts of COVID-19 on our business and maintain liquidity, we furloughed approximately 90% of our employees beginning on April 11, 2020.

Beginning on May 18, 2020, we began reopening our properties and as of September 30, 2020 we have resumed operations at all of our properties, with the exception of The

Cromwell, Planet Hollywood, Rio, and Caesars Windsor.

Planet Hollywood and Caesars Windsor reopened on October 8, 2020 and The Cromwell reopened on October 29, 2020.

In an effort to mitigate the impacts of COVID-19 public health emergency on our business and maintain liquidity, we furloughed approximately 90% of our employees beginning on April 11, 2020.

As a result of these payroll changes combined with other cost saving measures, our operating expenses were reduced significantly.

We expect that our primary capital requirements going forward will relate to the operation and maintenance of our properties, taxes, servicing our outstanding indebtedness, and rent payments under our GLPI Master Lease, the VICI Leases and other leases.

In an effort to maintain liquidity and provide financial flexibility as the effects of COVID-19 public health emergency continue to evolve and impact global financial markets, we borrowed $465 million under our revolving credit facility on March 16, 2020, which we repaid utilizing, in part, proceeds from the sale of our interests in Kansas City and Vicksburg.

On June 19, 2020, we completed a public offering of 20,700,000 shares of common stock, at a public offering price of $39.00 per share, with proceeds of $772 million, net of fees and estimated expenses of $35 million.

On July 6, 2020, we issued $3.4 billion aggregate principal amount of 6.250% Senior Secured Notes due 2025 (the “CEI Senior Secured Notes”) and $1.8 billion aggregate principal amount of 8.125% Senior Notes due 2027 (the “CEI Senior Notes”).

In addition, we issued $1.0 billion aggregate principal amount of 5.75% Senior Secured Notes due 2025 (the “CRC Senior Secured Notes”).

On July 1, 2020, we completed the sale of Kansas City and Vicksburg for $230 million and used a portion of the proceeds to repay the outstanding balance under our revolving credit facility.

In addition, we closed the sale of Harrah’s Reno on September 30, 2020 which provided additional proceeds of $8 million, net of certain closing costs.

On July 20, 2020, in connection with the Merger, we consummated the sale leaseback transactions related to Harrah’s New Orleans, Harrah’s Laughlin and Harrah’s Resort Atlantic City, including the Harrah’s Atlantic City Waterfront Conference Center, for approximately $1.8 billion of net proceeds.

Additionally, we received a one-time payment from VICI of approximately $1.4 billion for amendments to the VICI leases.

Furthermore, we entered into an incremental agreement to the existing CRC credit agreement, for an incremental term loan in an aggregate principal amount of $1.8 billion.

In connection with the consummation of the Merger, on July 20, 2020, our current and future liquidity significantly changed.

A portion of the proceeds from our newly issued debt and proceeds we received from VICI, as well as cash on hand generated from our sale of common stock, were used (a) to fund a portion of the cash consideration of the Merger, (b) to prepay in full the loans outstanding and terminate all commitments under our existing Credit Agreement, dated as of April 17, 2017, (c) to satisfy and discharge our Senior Notes, (d) to repay $975 million of the outstanding amount under the existing CRC revolving credit facility, (e) to repay in full the loans outstanding and terminate all commitments under the existing CEOC, LLC Credit Agreement, dated as of October 6, 2017, (f) to pay fees and expenses related to the financing arrangements, and (g) for general corporate use.

Additionally, we entered into the CEI Revolving Credit Facility which provides for a five-year senior secured revolving credit facility in an aggregate principal amount of $1.2 billion.

On September 18, 2020, we entered into a $400 million Loan Agreement with a subsidiary of VICI for a term of five years, with such loan secured by, among other things, a first priority fee mortgage on the Caesars Forum Convention Center (the “Forum Convention Center Mortgage Loan”).

The interest rate on the Forum Convention Center Mortgage Loan is initially 7.7% per annum, which escalates annually to a maximum interest rate of 8.3% per annum.

After the second anniversary of the closing of the loan, we have the option of prepaying the loan, which may include a premium.

As of September 30, 2020, our cash on hand and revolving borrowing capacity was as follows:

(In millions) September 30, 2020

Cash and cash equivalents $ 1,037

Revolver capacity 1,310

Revolver capacity committed to letters of credit (83)

Total $ 2,264

On September 30, 2020, we announced that we had reached an agreement with William Hill on the terms of a recommended cash acquisition pursuant to which the we would acquire the entire issued and to be issued share capital (other than shares owned by us or held in treasury) of William Hill, in an all-cash transaction of approximately £2.9 billion, or $3.7 billion.

The transaction is conditional on, among other things, the approval of William Hill shareholders and state and federal regulators.

On September 25, 2020, to provide liquidity to potentially fund a portion of the cash purchase price, as required by UK regulators, we borrowed $900 million on our CEI Revolving Credit Facility.

On September 28, 2020, we deposited $2.1 billion, which included the proceeds from the revolver, into an escrow account related to the William Hill offer.

As of September 30,

2020 these funds in escrow were classified as restricted cash until we received certain regulatory approvals for financing described below.

On September 28, 2020, we entered into a foreign exchange forward contract to hedge the risk of appreciation of the GBP denominated purchase price.

Under the agreement, we would purchase £1.3 billion at a contracted exchange rate.

An unrealized loss of $5 million related to the change in fair value during the period from September 28, 2020 and September 30, 2020 was recorded in the consolidated condensed statement of operations.

On October 1, 2020 the contract was cancelled.

On October 1, 2020, we completed a public offering of 35,650,000 shares of our common stock at a public offering price of $56.00 per share.

Net proceeds from the offering, after deducting the underwriting discounts and commissions and estimated expenses, was approximately $1.9 billion.

We expect to use $1.7 billion of these proceeds for the acquisition of William Hill and, as such, we deposited that amount into a UK escrow account denominated in British Pounds.

Upon receipt of regulatory approval of our Interim Facilities Agreement (described below), the restriction on the $2.1 billion funded as of September 30, 2020, was released and we transferred $1.4 billion of cash back into our operating accounts and the outstanding balance of our revolving credit facility was repaid in full.

Approximately $598 million of cash remains in an unrestricted account.

