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Item 7. Management’s Discussion and Analysis

2022-02-24 compared with 2021-03-01 · 532 added, 546 removed, 305 unchanged (78% of the section changed)

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The following discussion should be read in conjunction with, and is qualified in its entirety by, the audited consolidated financial statements and the notes thereto and other financial information included elsewhere in this Annual Report on Form 10-K.

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

Caesars Entertainment, Inc., a Delaware corporation, 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 also refer to (i) our Consolidated Financial Statements as our “Financial Statements,” (ii) our Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income (Loss) as our “Statements of Operations,” (iii) our Consolidated Balance Sheets as our “Balance Sheets,” and (iv) our Consolidated Statements of Cash Flows as our “Statements of Cash Flows.” References to numbered “Notes” refer to Notes to our Consolidated Financial Statements included in Item 8.

The statements in this discussion regarding our expectations of our future performance, liquidity and capital resources, and other non-historical statements are forward-looking statements.

These forward-looking statements are subject to numerous risks and uncertainties.

Our actual results may differ materially from those contained in or implied by any forward-looking statements.

See Item 1A, “Risk Factors—CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS,” of this report.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to be a narrative explanation of the financial statements and other statistical data that should be read in conjunction with the accompanying financial statements to enhance an investor’s understanding of our financial condition, changes in financial condition and results of operations.

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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.

(“Isle” or “Isle of Capri”) in 2017 and Grand Victoria Casino (“Elgin”) and Tropicana Entertainment, Inc.

(“Tropicana”) in 2018.

Prior to the Merger (as defined below), we operated 23 gaming facilities in 11 states, with no international operations, featuring 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 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 54 domestic properties in 16 states with approximately 54,600 slot machines, VLTs and e-tables, approximately 3,200 table games and approximately 47,700 hotel rooms as of December 31, 2020.

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

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

in 2014, Isle of Capri Casinos, Inc.

(“Isle” or “Isle of Capri”) in 2017 and Tropicana Entertainment, Inc.

On July 20, 2020, we completed the merger with Caesars Entertainment Corporation (“Former Caesars”) pursuant to which Former Caesars became our wholly-owned subsidiary (the “Merger”) and our ticker symbol on the NASDAQ Stock Market changed from “ERI” to “CZR”.

On April 22, 2021, we completed the acquisition of William Hill PLC for £2.9 billion , or approximately $3.9 billion (the “William Hill Acquisition”).

We currently own, lease or manage an aggregate of 52 domestic properties in 16 states with approximately 55,700 slot machines, video lottery terminals and e-tables, approximately 2,900 table games and approximately 47,700 hotel rooms as of December 31, 2021.

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

Upon completion of our previously announced sales, or expected sales, of certain gaming properties, we expect that we will continue to own, lease or manage 48 properties.

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

See Note 3 for further discussion of the Merger and related transactions.

Our primary source of revenue is generated by our casino properties’ gaming operations, retail and online sports betting as well as online gaming, and we utilize hotels, restaurants, bars, entertainment, racing, retail shops and other services to attract customers to our properties.

As of December 31, 2021, we owned 20 of our casinos and leased 26 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 acquisition of Tropicana on October 1, 2018 (as amended, the “GLPI Master Lease”) and our Lumière lease.

Eight of the leased casinos are subject to leases with GLPI, and we lease an additional 21 casinos from other third parties, including VICI.

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

We periodically divest assets that we do not consider core to our business to raise capital or, in some cases, to comply with conditions, terms, obligations or restrictions imposed by antitrust, gaming and other regulatory entities.

We lease 18 casinos from VICI Properties L.P., a Delaware limited partnership (“VICI”) pursuant to a regional lease, a Las Vegas lease and a Joliet lease.

In addition, we lease seven casinos from GLP Capital, L.P., the operating partnership of Gaming and Leisure Properties, Inc.

(“GLPI”) pursuant to a Master Lease (as amended, the “GLPI Master Lease”) and a Lumière lease (together with the GLPI Master Lease, the “GLPI Leases”).

Additionally, we lease the Rio All-Suite Hotel & Casino from a separate third party.

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

We also operate and conduct sports wagering across 21 states and domestic jurisdictions, 14 of which are mobile for sports betting, and operate regulated online real money gaming in five states.

Our recently launched Caesars Sportsbook app operates on the Liberty platform, which we acquired in the William Hill Acquisition along with other technology platforms that we intend to migrate to the Liberty platform in the future, subject to required approvals.

The map below illustrates Caesars Digital’s presence as of December 31, 2021:

Subsequent to December 31, 2021, we launched mobile sports betting on our Liberty platform in New York on January 8, 2022 and Louisiana on January 28, 2022 and went live with retail sports betting in Washington on February 10, 2022.

We are also in the process of expanding our Caesars Digital footprint into other states in the near term.

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

We also divested certain assets in connection with obtaining regulatory approvals related to closing of the Merger.

A summary of recently completed and planned divestitures of our properties as of December 31, 2021 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)

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

Regional Eldorado Resort Casino Shreveport (“Eldorado Shreveport”) December 23, 2020 (b)

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

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

Regional Belle of Baton Rouge Casino & Hotel (“Baton Rouge”) N/A (d)

Discontinued operations (e):

Regional Harrah’s Reno September 30, 2020 (f)

Regional Bally’s Atlantic City November 18, 2020 (g)

Regional Harrah’s Louisiana Downs N/A (h)

Regional Caesars Southern Indiana N/A (c)(i)

Regional Horseshoe Hammond N/A (c)

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 year ended December 31, 2020.

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

(“Twin River” or “Bally’s Corporation”) 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 customary 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.

The sale of Eldorado Shreveport closed on December 23, 2020 for $140 million, subject to a customary working capital adjustment and we recognized a gain of approximately $29 million during the year ended December 31, 2020.

The sale of MontBleu is expected to close in the first half of 2021.

MontBleu met the requirements for presentation as assets held for sale as of December 31, 2020.

However, the pending divestitures of MontBleu did not meet the requirements for presentation as discontinued operations and MontBleu’s results of operations are included in income from continuing operations in the periods presented.

As a result of the agreement to sell MontBleu, an impairment charge totaling $45 million was recorded during the year ended December 31, 2020 due to the carrying value exceeding the estimated net sales proceeds from the sale.

(c) In connection with its review of the Merger, the Indiana Gaming Commission determined on July 16, 2020 that, as a condition to their approval of the Merger, we are required to enter into agreements to divest of three properties within the state of Indiana in order to avoid undue economic concentration.

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, on December 24, 2020, the Company entered into an agreement to divest of Caesars Southern Indiana (See (i) below).

We expect to enter into an agreement to sell Horseshoe Hammond prior to December 31, 2021, as the deadline was extended by the Indiana Gaming Commission.

Evansville met the requirements for presentation as assets held for sale as of December 31, 2020, while Caesars Southern Indiana and Horseshoe Hammond met the requirements for presentation as held for sale and discontinued operations.

(d) On December 1, 2020, the Company entered into an agreement to sell the Baton Rouge to CQ Holding Company, Inc.

Pursuant to the terms of the GLPI Master Lease, Baton Rouge will be removed from the GLPI Master Lease, and the rent payments to GLPI will remain unchanged.

GLPI will retain ownership of the real estate of Baton Rouge.

As a result of the agreement to sell Baton Rouge, an impairment charge totaling $50 million was recorded during the year ended December 31, 2020 due to the carrying value exceeding the estimated net sales proceeds.

The transaction is expected to close in mid-2021 and is subject to regulatory approvals and other customary closing conditions.

(e) These Former Caesars properties met held for sale criteria as of the acquisition date.

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

(f) On September 30, 2020, the Company and VICI completed the sale of Harrah’s Reno to and affiliate of CAI Investments for $42 million.

The proceeds from the sale were split between the Company and VICI, and the Company received $8 million of net proceeds.

(g) On November 18, 2020, the Company and VICI completed the sale of Bally's Atlantic City to Bally’s Corporation for $25 million.

The proceeds from the sale were split between the Company and VICI, and the Company received $5 million of net proceeds.

As a result of the sale, the Company agreed to reimburse Bally’s Corporation $30 million for capital expenditures required at Bally’s Atlantic City and recorded a liability within Accrued other liabilities and recorded a charge to Discontinued operations, net of income taxes.

Our commitment will be satisfied by adjusting obligations under certain sportsbook operating agreements between Bally’s Corporation and the Company following our expected acquisition of William Hill.

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

(h) On September 3, 2020, the Company and VICI entered into an agreement with Rubico Acquisition Corp.

to sell Harrah’s Louisiana Downs for $22 million, subject to a customary working capital adjustment, where the proceeds will be split between 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.

(i) On December 24, 2020, the Company entered into agreement to sell Caesars Southern Indiana to the Eastern Band of Cherokee Indians (“EBCI”) for $250 million, subject to a customary working capital adjustment.

Caesar’s annual payments to VICI under the Regional Lease will decline by $33 million upon closing of the transaction.

Additionally, effective as of the closing of the transaction, Caesars and EBCI will enter into a long-term agreement for the continued use of the Caesars brand and Caesars Rewards loyalty program at Caesars Southern Indiana.

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

Segment Property Date Sold Sales Price

Regional Presque Isle Downs & Casino (“Presque”) January 11, 2019 $179 million

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

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

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

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

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

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

Regional Eldorado Resort Casino Shreveport (“Eldorado Shreveport”) December 23, 2020 $140 million

Regional MontBleu Casino Resort & Spa (“MontBleu”) April 6, 2021 $15 million

Regional Tropicana Evansville (“Evansville”) June 3, 2021 $480 million

Regional Belle of Baton Rouge Casino & Hotel (“Baton Rouge”) N/A *

Discontinued operations:

Regional Harrah’s Reno September 30, 2020 $42 million (c)

Regional Bally’s Atlantic City November 18, 2020

$25 million (c)

Regional Harrah’s Louisiana Downs November 1, 2021 $22 million (c)

Regional Caesars Southern Indiana September 3, 2021 $250 million

N/A Emerald Resort & Casino July 16, 2021 *

N/A Caesars Entertainment UK July 16, 2021 *

N/A William Hill International N/A £2.2 billion

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* Not meaningful.

(a) Mountaineer, Cape Girardeau and Caruthersville were sold for aggregate consideration of $385 million.

(b) Kansas City and Vicksburg were sold for aggregate consideration of $230 million.

Financial Statements and Supplementary Data — Note 4 for further discussion on these key transactions and any applicable gain (loss) or impairment charges recorded.

Merger and Acquisitions Related Activities

Acquisition of William Hill

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

On April 22, 2021, the Company completed the acquisition for £2.9 billion , or approximately $3.9 billion .

In connection with the William Hill Acquisition, on April 22, 2021, a newly formed subsidiary of the Company entered into a Credit Agreement (the “Bridge Credit Agreement”) with certain lenders party thereto and Deutsche Bank AG, London Branch, as administrative agent and collateral agent, pursuant to which the lenders party thereto provided the Debt Financing (as defined below).

The Bridge Credit Agreement provides for (a) a 540-day £1.0 billion asset sale bridge facility, (b) a 60-day £503 million cash confirmation bridge facility and (c) a 540-day £116 million revolving credit facility (collectively, the “Debt Financing”).

The proceeds of the bridge loan facilities provided under the Bridge Credit Agreement were used (i) to pay a portion of the cash consideration for the acquisition and (ii) to pay fees and expenses related to the acquisition and related transactions.

The proceeds of the revolving credit facility under the Bridge Credit Agreement may be used for working capital and general corporate purposes.

The £1.5 billion Interim Facilities Agreement (“Interim Facilities Agreement”) entered into on October 6, 2020 with Deutsche Bank AG, London Branch and JPMorgan Chase Bank, N.A., and amended on December 11, 2020, was terminated upon the execution of the Bridge Credit Agreement.

On May 12, 2021, the Company repaid the £503 million cash confirmation bridge facility.

On June 14, 2021, the Company drew down the full £116 million from the revolving credit facility and the proceeds, in addition to excess Company cash, were used to make a partial repayment of the asset sale bridge facility in the amount of £700 million.

Outstanding borrowings under the Bridge Credit Agreement are expected to be repaid upon the sale of William Hill’s non-U.S.

operations including the UK and international online divisions and the retail betting shops (collectively, “William Hill International”), all of which are held for sale and reflected within

discontinued operations.

Certain investments acquired will be excluded from the held for sale group.

On September 8, 2021, we entered into an agreement to sell William Hill International to 888 Holdings Plc for approximately £2.2 billion.

After repayment of the outstanding debt under the Bridge Credit Agreement, described above, and other working capital adjustments, the Company expects to receive approximately £835 million, or $1.2 billion, subject to any permitted leakage, which is customary for sale transactions in the UK.

The sale is subject to satisfaction of customary conditions, including receipt of the approval of shareholders of 888 Holdings Plc and regulatory approvals, and is expected to close in the second quarter of 2022.

We recognized acquisition-related transaction costs of $68 million and $8 million for the years ended December 31, 2021 and 2020, respectively, excluding additional transaction cost associated with sale of William Hill International.

These costs were associated with legal and professional services and were recorded in Transaction costs and other operating costs in our Statements of Operations.

Consolidation of Horseshoe Baltimore

On August 26, 2021, we increased our ownership interest in CBAC Borrower, LLC (“Horseshoe Baltimore”), a property which we also managed, to approximately 75.8% for cash consideration of $55 million.