On October 9, 2020, we entered into a foreign exchange forward contract to hedge the risk of appreciation of the GBP denominated purchase price for the William Hill acquisition.

Under the agreement, we would purchase £536 million at a contracted exchange rate.

The forward term of the contract ends on March 31, 2021.

On October 6, 2020, we entered into a £1.5 billion interim facilities agreement (the “Interim Facilities Agreement”) with Deutsche Bank AG, London Branch and JPMorgan Chase Bank, N.A.

(the “Arrangers”).

Pursuant to the Interim Facilities Agreement, the Arrangers have made available to the Company:

(a) a 540-day £1.0 billion asset sale bridge facility and (b) a 60-day £503.0 million cash confirmation bridge facility (collectively, the “Facility”).

The Facility may be used to finance the acquisition, refinance or otherwise discharge the indebtedness of William Hill and its subsidiaries, pay transaction fees and expenses related to the foregoing and for working capital and general corporate purposes, among other things.

The availability of the borrowings under the Facility is subject to the satisfaction of certain customary conditions.

If drawn upon, outstanding borrowings under the Facility will bear interest at a rate equal to the London interbank offered rate plus 3.50% per annum.

We entered into the Interim Facilities Agreement in connection with requirement under applicable United Kingdom law to demonstrate that we have “funds certain” to pay the entirety of the cash purchase price for the acquisition of William Hill.

We do not intend to borrow under the Interim Facilities Agreement.

Instead, we intend to negotiate long-form financing documentation pursuant to which a subsidiary will incur the Debt Financing for the acquisition.

In addition to the capital required to complete the proposed acquisition of William Hill, we expect that our primary capital requirements going forward will relate to the operation and maintenance of our properties, taxes, servicing our outstanding indebtedness, and rent payments under our GLPI Master Lease, the VICI Leases and other leases.

We make capital expenditures and perform continuing refurbishment and maintenance at our properties to maintain our quality standards.

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We expect to use cash on hand and cash generated from operations to meet such obligations.

In an effort to maintain liquidity and provide financial flexibility as the effects of COVID-19 continue to evolve and impact global financial markets, we borrowed $465.0 million under our revolving credit facility on March 16, 2020.

We repaid $357.0 million during the second quarter and had $108.0 million outstanding as of June 30, 2020.

In addition, we had $372.9 million of available borrowing capacity, after consideration of $19.1 million in outstanding letters of credit, under our Revolving Credit Facility.

On July 1, 2020, we utilized proceeds from the sale of our interests in Kansas City and Vicksburg to pay down the remaining $108.0 million on the revolving credit facility.

On June 19, 2020, we completed a public offering of 20,700,000 shares (including the shares sold pursuant to the underwriters’ option) of common stock, at a public offering price of $39.00 per share, with proceeds of $772.4 million, net of fees and estimated expenses of $34.9 million.

As of June 30, 2020, our cash on hand and revolving borrowing capacity was as follows:

June 30, 2020

(in thousands)

Cash and cash equivalents $ 950,483

Revolver capacity 392,000

Revolver capacity committed to letters of credit (19,135)

Total $ 1,323,348

On July 6, 2020, we issued $3.4 billion of 2025 Secured Notes, $1.8 billion of 2027 Senior Notes and $1.0 billion of CRC Secured Notes in connection with the Merger (collectively, the “Debt Financing”).

Additionally, we received a one-time payment from VICI of approximately $1.38 billion for amendments to VICI Leases.

Furthermore, we entered into the ERI Revolving Credit Facility which provides for a five-year senior secured revolving credit facility in an aggregate principal amount of $1.2 billion, including an incremental agreement which is, as discussed below, subject to regulatory approval.

In addition, the borrowing capacity and obligations under CRC’s existing $1.0 billion revolving credit facility remain outstanding following the consummation of the Merger.

In connection with the consummation of the Merger, on July 20, 2020, our current and future liquidity significantly changed.

As a result of these transactions, we may incur a loss on extinguishment of debt during the third quarter of 2020, which could be significant.

Following the completion of the transactions described in conjunction with the closing of the Merger, we estimate our total liquidity to be approximately $4.3 billion, which includes approximately $2.3 billion of cash on hand, and $2.0 billion of availability on our revolving credit facilities.

We expect to obtain an additional $210 million of capacity on our revolving credit facilities upon regulatory approval and generate approximately $500 million of additional proceeds from VICI with a sale of excess land and a new mortgage note during the third quarter of 2020.

On August 27, 2020, Hurricane Laura made landfall on Lake Charles as a Category 4 storm.

The hurricane severely damaged the Isle of Capri Casino Lake Charles and the Company has recorded in insurance receivable of $31 million, of which $15 million related to fixed asset impairments and $16 million related to remediation costs and repairs that have been incurred in the three months ended September 30, 2020 .

The property has remained closed.

A significant portion of our liquidity needs are for debt service and payments associated with our leases.

In addition to our newly issued debt, our debt obligations increased as a result of outstanding debt of Former Caesars that remained outstanding following the consummation of the Merger.

Our estimated debt service (including principal and interest) is $200 million for the remainder of 2020.

The convertible notes assumed in connection with the Merger are expected to be settled during 2020.

The convertible notes are convertible into weighted average of the number of shares of Company Common Stock and amount of cash actually received per share by holders of common stock of Former Caesars that made elections for consideration in the Merger.

We currently estimate a cash payment of approximately $1.3 billion to settle the convertible notes during 2020.

We lease certain real property assets from third parties, including GLPI and VICI.

Our estimated debt service (including principal and interest) is approximately $165 million for the remainder of 2020.

We also lease certain real property assets from third parties, including GLPI and VICI.

We estimate our lease payments to be approximately $300 million for the remainder of 2020.

On April 24, 2020, we entered into a definitive purchase agreement with Twin River to sell Eldorado Shreveport and MontBleu for aggregate consideration of $155 million.

The agreement is subject to regulatory approvals and expected to close in the first quarter of 2021.

We also expect to enter into agreements to divest three properties in the state of Indiana as required by the Indiana Gaming Commission prior to December 31, 2020.