We were subsequently determined to have a controlling financial interest in Horseshoe Baltimore and have consolidated the results of operations of the property following our change in ownership.

As a result of the increase in our ownership interest, our previously held investment was remeasured and we recognized a gain of $40 million for the year ended December 31, 2021.

Management fees received prior to the consolidation event have been presented within our Managed and Branded segment.

Operations following the consolidation event are presented within our Regional segment.

Merger with Caesars Entertainment Corporation

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• Realization of significant identified synergies

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 the NASDAQ Stock Market 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 in connection with the Merger of $160 million for the year ended December 31, 2020, and $80 million for the year ended December 31, 2019.

Tropicana Entertainment Inc.

On October 1, 2018, we acquired Tropicana in a cash transaction valued at $1.9 billion (the “Tropicana Acquisition”).

At the closing of the transaction Tropicana became a wholly-owned subsidiary of ours.

Immediately prior to our acquisition, Tropicana sold Tropicana Aruba Resort and GLP Capital, L.P., a wholly-owned subsidiary of GLPI, acquired substantially all of Tropicana’s real estate, other than the real estate underlying MontBleu and Lumière, for approximately $964 million.

We acquired the real estate underlying Lumière for $246 million with the proceeds of a $246 million loan from GLPI.

We funded the remaining consideration payable with our cash on hand and cash on hand at Tropicana, borrowings under our revolving credit facility and proceeds from our offering of $600 million of 6% senior notes due 2026.

Substantially concurrently with the acquisition of the real estate portfolio by GLPI, we entered into a triple net master lease for the Tropicana properties acquired by GLPI (“GLPI Master Lease”).

The initial annual rent under the terms of the lease was approximately $88 million and is subject to annual escalation.

We do not have the ability to terminate the obligations under the Master Lease prior to its expiration without GLPI’s consent.

In connection with the purchase of the real estate related to Lumière, Tropicana St.

Louis RE LLC, a wholly-owned subsidiary of ours, and GLPI entered into a loan agreement, dated as of October 1, 2018 (the “Lumière Loan”), relating to a loan of $246 million by GLPI to Tropicana St.

Louis RE to fund the purchase price of the real estate underlying Lumière.

The Lumière Loan was guaranteed by us, bore interest at a rate equal to 9.27% and had a maturity date of October 1, 2020.

On June 24, 2020, the Company received approval from Missouri Gaming Commission to sell the real estate underlying Lumière to GLPI and leaseback the property under a long-term financing obligation.

As of December 31, 2020, the Lumière loan has been satisfied in full and the real estate has been refinanced under a financing obligation.

Grand Victoria Casino

On August 7, 2018, we completed the acquisition (the “Elgin Acquisition”) of the Grand Victoria Casino (“Elgin”) in Elgin, Illinois.

We purchased Elgin for $329 million, including a working capital adjustment totaling $1 million.

The Elgin Acquisition was financed using cash on hand and borrowings under the Company’s revolving credit facility.

Partnerships and Acquisition Opportunities

In September 2018, we entered into a 25-year agreement, which became effective January 29, 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 with an initial value of 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.

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.

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 .

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 fully repaid in October 2020.

O n October 1, 2020, we raised an additional $1.9 billion through a public offering of Company Common Stock which was deposited into an escrow account.

As of December 31, 2020, these funds in escrow were classified as restricted cash and will remain restricted until the proposed acquisition of William Hill plc closes.

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 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.

Pending negotiation of the loan agreement for the Debt Financing, on October 6, 2020, our newly formed subsidiary 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.

(a) a 90-day £1.0 billion interim asset sale bridge facility and (b) a 90-day £503 million interim cash confirmation bridge facility.

The transaction is conditioned on, among other things, the approval of William Hill plc shareholders, which was received on November 19, 2020, and receipt of required regulatory approvals.

On December 28, 2020, we obtained the early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”) relating to the proposed combination with William Hill plc.

A final UK court hearing is scheduled for the last week of March 2021 and we expect to close the acquisition shortly thereafter.

The total purchase consideration for Former Caesars was $10.9 billion.

The estimated purchase consideration in the acquisition was determined with reference to its acquisition date fair value.

We recognized acquisition-related transaction costs in connection with the Merger of $30 million, $160 million and $80 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Investments and Partnerships

The acquired net assets of William Hill included an investment in NeoGames S.A.

(“NeoGames”), a global leader of iLottery solutions and services to national and state-regulated lotteries, and other investments.

On September 16, 2021, the Company sold a portion of its shares of NeoGames common stock for $136 million which decreased its ownership interest from 24.5% to approximately 8.4%.

As of December 31, 2021, the Company held approximately 2 million shares of NeoGames common stock with a fair value of $60 million.

The shares have a readily determinable fair value and, accordingly, the Company remeasures the investment based on the publicly available share price (Level 1).

For the year ended December 31, 2021, the Company recorded a loss to the investment in NeoGames of $54 million, which is included within Other income (loss) on the Statements of Operations.

The Stars Group/Flutter Entertainment

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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 1 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.

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

In December 2020, the Company sold 121,285 of these Flutter shares for net proceeds of approximately $24 million.

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

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

In December 2020, the Company sold a portion of these Flutter shares for net proceeds of $24 million.

On July 7, 2021, the Company sold all remaining Flutter shares for $9 million.

The Company recorded a loss of $1 million during the year ended December 31, 2021, which is included within Other income (loss) on our Statements of Operations.

Pompano Joint Venture

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

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

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

In June 2021, the joint venture issued a capital call and we contributed $3 million, for a total of $4 million in cash since the inception of the joint venture.

On February 12, 2021, the Company contributed 186 acres to the joint venture with a fair value of $61 million.

Total contributions of approximately 206 acres of land have been made with a fair value of approximately $69 million, and the Company has no further obligation to contribute additional real estate or cash as of December 31, 2021.

We entered into a short-term lease agreement in February 2021, which we can cancel at any time, to lease back a portion of the land from the joint venture.

While the Company holds a 50% variable interest in the joint venture, it is not the primary beneficiary;

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

The Company participates evenly with Cordish in the profits and losses of the joint venture, which are included in Transaction costs and other operating costs on the Statements of Operations.

As of December 31, 2021 and December 31, 2020, the Company’s investment in the joint venture is recorded in Investment in and advances to unconsolidated affiliates on the Balance Sheets.

Reportable Segments

Segment results in this MD&A are presented consistent with the way our management assesses the operating results, assesses performance and allocates resources of the Company, which is a consolidated view that adjusts for the effect of certain transactions related to reportable segments within the Company.

We view each property as an operating segment.

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

West, Midwest, South, East and Central, in addition to Corporate and Other.

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

The Company’s reportable segments are:

Segment results in this MD&A are presented consistent with the way our management reviews operating results, assesses performance and makes decisions on a “significant market” basis.

Management views each of the Company’s casinos as an operating segment.

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

Prior to the William Hill Acquisition, our principal operating activities occurred in three regionally-focused reportable segments:

Las Vegas, Regional, and Managed, International, CIE, in addition to Corporate and Other.

The William Hill Acquisition and rebranding of our interactive business (formerly, Caesars Interactive Entertainment “CIE” and now, inclusive of William Hill US, “Caesars Digital”) expanded our access to conduct sports wagering and iGaming gaming operations.

As a result, the Company has made a change to the composition of its reportable segments.

The Las Vegas and Regional segments are substantially unchanged, while the former Managed, International and CIE reportable segment has been recast for all periods presented into two segments;

Caesars Digital and Managed and Branded.

Accordingly, our principal operating activities occur in four reportable segments:

(1) Las Vegas, (2) Regional, (3) Caesars Digital, and (4) Managed and Branded, in addition to Corporate and Other.

“Properties” for listing of properties by segment.

Presentation of Financial Information

The financial information included in this Item 7 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 included in this Item 7 for the periods after our sales and acquisitions of various properties are not fully comparable to the periods prior to their respective sale dates.

The financial information included in this Item 7 for the periods after our acquisitions of Former Caesars on July 20, 2020, William Hill on April 22, 2021 and of the increase in our ownership percentage and subsequent consolidation of Horseshoe Baltimore on August 26, 2021, is not fully comparable to the periods prior to the acquisitions.

In addition, the presentation of financial information herein for the periods after the Company’s sales of various properties is not fully comparable to the periods prior to their respective sale dates.

Refer to “Reportable Segments” above for a discussion of changes to the Company’s reportable segments.

This MD&A is intended to provide information to assist in better understanding and evaluating our financial condition and results of operations.

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Certain reclassifications of prior year presentations have been made to conform to the current period presentation.

Marketing and promotions expense previously disclosed for the years ended December 31, 2019 and 2018 has been reclassified to Casino and pari-mutuel commissions expense and General and administrative expense based on the nature of the expense.

In June 2021, the Indiana Gaming Commission amended its order that previously required the Company to sell a third casino asset in the state of Indiana.

As a result, Horseshoe Hammond no longer meets the held for sale criteria.

The assets and liabilities previously held

for sale have been reclassified as held and used for all periods presented measured at the lower of the carrying amount, adjusted for depreciation and amortization that would have been recognized had the assets been continuously classified as held and used, and the fair value at the date of the amended ruling.

Additionally, amounts previously presented in discontinued operations have been reclassified into continuing operations for all periods presented.

Key Performance Metrics

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

Our operating results are highly dependent on the volume and quality of customers visiting and staying at our properties.

Key performance metrics include volume indicators such as table games drop and slot handle, which refer to amounts wagered by our customers.

Our primary source of revenue is generated by our gaming operations, retail and online sports betting, as well as online gaming.

Additionally we utilize our hotels, restaurants, bars, entertainment venues, retail shops, racing and other services to attract customers to our properties.

Our operating results are highly dependent on the volume and quality of customers visiting and staying at our properties and using our sports betting and iGaming applications.

Key performance metrics include volume indicators such as drop or handle, which refer to amounts wagered by our customers.

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

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.

Slot win percentage is typically in the range of approximately 9% to 11% of slot handle for both the Las Vegas and Regional segments.

Table game hold percentage is typically in the range of approximately 14% to 23% of table game drop in the Las Vegas segment and 18% to 21% of table game drop in the Regional segment.

Sports betting hold is typically in the range of 5% to 9% and iGaming hold typically ranges from 3% to 4%.

In addition, hotel occupancy, which is the average percentage of available hotel rooms occupied during a period, is a key indicator for our hotel business in the Las Vegas segment.

See “Results of Operations” section below.

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

The key metrics we utilize to measure our profitability and performance are Adjusted EBITDA and Adjusted EBITDA margin.

Significant Factors Impacting Financial Results

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Acquisitions and Transaction Costs

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

Transaction costs related to our acquisition of Former Caesars totaled $160 million and $80 million for the years ended December 31, 2020 and 2019, respectively.

• Tropicana – Our results of operations for the year ended December 31, 2018 include incremental revenues and expenses attributable to the seven properties we acquired in our acquisition of Tropicana on October 1, 2018.

Transaction expenses related to our acquisition of Tropicana totaled $4 million and $18 million for the years ended December 31, 2019 and 2018, respectively.

• Elgin – Our results of operations for the year ended December 31, 2018 include incremental revenues and expenses for the period of August 7, 2018 through December 31, 2018 attributable to Elgin.

Transaction expenses related to our acquisition of Elgin totaled $0.2 million and $4 million for the years ended December 31, 2019 and 2018, respectively.

• Acquisition of William Hill – On April 22, 2021, the Company consummated its previously announced acquisition of the entire issued and to be issued share capital (other than shares owned by the Company or held in treasury) of William Hill PLC, in an all-cash transaction of £2.9 billion , or approximately $3.9 billion.

We recognized acquisition-related transaction costs of $68 million and $8 million for the years ended December 31, 2021 and 2020, respectively, excluding additional transaction costs associated with sale of William Hill International.

• Consolidation of Horseshoe Baltimore – On August 26, 2021, the Company increased its ownership interest in Horseshoe Baltimore to approximately 75.8%.

Prior to the purchase, the Company held an interest in Horseshoe Baltimore of approximately 44.3% which was accounted for as an equity method investment.

Subsequent to the change in ownership, the Company was determined to have a controlling financial interest and has begun to consolidate the operations of Horseshoe Baltimore.

As a result of the consolidation, the Company recognized a gain of $40 million during the year ended December 31, 2021.

• Merger with Caesars Entertainment Corporation – The Merger closed on July 20, 2020.

The Company recognized acquisition-related transaction costs in connection with the Merger of $30 million, $160 million and $80 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Divestitures and Discontinued Operations

• Divestitures – We closed the sale of Eldorado Shreveport on December 23, 2020 and recorded a gain of approximately $29 million during the year ended December 31, 2020.

We closed the sales of Kansas City and Vicksburg on July 1, 2020 and recorded a gain of approximately $8 million during the year ended December 31, 2020.

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

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 “Divestitures.” In conjunction with the classification of MontBleu and Baton Rouge’s operations as assets held for sale as a result of the announced sale, impairment charges totaling $45 million and $50 million, respectively, were recorded during the year ended December 31, 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 the results of operations of the relevant entities are included in income from continuing operations for the periods prior to their respective closing dates.

• 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 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 and Bally’s Atlantic City on November 18, 2020.

As a result of the sale of Bally’s Atlantic City, Caesars agreed to reimburse Bally’s Corporation $30 million for capital expenditures required at Bally’s Atlantic City and recorded a liability within Accrued other liabilities and a charge to Discontinued operations, net of income taxes.

commitment will be satisfied by adjusting obligations under certain sportsbook operating agreements between Bally’s Corporation and the Company following our expected acquisition of William Hill.

• Divestitures and Discontinued Operations – See “Overview” section above for detail on properties divested or held for sale, including related discontinued operations.

Financing and Lease Transactions

• New Debt Transactions related to the Merger – In connection with the Merger, we issued new notes, entered into a new credit agreement and assumed certain of Former Caesars indebtedness.

• Debt Transactions – In connection with the Merger, we issued new notes, entered into a new credit agreement and assumed certain of Former Caesars indebtedness.

In addition, we terminated previously outstanding credit agreements and discharged outstanding notes.

As a result of these transactions, described more fully in the Liquidity and Capital Resources section below, we recorded a loss on extinguishment of debt of $132 million during the year ended December 31, 2020, which is recorded within Loss on extinguishment of debt on the Statement of Operations, as well as an additional $388 million of interest expense for the year ended December 31, 2020 compared to 2019.

We also recorded a net gain of $16 million on conversions related to the 5% Convertible Notes during the year ended December 31, 2020.

During 2021, we issued $1.2 billion in aggregate principal amount of 4.625% Senior Notes due 2029, we repriced the Incremental CRC Term Loan, we fully converted the outstanding the 5% Convertible Notes, we purchased or redeemed the entire $1.7 billion in aggregate principal amount of outstanding CRC Notes of, and we purchased $100 million in aggregate principal amount of CEI Senior Notes.

As a result of these transactions, described more fully in the Liquidity and Capital Resources section below, we experienced some interest savings subsequent to these transactions.

Additionally, we recorded a loss on extinguishment of debt of $236 million and

$197 million during the years ended December 31, 2021 and 2020, respectively, which is recorded within Loss on extinguishment of debt on the Statement of Operations.

• VICI Leases – Upon consummation of the Merger, CEI assumed obligations of certain real property assets leased from VICI by Former Caesars under various lease agreements.

We recorded interest expense of $491 million during the year ended December 31, 2020.

• GLPI Master Lease – We accounted for the GLPI Master Lease as a deferred financing obligation effective October 1, 2018.

We recorded interest expense in the amount of $104 million, $99 million and $24 million during the years ended December 31, 2020, 2019 and 2018, respectively, which was in excess of the cash lease payments as we continue to accrete up the liability during the earlier periods of the GLPI Master Lease.

• Tropicana Financing – On September 20, 2018, we issued $600 million in aggregate principal amount of 6.0% senior notes due 2026.

The proceeds from the notes were used to fund the Tropicana Acquisition which closed on October 1, 2018.

We incurred $10 million of incremental interest expense on these notes for the year ended December 31, 2018.

We recorded interest expense of $1.1 billion and $519 million for the years ended December 31, 2021 and 2020, respectively, which was in excess of the cash lease payments as we continue to accrete up the liability during the earlier periods of the VICI Leases.

Our VICI Leases also contain annual escalators based on the Consumer Price Index (“CPI”), with a floor of 2%.

• GLPI Leases – We have accounted for the GLPI Leases as deferred financing obligations.

We recorded interest expense in the amount of $111 million, $104 million and $99 million during the years ended December 31, 2021, 2020 and 2019, respectively, which was in excess of the cash lease payments as we continue to accrete up the liability during the earlier periods of the GLPI Leases.

Our GLPI Leases also contain an annual escalation provision based on stated rates ranging from 1.25% to 2.0% per year.

Other Significant Factors

• 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 December 31, 2020, with the exception of additional temporary closures of Caesars Windsor, Harrah’s Philadelphia, and our properties in Illinois.

Subsequently, Harrah’s Philadelphia and our properties in Illinois have reopened.

The COVID-19 public health emergency has had a material adverse effect on our business, financial condition and results of operations for the year ended December 31, 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 during the duration of their respective furlough period.

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 Caesars credit facility agreement and the GLPI Master Lease.

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 on our business, results of operations and financial condition will ultimately depend on future developments, including but not limited to, the duration and severity of the outbreak, the efficacy and availability of vaccines, 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.

• 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 year ended December 31, 2020.

In addition, as a result of the agreements to sell properties in our Regional segment, as well as certain corporate assets, impairment charges

totaling $99 million were recorded during the year ended December 31, 2020 due to the carrying value exceeding the estimated net sales proceeds.

• 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 closed as the construction of a new land-based casino is in process.

We recorded an insurance receivable of $44 million , of which $15 million related to fixed asset impairments and $29 million related to remediation costs and repairs that have been incurred during year ended December 31, 2020 .

During the year ended December 31, 2021, most of our properties experienced positive trends as restrictions on maximum capacities and amenities available were eased.

Following temporary furloughs and salary reductions during 2020, the Company has emphasized a focus on labor efficiencies as operations resumed.

As properties began to reopen during the year ended December 31, 2020, certain capacity restrictions, mask mandates, sanitation guidelines, and the federal COVID-19 vaccine and testing emergency temporary standard were adhered to as required by governmental or tribal orders, directives, and guidelines.

We experienced positive operating trends in 2021, with a continued focus on operational efficiencies.

Although we have experienced a decline in net income, Adjusted EBITDA and Adjusted EBITDA margins for the year ended December 31, 2021 exceeded pre-pandemic levels experienced in 2019 within our Las Vegas and Regional segments.

However, certain revenue streams, such as convention and entertainment revenues, continued to be negatively impacted due to capacity restrictions in the first half of 2021.

Future effects of COVID-19 from further outbreaks, including new variants, mask mandates or other restrictions are uncertain and could result in additional closures such as the temporary closure of Caesars Windsor from January 5, 2022 through January 31, 2022.

Extensive closure periods impacting many of our properties would have a material adverse effect on future results of operations.

• Impairment Charges – 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 year ended December 31, 2020.

In addition, as a result of entering agreements to sell properties in our Regional segment, impairment charges totaling $99 million were recorded during the year ended December 31, 2020 due to the carrying value exceeding the net sales proceeds.

In December 2021, the Company approved a capital plan which included the planned rebranding of certain of our properties, which is expected to be substantially complete by December 31, 2022.

The Company utilized an income approach to determine the fair value of the trademarks subject to rebranding based on their expected future cash flows, which resulted in an impairment charge of $102 million.

The adjusted carrying values of these trademarks, previously considered to have indefinite lives, have begun to be amortized over their respective remaining useful lives.

• Weather and Construction Disruption – During the third quarter of 2021, our Regional segment was negatively impacted by natural disasters including Hurricane Ida in Louisiana and Mississippi and wildfires in the Lake Tahoe area.

Harrah’s New Orleans, Harrah’s Lake Tahoe and Harvey’s Lake Tahoe all experienced temporary closures which lasted slightly more than one week.

Additionally, in late August 2020, our Regional segment was negatively impacted by Hurricane Laura, causing severe damage to Lake Charles, which will remain closed until the second half of 2022 when construction of a new land-based casino is expected to be complete.

During the year ended December 31, 2021 , we received insurance proceeds of $44 million related to damaged fixed assets and remediation costs.

The Company also recorded a gain of $21 million as proceeds received for the cost to replace damaged property were in excess of the respective carrying value of the assets.

• Caesars Sportsbook Launch and Rebranding – In connection with the launch and rebranding of the Caesars Sportsbook app during the year ended December 31, 2021, our Caesars Digital segment initiated a significant marketing campaign with distinguished actors, athletes and other media personalities.

As new states and jurisdictions

have legalized sports betting, we have made significant upfront investment which has been executed through the marketing campaign and promotional incentives to establish ourselves as an industry leader.

• Post-Merger Synergies – We continue to identify operating and cost efficiencies, including savings from the purchasing power of th e combined Caesars organization and targeted integrated marketing strategies, as well as the elimination of redundant costs such as accounting and professional expenses, certain payroll costs, and other corporate costs.

As a result, we experienced margin improvements in our results of operations for the year ended December 31, 2021.

Results of Operations

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Regional 5,537 2,660 2,494

Managed, International, CIE 163 — —

Caesars Digital 337 95 26

Managed and Branded 278 107 —

Corporate and Other (a)

Total $ 9,570 $ 3,628 $ 2,528

Net (loss) income $ (1,758) $ 81 $ 95

Net income (loss) $ (1,016) $ (1,758) $ 81

Adjusted EBITDA (b) :

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Regional 1,979 711 719

Managed, International, CIE 34 — —

Caesars Digital (476) 26 13

Managed and Branded 87 25 —

Corporate and Other (a)

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Total Segment Adjusted EBITDA $ 2,990 $ 794 $ 697

Net (loss) income margin (c)

Net income (loss) margin (c)

(10.6) % (48.5) % 3.2 %

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

Corporate and Other expenses include 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.

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.

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

Consolidated comparison of the years ended December 31, 2020, 2019 and 2018

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

Corporate and Other Adjusted EBITDA includes corporate overhead costs, which consist of certain expenses, such as:

payroll, professional fees and other general and administrative expenses.

Consolidated comparison for the years ended December 31, 2021, 2020 and 2019

The following table highlights the results of our operations:

Comparisons between 2021 and 2020 are described below.

A discussion of changes in our results of operations between year ended December 31, 2020 compared to 2019 has been omitted from this Annual Report on Form 10-K and can be found in “ Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019 ” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

The reclassification of Horseshoe Hammond from discontinued operations to continuing operations in the year ended December 31, 2020 did not result in material changes to the comparative analysis provided on Form 10-K for the fiscal year ended December 31, 2020.

Net revenues were as follows:

Years Ended December 31, Variance Percent Change Variance Percent Change

(Dollars in millions) 2020 2019 2018 2020 vs 2019 2019 vs 2018

Net revenues:

(Dollars in millions) 2021 2020 2019 2021 vs 2020

Casino and pari-mutuel commissions $ 5,827 $ 2,482 $ 1,808 $ 3,345 134.8 % $ 674 37.3 %

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Net Revenues $ 9,570 $ 3,628 $ 2,528 $ 5,942 163.8 % $ 1,100 43.5 %

Consolidated revenues increased for the year ended December 31, 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 impact of COVID-19 public health emergency and, to a lesser extent, divestitures of certain properties discussed earlier.

Subsequently, Harrah’s Philadelphia and our properties in Illinois have reopened.

Our property in Lake Charles remains closed as a result of damage suffered in Hurricane Laura and will remain closed until construction of a new land-based casino is complete.

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 conventions.

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 such time as we are able to fully operate our non-gaming amenities following the reduction or elimination of social distancing and safety and health protocols, and other regulatory restrictions limiting capacity and other aspects of our business.

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 year ended December 31, 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 as compared to the prior year period.

These destination markets were impacted by restrictions on, and an overall decline in, air travel related to COVID-19.

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, air travel, 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.

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* Not meaningful.

Consolidated revenues increased for the year ended December 31, 2021 primarily due to recent acquisitions including the Merger on July 20, 2020, the William Hill Acquisition on April 22, 2021, and the consolidation of Horseshoe Baltimore on August 26, 2021, offset by the divestiture of certain properties discussed above.

In addition, net revenues for the year ended December 31, 2020 were negatively impacted by the COVID-19 public health emergency.

All of our casino properties were temporarily closed for the period from mid-March 2020 through mid-May 2020.

Further, many of our properties were operating under restrictive guidelines through the first half of 2021 due to orders issued by various government agencies and tribal bodies as part of certain precautionary measures intended to help slow the spread of COVID-19.

Local and state regulations and the implementation of social distancing and health and safety protocols in response to COVID-19 resulted in reduced gaming capacity and hotel occupancy as well as limitations on the operation of food and beverage outlets, live entertainment events, and conventions.

As of December 31, 2021, all of our properties have resumed certain operations, to the extent permitted, with the exception of Lake Charles which was severely damaged by Hurricane Laura and will remain closed until the second half of 2022 when construction of a new land-based casino is expected to be completed.

Operating Expenses

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Years Ended December 31, Variance Percent Change Variance Percent Change

(Dollars in millions) 2020 2019 2018 2020 vs 2019 2019 vs 2018

Operating Expenses:

(Dollars in millions) 2021 2020 2019 2021 vs 2020

Casino and pari-mutuel commissions $ 3,129 $ 1,271 $ 905 $ 1,858 146.2 % $ 366 40.4 %

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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 year ended December 31, 2020 increased year over year as a result of our acquisition of Former Caesars.

This was partially 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.

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

Casino and pari-mutuel, hotel, food and beverage, and other expenses for the year ended December 31, 2021 increased year over year as a result of our recent acquisitions, including the Merger, the William Hill Acquisition, and the consolidation of Horseshoe Baltimore.

In addition, the reopening of substantially all of our properties to the extent permitted by regulations governing the applicable jurisdiction, the partial return of our workforce, and advertising costs consisting of television, radio and internet marketing campaigns directly attributable to the launch and rebranding of our Caesars Sportsbook app contributed

to the increase noted.

These increases were partially offset as the Company focused on labor efficiencies and post-merger synergies, as described above.

Additionally, during the year ended December 31, 2021, the Company managed increases in food costs and effectively improved margins by focusing on efficiencies within food and beverage venues and menu options.