We expect that borrowings incurred under the ERI Revolving Credit Facility, the CRC revolving credit facility and Convention Center Mortgage Loan and cash generated from operations, the equity offering consummated in July 2020 and the announced asset sales, net of associated taxes, will be sufficient to fund our operations, capital requirements and service our outstanding indebtedness for the next twelve months.

The 5% Convertible Notes (defined below) remain outstanding following the consummation of the Merger.

As a result of the Merger, the 5% Convertible Notes are convertible into weighted average of the number of shares of Company Common Stock and amount of cash actually received per share by holders of common stock of Former Caesars that made elections for

consideration in the Merger.

The 5% Convertible Notes are convertible at any time at the option of the holders thereof and, beginning in October 2020, are convertible at the option of the Company if the last reported sale price of Company Common Stock equals or exceeds 140% of the conversion price for the 5% Convertible Notes in effect on each of at least 20 trading days during any 30 consecutive trading day period.

As of September 30, 2020, we have paid approximately $574 million and issued approximately 6.8 million shares upon conversion of $487 million in aggregate principal amount of the convertible notes during 2020.

Through November 2, 2020, we paid an additional $328 million and issued 3.9 million shares upon conversion of an additional $281 million in aggregate principal amount of the 5% Convertible Notes.

At such time as the holders of the 5% Convertible Notes elect to cause conversion, we estimate using cash of $380 million and issuing 4.5 million shares to settle the remaining outstanding 5% Convertible Notes.

On April 24, 2020, the Company entered into a definitive purchase agreement with Twin River and certain of its affiliates for the sale of the equity interests of Eldorado Resort Casino Shreveport Joint Venture and Columbia Properties Tahoe, LLC, the entities that hold Eldorado Shreveport and MontBleu, respectively, for aggregate consideration of $155 million, subject to a working capital adjustment.

The definitive agreement provides that the consummation of the sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and the sale of Eldorado Shreveport and MontBleu is expected to close in the first quarter of 2021.

On September 3, 2020, the Company and VICI entered into agreement to sell Harrah’s Louisiana Downs with Rubico Acquisition Corp.

for $22 million, subject to a customary working capital adjustment, where the proceeds will be split between the Company and VICI.

The sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in the first half of 2021.

We previously reached an agreement with VICI to sell Bally’s Atlantic City Hotel & Casino to Twin River for approximately $25 million.

Caesars will receive approximately $6 million from the sale.

In addition, on October 9, 2020, we reached an agreement to sell the Bally’s brand to Twin River Worldwide Holding, Inc.

for $20 million, while retaining the right to use the brand within Bally’s Las Vegas into perpetuity.

In addition to the agreements above, we also expect to enter into additional agreements to divest of Caesars Southern Indiana, Horseshoe Hammond and Evansville prior to December 31, 2020, as required by the Indiana Gaming Commission.

Further, we expect to enter into agreements to sell several other non-core properties including our international properties within our Caesars UK group, which includes Emerald Resorts Casino.

We expect these divestitures to close by mid-year 2021.

We expect that our current liquidity, cash flows from operations, borrowings under committed credit facilities and the announced asset sales, net of associated taxes, will be sufficient to fund our operations, capital requirements and service our outstanding indebtedness for the next twelve months.

However, the COVID-19 public health emergency has had, and is expected to continue to have, an adverse effect on our business, financial condition and results of operations and has caused, and may continue to cause, disruption in the financial markets.

While we have undertaken efforts to mitigate the impacts of COVID-19 on our business and maintain liquidity, the extent of the ongoing and future effects of the COVID-19 public health

emergency on our business, results of operations and financial condition is uncertain and may adversely impact our liquidity in the future.

While we have undertaken efforts to mitigate the impacts of COVID-19 on our business and maintain liquidity, the extent of the ongoing and future effects of the COVID-19 public health emergency on our business, results of operations and financial condition is uncertain and may adversely impact our liquidity in the future.

Our ability to access additional capital may be adversely affected by the disruption in the financial markets caused by the COVID-19 public health emergency, restrictions on incurring additional indebtedness contained in the agreements governing our indebtedness and the impact of the public health emergency on our business, results of operations and financial condition.

Operating Cash Flows .

For the six months ended June 30, 2020 , cash flows used by operating activities totaled $80.5 million compared to $127.9 million provided for the same prior year period.

Our operating cash flows generally follow trends in operating income, excluding non-cash charges.

Changes in the balance sheet accounts and the timing of significant payments, including interest , rent and tax payments will impact our operating cash flows.

The decrease in operating cash flows compared to the same prior year period was primarily due to cash used to continue to pay operating expenses, including rent and interest payments, during the temporary closure of our properties as a result of the COVID-19 public health emergency from mid-March to mid-May 2020.

Investing Cash Flow and Capital Expenditures .

Net cash flows used in investing activities totaled $41.4 million for the six months ended June 30, 2020 compared to $75.5 million provided by investing activities in the same prior year period.

Our investing cash flows generally fluctuate depending upon the timing of strategic and maintenance capital expenditures in addition to business acquisitions or dispositions.

Net cash used in investing activities for the six months ended June 30, 2020 was primarily due to $41.0 million cash used for capital expenditures for various property enhancement and maintenance projects along with equipment purchases.

Net cash flows provided by investing activities for the six months ended June 30, 2019 was primarily due to $178.9 million in net proceeds from the sales of Presque Isle Downs and Nemacolin offset by cash used totaling $97.1 million for capital expenditures.

Financing Cash Flow .

Net cash provided by financing activities for the six months ended June 30, 2020 totaled $862.7 million compared to $253.2 million used in financing activities for the same prior year period.

The cash provided by financing activities for the six months ended June 30, 2020 was principally due to $772.4 million of proceeds from issuance of common stock and $465.0 million of borrowings under the Revolving Credit Facility offset by $357.0 million and $10.0 million of payments under the Revolving Credit Facility and Term Loan, respectively.

The cash used in financing activities for the six months ended June 30, 2019 was principally due to net payments under the Revolving Credit Facility partially funded by the proceeds from the sales of Presque and Nemacolin.

Debt and Master Lease Covenant Compliance

Due to the ongoing effects of the COVID-19 public health emergency, our ability to maintain compliance with the financial covenants under our Credit Facility was negatively impacted.

On June 15, 2020, we entered into an amendment to the Credit Facility which provided relief for the financial covenant requirement under the existing Credit Facility agreement through September 30, 2021.

During the covenant relief period we were required to maintain a minimum liquidity level, including unrestricted cash and unused commitments under the Revolving Credit Facility of $200.0 million.

Additionally, our GLPI Master Lease contains certain operating, capital expenditure and financial covenants thereunder, and our ability to maintain compliance with these covenants was also negatively impacted.

On June 15, 2020, we entered into an amendment to the GLPI Master Lease which, among other things, provides certain relief under these covenants in the event of facility closures due to pandemics, governmental restrictions and certain other instances of unavoidable delay.

Subsequent to June 30, 2020, the amendment to the GLPI Master Lease became effective as the Company obtained all necessary approvals and the applicable waiting period expired.

As of June 30, 2020, we were in compliance with all of the applicable financial covenants under the 7% Senior Notes due 2023, 6% Senior Notes due 2025, 6% Senior Notes due 2026, and the Lumière Loan.

The CRC Credit Agreement, the CEI Revolving Credit Facility and the indenture related to the CRC Notes and CEI Notes contain covenants which are standard and customary for these types of agreements.

These include negative covenants, which, subject to certain exceptions and baskets, limit our ability to (among other items) incur additional indebtedness, make investments, make restricted payments, including dividends, grant liens, sell assets and make acquisitions.

The indenture for the 5% Convertible Notes contained limited covenants as a result of amendments that became effective in connection with the consummation of the Merger.

The CRC Revolving Credit Facility and CEI Revolving Credit Facility include a maximum first-priority net senior secured leverage ratio financial covenant of 6.35:1, which is applicable solely to the extent that certain testing conditions are satisfied.

Failure to comply with such covenants could result in an acceleration of the maturity of indebtedness outstanding under the relevant debt document.

The Company’s results of operations have been materially adversely affected by the impacts of the COVID-19 public health emergency.

As a result, the current terms of the CRC Credit Agreement and the CEI Credit Agreement provide that the financial covenant measurement period is not effective through September 30, 2021 so long as the CRC and the Company,

respectively, comply with a minimum liquidity requirement, which includes any such availability under the applicable revolving credit facilities.

The GLPI Master Lease contains certain operating, capital expenditure and financial covenants thereunder, and our ability to comply with these covenants was negatively impacted by the effects of the COVID-19 public health emergency on our results of operations.

On June 15, 2020, we entered into an amendment to the GLPI Master Lease which provides certain relief under these covenants in the event of facility closures due to public health emergencies, governmental restrictions and certain other instances of unavoidable delay.

On July 17, 2020, the amendment to the GLPI Master Lease became effective as the Company obtained all necessary approvals and the applicable waiting period expired.

Furthermore, the Company obtained waivers from VICI with relation to annual capital expenditure requirements related to the leases with VICI, starting with the annual period ending December 31, 2020.

As of September 30, 2020, we were in compliance with all of the applicable financial covenants under the CRC Credit Agreement, the CEI Credit Agreement, CEI Senior Secured Notes, CEI Senior Notes, CRC Secured Notes, 5% Convertible Notes, the GLPI Leases and VICI Leases.

Share Repurchase Program

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There is no minimum number of shares of common stock that we are required to repurchase under the Share Repurchase Program.

As of June 30, 2020, we acquired 223,823 shares of common stock under the program at an aggregate value of $9.1 million and an average of $40.80 per share.

No shares were repurchased during the six months ended June 30, 2020 and 2019.

Debt Obligations and GLPI Master Lease

Term Loan and Revolving Credit Facility

As of June 30, 2020, we were party to a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto dated as of April 17, 2017 (as amended, the “Credit Facility”), consisting of a $1.5 billion term loan facility (the “Term Loan Facility” or “Term Loan”) and a $500.0 million revolving credit facility (the “Revolving Credit Facility”).

The Credit Facility provided that our obligations under the Revolving Credit Facility would mature on October 1, 2023 and our obligations under the Term Loan Facility would mature on April 17, 2024.

As of June 30, 2020, we had $488.8 million outstanding on the Term Loan and $108.0 million outstanding under the Revolving Credit Facility.

During the six months ended June 30, 2020, we elected to draw down $465.0 million of availability under the Revolving Credit Facility as a precautionary measure to enhance our liquidity and provide financial flexibility as the effects of COVID-19 continue to evolve and impact global financial markets and we repaid $357.0 million of the outstanding balance.

We had $372.9 million of available borrowing capacity, after consideration of $19.1 million in outstanding letters of credit under our Revolving Credit Facility, as of June 30, 2020.

The interest rate per annum applicable to loans under the Revolving Credit Facility are, at our option, either LIBOR plus a margin ranging from 1.75% to 2.50% or a base rate plus a margin from 0.75% to 1.50%, the margin is based on our total leverage ratio.

The interest rate per annum applicable to the loans under the Term Loan Facility is, at our option, either LIBOR plus 2.25% or a base rate plus 1.25%;

provided, however, that in no event will LIBOR be less than zero or the base rate be less than 1.00%.

Additionally, we pay a commitment fee on the unused portion of the Revolving Credit Facility of 0.50% per annum.

As of June 30, 2020, the weighted average interest rates on the Term Loan and Revolving Credit Facility were 3.25% and 3.13%, respectively.

On July 20, 2020, in connection with the Merger, all amounts outstanding under the Credit Facility, including accrued interest and fees, were paid in full, the commitment to extend credit under the Credit Facility were terminated and all guarantees and security interests in respect of the Credit Facility were released.

6% Senior Notes due 2026

On September 20, 2018, Delta Merger Sub, Inc.

(“Escrow Issuer”), a Delaware corporation and a wholly-owned subsidiary of the Company, issued $600 million aggregate principal amount of 6.0% senior notes due 2026 (the “6% Senior Notes due 2026”) pursuant to an indenture, dated as of September 20, 2018 (the “2026 Indenture”), between Escrow Issuer and U.S.

Bank, National Association, as Trustee.

Interest on the 6% Senior Notes due 2026 will be paid semi-annually in arrears on March 15 and September 15.