General and administrative expenses include items such as information technology, facility maintenance, utilities, property and liability insurance, expenses for administrative departments such as accounting, compliance, purchasing, human resources, legal 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 year ended December 31, 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 year ended December 31, 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 year ended December 31, 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 year ended December 31, 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 associated with the Merger.

Impairment charges increased by $214 million in 2020 due to impairment related to goodwill and trade names recognized due to a triggering event resulting from the COVID-19 public health emergency as well as impairments related to our held for sale properties recognized due to the carrying value exceeding the estimated net sales proceeds.

General and administrative expenses also include other marketing expenses not directly related to our gaming and non-gaming operations.

General and administrative expenses for the year ended December 31, 2021 increased year over year as the result of the reopening of all of our properties to the extent permitted by regulations governing the applicable jurisdiction, the Merger, the William Hill Acquisition and the consolidation of Horseshoe Baltimore.

These increases were partially offset by a reduced cost structure implemented by the Company while our properties were temporarily closed due to the impact of COVID-19.

Additionally, synergies associated with the combined companies from the Merger and the Company’s focus on labor efficiencies and expense savings resulted in reductions to certain administrative costs for the year ended December 31, 2021.

Corporate expenses include unallocated expenses such as payroll, annual bonus plans, stock-based compensation, professional fees, and other various expenses not directly related to the Company’s operations.

For the year ended December 31, 2021 compared to the same prior year period, corporate expenses increased primarily due to the Merger, the William Hill Acquisition and the consolidation of Horseshoe Baltimore.

In addition, payroll costs increased as compared to the prior year period due to performance-based incentives and higher costs in the labor market.

These costs have been partially offset by a decline in the corporate headcount.

For the year ended December 31, 2021 compared to the same prior year period, depreciation and amortization expense increased primarily due to the recent acquisitions, including the Merger, the William Hill Acquisition, and the consolidation of Horseshoe Baltimore.

Transaction costs and other operating costs primarily included expenses related to the William Hill Acquisition for the year ended December 31, 2021 and costs related to the Merger for the year ended December 31, 2020.

Impairment charges in 2021 relate to the rebranding of certain of our properties.

Impairment charges in 2020 relate to the impairment of goodwill and trade names recognized due to a triggering event resulting from COVID-19 and agreements to sell properties whereby the carrying value exceeded the estimated net sales proceeds.

Other Expense

1 unchanged sentence

Years Ended December 31, Variance Percent Change Variance Percent Change

(Dollars in millions) 2020 2019 2018 2020 vs 2019 2019 vs 2018

Other expense

(Dollars in millions) 2021 2020 2019 2021 vs 2020

Interest expense, net $ (2,295) $ (1,202) $ (286) $ (1,093) (90.9) % $ (916) *

Loss on extinguishment of debt (236) (197) (8) (39) (19.8) % (189) *

Other (loss) income 176 9 (3) 167 * 12 *

Provision for income taxes (126) (44) (40) (82) (186.4) % (4) (10.0) %

Other income (loss) (198) 176 9 (374) * 167 *

Benefit (provision) for income taxes 283 (132) (44) 415 * (88) (200.0) %

___________________

* Not meaningful.

For the year ended December 31, 2020, interest expense, net increased year over year as a result of our acquisition of Former Caesars.

For the year ended December 31, 2021, interest expense, net increased year over year as a result of the Merger, the William Hill Acquisition and the consolidation of Horseshoe Baltimore.

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

For the year ended December 31, 2020, the loss on extinguishment of debt increased year over year due to the early repayment of outstanding debt as a result of our acquisition of Former Caesars.

For the year ended December 31, 2020, other (loss) income increased year over year mainly due to a gain of $169 million related to the change in the foreign currency exchange rate associated with restricted cash held in GBP for, and a derivative contract related to, our expected acquisition of William Hill.

The increase was partially offset by reduction in interest expense due to the extinguishment of the 5% Convertible Notes, early extinguishment of the CRC Notes, partial repayment of the CEI Senior Notes and the repricing of CRC Incremental Term Loan.

For the year ended December 31, 2021, the loss on extinguishment of debt was related to early repayment premiums, and extinguishment of deferred financing costs and discounts associated with the prepayments of the CRC Notes and CEI Senior Notes, the repricing of the CRC Incremental Term Loan, and the early extinguishment of the 5% Convertible Notes.

The loss on extinguishment of debt for the year ended December 31, 2020 was related to the payment of outstanding debt in connection with the Merger.

For the year ended December 31, 2021, other income (loss) fluctuated year over year mainly due to a loss on the change in fair value of investments and a loss on the change in fair value of the derivative liability related to the 5% Convertible Notes.

The effective tax rate was 22.3% for 2021, (8.2%) for 2020, and 35.2% for 2019.

The effective tax rate in 2020 differed from the statutory rate of 21% primarily due to an increase in the valuation allowance against the deferred tax assets due to the series of transactions with VICI during the year.

The effective tax rate in 2020 differed from the statutory rate of 21% primarily due to an increase in valuation allowance against the deferred tax assets due to the series of transactions with VICI during the year.

Such transactions did not occur in 2021.

Refer to Item 8.

- Note 17 for the effective income tax rate reconciliation.

Segment comparison for the years ended December 31, 2021, 2020 and 2019

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Years Ended December 31, Variance Percent Change Variance Percent Change

(Dollars in millions) 2020 2019 2018 2020 vs 2019 2019 vs 2018

(Dollars in millions) 2021 2020 2019 2021 vs 2020

Casino and pari-mutuel commissions $ 1,226 $ 319 $ — $ 907 * $ 319 *

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Net revenues $ 3,409 $ 751 $ — $ 2,658 * $ 751 *

Table game drop $ 3,088 $ 1,082 $ — $ 2,006 185.4 % $ 1,082 *

Table game hold % 20.2 % 16.6 % — % 3.6 pts 16.6 pts

Slot handle $ 10,309 $ 3,498 $ — $ 6,811 194.7 % $ 3,498 *

Hotel occupancy 82.1 % 47.2 % — % 34.9 pts 47.2 pts

Adjusted EBITDA $ 1,568 $ 133 $ — $ 1,435 * $ 133 *

Adjusted EBITDA margin 17.7 % — % — % 17.7 pts *

Net (loss) income attributable to Caesars $ (287) $ — $ — $ (287) * $ — *

Adjusted EBITDA margin 46.0 % 17.7 % — % 28.3 pts 17.7 pts

Net income (loss) attributable to Caesars $ 641 $ (287) $ — $ 928 * $ (287) *

___________________

* Not meaningful.

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

As of December 31, 2020, all of our Las Vegas properties were reopened.

All of our properties within the Las Vegas segment reopened with reduced gaming and hotel capacity with limited food and beverage offerings as well as limited capacity at a few entertainment shows.

As of December 31, 2020, convention venues have not reopened due to capacity limitations.

In the period between properties reopening and December 31, 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.

Compared to our Regional Segment, Adjusted EBITDA margin for our Las Vegas segment experienced a more significant negative impact from declines in revenue, as well as rent expense associated with our Rio lease beginning in December 2019.

Las Vegas segment’s net revenues and Adjusted EBITDA increased as a result of the Merger and reopening of all of our Las Vegas properties in accordance with state and local regulations as of December 31, 2021.

In June 2021, convention and entertainment venues began to reopen as COVID-19 capacity restrictions were lifted.

During the year ended December 31, 2021, all of our reopened properties in the Las Vegas segment experienced an increase in net revenues and Adjusted EBITDA compared to Former Caesars’ prior year results as all properties were temporarily closed for a portion of 2020.

Slot win percentage in Las Vegas during the year ended December 31, 2021 was within our typical range and hotel occupancy trended upward compared to 2020.

Additionally, pent up demand positively impacted our results of operations in the Las Vegas segment for the year ended December 31, 2021.

These positive trends, however, may not be sustained due to increasing costs and continuing uncertainty relating to COVID-19.

Regional Segment

Years Ended December 31, Variance Percent Change Variance Percent Change

(Dollars in millions) 2020 2019 2018 2020 vs 2019 2019 vs 2018

(Dollars in millions) 2021 2020 2019 2021 vs 2020

Casino and pari-mutuel commissions $ 4,305 $ 2,079 $ 1,782 $ 2,226 107.1 % $ 297 16.7 %

3 unchanged sentences

Net revenues $ 5,537 $ 2,660 $ 2,494 $ 2,877 108.2 % $ 166 6.7 %

Table game drop $ 4,349 $ 2,386 $ 1,328 $ 1,963 82.3 % $ 1,058 79.7 %

Table game hold % 21.1 % 20.6 % 19.1 % 0.5 pts 1.5 pts

Slot handle $ 44,667 $ 24,441 $ 16,955 $ 20,226 82.8 % $ 7,486 44.2 %

Adjusted EBITDA $ 1,979 $ 711 $ 719 $ 1,268 178.3 % $ (8) (1.1) %

Adjusted EBITDA margin 35.7 % 26.7 % 28.8 % 9 pts (2.1) pts

Net (loss) income attributable to Caesars $ (338) $ 398 $ 320 $ (736) (184.9) % $ 78 24.4 %

Regional segment’s net revenues increased as a result of our merger with Former Caesars.

Adjusted EBITDA and margin decreased for the year ended December 31, 2020 compared to the same prior year period as a result of property closures due to the COVID-19 public health emergency.

All of our properties in our Regional segment, with the exception of Lake Charles, Harrah’s Philadelphia and our properties in Illinois reopened as of December 31, 2020.

Subsequently, Harrah’s Philadelphia and our properties in Illinois have reopened.

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

In the period between properties reopening and December 31, 2020, our Regional properties experienced a decline in net revenues as compared to the prior year.

The majority of our Regional properties other than Atlantic City, Northern Nevada and New Orleans, Adjusted EBITDA declined slightly as compared to prior year, when including Former Caesars’ prior year, for the same properties.

Adjusted EBITDA margin for these properties was 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.

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

Net income (loss) attributable to Caesars $ 637 $ (349) $ 385 $ 986 * $ (734) *

___________________

* Not meaningful.

Regional segment’s net revenues and Adjusted EBITDA increased for the year ended December 31, 2021 compared to the same prior year period as a result of the Merger and consolidation of Horseshoe Baltimore.

The increase was slightly offset by divestitures of certain properties and closures of certain properties due to Hurricane Ida and the Caldor fire.

As of December 31, 2021, all of our properties in our Regional segment reopened, with the exception of Lake Charles which closed due to severe damage from Hurricane Laura and will remain closed until the second half of 2022 when construction of a new land-based casino is expected to be completed.

Slot win percentage in the Regional segment during the year ended December 31, 2021 was within our typical range.

Additionally, pent up demand positively impacted our results of operations in the Regional segment for the year ended December 31, 2021.

These positive trends, however, may not be sustained due to increasing costs and continuing uncertainty relating to COVID-19.

For the year ended December 31, 2021, our Regional segment’s net revenues, Adjusted EBITDA and Adjusted EBITDA margin increased compared to the prior year across all properties, including Former Caesars, due to reductions in workforce and marketing costs, synergies from the purchasing power of the combined Caesars organization, and the Company’s focus on higher margin food and beverage offerings.

Caesars Digital Segment

Years Ended December 31, Variance Percent Change Variance Percent Change

(Dollars in millions) 2020 2019 2018 2020 vs 2019 2019 vs 2018

(Dollars in millions) 2021 2020 2019 2021 vs 2020

Casino and pari-mutuel commissions $ 296 $ 84 $ 26 $ 212 * $ 58 *

Food and beverage 1 — — 1 * — *

Other 41 11 — 30 * 11 *

Net revenues $ 337 $ 95 $ 26 $ 242 * $ 69 *

Sports betting handle (a)

$ 6,046 $ 30 $ — $ 6,016 * $ 30 *

iGaming handle 5,621 2,448 1,040 3,173 129.6 % 1,408 135.4 %

Adjusted EBITDA $ (476) $ 26 $ 13 $ (502) * $ 13 100.0 %

Adjusted EBITDA margin (141.2) % 27.4 % 50.0 % * (22.6) pts

Net (loss) income attributable to Caesars $ 38 $ — $ — $ 38 * $ — *

Net income (loss) attributable to Caesars $ (580) $ 26 $ 13 $ (606) * $ 13 100.0 %

___________________

* 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 December 31, 2020, with the exception of Caesars Windsor.

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

For the year ended December 31, 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 current period.

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.

(a) Caesars Digital generated an additional $706 million of sports betting handle, which is not included in this table for the year ended December 31, 2021, for select wholly-owned and third-party operations for which Caesars Digital provides services and we receive all.

or a share of, the net profits.

Sports betting handle includes $40 million for the year ended December 31, 2021, related to horse racing and pari-mutuel wagers.

Caesars Digital includes Caesars operations for retail and mobile sports betting, online casino, and online poker.

It is comprised of the Caesars interactive business acquired in the Merger, operations acquired in the William Hill Acquisition and historical iGaming at Tropicana Atlantic City.

Caesars Digital’s sports betting handle, iGaming handle, and net revenues increased significantly for the year ended December 31, 2021 compared to the same prior year period due to the acquisitions and the recent marketing launch of our new sportsbook.

However, net revenues for the year ended December 31, 2021 were negatively impacted by a sports betting hold percentage that was below our typical range.