The 6% Senior Notes due 2026 were general unsecured obligations of Escrow Issuer’s upon issuance and, upon the assumption of such obligations by the Company and the subsidiary guarantors (the “Guarantors”) upon consummation of the Tropicana Acquisition, became general unsecured obligations of the Company and the Guarantors, ranking senior in right of payment to all of the Company’s existing and future debt that is expressly subordinated in right of payment to the 6% Senior Notes due 2026 and the guarantees, ranking equally in right of payment with all of the applicable obligor’s existing and future senior liabilities, including the obligations under the Company’s existing 7% Senior Notes due 2023 and 6% Senior Notes due 2025, and are effectively subordinated to all of the applicable obligor’s existing and future secured debt, including indebtedness under the Company’s Term Loan and Revolving Credit Facility and the Lumière Note (as defined in the 2026 Indenture), in each case, to the extent of the value of the collateral securing such debt.

In addition, the 6% Senior Notes due 2026 and the related guarantees are structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s subsidiaries and other entities in which the Company has an equity interest that do not guarantee the 6% Senior Notes due 2026 (other than indebtedness and liabilities owed to the Company or the Guarantors).

In connection with the Merger, $210 million aggregate principal amount of the 6% Senior Notes due 2026 was redeemed on July 25, 2020 at a redemption price of 106% of such aggregate principal amount, and the remaining and outstanding principal amount of the 6% Senior Notes due 2026 was redeemed on July 26, 2020 at a redemption price of 100% of the aggregate principal amount thereof plus the Applicable Premium as defined in the 2026 Indenture.

6% Senior Notes due 2025

On March 29, 2017, Eagle II issued at par $375.0 million aggregate principal amount of 6.0% senior notes due 2025 (the “6% Senior Notes due 2025”) pursuant to an indenture, dated as of March 29, 2017 (the “2025 Indenture”), between Eagle II and U.S.

Bank, National Association, as Trustee.

The 6% Senior Notes due 2025 will mature on April 1, 2025, with interest

payable semi-annually in arrears on April 1 and October 1.

In connection with the consummation of the Isle Acquisition on May 1, 2017, the Company assumed Eagle II’s obligations under the 6% Senior Notes due 2025 and the 2025 Indenture and certain of the Company’s subsidiaries (including Isle and certain of its subsidiaries) executed guarantees of the Company’s obligations under the 6% Senior Notes due 2025.

On September 13, 2017, the Company issued an additional $500.0 million principal amount of its 6% Senior Notes due 2025 at an issue price equal to 105.5% of the principal amount of the 6% Senior Notes due 2025.

The additional notes were issued pursuant to the 2025 Indenture that governs the 6% Senior Notes due 2025.

The Company used the proceeds of the offering to repay $78.0 million of outstanding borrowings under the previous revolving credit facility and used the remainder to repay $444.5 million outstanding borrowings under the previous term loan facility and related accrued interest.

In connection with the Merger, the 6% Senior Notes due 2025 were redeemed on July 25, 2020 at a redemption price of 104.5% of the aggregate principal amount.

7% Senior Notes due 2023

On July 23, 2015, the Company issued at par $375.0 million in aggregate principal amount of 7.0% senior notes due 2023 (“7% Senior Notes due 2023”) pursuant to an indenture, dated as of July 23, 2015 (the “2023 Indenture”), between the Company and U.S.

As of September 30, 2020, we acquired 223,823 shares of common stock under the program at an aggregate value of $9 million and an average of $40.80 per share.

No shares were repurchased during the nine months ended September 30, 2020 and 2019.

Debt Obligations and Leases

New Debt Transactions

We were party to a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto dated as of April 17, 2017 (as amended, the “ERI Credit Facility”), consisting of a $1.5 billion term loan facility and a $500 million revolving credit facility.

In an effort to maintain liquidity and provide financial flexibility as the effects of COVID-19 continued to evolve and impact global financial markets, we borrowed $465 million under the ERI Credit Facility on March 16, 2020, which we repaid in July 2020 utilizing, in part, proceeds from the sale of our interests in Kansas City and Vicksburg.

On July 6, 2020, Colt Merger Sub, Inc., a wholly-owned subsidiary of the Company (“Escrow Issuer”) issued $3.4 billion aggregate principal amount of 6.250% Senior Secured Notes due 2025 (the “CEI Senior Secured Notes”), $1.8 billion aggregate principal amount of 8.125% Senior Notes due 2027 (the “CEI Senior Notes”) and $1.0 billion aggregate principal amount of 5.75% Senior Secured Notes due 2025 (the “CRC Senior Secured Notes”).

On July 20, 2020, in connection with the closing of the Merger, the Company entered into a new credit agreement (“CEI Credit Agreement”) which provides a five-year senior secured revolving credit facility for an aggregate principal amount of $1.2 billion (the “CEI Revolving Credit Facility”).

In addition, Caesars Resort Collection, LLC, which became a wholly-owned subsidiary of the Company as a result of the Merger (“CRC”), entered into an incremental agreement to the CRC Credit Agreement (described below) for an aggregate principal amount of $1.8 billion.

A portion of the proceeds from these arrangements was used to prepay in full the loans outstanding and terminate all commitments under the ERI Credit Facility, and to satisfy and discharge the Company’s 6% Senior Notes due 2025, 6% Senior Notes due 2026, and the 7% Senior Notes due 2023.

The 6% Senior Notes due 2025 were redeemed at a redemption price of 105%, the 7% Senior Notes due 2023 were redeemed at a redemption price of 103.5%, and $210 million aggregate principal amount of the 6% Senior Notes due 2026 was redeemed at a redemption price of 106% with the remaining balance redeemed at a redemption price of 100% of the aggregate principal amount thereof plus the Applicable Premium, as defined in the indenture for the 6% Senior Notes due 2026.

The redemption of these Notes resulted in a loss on extinguishment of debt of $132 million during the three and nine months ended September 30, 2020, which is recorded within other (loss) income on the Statement of Operations.

CEI Senior Secured Notes due 2025

On July 6, 2020, Escrow Issuer issued $3.4 billion in aggregate principal amount of 6.250% CEI Senior Secured Notes pursuant to an indenture dated July 6, 2020 (the “Senior Secured Notes Indenture”), by and among the Escrow Issuer, U.S.

Bank National Association, as trustee, and U.S.

Bank National Association, as collateral agent.