The low hold percentage was driven in part by increased odds and profit boosts, which are promotional enhancements that improve odds or wager payouts for customers.

In addition, our hold percentage was negatively impacted by competitive pricing strategies and lower than typical hold in certain betting markets.

iGaming hold percentage for the year ended December 31, 2021 was within our typical range.

In connection with the launch of our Caesars branded sportsbook and iGaming applications, we deployed a significant level of marketing spend to build brand awareness and acquire and retain customers.

As sports betting and online casinos expand through increased state legalization and customer adoption, growth in marketing and promotional costs in highly competitive markets negatively impacts Caesars Digital Adjusted EBITDA and Adjusted EBITDA margins in comparison to prior periods.

Managed and Branded Segment

Years Ended December 31, Variance Percent Change Variance Percent Change

(Dollars in millions) 2021 2020 2019 2021 vs 2020

Food and beverage $ — $ 1 $ — $ (1) (100.0) % $ 1 *

Other 278 106 — 172 162.3 % 106 *

Net revenues $ 278 $ 107 $ — $ 171 159.8 % $ 107 *

Adjusted EBITDA $ 87 $ 25 $ — $ 62 * $ 25 *

Adjusted EBITDA margin 31.3 % 23.4 % — % 7.9 pts 23.4 pts

Net income attributable to Caesars $ 68 $ 29 $ — $ 39 134.5 % $ 29 *

___________________

* Not meaningful.

We manage several properties and license rights to the use of our brands.

These revenue agreements typically include reimbursement of certain costs that we incur directly.

Such costs are primarily related to payroll costs incurred on behalf of the properties under management.

The revenue related to these reimbursable management costs has a direct impact on our evaluation of Adjusted EBITDA margin which, when excluded, reflects margins typically realized from such agreements.

The table below presents the amount included in net revenues and total operating expenses related to these reimbursable costs.

Years Ended December 31, Variance Percent Change Variance Percent Change

(Dollars in millions) 2021 2020 2019 2021 vs 2020

Reimbursable management revenue $ 191 $ 73 $ — $ 118 161.6 % $ 73 *

Reimbursable management cost 191 73 — 118 161.6 % 73 *

___________________

* Not meaningful.

Managed and Branded segment’s net revenues and Adjusted EBITDA increased as a result of the Merger.

Upon the consolidation of Horseshoe Baltimore, the operations of the property are included in the Regional segment above and management revenue is eliminated upon consolidation.

Additionally, in connection with the closing of the sale of Caesars Southern Indiana on September 3, 2021, the Company and the Eastern Band of Cherokee Indians (“EBCI”) extended their existing relationship by entering into a 10-year brand license agreement, with cancellation rights in exchange for a termination fee at the buyer’s discretion following the fifth anniversary of the agreement, for the continued use of the Caesars brand and Caesars Rewards loyalty program at Caesars Southern Indiana.

Caesars Southern Indiana was previously reported within the Regional segment and subsequent to the sale, as a result of the license agreement relating to the continued use of the Caesars brand and Caesars Rewards loyalty program at Caesars Southern Indiana, is reported within the Managed and Branded

All of our managed properties have reopened as of December 31, 2021, however, a subsequent temporary closure of Caesars Windsor occurred from January 5, 2022 through January 31, 2022 due to COVID - 19.

For the year ended December 31, 2021, net revenues and Adjusted EBITDA for Managed and Branded increased as compared to Former Caesars’ prior period.

Corporate & Other

Years Ended December 31, Variance Percent Change Variance Percent Change

(Dollars in millions) 2020 2019 2018 2020 vs 2019 2019 vs 2018

(Dollars in millions) 2021 2020 2019 2021 vs 2020

Other $ 9 $ 15 $ 8 $ (6) (40.0) % $ 7 87.5 %

6 unchanged sentences

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

Adjusted EBITDA represents net income (loss) before interest 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.

Adjusted EBITDA represents net income (loss) before interest income or interest expense net of interest capitalized, (benefit) provision for income taxes, unrealized (gain) loss on investments and marketable securities, depreciation and amortization, stock-based compensation, impairment charges, 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, certain litigation awards and settlements, losses on inventory associated with properties temporarily closed as a result of the COVID-19 public health emergency, contract exit or termination costs, and certain regulatory settlements.

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

Adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with GAAP.

Adjusted EBITDA is unaudited and should not be considered an alternative to, or more meaningful than, net income (loss) as an indicator of our operating performance.

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

3 unchanged sentences

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 years ended December 31, 2020, 2019 and 2018, respectively, in addition to reconciling net (loss) income to Adjusted EBITDA in accordance with US GAAP (unaudited):

The following table summarizes our Adjusted EBITDA for the years ended December 31, 2021, 2020 and 2019, respectively, in addition to reconciling net income (loss) to Adjusted EBITDA in accordance with GAAP (unaudited):

Year Ended December 31, 2021

(In millions) CEI Less:

(In millions) CEI Pre-Cons.

Baltimore (d)

Net loss attributable to Caesars $ (1,019) $ (32) $ (33) $ (7) $ (1,091)

Net loss attributable to noncontrolling interests (1) — (67) (68)

Interest expense, net 1,174 49 750 1,973

Provision (benefit) for income taxes 126 9 (224) (89)

Other loss (income) (a)

Net income attributable to noncontrolling interests 3 — — — 3

Discontinued operations, net of income taxes 30 — — (23) 7

Benefit for income taxes (283) — (2) — (285)

Other (income) loss (a)

198 40 (2) — 236

Loss on extinguishment of debt (b)

Loss on extinguishment of debt 236 — — — 236

Interest expense, net 2,295 9 — — 2,304

Impairment charges 102 — — — 102

Depreciation and amortization 1,126 10 8 — 1,144

Stock-based compensation expense 78 1 26 105

Transaction costs and other operating costs (c)

Transaction costs and other operating costs (b)

144 6 27 — 177

Other items (d)

Stock-based compensation expense 82 — — — 82

Other items (c)

Adjusted EBITDA $ 2,990 $ 33 $ — $ (30) $ 2,993

Year Ended December 31, 2020

(In millions) CEI Less:

Divestitures (h)

(In millions) CEI Pre-Cons.

Baltimore (d)

Net income (loss) attributable to Caesars $ (1,757) $ (11) $ (5) $ (1,059) $ 264 $ (2,568)

Net loss attributable to noncontrolling interests — — (3) (3)

Provision (benefit) for income taxes 44 (37) (141) (134)

Other loss (income) (a)

Net income (loss) attributable to noncontrolling interests (1) — — (67) 63 (5)

Discontinued operations, net of income taxes 20 — — — (20) —

(Benefit) provision for income taxes 132 — (7) (224) 1 (98)

Other income (a)

(176) (10) (3) (45) (19) (253)

3 unchanged sentences

Impairment charges 215 — — 189 (203) 201

Transaction costs and other operating costs (c)

Transaction costs and other operating costs (b)

270 1 23 71 (6) 359

Stock-based compensation expense 79 1 — 26 — 106

Other items (d)

Other items (c)

30 (1) — 54 (3) 80

Adjusted EBITDA $ 794 $ 11 $ 31 $ 254 $ (38) $ 1,052

Year Ended December 31, 2019

(In millions) CEI Less:

Divestitures (h)

Trop & Elgin (j)

Net income attributable to Caesars $ 95 $ (47) $ 303 $ 56 $ 407

Net income attributable to noncontrolling interests — — 1 — 1

Provision (benefit) for income taxes 40 (11) (121) 19 (73)

Other loss (income) (a)

(In millions) CEI Pre-Cons.

Baltimore (d)

Net income (loss) attributable to Caesars $ 81 $ (1) $ 1 $ (1,195) $ 53 $ (1,061)

Net income (loss) attributable to noncontrolling interests — — — (3) 3 —

(Benefit) provision for income taxes 44 — (1) (141) (47) (145)

Other (income) loss (a)

(9) (1) (3) 587 3 577

3 unchanged sentences

Impairment charges 1 — — 468 (50) 419

Transaction costs and other operating costs (c)

Transaction costs and other operating costs (b)

37 — 1 136 (31) 143

Stock-based compensation expense 20 — — 88 (1) 107

Other items (d)

Other items (c)

7 — — 80 (2) 85

1 unchanged sentence

____________________

(a) Other loss (income) for the year ended December 31, 2020 primarily represents gains resulting from the change in the foreign currency exchange rate associated with restricted cash held in GBP and a derivative contract associated with our expected acquisition of William Hill, gains on William Hill UK and Flutter stock held by the Company and realized gain on conversion of CEC’s 5% convertible notes.

Partially offsetting these gains is a loss on the change in fair value of the derivative liability related to CEC’s 5% convertible notes.

Other loss (income) for the year ended December 31, 2019 primarily represents unrealized loss on the change in fair value of the derivative liability related to CEC’s 5% convertible notes.

(b) Loss on extinguishment of debt for the year ended December 31, 2020 primarily represents loss on early repayment of debt in connection with the consummation of the Merger.

Loss on extinguishment of debt for the year ended December 31, 2019 is related to the pro-rated write off of deferred financing costs associated with permanent payments on the ERI Term Loan.

(c) Transaction costs and other operating costs for the years ended December 31, 2020 and 2019 primarily represent costs related to the Merger with Former Caesars, various contract or license termination exit costs, and severance costs.

Transaction costs for the year ended December 31, 2018 primarily represent costs related to the Tropicana acquisition.

(d) Other items include internal labor charges related to certain departed executives and contract labor and other miscellaneous items.

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

(f) Pre-acquisition CEC represents results of operations for Former Caesars for the period from January 1, 2020 to July 20, 2020, the date on which the Merger was consummated, for the year ended December 31, 2020, respectively, and for the years ended December 31, 2019 and 2018.

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.

(g) 2020 Total for the year ended December 31, 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.

(h) Divestitures for the year ended December 31, 2020 include results of operations for Kansas City and Vicksburg, Eldorado Shreveport, Harrah’s Reno, and Bally’s Atlantic City.

Divestitures for the year ended December 31, 2019 and 2018 include results of operations for Presque, Nemacolin, Mountaineer, Cape Girardeau, Caruthersville, Kansas City, Vicksburg, Eldorado Shreveport, Harrah’s Reno and Bally’s Atlantic City.

(a) Other (income) loss primarily includes changes in fair value of investments, changes in fair value of the derivative liability related to the 5% Convertible Notes, and gains and losses on foreign currency exchange.

(b) Transaction costs and other operating costs primarily represent costs related to the William Hill Acquisition and the Merger, various contract or license termination exit costs, professional services, other acquisition costs and severance costs.

(c) Other items primarily represent certain consulting and legal fees, rent for non-operating assets, relocation expenses, retention bonuses, and business optimization expenses.

(d) Represents results of operations for Horseshoe Baltimore for periods prior to the consolidation resulting from the Company’s increase in its ownership interest on August 26, 2021.

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.

(i) 2020, 2019, and 2018 Totals for the years ended December 31, 2020, 2019 and 2018 exclude results of operations from 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.

(j) Pre-acquisition Trop & Elgin represents results of operations for Tropicana for the nine months ended September 30, 2018 and for Elgin for the period beginning January 1, 2018 and ending August 6, 2018.

(e) Pre-acquisition William Hill represents results of operations for William Hill prior to the acquisition.

Such figures are based on unaudited internal financial statements and have not been reviewed by the Company’s auditors and, for the 2021, 2020 and 2019 periods, do not conform to GAAP.

(f) Divestitures include results of operations for certain properties divested.

See Item 7 - Overview above.

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.

(g) 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.

(h) Pre-acquisition CEC represents results of operations for Former Caesars prior to the Merger.

Such figures are based on unaudited internal financial statements and have not been reviewed by the Company’s auditors and, for the 2020 and 2019 periods, do not conform to GAAP.

Liquidity and Capital Resources

We are a holding company and our only significant assets are ownership interests in our subsidiaries.

Our ability to fund our obligations depends on existing cash on hand, contracted asset sales, cash 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 facilities, proceeds from the issuance of debt and equity securities and proceeds from completed asset sales and sale leaseback 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.

Our operating cash flows also significantly depend on our properties to remain open.

As describe above, 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 to reduce the spread of COVID-19.

Beginning on May 15, 2020, we began reopening our properties and as of December 31, 2020 we have resumed operations at all of our properties, with the exception of additional temporary closures of Caesars Windsor, Harrah’s Philadelphia, and our properties in Illinois.

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.

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 operating expenses and operating cash flows were reduced significantly.

In an effort to maintain liquidity and provide financial flexibility as the effects of COVID-19 public health emergency continued 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.

Additionally, on June 19, 2020, we completed a public offering of 20,700,000 shares of Company Common Stock, at an offering price of $39.00 per share, which provided $772 million of proceeds, net of fees and estimated expenses of $35 million, for general corporate purposes.

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 6, 2020, we issued $3.4 billion aggregate principal amount of 6.25% 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 Merger, we consummated certain sale leaseback transactions with VICI with respect 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 the sale of Company 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 purposes.

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, that matures in 2025.

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.

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

Our primary sources of liquidity and capital resources are existing cash on hand, cash flows from operations, availability of borrowings under our revolving credit facilities, proceeds from the issuance of debt and equity securities and proceeds from completed asset sales.

Our cash requirements may fluctuate significantly depending on our decisions with respect to business acquisitions or divestitures and strategic capital and marketing investments.