In connection with the consummation of the Merger, we assumed the rights and obligations under the CEI Senior Secured Notes and the Senior Secured Notes Indenture on July 20, 2020.The CEI Senior Secured Notes will mature on July 1, 2025 with interest payable semi-annually in cash in arrears on January 1 and July 1 of each year, commencing January 1, 2021.

CEI Senior Notes due 2027

On July 6, 2020, Escrow Issuer issued $1.8 billion in aggregate principal amount of 8.125% Senior Notes due 2027 pursuant to an indenture, dated July 6, 2020 (the “Senior Notes Indenture”), by and between the Escrow Issuer and U.S.

Bank National Association, as trustee.

The 7% Senior Notes due 2023 will mature on August 1, 2023, with interest payable semi-annually in arrears on February 1 and August 1 of each year.

In connection with the Merger, the 7% Senior Notes due 2023 were redeemed on July 25, 2020 at a redemption price of 103.5% of the aggregate principal amount.

We borrowed $246.0 million from GLPI to fund the purchase price of the real estate underlying Lumière.

The Lumière Loan bears interest at a rate equal to (i) 9.09% until October 1, 2019 and (ii) 9.27% until October 1, 2020, and matures on October 1, 2020.

The Lumière Loan was secured by a first priority mortgage on the Lumière real property that was released pursuant to its terms on October 1, 2019.

On June 24,2020, we received approval from Missouri Gaming Commission to sell Lumière to GLPI and leaseback the property under a long term financing obligation.

The loan is scheduled to mature during 2020;

however, we have classified the loan balance as long-term debt as of June 30, 2020 as the Lumière real estate will be refinanced under a long-term lease, or financing obligation, during the third quarter of 2020.

GLPI Master Lease

Our GLPI Master Lease is accounted for as a financing obligation and totaled $975.8 million as of June 30, 2020.

We assumed the rights and obligations under the CEI Senior Notes and the Senior Notes Indenture on July 20, 2020.

The CEI Secured Notes will mature on July 1, 2027 with interest payable semi-annually in cash in arrears on January 1 and July 1 of each year, commencing January 1, 2021.

CRC Senior Secured Notes due 2025

On July 6, 2020, Escrow Issuer issued $1.0 billion in aggregate principal amount of 5.75% Senior Notes due 2025 pursuant to an indenture, dated July 6, 2020 (the “CRC Senior Secured Notes Indenture”), by and among the Escrow Issuer, U.S.

Bank National Association, as trustee and Credit Suisse AG, Cayman Islands Branch, as collateral agent.

CRC assumed the rights and obligations, jointly and severally, under the CRC Senior Secured Notes on July 20, 2020.

The rights and obligations under the CRC Senior Secured Notes to be assumed jointly and severally by CRC.

The CRC Senior Secured Notes will mature on July 1, 2025 with interest payable semi-annually in cash in arrears on January 1 and July 1 of each year, commencing January 1, 2021.

CEI Revolving Credit Facility

On July 20, 2020, we entered into a new credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, U.S.

Bank National Association, as collateral agent, and certain banks and other financial institutions and lenders party thereto, as well as an incremental amendment thereto, which provide for a five-year CEI Revolving Credit Facility for an aggregate principal amount of $1.2 billion.

The CEI Revolving Credit Facility matures in 2025 and includes a letter of credit sub-facility of $250 million.

The interest rate per annum applicable under the CEI Revolving Credit Facility, at the Company’s option is either (a) LIBOR adjusted for certain additional costs, subject to a floor of 0% or (b) a base rate determined by reference to the highest of (i) the federal funds rate plus 0.50%, (ii) the prime rate as determined by JPMorgan Chase Bank, N.A.

and (iii) the one-month adjusted LIBOR rate plus 1.00%, in each case plus an applicable margin.

Such applicable margin shall be 3.25% per annum in the case of any LIBOR loan and 2.25% per annum in the case of any base rate loan, subject to three 0.25% step-downs based on the Company’s total leverage ratio.

Additionally, we are required to pay a commitment fee in respect of any unused commitments under CEI Revolving Credit Facility in the amount of 0.50% of principal amount of the commitments of all lenders, subject to a step-down to 0.375% based upon the Company’s total leverage ratio.

We are also required to pay customary agency fees as well as letter of credit participation fees computed at a rate per annum equal to the applicable margin for LIBOR borrowings on the dollar equivalent of the daily stated amount of outstanding letters of credit, plus such letter of credit issuer’s customary documentary and processing fees and charges and a fronting fee in an amount equal to 0.125% of the daily stated amount of such letter of credit.

We had $266 million of available borrowing capacity, after consideration of $19 million in outstanding letters of credit under CEI Revolving Credit Facility, as of September 30, 2020.

Convention Center Mortgage Loan

On September 18, 2020, we entered into a loan agreement with VICI to borrow a 5-year, $400 million Forum Convention Center mortgage loan (the “Mortgage Loan”).

The Mortgage Loan bears interest at a rate of, initially, 7.7% per annum, which escalates annually to a maximum interest rate of 8.3% per annum.

Assumed Debt Activity

Former Caesars and its subsidiaries incurred the following indebtedness that remained outstanding following the consummation of the Merger.

CRC Term Loans and CRC Revolving Credit Facility

In connection with the Merger, we assumed the CRC senior secured credit facility (the “CRC Senior Secured Credit Facilities”), which included a $1.0 billion five-year revolving credit facility (the “CRC Revolving Credit Facility”) and an initial $4.7 billion seven-year first lien term loan (the “CRC Term Loan”).

The CRC Senior Secured Credit Facilities were funded pursuant to the Credit Agreement, dated as of December 22, 2017 (the “CRC Credit Agreement”).

On July 20, 2020, in connection with the closing of the Merger, CRC entered into an incremental amendments to the CRC Credit Agreement, which provided a $1.8 billion incremental tern loan (“CRC Incremental Term Loan”).

The CRC Term Loan matures in 2024.

The CRC Incremental Term Loan matures in 2025.

The CRC Revolving Credit Facility matures in 2022 and includes a letter of credit sub-facility.

Each of the CRC Term Loan requires scheduled quarterly principal payments in amounts equal to 0.25% of the original aggregate principal amount, with the balance due at maturity.