As of December 31, 2021, our cash on hand and revolving borrowing capacity were as follows:

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Cash and cash equivalents $ 1,070

Revolver capacity 2,210

Revolver capacity (a)

Revolver capacity committed to letters of credit (92)

Revolver capacity committed as regulatory requirement (48)

Total $ 2,960

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 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.

by UK regulations, we were required to provide a cash confirmation of funding for our potential acquisition of William Hill.

In support of the confirmation process, on September 25, 2020, we borrowed $900 million on our CEI Revolving Credit Facility.

The transaction remains conditional on, among other things, approvals from state, federal and international regulators.

We entered into a foreign exchange forward contract to hedge the risk of appreciation of the GBP denominated purchase price for the proposed William Hill acquisition.

Under the agreement, we have agreed to purchase £536 million at a contracted exchange rate.

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

On October 1, 2020, we completed a public offering of 35,650,000 shares of Company Common Stock at an offering price of $56.00 per share.

Net proceeds from the offering, after deducting the underwriting discounts and commissions and estimated expenses, were approximately $1.9 billion which we intend to use for general corporate purposes, including to finance a portion of the proposed William Hill acquisition.

As of December 31, 2020 , we have restricted cash of approximately $1.9 billion which we expect to apply to pay a portion of the purchase price of the acquisition.

On October 6, 2020, we entered into a £1.5 billion Interim Facilities Agreement with Deutsche Bank AG, London Branch and JPMorgan Chase Bank, N.A.

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

(a) a 540-day £1.0 billion asset sale bridge facility and (b) a 60-day £503 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 proposed 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 the GLPI Master Lease, the VICI Leases and other leases.

___________________

(a) Revolver capacity includes $995 million under our CEI Revolving Credit Facility, as amended, maturing in July 2025, $1,025 million under our CRC Revolving Credit Facility, maturing in December 2022 and $10 million under our Baltimore Revolving Credit Facility, maturing in July 2022.

During the year ended December 31, 2021, our operating activities generated operating cash inflows of $1.2 billion, as compared to operating cash outflows of $561 million during the year ended December 31, 2020 due to the results of operations described above in addition to the Merger, William Hill Acquisition and consolidation of Horseshoe Baltimore.

In addition, we continue to improve our financial position and reduce our operating costs related to our debt through accelerated repayments, amendments to existing debt agreements and obtaining favorable rates on new borrowings which has resulted in, and is expected to continue to provide, interest expense savings.

On September 21, 2021, CRC entered into a second amendment related to the CRC Incremental Term Loan to reduce the interest rate margins to 3.50% per annum in the case of any London Inter-bank Offered Rate (“LIBOR”) loan or 2.50% per annum in the case of any base rate loan.

The CRC Incremental Term Loan is a LIBOR based loan of which the amendment lowers our annual interest cost by reducing the applicable margin by 100 basis points from 4.50% to 3.50%.

During the year ended December 31, 2021, the Company purchased or redeemed all $1.7 billion 5.25% senior notes due 2025 (the “CRC Notes”) and recognized a $199 million loss on the early extinguishment of debt.

During the year ended December 31, 2021, the Company purchased a total of $100 million in principal amount of the $1.8 billion 8.125% Senior Notes due 2027 (the “CEI Senior Notes”) and the Company recognized a $14 million loss on the early extinguishment of debt.

On September 24, 2021, the Company issued $1.2 billion in aggregate principal amount of 4.625% Senior Notes due 2029 (the “Senior Notes”) pursuant to an indenture dated as of September 24, 2021 between the Company and U.S.

Bank National Association, as Trustee.

The Senior Notes will mature on October 15, 2029 with interest payable on April 15 and October 15 of each year, commencing April 15, 2022.

Proceeds from the issuance of the Senior Notes, as well as cash on hand, was used to repay the CRC Notes, as described above.

As a result of our increased ownership interest in Horseshoe Baltimore, we began to consolidate the aggregate principal amount of Horseshoe Baltimore’s senior secured term loan facility (the “Baltimore Term Loan”) and amounts outstanding, if any, under Horseshoe Baltimore’s senior secured revolving credit facility (the “Baltimore Revolving Credit Facility”).

The Baltimore Term Loan matures in 2024 and is subject to a variable rate of interest calculated as LIBOR plus 4.00%.

The Baltimore Revolving Credit Facility has borrowing capacity of up to $10 million available, matures in 2022, and is subject to a variable rate of interest calculated as LIBOR plus 6.00%.

As of December 31, 2021, there was $10 million of available borrowing capacity under the Baltimore Revolving Credit Facility.

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

On April 22, 2021, the Company completed the acquisition of William Hill PLC for £2.9 billion , or approximately $3.9 billion .

In connection with the William Hill Acquisition, on April 22, 2021, a newly formed subsidiary of the Company (the “Bridge Facility Borrower”) entered into a Credit Agreement (the “Bridge Credit Agreement”) with certain lenders party thereto and Deutsche Bank AG, London Branch, as administrative agent and collateral agent, pursuant to which the lenders party thereto provided the Debt Financing (as defined below).

The proceeds of the revolving credit facility under the Bridge Credit Agreement may be used for working capital and general corporate purposes.

The £1.5 billion Interim Facilities Agreement (the “Interim Facilities Agreement”) entered into on October 6, 2020 with Deutsche Bank AG, London Branch and JPMorgan Chase Bank, N.A., and amended on December 11, 2020, was terminated upon the execution of the Bridge Credit Agreement.

On May 12, 2021, we repaid the £503 million cash confirmation bridge facility.

Outstanding borrowings under the Bridge Credit Agreement are expected to be repaid upon the sale of William Hill International.

Certain investments acquired have been excluded from the held for sale asset group.

On September 8, 2021, the Company entered into an agreement to sell William Hill International to 888 Holdings Plc for approximately £2.2 billion.

After repayment of the outstanding debt under the Bridge Credit Agreement, described above, the Company expects to receive approximately £835 million, or $1.2 billion, subject to any permitted leakage, which is customary for sale transactions in the UK.

In order to manage the risk of changes in the GBP denominated sales price and expected proceeds, the Company has entered into foreign exchange forward contracts.

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

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

Our capital expenditure requirements for 2021 are expected to significantly increase as a result of the additional properties acquired in the Merger and new development projects.

We also funded $400 million to escrow as of the closing of the Merger and will utilize those funds in accordance with a three year capital expenditure plan in the state of New Jersey, and an additional $25 million was funded in the fourth quarter of 2020 for improvements at our racing properties within the state of Indiana.

These amounts are currently included in restricted cash.

We are also in the process of a more than $47 million renovation to the resort rooms and suites of Silver Legacy Resort Casino, projected to be completed by summer 2021.

In relation to the extension of the casino operating contract and ground lease for Harrah’s New Orleans (see Note 11), we are required to make a capital investment of $325 million by July 15, 2024.

Cash spent for capital expenditures totaled $163 million, $171 million, $147 million for the years ended December 31, 2020, 2019 and 2018, respectively, related to our growth and maintenance capital projects.

Our capital expenditure requirements for 2022 are expected to increase compared to prior periods as a result of increased expansion projects, the rebranding of certain properties, implementation and migration of states to our Liberty platform and continued investment into new markets with our Caesars Sportsbook and iGaming applications in our Caesars Digital segment.

In addition, we may, from time to time, seek to repurchase our outstanding indebtedness.

Any such purchases may be funded by existing cash balances or the incurrence of debt.

The amount and timing of any repurchase will be based on business and market conditions, capital availability, compliance with debt covenants and other considerations.

In 2020, we funded $400 million to escrow as of the closing of the Merger and have begun to utilize those funds in accordance with a three year capital expenditure plan in the state of New Jersey.

This amount is currently included in restricted cash in Other assets, net.

As of December 31, 2021, our restricted cash balance in the escrow account was $297 million for future capital expenditures in New Jersey.

As a condition of the extension of the casino operating contract and ground lease for Harrah’s New Orleans, we are also required to make a capital investment of $325 million in Harrah’s New Orleans by July 15, 2024.

In connection with the capital investment in Harrah’s New Orleans, construction has begun and we are in the process of rebranding the property as Caesars New Orleans which we expect to be complete in 2024.

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

The hurricane severely damaged Lake Charles and the Company has begun to receive insurance proceeds related to, in part, estimated damages and repairs that have been incurred to the property.

A portion of the proceeds received is expected to be utilized for the construction of a new land-based casino which is expected to be completed in the second half of 2022.

We continue to expand into new markets with projects such as Caesars Virginia, which is expected to be a $500 million premier destination resort casino.

The property plans to include a 500 room hotel and casino including slot machines, table games, WSOP Room and Caesars Sportsbook.

Additionally, Caesars announced the plans to expand into Nebraska with a $75 million development of a Harrah’s casino and racetrack.

Cash spent for capital expenditures totaled $520 million, $164 million, $171 million for the years ended December 31, 2021, 2020 and 2019, respectively, related to our growth, renovation, maintenance, and other capital projects.

Due, in part, to constraints on the supply chain, certain projects and planned spend during 2021 are expected to be incurred during 2022.

The following table summarizes our estimates for 2022 capital expenditures:

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Atlantic City $ 240 $ 260

Indiana racing operations 5 10

Total estimated capital expenditures from restricted cash 245 270

Lake Charles 75 125

New Orleans 25 50

Other growth and maintenance projects (a)

Growth and renovation projects 605 755

Caesars Digital 115 135

Maintenance projects 290 340

Total estimated capital expenditures from unrestricted cash and insurance proceeds 1,010 1,230

Total estimated capital expenditures in 2021 $ 605 $ 765

____________________

(a) Includes capital expenditures that may be incurred at our Atlantic City, Indiana and Lake Charles properties for normal maintenance projects in addition to amounts described above.

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, as a result of which the Company has recorded an insurance receivable of $44 million, of

which $15 million related to fixed asset impairments and $29 million related to remediation costs and repairs that have been incurred in the year ended December 31, 2020 .

The property will remain closed until construction of a new land-based casino is complete.

Total $ 1,255 $ 1,500

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 approximately $840 million for 2022 .

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

We estimate our lease payments to be approximately $1.1 billion for 2021.

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 the 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 or the Company.

We do not intend to exercise our option to cause the conversion of the 5% Convertible Notes prior to maturity.

As of December 31, 2020, we have paid approximately $903 million and issued approximately 10.8 million shares upon conversion of $770 million in aggregate principal amount of the 5% Convertible Notes during 2020.

At such time as the holders of the 5% Convertible Notes elect to cause conversion, we estimate using cash of $379 million and issuing 4.5 million shares to settle the remaining outstanding 5% Convertible Notes as of December 31, 2020.

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 customary 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.

On December 23, 2020, the Company consummated the sale of Eldorado Shreveport to Bally's Corporation for $140 million resulting in a gain of $29 million.

MontBleu is expected to close in the first half 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 and closed the sale of Bally’s Atlantic City Hotel & Casino to Bally’s Corporation for $25 million on November 18, 2020 .

The proceeds from the sale were split between the Company and VICI, and the Company received $5 million of net proceeds.

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

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

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.

On December 1, 2020, the Company entered into a definitive agreement with CQ Holding Company, Inc.

to sell the equity interests of Baton Rouge.

The definitive agreement provides that the consummation of the sale is subject to satisfaction of customary conditions, including receipt of required regulatory approvals and is expected to close in mid-2021.

On December 24, 2020, the Company entered into an agreement to sell Caesars Southern Indiana to the EBCI for $250 million, subject to a customary working capital adjustment.

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

In addition to the agreements above, we also expect to enter into additional agreements to divest of Horseshoe Hammond prior to December 31, 2021 .

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

We estimate our lease payments to VICI and GLPI to be approximately $1.2 billion for 2022 .

On June 21, 2021, the Company delivered a notice of mandatory conversion to the trustee of the 5% Convertible Notes to convert all outstanding notes on June 24, 2021.

All outstanding notes, at the election of either the Company or the holder, were subject to conversion into approximately 0.014 shares of the Company’s Common Stock (“Company Common Stock”) and approximately $1.17 of cash per $1.00 principal amount of the 5% Convertible Notes.

During the year ended December 31, 2021, the Company converted the remaining outstanding aggregate principal amount of the 5% Convertible Notes, which resulted in cash payments of $367 million, net of approximately $12 million paid into our trust accounts and the issuance of approximately 5 million shares of Company Common Stock.

The Company periodically divests assets that it does not consider core to its business to raise capital or, in some cases, to comply with conditions, terms, obligations or restrictions imposed by antitrust, gaming and other regulatory entities.

divested of several international properties including an interest in a Korea joint venture and the Caesars UK Group, which includes Emerald Resort & Casino.

The sale of the Caesars UK Group closed on July 16, 2021, and t he buyer assumed all liabilities associated with the Caesars UK Group.

We also expect to divest of William Hill International in the second quarter of 2022 , as described above.

On April 6, 2021, the Company consummated the sale of the equity interests of MontBleu for $15 million.

The purchase price is due no later than the first anniversary of the consummation of the transaction.

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

for $22 million, subject to a customary working capital adjustment.

The proceeds were split between the Company and VICI.

On November 1, 2021, the sale of Harrah’s Louisiana Downs was completed.

The annual base rent payments under the Regional lease between Caesars and VICI remain unchanged.