The CRC Credit Agreement also includes customary voluntary and mandatory prepayment provisions, subject to certain exceptions.

As of September 30, 2020, approximately $64 million was committed to outstanding letters of credit.

As of September 30, 2020, there were no borrowings outstanding under the CRC Revolving Credit Facility.

Borrowings under the CRC Credit Agreement bear interest at a rate equal to either (a) LIBOR adjusted for certain additional costs, subject to a floor of 0% or (b) a base rate determined by reference to the highest of (i) the federal funds rate plus 0.50%, (ii) the prime rate as determined by Credit Suisse AG, Cayman Islands Branch, as administrative agent under the CRC Credit Agreement and (iii) the one-month adjusted LIBOR rate plus 1.00%, in each case plus an applicable margin.

Such applicable margin shall be (a) with respect to the CRC Term Loan, 2.75% per annum in the case of any LIBOR loan or 1.75% per annum in the case of any base rate loan, (b) with respect to the CRC Incremental Term Loan, 4.50% per annum in the case of any LIBOR loan or 3.50% in the case of any base rate loan and (c) in the case of the CRC Revolving Credit Facility, 2.25% per annum in the case of any LIBOR loan and 1.25% per annum in the case of any base rate loan, subject in the case of the CRC Revolving Credit Facility to two 0.125% step-downs based on CRC’s senior secured leverage ratio (“SSLR”), the ratio of first lien senior secured net debt to adjusted earnings before interest, taxes, depreciation and amortization.

The CRC Revolving Credit Facility is subject to a financial covenant discussed below.

In addition, CRC is required to pay a commitment fee in respect of any commitments under the CRC Revolving Credit Facility in the amount of 0.50% of the principal amount of the commitments, subject to step-downs to 0.375% and 0.25% based upon CRC’s SSLR.

CRC is also required to pay customary agency fees as well as letter of credit participation fees computed at a rate per annum equal to the applicable margin for LIBOR borrowings on the dollar equivalent of the daily stated amount of outstanding letters of credit, plus such letter of credit issuer’s customary documentary and processing fees and charges and a fronting fee in an amount equal to 0.125% of the daily stated amount of such letter of credit.

Former Caesars 5% Convertible Notes

On October 6, 2017, Former Caesars issued $1.1 billion aggregate principal amount of 5.00% convertible senior notes maturing in 2024 (the “5% Convertible Notes”).

The 5% Convertible Notes are convertible into weighted average of the number of shares of Company Common Stock and amount of cash actually received per share by holders of common stock of Former Caesars that made elections for consideration in the Merger.

As of September 30, 2020, we have paid approximately $574 million and issued approximately 6.8 million shares to settle $487 million of the convertible notes during 2020.

In October 2020, we paid an additional $328 million and issued 3.9 million shares to settle an additional $281 million of the convertible notes.

The Company has determined that the 5% Convertible Notes contain derivative features that require bifurcation.

The Company separately account for the liability component and equity conversion option of the Convertible Notes.

The portion of the overall fair value allocated to the liability was calculated by using a market-based approach without the conversion features included.

The difference between the overall instrument value and the value of the liability component was assumed to be the value of the equity component.

See Note 11 for more information on the Convertible Notes’ fair value measurements.

Net amortization of the debt issuance costs and the discount and/or premium associated with the Company’s indebtedness totaled $34 million and $2 million for the three months ended September 30, 2020 and 2019, respectively, and $37 million and $6 million for the nine months ended September 30, 2020 and 2019 respectively.

Amortization of debt issuance costs is computed using the effective interest method and is included in interest expense.

Upon consummation of the Merger, we assumed obligations of certain real property assets leased from VICI by Former Caesars under the following agreements:

(i) for a portfolio of properties at various locations throughout the United States (the “Non-

CPLV lease”), (ii) for Caesars Palace Las Vegas (the “CPLV lease”), (iii) for Harrah’s Joliet Hotel & Casino (the “Joliet Lease”) and (iv) for Harrah’s Las Vegas (the “HLV Lease”).

These lease agreements provided for annual fixed rent (subject to escalation) of $773 million during an initial period, then rent consisting of both base rent and variable rent elements.

The lease agreements had a 15-year initial term and four five-year renewal options.

The lease agreements included escalation provisions beginning in year two of the initial term and continuing through the renewal terms.

The lease agreements also included provisions for variable rent payments calculated, in part, based on increases or decreases of net revenue of the underlying lease properties, commencing in year eight of the initial term and continuing through the renewal terms.

Former Caesars entered into a Golf Course Use Agreement with VICI, which has a 35-year term (inclusive of all renewal periods), pursuant to which such affiliates of the Company agreed to pay (i) an annual payment of $10 million, subject to escalation, (ii) an annual use fee of $3 million, subject to escalation beginning in the second year, and (iii) certain per-round fees, all as more particularly set forth in the Golf Course Use Agreement.

In connection with the closing of the Merger on July 20, 2020, we consummated a series of transactions with VICI and certain of its affiliates in accordance with the MTA entered on June 24, 2019 and certain purchase and sales agreement entered on September 26, 2019.

We consummated sale leaseback transactions related to Harrah’s New Orleans, Harrah’s Laughlin and Harrah’s Resort Atlantic City, including the Harrah’s Atlantic City Waterfront Conference Center, for approximately $1.8 billion of net proceeds.

The CPLV Lease with VICI was amended, among other things, (i) add Harrah’s Las Vegas (“HLV”) to the leased premises thereunder (and in connection therewith HLV Lease was terminated), (ii) add (subject to certain adjustments) the rent payable with respect to HLV under such terminated stand-alone lease to such lease and further increase the annual rent payable with respect to HLV by approximately $15 million, (iii) increase the annual rent with respect to CPLV by approximately $84 million and (iv) extend the term of such lease so that following the amendment of such lease there will be 15 years remaining until the expiration of the initial term.

In addition, Harrah’s New Orleans, Harrah’s Laughlin, and Harrah’s Resort Atlantic City, including the Harrah’s Atlantic City Waterfront Conference Center, were added to the Regional Lease and such lease was further amended to increase the annual rent thereunder by $154 million in the aggregate related to such added properties and extend the term of such lease so that following the amendment of such lease there will be 15 years remaining until the expiration of the initial term.