On June 3, 2021, the Company consummated the sale of the real property and equity interests of Evansville to GLPI and Bally’s Corporation, respectively, for $480 million in cash, subject to a customary working capital adjustment, resulting in a gain of $12 million.

On December 1, 2020, the Company entered into a definitive agreement to sell the operations of Baton Rouge to CQ Holding Company, Inc.

The transaction has received regulatory approvals and is expected to close in the first quarter of 2022, subject to other customary closing conditions.

On December 24, 2020, the Company entered into an agreement to sell the equity interests of Caesars Southern Indiana to the EBCI for $250 million, subject to customary purchase price adjustments.

On September 3, 2021, the Company completed the sale of Caesars Southern Indiana resulting in a gain of $12 million.

In connection with this transaction, the Company’s annual base rent payments to VICI Properties under the Regional Master Lease were reduced by $33 million.

If the agreed upon selling price for future divestitures does not exceed the carrying value of the assets, we may be required to record additional impairment charges in future periods which may be material.

We expect that our current liquidity, cash flows from operations, borrowings under committed credit facilities and proceeds from the announced asset sales, will be sufficient to fund our operations, capital requirements and service our outstanding

indebtedness for the next twelve months.

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.

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.

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

However, we cannot be certain that the COVID-19 public health emergency will not adversely affect our business, financial condition and results of operations or cause disruption in the financial markets that could adversely affect ability to access additional capital.

Debt and Master Lease Covenant Compliance

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

The Caesars Resort Collection (“CRC”) Credit Agreement, the CEI Revolving Credit Facility, the Baltimore Term Loan and the indentures related to the CEI Senior Secured Notes, the CEI Senior Notes, the CRC Senior Secured Notes and the Senior 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 covenants in the indenture for the 5% Convertible Notes are limited 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 documents.

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 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 for 2020.

As of December 31, 2020, we were in compliance with all of the applicable financial covenants under the CEI Credit Agreement, CEI Senior Secured Notes, CRC Credit Agreement, CEI Senior Notes, CRC Senior Secured Notes, 5% Convertible Notes, the GLPI Leases and VICI Leases.

The CRC Revolving Credit Facility and the 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.

The Baltimore Revolving Credit Facility includes a senior secured leverage ratio financial covenant of 5.0:1.

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

The GLPI Leases and VICI Leases contain certain covenants requiring minimum capital expenditures based on a percentage of net revenues along with maintaining certain financial ratios.

The Bridge Credit Agreement associated with the planned divestiture of William Hill International, which is presented within liabilities held for sale, includes a financial covenant requiring the Bridge Facility Borrower to comply with a maximum total net leverage ratio of 10.50 to 1.00.

The borrowings under the Bridge Credit Agreement are guaranteed by the Bridge Facility Borrower and the Bridge Facility Borrower’s material wholly-owned subsidiaries (subject to exceptions), and are secured by a pledge of substantially all of the existing and future property and assets of the Bridge Facility Borrower and the guarantors (subject to exceptions).

Additionally, no financial covenants are related to the $943 million of debt from the two trust deeds assumed in the William Hill Acquisition, which are also held for sale.

As of December 31, 2021, we were in compliance with all of the applicable financial covenants described above.

Share Repurchase Program

On November 8, 2018, we issued a press release announcing that our Board has authorized a $150 million common stock repurchase program (the “Share Repurchase Program”) pursuant to which we may, from time to time, repurchase shares of common stock on the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions.

On November 8, 2018, our Board of Directors authorized a $150 million common stock repurchase program (the “Share Repurchase Program”) pursuant to which we may, from time to time, repurchase shares of common stock on the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions.

The Share Repurchase Program has no time limit and may be suspended or discontinued at any time without notice.

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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 6.25% Senior Secured Notes due 2025, $1.8 billion aggregate principal amount of 8.125% Senior Notes due 2027 and $1.0 billion aggregate principal amount of 5.75% Senior Secured Notes due 2025.

On July 20, 2020, in connection with the closing of the Merger, the Company entered into a new credit agreement which provides a five-year senior secured revolving credit facility in an aggregate principal amount of $1.2 billion.

In addition, Caesars Resort Collection, LLC, which became a wholly-owned subsidiary of the Company as a result of the Merger (“CRC”), entered into incremental agreements 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 104.5%, 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 senior notes resulted in a loss on extinguishment of $132 million during the year ended December 31, 2020, which is recorded within Loss on extinguishment of debt on the Statement of Operations.

Baltimore Term Loan and Baltimore Revolving Credit Facility

As a result of our increased ownership interest in Horseshoe Baltimore, we began to consolidate the aggregate principal amount of Horseshoe Baltimore’s senior secured term loan facility (the “Baltimore Term Loan”) and amount outstanding, if any, under Horseshoe Baltimore’s senior secured revolving credit facility (the “Baltimore Revolving Credit Facility”).

The Baltimore Term Loan matures in 2024 and is subject to a variable rate of interest calculated as LIBOR plus 4.00%.

The Baltimore Revolving Credit Facility has borrowing capacity of up to $10 million available and matures in 2022, subject to a variable rate of interest calculated as LIBOR plus 6.00%.

As of December 31, 2021, there was $10 million of available borrowing capacity under the Baltimore Revolving Credit Facility.

CRC Term Loans and CRC Revolving Credit Facility

CRC is party to the Credit Agreement, dated as of December 22, 2017 (as amended, the “CRC Credit Agreement”), 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”), which was increased by $1.8 billion pursuant to an incremental agreement executed in connection with the Merger (the “CRC Incremental Term Loan”).

The CRC Term Loan matures in December 2024 and the CRC Incremental Term Loan matures in July 2025.

The CRC Revolving Credit Facility matures in December 2022 and includes a $400 million letter of credit sub-facility.

The CRC Term Loan and the CRC Incremental Term Loan require 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.

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.

On September 21, 2021, CRC entered into a second amendment related to the CRC Incremental Term Loan to reduce the interest rate margins to 3.50% per annum in the case of any LIBOR loan or 2.50% per annum in the case of any base rate loan.

The CRC Term Loan and the CRC Incremental Term Loan are LIBOR based loans as of December 31, 2021.

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.

We had $956 million of available borrowing capacity, after consideration of $69 million in outstanding letters of credit under the CRC Revolving Credit Facility, as of December 31, 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”).

On November 10, 2021, we amended the CEI Revolving Credit Facility to establish reserves in the total amount of $190 million which are available only for permitted use.

The CEI Revolving Credit Facility matures in July 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 the 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 $924 million of available borrowing capacity under the CEI Revolving Credit Facility, after consideration of $23 million in outstanding letters of credit, $48 million committed for regulatory purposes and the reserves described above, as of December 31, 2021.

CEI Senior Secured Notes due 2025

On July 6, 2020, Escrow Issuer issued $3.4 billion in aggregate principal amount of 6.25% CEI Senior Secured Notes due 2025 pursuant to an indenture dated July 6, 2020 (the “CEI Senior Secured Notes”), by and among the Escrow Issuer, U.S.

On July 6, 2020, the Escrow Issuer issued $3.4 billion in aggregate principal amount of 6.25% Senior Secured Notes due 2025 pursuant to an indenture dated July 6, 2020 (the “CEI Senior Secured Notes”), by and among the Escrow Issuer, U.S.

Bank National Association, as trustee, and U.S.

Bank National Association, as collateral agent.

In connection with the consummation of the Merger, we assumed the rights and obligations under the CEI Senior Secured Notes and the indenture governing the CEI Senior Secured Notes 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.

The Company assumed the rights and obligations under the CEI Senior Secured Notes and the indenture governing such notes on July 20, 2020.

The CEI Senior Secured Notes will mature on July 1, 2025 with interest payable semi-annually in cash in arrears on January 1 and July 1 of each year.

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 “CEI Senior Notes”), by and between the Escrow Issuer and U.S.

On July 6, 2020, the Escrow Issuer issued $1.8 billion in aggregate principal amount of 8.125% Senior Notes due 2027 pursuant to an indenture, dated July 6, 2020 (the “CEI Senior Notes”), by and between the Escrow Issuer and U.S.

Bank National Association, as trustee.

We assumed the rights and obligations under the CEI Senior Notes and the indenture governing the CEI Senior Notes 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.

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.

In September 2021, the Company began to repurchase CEI Senior Notes on the open market and, as of December 31, 2021, a total of $100 million in principal amount of CEI Senior Notes was purchased and the Company recognized a $14 million loss on the early extinguishment of debt.

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”), by and among the Escrow Issuer, U.S.

On July 6, 2020, the 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”), 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 under the CRC Senior Secured Notes and the indenture governing the CRC Senior Secured Notes on July 20, 2020.

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.

The CEI Revolving Credit Facility matures in 2025 and includes a letter of credit sub-facility of $250 million.

and (iii) the one-month adjusted LIBOR rate plus 1.00%, in each case plus an applicable margin.

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 had $1.2 billion of available borrowing capacity, after consideration of $19 million in outstanding letters of credit under CEI Revolving Credit Facility, as of December 31, 2020.

As of December 31, 2020, there were no borrowings outstanding under the CEI Revolving Credit Facility.

In connection with the consummation of the Merger, CRC assumed the rights and obligations under the CRC Senior Secured Notes and the indenture governing such notes.

The CRC Senior Secured Notes will mature on July 1, 2025 with interest payable semi-annually in cash in arrears on January 1 and July 1 of each year.

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 were convertible into approximately 0.014 shares of the Company’s Common Stock (“Company Common Stock”) and approximately $1.17 of cash per $1.00 principal amount of the 5% Convertible Notes.

During the year

ended December 31, 2021, the Company converted the remaining outstanding aggregate principal amount of the 5% Convertible Notes, which resulted in cash payments of $367 million, net of approximately $12 million paid into our trust accounts and the issuance of approximately 5 million shares of Company Common Stock.

The fair value of the shares contributed to, and held in, the trust was $14 million, which is included within Treasury stock.

The Company recognized a loss on the change in fair value of the derivative liability of $16 million recorded in Other income (loss) and a $23 million loss on extinguishment of debt, related to the unamortized discount, on the Statement of Operations.

On October 16, 2017, CRC issued $1.7 billion aggregate principal amount of 5.25% senior notes due 2025 (the “CRC Notes”).

During the year ended December 31, 2021, the Company purchased or redeemed all $1.7 billion of the CRC Notes and recognized a $199 million loss on the early extinguishment of debt.

Senior Notes due 2029

Bank National Association, as Trustee.

The Senior Notes will mature on October 15, 2029 with interest payable on April 15 and October 15 of each year, commencing April 15, 2022.

Proceeds from the issuance of the Senior Notes, as well as cash on hand, was used to repay the CRC Notes, as described above.

Convention Center Mortgage Loan

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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.

The Company borrowed $246 million from GLPI to fund the purchase price of the real estate underlying Lumière, which was scheduled to mature on October 1, 2020.

On June 24, 2020, the Company received approval from Missouri Gaming Commission to sell the real estate underlying Lumière to GLPI and leaseback the property under a long-term financing obligation.

As of December 31, 2020, the Lumière loan has been satisfied in full and the real estate has been refinanced under a financing obligation.

See Note 10 .

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”), which was increased by $1.8 billion pursuant to an incremental agreement executed in connection with the Merger (the “CRC Incremental Term Loan”).

The CRC Revolving Credit Facility matures in 2022 and includes a letter of credit sub-facility.

The CRC Term Loan matures in 2024.

The CRC Incremental Term Loan matures in 2025.

Each of the CRC Term Loan and the CRC Incremental Term Loan require scheduled quarterly principal payments in amounts equal to 0.25% of the original aggregate principal amount, with the balance due at maturity.

The credit agreement for the CRC Revolving Credit Facility also includes customary voluntary and mandatory prepayment provisions, subject to certain exceptions.

As of December 31, 2020, approximately $65 million was committed to outstanding letters of credit.

As of December 31, 2020, there were no borrowings outstanding under the CRC Revolving Credit Facility.

(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, 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.

On October 16, 2017, CRC issued $1.7 billion aggregate principal amount of 5.25% senior notes due 2025 (the “CRC Notes”).

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 December 31, 2020, we have paid approximately $903 million and issued approximately 10.8 million shares upon conversion of $770 million of the 5% Convertible Notes during 2020.

The Company has determined that the 5% Convertible Notes contain derivative features that require bifurcation.

The Company separately accounts for the liability component and equity conversion option of the 5% 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 conversion option component.

The value of the liability is determined based on a discounted cash flow of the debt instrument.

See Note 8 for more information on the 5% 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 $80 million, $8 million and $6 million for the years ended December 31, 2020, 2019 and 2018, 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 Non-CPLV lease (as amended, 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.

On December 24, 2020, the Company entered into agreement to sell Caesars Southern Indiana to the Eastern Band of Cherokee Indians (“EBCI”) for $250 million, subject to a customary working capital adjustment.

Caesar’s annual payments to VICI Properties under the Regional Lease will decline by $33 million upon closing of the transaction.

Our VICI lease is accounted for as a financing obligation and totaled $11.0 billion as of December 31, 2020.

Furthermore, we obtained waivers from VICI with relation to annual capital expenditure requirements for 2020.

See Note 10 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 December 31, 2020.

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

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

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 10 to our Consolidated Condensed Financial Statements for additional information about our GLPI Master Lease and related matters.

Beginning October 1, 2021, the Mortgage Loan is subject to an interest rate of 7.854% for the next twelve months.

CEI leases certain real property assets from VICI under the following agreements:

(i) for a portfolio of properties located throughout the United States (the “Regional Lease”), (ii) for Caesars Palace Las Vegas and Harrah’s Las Vegas (the “Las Vegas Lease”), and (iii) for Harrah’s Joliet Hotel & Casino (the “Joliet Lease”).

The lease agreements, inclusive of all amendments, include (i) a 15-year initial term with four five-year renewal options, (ii) annual fixed rent payments of $1.1 billion, subject to annual escalation provisions based on the CPI and a 2% floor commencing in lease year two of the initial term and (iii) a variable element based on net revenues of the underlying leased properties, commencing in lease year eight of the initial term.

The Regional Lease includes a put-call option whereby the Company may require VICI to purchase and lease back (as lessor) or whereby VICI may require the Company to sell to VICI and lease back (as lessee) the real estate components of the gaming and racetrack facilities of Harrah’s Hoosier Park Racing & Casino and Indiana Grand (“Centaur properties”).

Election to exercise the option by either party must be made during the election period beginning January 1, 2022 and ending December 31, 2024.

Upon either party exercising their option, the Centaur properties would be sold at a price in accordance with the agreement and leased back to CEI in accordance to the pre-existing terms of the Regional Lease.

The sale of Caesars Southern Indiana to EBCI for $250 million was finalized on September 3, 2021 and as a result of the sale, Caesars’ annual payments to VICI Properties under the Regional Lease decreased by $33 million and variable rent under the lease shall exclude net revenue attributable to Caesars Southern Indiana.

Our VICI Leases are accounted for as a financing obligation and totaled $11.1 billion as of December 31, 2021.

See Note 10 to our Financial Statements for additional information about our VICI Leases and related matters.

The GLPI Master Lease, encompassing a portfolio of properties within the United States, provides for the lease of land, buildings, structures and other improvements on the land (including barges and riverboats), easements and similar appurtenances to the land and improvements relating to the operation of the leased properties.

The GLPI Master Lease, inclusive of all amendments, provides for (i) an initial term of 20 years (through September 2038), with four five-year renewals at the Company’s option, (ii) annual land and building base rent of $24 million and $63 million, (iii) escalating provisions of building base rent equal to 101.25% of the rent for the preceding year for lease years five and six, 101.75% for lease years seven and eight and 102% for each lease year thereafter and (iv) relief from the operating, capital expenditure and financial covenants in the event of involuntary closures.

The Lumière Lease was entered into by the Company and GLPI, whereby the Company sold the real estate underlying Lumière to GLPI and leased back the property under a long-term financing obligation.

The Lumière Lease, inclusive of all amendments, provides for (i) an initial term commencing on September 29, 2020 and ending on October 31, 2033, (ii) four five-year renewal options, (iii) annual rent payments of $23 million, (iv) escalation provisions commencing in lease year two equal to 101.25% of the rent for the preceding year for lease years two through five, 101.75% for lease years six and seven and 102% for each lease year thereafter, (v) maintaining a minimum of 1.20:1 adjusted revenue to rent ratio and (vi) certain relief under the financial covenant in the event of involuntary closures.

The GLPI Leases are accounted for as financing obligations and totaled $1.2 billion as of December 31, 2021.

See Note 10 to our Financial Statements for additional information about our GLPI Leases and related matters.

Other Liquidity Matters

We are faced with certain contingencies involving litigation and environmental remediation and compliance.

We are faced with certain contingencies, from time to time, involving litigation, claims, assessments, environmental remediation or compliance.

These commitments and contingencies are discussed in greater detail in “ Part I, Item 3.

Legal Proceedings ” and Note 11 to our consolidated financial statements, both of which are included elsewhere in this Annual Report on Form 10-K.

In addition, new competition may have a material adverse effect on our revenues and could have a similar adverse effect on our liquidity.

Legal Proceedings ” and Note 11 to our Financial Statements, both of which are included elsewhere in this Annual Report on Form 10-K.

In addition, new competition among retail and online operations may have a material adverse effect on our revenues and could have a similar adverse effect on our liquidity.

See “ Part I, Item 1A.

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Business Combinations

We applied the provisions of Accounting Standards Codification (“ASC”) Topic 805, “Business Combinations,” in the accounting for our acquisitions of Former Caesars, Tropicana, Elgin and our previous acquisitions.

We applied the provisions of Accounting Standards Codification (“ASC”) Topic 805, “Business Combinations,” in the accounting for our acquisitions of Former Caesars, William Hill PLC, and our additional interest in Horseshoe Baltimore.

It required us to recognize the assets acquired and the liabilities assumed at their acquisition date fair values, which were determined using market, income, and cost approaches, or a combination.

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The fair value for these intangible assets was determined using either the relief from royalty method and excess earnings method under the income approach or a replacement cost market approach.

Trademarks and Caesars Rewards were valued using the relief from royalty method, which presumes that without ownership of such trademarks or loyalty program, we would have to make a stream of payments to a brand or franchise owner in return for the right to use their name or program.

By virtue of this asset, we avoid any such payments and record the related intangible value of the Company’s ownership of the brand name or program.

Acquired trademarks, developed technology and Caesars Rewards were valued using the relief from royalty method, which presumes that without ownership of such trademarks, technology, or loyalty program, we would have to make a stream of

payments to a third party in return for the right to use their name, technology, or program.

By virtue of this asset, we avoid any such payments and record the related intangible value of the Company’s ownership of the brand name, technology, or program.

Customer relationships were valued using the cost approach and the incremental cash flow method under the income approach.

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The fair value of the gaming rights was determined using the excess earnings or replacement cost methodology, based on whether the license resides in gaming jurisdictions where competition is limited to a specified number of licensed gaming operators.

The excess earnings methodology is an income approach methodology that estimates the projected cash flows of the business attributable to the gaming license intangible asset, which is net of charges for the use of other identifiable assets of the business including working capital, fixed assets and other intangible assets.

The excess earnings methodology is an income approach that estimates the projected cash flows of the business attributable to the gaming license intangible asset, which is net of charges for the use of other identifiable assets of the business including working capital, fixed assets and other intangible assets.

The replacement cost of the gaming license was used as an indicator of fair value.

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The fair value of the financing obligations were calculated as the net present value of both the fixed base rent payments and the forecasted variable payments plus the expected residual value of the land and building returned at the end of the expected usage period.

The fair value of land was determined using the sales comparable approach.

Reacquired rights were valued using the excess earnings method that reflects the present value of the future profit William Hill expected to earn over the remaining term of the contract, adjusted for returns of other assets that contribute to the generation of this profit, such as working capital, fixed assets and other intangible assets.

The forecasted profit used within the valuation was adjusted for the settlement of the preexisting relationship as a component of the purchase consideration.

Fair value of land was determined using the sales comparable approach.

The market data is then adjusted for any significant differences, to the extent known, between the identified comparable sites and the site being valued.

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physical deterioration, functional obsolescence, and/or economic obsolescence.

Assets and liabilities which are designated as held for sale on an acquisition date are also measured at fair value, utilizing similar market, income and cost approaches described above, based on the underlying asset class held for sale.

Cash flow estimates are significant to many valuations described above and may include forecasts with assumptions regarding factors such as recent and budgeted operating performance, future growth rates, and the determination of appropriate discount rates to estimate fair value.

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Fair Value Measurements

The 5% Convertible Notes contain derivative features that require bifurcation.

We estimate the fair value of the 5% Convertible Notes using a market-based approach that incorporates the value of both straight debt and conversion features of the notes.

The valuation model incorporates actively traded prices of the 5% Convertible Notes as of the reporting date, the value of CEI’s equity into which these notes could convert, and assumptions regarding the incremental cost of borrowing for CEI.

The fair value of the 5% Convertible Notes derivative liability is subject to interest rate and market price risk due to the conversion features of the notes and other factors.

Generally, as the fair value of fixed interest rate debt increases (due to a decrease in interest rates) the derivative liability decreases and as the fair value of fixed interest rate debt decreases (due to an increase in interest rates) the derivative liability increases.

The fair value of the 5% Convertible Notes derivative liability may also increase as the market price of our stock rises or due to increased volatility in our stock price which will result in a loss recognized in our Statement of Operations, and decrease as the market price of our stock falls or due to decreased volatility in our stock price which will result in income recognized in our Statement of Operations.

On October 6, 2017, Former Caesars issued $1.1 billion aggregate principal amount of 5% Convertible Notes.

As of December 31, 2020, the fair value of the derivative associated with the 5% Convertible Notes was $326 million when the price per share of our common stock was $74.27.

During the year ended December 31, 2020, we recognized a loss of $111 million associated to the changes in fair value of the derivative as a result of fluctuations in the share price of our common stock.

We use interest rate swaps, which are derivative instruments classified as hedging transactions, to limit our exposure to interest rate risk.

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We determine the fair value of our indefinite-lived intangible assets using either the relief from royalty method or the excess earnings method under the income approach or replacement cost market approach.

The determination of fair value of our reporting units and indefinite-lived intangible assets requires management to make significant assumptions and estimates around the forecasts as well as the selection of discount rates and valuation multiples.

Changes in these estimates could have a significant impact on the fair value of our reporting units and intangible assets and the amount of goodwill or indefinite-lived intangible asset impairments, if any.

The determination of fair value of our

reporting units and indefinite-lived intangible assets requires management to make significant assumptions and estimates around the forecasts as well as the selection of discount rates and valuation multiples.

Changes in these estimates could have a significant impact on the fair value of our reporting units, intangible assets and result in potential impairment.

Forecasts and the determination of appropriate discount rates and valuation multiples used to determine the fair value of our reporting units and indefinite-lived intangible assets involves significant assumptions and estimates.

Assumptions include those used assess future effects of COVID-19 as well as the realization of synergies anticipated from the Merger which may not be realized at the projected rate.

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 year ended December 31, 2020.

The impairment charges resulted in a reduction to the carrying amounts of the right-of-use assets, property and equipment, goodwill and other intangibles totaling $1 million, $47 million and $2 million, respectively, recorded in the Regional segment.

The impairment charges resulted in a reduction to the carrying amounts of the right-of-use assets, property and equipment, goodwill and other intangibles totaling $18 million, $23 million and $4 million, respectively, recorded in the Regional segment.

We acquired Former Caesars on July, 20, 2020 and allocated the total purchase consideration transferred to the identifiable assets acquired and liabilities assumed based on their respective fair values, including goodwill and indefinite-lived intangible assets, and therefore, the fair value of the Former Caesars reporting units and indefinite-lived intangible assets do not significantly exceed their respective carrying values.

As of October 1, 2020, two other reporting units in the Regional Segment with goodwill totaling $208 million had fair values that did not significantly exceed their respective carrying values.

Assumptions include those used to assess future effects of COVID-19 as well as the realization of synergies anticipated from acquisitions which may not be realized at the projected rate.

We acquired William Hill PLC on April 22, 2021 and allocated the total purchase consideration transferred to the identifiable assets acquired and liabilities assumed based on their respective fair values and therefore, the fair value of the acquired reporting units and indefinite-lived intangible assets do not significantly exceed their respective carrying values.

As of October 1, 2021, one other reporting unit in the Regional Segment with goodwill totaling $420 million had a fair value that did not significantly exceed its respective carrying values.

To the extent gaming volumes deteriorate in the near future, discount rates increase significantly, or we do not meet our projected performance, we may recognize further impairments, and such impairments could be material.

In addition, $352 million of goodwill within our Regional segment is associated with reporting units with zero or negative carrying value.

See Note 7 for additional information.

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While the total cost of claims incurred depends on future developments, in managements’ opinion, recorded reserves are adequate to cover future claims payments.

Self-insurance reserves for employee medical claims and workers’ compensations are included in accrued payroll and related on the consolidated balance sheets.

Self-insurance reserves for general liability claims are included in accrued other liabilities on the Consolidated Balance Sheets.

Due to the novel nature of the disruption resulting from the COVID-19 public health emergency, actuarial data is limited for determining its effect.

The assumptions utilized by our actuaries are subject to significant uncertainty and if outcomes differ from these assumptions or events develop or progress in a negative manner, the Company could experience a material adverse effect and additional liabilities may be recorded in the future.

Alternatively, as a result of the current work stoppages, a reduction of claims in future periods could be beneficial to our financial condition and results of operations.

Self-insurance reserves for employee medical claims, workers’ compensations and general liability claims are included self-insurance claims and reserves within Accrued other liabilities on the Balance Sheets.

The assumptions, including those related to the COVID-19 public health emergency, utilized by our actuaries are subject to significant uncertainty and if outcomes differ from these assumptions or events develop or progress in a negative manner, the Company could experience a material adverse effect and additional liabilities may be recorded in the future.

Litigation, Claims and Assessments

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Recently Issued Accounting Pronouncements

For information with respect to recent accounting pronouncements and the impact of these pronouncements on our consolidated financial statements, see Note 2, Summary of Significant Accounting Policies – Recently Issued Accounting Pronouncements , in the notes to the consolidated financial statements.

For information with respect to recent accounting pronouncements and the impact of these pronouncements on our Financial Statements, see Note 2, Summary of Significant Accounting Policies – Recently Issued Accounting Pronouncements , in the Notes.

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-K

Item 7. Management’s Discussion and Analysis