Furthermore, the Joliet Lease, as well as the term of the Golf Course Use Agreement, were extended such that there will be 15 years remaining until the expiration of the initial term.

Our VICI lease is accounted for as a financing obligation and totaled $11 billion as of September 30, 2020.

Furthermore, we obtained waivers from VICI with relation to annual capital expenditure requirements.

This waiver is effective as of June 1, 2020 until December 31, 2020.

See Note 9 to our Consolidated Condensed Financial Statements for additional information about our VICI Lease and related matters.

Our GLPI Master Lease is accounted for as a financing obligation and totaled $1.2 billion as of September 30, 2020.

Subsequent to June 30, 2020, the amendment to the GLPI Master Lease became effective as we obtained all necessary approvals and the applicable waiting period expired.

See Note 10 to our Consolidated Financial Statements for additional information about our GLPI Master Lease and related matters.

As of July 17, 2020, the amendment to the GLPI Master Lease became effective as we obtained all necessary approvals and the applicable waiting period expired.

See Note 9 to our Consolidated Condensed Financial Statements for additional information about our GLPI Master Lease and related matters.

Contractual Obligations

There have been no material changes during the six months ended June 30, 2020 to our contractual obligations as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019.

Summarized Information of Guarantors

Certain of our wholly-owned subsidiaries have fully and unconditionally guaranteed on a joint and several basis, the payment of all obligations under our 7% Senior Notes due 2023, 6% Senior Notes due 2025, 6% Senior Notes due 2026 and Credit Facility.

There were no changes in our wholly-owned subsidiaries serving as guarantors, on a joint and several basis during the six months ended June 30, 2020.

Our debt obligations as of June 30, 2020 are considered to be obligations of Eldorado Resorts, Inc., prior to the consummation of the Merger and our subsequent name change.

The consolidating condensed balance sheet as of June 30, 2020 is as follows:

Obligor Group Non-Obligors Consolidating

and Eliminating

Entries Eldorado

Resorts, Inc.

(in thousands)

Current assets $ 1,512,907 $ 21,830 $ — $ 1,534,737

Intercompany (payables) receivables (7,831) 7,831 — —

Other non-current assets 4,609,918 3,792 — 4,613,710

Current liabilities 461,638 14,364 — 476,002

Non-current liabilities 4,057,595 (1,599) — 4,055,996

The consolidating condensed balance sheet as of December 31, 2019 is as follows:

Obligor Group Non-Obligors Consolidating

and Eliminating

Entries Eldorado

Resorts, Inc.

(in thousands)

Current assets $ 582,918 $ 21,725 $ — $ 604,643

Intercompany receivables (payables) 1,790 (1,790) — —

Other non-current assets 8,876,547 13,768 (3,854,405) 5,035,910

Current liabilities 673,403 15,043 — 688,446

Non-current liabilities 3,836,939 (2,089) — 3,834,850

The consolidating condensed statement of operations for the three months ended June 30, 2020 is as follows:

Obligor Group Non-Obligors Consolidating and Eliminating Entries Eldorado Resorts, Inc.

(in thousands)

Net revenues $ 125,514 $ 956 $ — $ 126,470

Operating (loss) income (79,253) 926 — (78,327)

Interest expense, net (68,280) 144 — (68,136)

Net (loss) income (100,845) 849 — (99,996)

The consolidating condensed statement of operations for the three months ended June 30, 2019 is as follows:

Obligor Group Non-Obligors Consolidating and Eliminating Entries Eldorado Resorts, Inc.

(in thousands)

Net revenues $ 635,597 $ 1,524 $ — $ 637,121

Operating (loss) income 101,623 927 — 102,550

Interest expense, net (71,310) (488) — (71,798)

Net (loss) income 78,757 198 (60,019) 18,936

The consolidating condensed statement of operations for the six months ended June 30, 2020 is as follows:

Obligor Group Non-Obligors Consolidating

and Eliminating

Entries Eldorado

Resorts, Inc.

(in thousands)

Net revenues $ 597,373 $ 2,166 $ — $ 599,539

Operating (loss) income (204,125) 2,618 — (201,507)

Interest expense, net (134,954) 354 — (134,600)

Net (loss) income (278,167) 2,533 — (275,634)

The consolidating condensed statement of operations for the six months ended June 30, 2019 is as follows:

Obligor Group Non-Obligors Consolidating

and Eliminating

Entries Eldorado

Resorts, Inc.

(in thousands)

Net revenues $ 1,264,937 $ 8,007 $ — $ 1,272,944

Operating income 223,656 2,498 — 226,154

Interest expense, net (144,575) (733) — (145,308)

Net income (loss) 188,242 1,196 (132,273) 57,165

The Company assumed various long-term debt arrangements, financing obligations and leases, previously described, associated with Former Caesars as result of the consummation of the Merger.

See Note 2 for a description of the Merger and the related obligations assumed and Note 13 for additional contractual obligations.

There have been no material changes during the nine months ended September 30, 2020 to our contractual obligations as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019.

Other Liquidity Matters

1 unchanged sentence

These commitments and contingencies are discussed in “Part II, Item 1.

Legal Proceedings” and Note 14 to our unaudited consolidated financial statements, both of which are included elsewhere in this report.

Legal Proceedings” and Note 13 to our unaudited consolidated condensed financial statements, both of which are included elsewhere in this report.

In addition, new competition may have a material adverse effect on our revenues, and could have a similar adverse effect on our liquidity.

1 unchanged sentence

Risk Factors—Risks Related to Our Business” which is included in our Annual Report on Form 10-K for the year ended December 31, 2019 and “Part II, Item IA.

Risk Factors” which is included in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.

Risk Factors” which is included in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.

Critical Accounting Policies

Our critical accounting policies disclosures are included in our Annual Report on Form 10-K for the year ended December 31, 2019.

Except as described in Note 1 to the accompanying condensed notes of these consolidated financial statements, we believe there have been no material changes since December 31, 2019.

Except as described in Note 1 and Note 2, as it relates to the Merger with Former Caesars, to the accompanying notes of these consolidated condensed financial statements, we believe there have been no material changes since December 31, 2019.

We have not substantively changed the application of our policies and there have been no material changes in assumptions or estimation techniques used as compared to prior periods.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis