Caesars Entertainment, Inc. 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 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, and its subsidiaries, may be referred to as the “Company,” “CEI,” “Caesars,” “we,” “our,” “us,” or the “Registrant.” 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 . Table of Contents 31 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. Objective This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to be a narrative explanation of the financial statements and other statistical data that should be read in conjunction with the accompanying financial statements to enhance an investor’s understanding of our financial condition, changes in financial condition and results of operations. Our objectives are: (i) to provide a narrative explanation of our financial statements that will enable investors to see the Company through the eyes of management; (ii) to enhance the overall financial disclosure and provide the context within which financial information should be analyzed; and (iii) to provide information about the quality of, and potential variability of, our earnings and cash flows so that investors can ascertain the likelihood of whether past performance is indicative of future performance. Overview We are a geographically diversified gaming and hospitality company that was founded in 1973 by the Carano family with the opening of the Eldorado Hotel Casino in Reno, Nevada. Beginning in 2005, we grew through a series of acquisitions, including the acquisition of MTR Gaming Group, Inc. in 2014, Isle of Capri Casinos, Inc. (“Isle” or “Isle of Capri”) in 2017 and Tropicana Entertainment, Inc. in 2018 and a merger with Caesars Entertainment Corporation (“Former Caesars”) on July 20, 2020, 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.” In addition, on April 22, 2021, we completed the acquisition of William Hill PLC (the “William Hill Acquisition”). We currently own, lease or manage an aggregate of 51 domestic properties in 16 states with approximately 52,800 slot machines, video lottery terminals and e-tables, approximately 2,800 table games and approximately 47,200 hotel rooms as of December 31, 2022. 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. Our primary source of revenue is generated by our casino properties’ gaming operations, including our retail and online sports betting, as well as our online gaming, and we utilize our hotels, restaurants, bars, entertainment, racing, retail shops and other services to attract customers to our properties. As of December 31, 2022, we owned 20 of our casinos and leased 25 casinos in the U.S. 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 (collectively, “VICI Leases”). We also lease six 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.” Table of Contents 32 We also operate and conduct sports wagering across 28 jurisdictions in North America, 20 of which are mobile for sports betting, and operate regulated online real money gaming in six jurisdictions in North America. Our 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, 2022: On January 1, 2023, we launched mobile sports betting on our Liberty platform in Ohio and Caesars Sportsbook is now accepting in-person sports wagers and mobile account cash deposits at certain destinations including Eldorado Gaming Scioto Downs. In addition to the Caesars Sportsbook app, we partnered with NYRABets LLC, the official online wagering platform of the New York Racing Association, Inc., and launched the Caesars Racebook app within eight states as of December 31, 2022. The Caesars Racebook app provides access for pari-mutuel wagering at over 300 race tracks around the world as well as livestreaming of races. Wagers placed can earn credits towards our Caesars Rewards loyalty program or points which can be redeemed for free wagering credits. We are also in the process of continuing the expansion of our Caesars Digital footprint in the near term with our Caesars Sportsbook and Caesars Racebook apps as jurisdictions legalize or provide necessary approvals. Table of Contents 33 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 divestitures of our properties as of December 31, 2022 is as follows: Segment Property Date Sold Sales Price 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 $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”) May 5, 2022 * Discontinued operations: Regional Harrah’s Reno September 30, 2020 $42 million (b) Regional Bally’s Atlantic City November 18, 2020 $25 million (b) Regional Harrah’s Louisiana Downs November 1, 2021 $22 million (b) 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 July 1, 2022 £2.0 billion ____________________ * Not meaningful. (a) Kansas City and Vicksburg were sold for aggregate consideration of $230 million. (b) The proceeds of this sale were split between the Company and VICI. See Item 8. 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 William Hill Acquisition On September 30, 2020, we announced that we had reached an agreement with William Hill PLC on the terms of a recommended cash acquisition pursuant to which we would acquire the entire issued and to be issued share capital (other than shares owned by us or held in treasury) of William Hill PLC, in an all-cash transaction. On the acquisition date, our intent was to divest William Hill PLC’s non-U.S. operations, including the United Kingdom and international online divisions and the retail betting shops (collectively, “William Hill International”), which were held for sale as of the date of the closing of the William Hill Acquisition with such operations reflected within discontinued operations. On April 22, 2021, we completed the acquisition of William Hill PLC for £2.9 billion , or approximately $3.9 billion . On September 8, 2021, we entered into an agreement to sell William Hill International to 888 Holdings Plc for approximately £2.2 billion. On April 7, 2022, we amended the agreement to sell William Hill International to 888 Holdings Plc for a revised enterprise value of approximately £2.0 billion. The amended agreement reflected a £250 million reduction in consideration payable at closing and up to £100 million as deferred consideration to be paid to us, subject to 888 Holdings Plc meeting certain 2023 financial targets. During the year ended December 31, 2022, the Company recorded impairments to assets held for sale of $503 million within discontinued operations based on the revised and final sales prices. On July 1, 2022, we completed the sale of William Hill International to 888 Holdings Plc and outstanding borrowings under the Bridge Credit Agreement between the Company and certain lenders party thereto and Deutsche Bank AG, London Branch as administrative agent and collateral agent were immediately repaid. After the repayment of the Bridge Credit Agreement, other permitted leakage, and the settlement of related forward contracts, we received net proceeds of $730 million. Including open market repurchases and repayments, we utilized all $730 million to reduce our outstanding debt. We recognized acquisition-related transaction costs of $21 million, $68 million and $8 million for the years ended December 31, 2022, 2021 and 2020, respectively, excluding additional transaction cost associated with sale of William Hill International. These costs were associated with legal, professional services and certain severance and retention costs and were primarily recorded in Transaction and other costs in our Statements of Operations. Table of Contents 34 Consolidation of Horseshoe Baltimore On August 26, 2021, we increased our ownership interest in CBAC Borrower, LLC (“Horseshoe Baltimore”), a property which we also manage, to approximately 75.8% for cash consideration of $55 million. 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. Subsequent to the change in ownership, we determined that we have a controlling financial interest and began to consolidate the operations of Horseshoe Baltimore. Merger with Caesars Entertainment Corporation On July 20, 2020, the Merger was consummated and Former Caesars became a wholly-owned subsidiary of ours. The strategic rationale for the Merger includes, but is not limited to, the following: • Creation of the largest owner, operator and manager of domestic gaming assets • Diversification of the Company’s domestic footprint • Access to iconic brands, rewards programs and new gaming opportunities expected to enhance customer experience • Realization of significant identified synergies 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 and $160 million for the years ended December 31, 2021 and 2020, respectively. Investments and Partnerships NeoGames 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, we sold a portion of our shares of NeoGames common stock for $136 million which decreased our ownership interest from 24.5% to approximately 8.4%. Additionally, on March 14, 2022 we sold our remaining 2 million shares at fair value for $26 million. During the years ended December 31, 2022 and 2021, we recorded losses related to the investment in NeoGames of $34 million and $54 million, respectively, which is included within Other income (loss) on the Statements of Operations. Pompano Joint Venture In April 2018, we 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 our Pompano property. As the managing member, Cordish will operate the business and manage the development, construction, financing, marketing, leasing, maintenance and day-to-day operation of the various phases of the project. Additionally, Cordish is responsible for the development of the master plan for the project with our input and will submit it for our 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 contributions since inception of the joint venture. On February 12, 2021, we 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 we have no further obligation to contribute additional real estate or cash. While we hold a 50% variable interest in the joint venture, we are not the primary beneficiary; as such the investment in the joint venture is accounted for using the equity method. We participate evenly with Cordish in the profits and losses of the joint venture, which are included in Transaction and other costs on our Statements of Operations. As of December 31, 2022 and 2021, the Company’s investment in the joint venture is recorded in Investment in and advances to unconsolidated affiliates on our Balance Sheets. Reportable Segments 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. 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. See Item 2. “Properties” for listing of properties by segment. Table of Contents 35 Presentation of Financial Information 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, described above, is not fully comparable to the periods prior to their respective sale dates. This MD&A is intended to provide information to assist in better understanding and evaluating our financial condition and results of operations. Our historical operating results may not be indicative of our future results of operations because of the factors described in the preceding paragraph and the changing competitive landscape in each of our markets, including changes in market and societal trends, increased competition, as well as by factors or trends discussed elsewhere herein. We recommend that you read this MD&A in conjunction with our audited consolidated financial statements and the notes to those statements included in this Annual Report on Form 10-K. Key Performance Metrics Our primary source of revenue is generated by our gaming operations, including 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. 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 16% to 23% of table game drop in both the Las Vegas and Regional segments. 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 The following summary highlights the significant factors impacting our financial results during the years ended December 31, 2022, 2021 and 2020. Acquisitions and Transaction Costs • William Hill Acquisition – On April 22, 2021, we consummated the 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 $21 million, $68 million and $8 million for the years ended December 31, 2022, 2021 and 2020, respectively, excluding additional transaction costs associated with sale of William Hill International. • Consolidation of Horseshoe Baltimore – On August 26, 2021, we increased our ownership interest in Horseshoe Baltimore to approximately 75.8%. Prior to the purchase, we 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, we determined we have a controlling financial interest and have consolidate the operations of Horseshoe Baltimore. As a result of the consolidation, we 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 and we have recognized acquisition-related transaction costs in connection with the Merger of $30 million and $160 million for the years ended December 31, 2021 and 2020, respectively. Table of Contents 36 Divestitures and Discontinued Operations • Divestitures and Discontinued Operations – See “Overview” section above for detail of properties divested, including related discontinued operations. Financing Transactions • Debt Transactions - We continue to utilize free cash flow to reduce our leverage and extend the maturity of our outstanding debt. The following are the key financing transactions and their effects on our operations, from the use of free cash flow, unless otherwise noted: ◦ Utilized proceeds from the sale of William Hill International and cash on hand to make partial prepayments of $755 million of the outstanding principal of the CRC Incremental Term Loan. ◦ Repaid $300 million of the outstanding principal of the CRC Term Loan, excluding the prepayment resulting from the proceeds of the CEI Term Loan A described below. ◦ Purchased a total of $11 million in principal amount of the CRC Senior Secured Notes and $89 million in principal amount of CEI Senior Notes due 2027. ◦ Amended the CEI Credit Agreement and utilized the entire proceeds of a new $750 million CEI Term Loan A to make a partial prepayment of the outstanding principal of the CRC Term Loan, terminate the CRC Revolving Credit Facility and increase the aggregate principal amount of the CEI Revolving Credit Facility to $2.25 billion. ◦ For the years ended December 31, 2022, 2021 and 2020, we recorded loss on extinguishment of debt of $85 million, $236 million and $197 million respectively, which is recorded within Loss on extinguishment of debt on the Statement of Operations due to the aforementioned activity. ◦ Refer to the Liquidity and Capital Resources section below for a further discussion of our recent debt transactions, including our financing transactions in 2023 in which we issued new CEI Senior Secured Notes due 2030, a new CEI Term Loan B, and fully repaid the CRC Term Loan and CRC Incremental Term Loan. Other Significant Factors • Economic Factors Impacting Discretionary Spending – Gaming and other leisure activities we offer represent discretionary expenditures which may be sensitive to economic downturns. The resurgence of the Omicron variant of COVID-19 impacted the beginning of the year, however, many of our properties experienced positive trends during much of the year ended December 31, 2022, including higher hotel occupancy and rates, particularly in Las Vegas, and increased gaming and food and beverage volumes coupled with improved product mix. The reduction in mandates and restrictions, combined with pent up consumer demand and supplemental discretionary spend from governmental stimulus, resulted in strong results across our properties during 2021. In addition to the loss of government stimulus programs from prior year that increased consumer discretionary spend, we are monitoring the trend of higher inflation in the current year and the possible implications to our customers. Although we have seen some periods of reduced visitation from those customers that are most affected by inflation, visitation from those customers not as sensitive to inflation remains steady or has slightly improved. Table of Contents 37 • Impairment Charges – As a result of our finalized and approved capital and operating plans and the completion of our 2022 annual impairment testing, we recognized impairment charges during the year ended December 31, 2022 in our Regional segment primarily due to an increase in the related discount rates, which represents the higher required cost of capital as a result of the macroeconomic environment and projected outlook. We identified one property, where the estimated fair value of the associated gaming rights was less than the carrying value and we recorded an impairment of $30 million. In addition, we identified two properties, where the estimated fair value of the enterprise was less than the carrying value and recorded an impairment to goodwill of $78 million. In December 2021, we approved a capital plan which included the planned rebranding of certain of our properties. We 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 during the year ended December 31, 2021. During the year ended December 31, 2020, we recognized impairment charges in our Regional segment related to goodwill and trade names totaling $100 million and $16 million, respectively, due to the effects of COVID-19. 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. • Weather Disruption – In late August 2020, our Regional segment was negatively impacted by Hurricane Laura, causing severe damage to Isle of Capri Casino Hotel Lake Charles. As a result of the damage, the property remained closed during the construction of a new land-based location, Horseshoe Lake Charles, which opened in December 2022. During the year ended December 31, 2022, we reached a final settlement agreement with the insurance carriers for the damage and disruption for a total amount of $128 million, before our insurance deductible of $25 million. We have received a total of $103 million related to damaged fixed assets, remediation costs and business interruption. We recorded gains of $38 million and $21 million during the years ended December 31, 2022 and 2021 , respectively, which are included in Transaction and other costs in our Statements of Operations, as proceeds received for the cost to replace damaged property were in excess of respective carrying value of the assets. • Caesars Sportsbook and Caesars Racebook – In connection with the launch and rebranding of the Caesars Sportsbook app, our Caesars Digital segment launched a significant marketing campaign in the second half of 2021 with distinguished actors, former athletes and other media personalities. As new states and jurisdictions have legalized sports betting, we have made significant upfront investments which have been executed through marketing campaigns and promotional incentives to acquire new customers and establish ourselves as an industry leader. For example, in connection with the launch of our Caesars Sportsbook app in the state of New York on January 8, 2022 and Louisiana on January 28, 2022, we experienced negative net revenue at the beginning of 2022 resulting from a substantial amount of bonus cash and matched deposits issued to customers as sign-on incentives, which exceeded our gaming win. Our level of investment and types of incentives provided are discretionary and are not expected to continue at elevated levels subsequent to the initial launch period. In addition, as our Caesars Racebook launches in new states and jurisdictions, we may offer deposit matching incentives to new users. A significant portion of our marketing and promotional costs are variable and we continue to monitor and adjust our level of investment based on jurisdiction specific conditions, customer behaviors, and results observed from prior state launches. Table of Contents 38 Results of Operations The following table highlights the results of our operations: Years Ended December 31, (Dollars in millions) 2022 2021 2020 Net revenues: Las Vegas $ 4,287 $ 3,409 $ 751 Regional 5,704 5,537 2,660 Caesars Digital 548 337 95 Managed and Branded 282 278 107 Corporate and Other (a) — 9 15 Total $ 10,821 $ 9,570 $ 3,628 Net loss $ (910) $ (1,016) $ (1,758) Adjusted EBITDA (b) : Las Vegas $ 1,964 $ 1,568 $ 133 Regional 1,985 1,979 711 Caesars Digital (666) (476) 26 Managed and Branded 84 87 25 Corporate and Other (a) (124) (168) (101) Total Segment Adjusted EBITDA $ 3,243 $ 2,990 $ 794 Net loss margin (8.4) % (10.6) % (48.5) % Adjusted EBITDA margin 30.0 % 31.2 % 21.9 % ___________________ (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. (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 income (loss) to Adjusted EBITDA. Consolidated comparison for the years ended December 31, 2022, 2021 and 2020 The following table highlights the results of our operations: Comparisons between 2022 and 2021 are described below. A discussion of changes in our results of operations between year ended December 31, 2021 compared to 2020 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, 2021 Compared to the Year Ended December 31, 2020 ” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Net Revenues Net revenues were as follows: Years Ended December 31, Variance Percent Change Variance Percent Change (Dollars in millions) 2022 2021 2020 2022 vs 2021 2021 vs 2020 Casino $ 5,997 $ 5,827 $ 2,482 $ 170 2.9 % $ 3,345 134.8 % Food and beverage 1,596 1,140 342 456 40.0 % 798 * Hotel 1,957 1,551 450 406 26.2 % 1,101 * Other 1,271 1,052 354 219 20.8 % 698 197.2 % Net Revenues $ 10,821 $ 9,570 $ 3,628 $ 1,251 13.1 % $ 5,942 163.8 % ___________________ * Not meaningful. Table of Contents 39 Despite the resurgence of the Omicron variant during the beginning of 2022, consolidated net revenues increased for the year ended December 31, 2022. The Company’s net revenues have benefited from steady gaming volumes at our properties, increased hotel occupancy and room rates, and improved food and beverage offerings. Banquets and conventions have improved during the current year, in addition to a strengthening of international visitation. The Company continues to remain strategic with new food and beverage offerings with a focus on operating margins and product mix. Restaurant covers have increased during the year, driven by our Las Vegas segment. Live entertainment events have also increased year over year following the prolonged impacts from COVID-19. Additionally, the consolidation of Horseshoe Baltimore on August 26, 2021 contributed to the increase in net revenues for the year ended December 31, 2022. These increases were offset slightly by negative gaming revenue in our Caesars Digital segment in the first quarter of 2022 and construction disruption experienced at certain properties. Operating Expenses Operating expenses were as follows: Years Ended December 31, Variance Percent Change Variance Percent Change (Dollars in millions) 2022 2021 2020 2022 vs 2021 2021 vs 2020 Casino $ 3,526 $ 3,129 $ 1,271 $ 397 12.7 % $ 1,858 146.2 % Food and beverage 935 707 265 228 32.2 % 442 166.8 % Hotel 529 438 170 91 20.8 % 268 157.6 % Other 411 373 140 38 10.2 % 233 166.4 % General and administrative 2,068 1,782 902 286 16.0 % 880 97.6 % Corporate 286 309 195 (23) (7.4) % 114 58.5 % Impairment charges 108 102 215 6 5.9 % (113) (52.6) % Depreciation and amortization 1,205 1,126 583 79 7.0 % 543 93.1 % Transaction and other costs 14 144 270 (130) (90.3) % (126) (46.7) % Total operating expenses $ 9,082 $ 8,110 $ 4,011 $ 972 12.0 % $ 4,099 102.2 % Casino expenses consist primarily of salaries and wages associated with our gaming operations, gaming taxes and marketing and promotions attributable to our Caesars Digital segment. Food and beverage expenses consist principally of salaries and wages and costs of goods sold associated with our food and beverage operations. Hotel expenses consist principally of salaries and wages, supplies and costs of services associated with our hotel operations. Other expenses consist principally of salaries and wages and costs of goods sold associated with our retail, entertainment and other operations. Casino, food and beverage, hotel, and other expenses for the year ended December 31, 2022 increased year over year following the revenue increases noted above, in addition to the impacts of the William Hill Acquisition and the consolidation of Horseshoe Baltimore. Advertising costs consisting of television, radio and internet marketing campaigns directly attributable to our Caesars Sportsbook app also contributed to the increase, particularly during the launch of the app in New York and Louisiana during the first quarter. These increases were partially offset as we scaled back our advertising efforts subsequent to the first quarter of 2022 and continue to identify more efficient methods to manage marketing and promotional spend and reduce gaming expenses within our Las Vegas and Regional segments. Further, we have managed increases in food costs 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, internal audit, and property taxes. General and administrative expenses also include other marketing expenses indirectly related to our gaming and non-gaming operations. General and administrative expenses and depreciation and amortization expense increased for the year ended December 31, 2022 as compared to the same prior year period, mainly due to the William Hill Acquisition and the consolidation of Horseshoe Baltimore. Property information technology costs, other marketing expenses and utility expenses also increased compared to the prior year. Corporate expenses include unallocated expenses such as payroll, inclusive of the annual bonus, stock-based compensation, professional fees, and other various expenses not directly related to the Company’s operations. Table of Contents 40 Transaction and other costs for the year ended December 31, 2022 decreased year over year due to a gain of approximately $38 million as proceeds received for the Isle of Capri Casino Hotel Lake Charles property damage were in excess of the respective carrying value of the assets. Additionally, no significant acquisition related transaction costs were incurred during the year as compared to the William Hill Acquisition in the prior year. Other Expense Other expense was as follows: Years Ended December 31, Variance Percent Change Variance Percent Change (Dollars in millions) 2022 2021 2020 2022 vs 2021 2021 vs 2020 Interest expense, net $ (2,265) $ (2,295) $ (1,202) $ 30 1.3 % $ (1,093) (90.9) % Loss on extinguishment of debt (85) (236) (197) 151 64.0 % (39) (19.8) % Other income (loss) 46 (198) 176 244 * (374) * Benefit (provision) for income taxes 41 283 (132) (242) (85.5) % 415 * ___________________ * Not meaningful. For the year ended December 31, 2022, interest expense, remained consistent year over year as a result of decreased interest expense associated with our debt instruments, offset by increases in interest expense associated with the financing obligations related to our leases with VICI and GLPI which contain annual escalators which have resulted in increased interest expense year over year. Repayments and early extinguishments during the prior year, which continued into the current year, and favorable interest rates from new debt have resulted in lower interest expense associated with our debt. Loss on extinguishment of debt for the year ended December 31, 2022 was attributable to the extinguishment of deferred financing costs and discounts associated with early partial repayments of the CRC Term Loan and the CRC Incremental Term Loan. Loss on extinguishment of debt for the year ended December 31, 2021 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. For the year ended December 31, 2022, other income (loss) primarily consisted of a gain related to the resolution of a portion of disputed claims liability related to Former Caesars’ bankruptcy and a change in the fair value of foreign exchange forward contracts, offset by the change in fair value of investments. For the year ended December 31, 2021, other income (loss) primarily consisted of 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 7.2% for 2022, 22.3% for 2021, and (8.2)% for 2020. The effective tax rate in 2022 differed from the statutory rate of 21% primarily due to an increase in tax expense due to state rate changes and a deferred tax adjustment related to the tax impact of the settlement of preexisting relationships upon the William Hill Acquisition in 2021 that was partially offset by changes to the valuation allowance. 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. Table of Contents 41 Segment comparison for the years ended December 31, 2022, 2021 and 2020 Las Vegas Segment Years Ended December 31, Variance Percent Change Variance Percent Change (Dollars in millions) 2022 2021 2020 2022 vs 2021 2021 vs 2020 Revenues: Casino $ 1,247 $ 1,226 $ 319 $ 21 1.7 % $ 907 * Food and beverage 1,063 702 130 361 51.4 % 572 * Hotel 1,341 968 186 373 38.5 % 782 * Other 636 513 116 123 24.0 % 397 * Net revenues $ 4,287 $ 3,409 $ 751 $ 878 25.8 % $ 2,658 * Table game drop $ 3,464 $ 3,088 $ 1,082 $ 376 12.2 % $ 2,006 185.4 % Table game hold % 22.0 % 20.2 % 16.6 % 1.8 pts 3.6 pts Slot handle $ 10,718 $ 10,309 $ 3,498 $ 409 4.0 % $ 6,811 194.7 % Hotel occupancy 92.2 % 82.1 % 47.2 % 10.1 pts 34.9 pts Adjusted EBITDA $ 1,964 $ 1,568 $ 133 $ 396 25.3 % $ 1,435 * Adjusted EBITDA margin 45.8 % 46.0 % 17.7 % (0.2) pts 28.3 pts Net income (loss) attributable to Caesars $ 1,021 $ 641 $ (287) $ 380 59.3 % $ 928 * ___________________ * Not meaningful. Las Vegas segment’s net revenues and net income (loss) and Adjusted EBITDA increased year over year. Visitation to Las Vegas has continued to trend toward levels experienced prior to the COVID-19 pandemic. Table game drop and slot handle have increased with slight increases in hold. Increased casino revenues were slightly offset by gaming capacity disruption at Caesars Palace caused by the renovation to the front entrance during the third quarter of 2022. Restaurant covers have increased during the year and we continue to expand food and beverage offerings, including Bobby’s Burgers, Nobu, and The Bedford by Martha Stewart at Paris, among others, with additional venues scheduled to open in 2023. Banquets and conventions have contributed to the positive results during the year helping continued growth in hotel occupancy and room rates. Slot win percentage in Las Vegas during the year ended December 31, 2022 was within our typical range. Table of Contents 42 Regional Segment Years Ended December 31, Variance Percent Change Variance Percent Change (Dollars in millions) 2022 2021 2020 2022 vs 2021 2021 vs 2020 Revenues: Casino $ 4,291 $ 4,305 $ 2,079 $ (14) (0.3) % $ 2,226 107.1 % Food and beverage 533 438 211 95 21.7 % 227 107.6 % Hotel 616 583 264 33 5.7 % 319 120.8 % Other 264 211 106 53 25.1 % 105 99.1 % Net revenues $ 5,704 $ 5,537 $ 2,660 $ 167 3.0 % $ 2,877 108.2 % Table game drop $ 4,270 $ 4,163 $ 2,386 $ 107 2.6 % $ 1,777 74.5 % Table game hold % 22.0 % 21.0 % 20.6 % 1 pts 0.4 pts Slot handle $ 42,853 $ 42,873 $ 24,441 $ (20) — % $ 18,432 75.4 % Adjusted EBITDA $ 1,985 $ 1,979 $ 711 $ 6 0.3 % $ 1,268 178.3 % Adjusted EBITDA margin 34.8 % 35.7 % 26.7 % (0.9) pts 9 pts Net income (loss) attributable to Caesars $ 463 $ 637 $ (349) $ (174) (27.3) % $ 986 * ___________________ * Not meaningful. Regional segment’s net income (loss) decreased during the year ended December 31, 2022 primarily due to impairments of $108 million recognized during the period, and a non-recurring prior year gain of $40 million related to our investment in Horseshoe Baltimore. Net revenues and Adjusted EBITDA increased slightly for the year ended December 31, 2022 compared to the same prior year period, in part from the consolidation of Horseshoe Baltimore. Table game volume for the year ended December 31, 2022 remained comparable, however slot volume decreased slightly from strong results during 2021 due to the reduction in supplemental discretionary spend from governmental stimulus. Performance among our Regional properties was affected by a resurgence of the Omicron variant of COVID-19 in the beginning of 2022; however, the Regional segment trended positively due to improved food and beverage offerings, increased hotel revenues and an increase in banquets. We continue to monitor trends observed during the current year of periods of reduced visitation from certain customers most affected by current inflationary pressures whereas visitation from customers not as affected by such pressures remains steady or has slightly improved. Further, renovations and capital projects at Harrah’s New Orleans and Atlantic City properties have led to slight disruptions in operations. Despite these headwinds, and the impact of our recent divestitures described above, our results of operations remain strong as compared to pre-pandemic years. Slot win percentage in the Regional segment during the year ended December 31, 2022 was within our typical range. Table of Contents 43 Caesars Digital Segment Years Ended December 31, Variance Percent Change Variance Percent Change (Dollars in millions) 2022 2021 2020 2022 vs 2021 2021 vs 2020 Revenues: Casino (a) $ 462 $ 296 $ 84 $ 166 56.1 % $ 212 * Other 86 41 11 45 109.8 % 30 * Net revenues $ 548 $ 337 $ 95 $ 211 62.6 % $ 242 * Sports betting handle (b) $ 12,801 $ 6,046 $ 30 $ 6,755 111.7 % $ 6,016 * Sports betting hold % 5.4 % 4.3 % 3.3 % 1.1 pts 1 pts iGaming handle $ 8,073 $ 5,621 $ 2,448 $ 2,452 43.6 % $ 3,173 129.6 % iGaming hold % 3.2 % 3.3 % 3.5 % (0.1) pts (0.2) pts Adjusted EBITDA $ (666) $ (476) $ 26 $ (190) (39.9) % $ (502) * Adjusted EBITDA margin (121.5) % (141.2) % 27.4 % 19.7 pts * Net income (loss) attributable to Caesars $ (790) $ (580) $ 26 $ (210) (36.2) % $ (606) * ___________________ * Not meaningful. (a) Includes total promotional and complimentary incentives related to sports betting, iGaming, and poker of $542 million, $187 million and $28 million for the year ended December 31, 2022, 2021, and 2020, respectively. Promotional and complimentary incentives for poker were $21 million, $18 million and $6 million for the year ended December 31, 2022, 2021, and 2020, respectively. (b) Caesars Digital generated an additional $1,223 million and $706 million of sports betting handle for the year ended December 31, 2022 and 2021, respectively, which is not included in this table, 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. Hold related to these operations was 11.0% and 9.7%, for the year ended December 31, 2022 and 2021, respectively. Sports betting handle includes $50 million and $40 million for the year ended December 31, 2022 and 2021, respectively, related to horse racing and pari-mutuel wagers. Caesars Digital includes the operations for our retail and mobile sports betting, online casino, poker and horse racing, which includes our Caesars Sportsbook and Caesars Racebook apps. Caesars Digital’s sports betting handle, iGaming handle, and net revenues increased significantly for the year ended December 31, 2022 compared to the same prior year period due to the William Hill Acquisition, the launch of our Caesars Sportsbook app in 2021, and the expansion of sports betting into additional states and jurisdictions subsequent to the acquisition. Net Revenues increased overall during the year ended December 31, 2022 due to higher handle and improved sports betting hold. Net revenues during the first quarter of 2022 were negatively impacted by costs associated with significant promotions offered with the launch of our Caesars Sportsbook, particularly in New York and Louisiana, which included cash bonuses and matched deposits to new customers as sign-on incentives. Following the first quarter, Caesars digital’s operations continued to improve for the remainder of 2022, nearly reaching positive net income and adjusted EBITDA during the fourth quarter. Sports betting and iGaming hold percentages for the year ended December 31, 2022 were within our typical range. We expect to continue to expand into new jurisdictions with our apps, our Caesars branded retail sportsbooks, and our iGaming applications, to the extent such jurisdictions allow. Historically we have deployed a significant level of marketing spend to build brand awareness and acquire and retain customers when entering new jurisdictions. As a result of our established market presence, we expect to remain strategic with our level of investment in new and existing markets. 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. These periods are not expected to be long in duration as we use our discretion to determine the ongoing level of investment for a particular jurisdiction. Table of Contents 44 Managed and Branded Segment Years Ended December 31, Variance Percent Change Variance Percent Change (Dollars in millions) 2022 2021 2020 2022 vs 2021 2021 vs 2020 Revenues: Food and beverage $ — $ — $ 1 $ — * $ (1) (100.0) % Other 282 278 106 4 1.4 % 172 162.3 % Net revenues $ 282 $ 278 $ 107 $ 4 1.4 % $ 171 159.8 % Adjusted EBITDA $ 84 $ 87 $ 25 $ (3) (3.4) % $ 62 * Adjusted EBITDA margin 29.8 % 31.3 % 23.4 % (1.5) pts 7.9 pts Net income (loss) attributable to Caesars $ (301) $ 68 $ 29 $ (369) * $ 39 134.5 % ___________________ * 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) 2022 2021 2020 2022 vs 2021 2021 vs 2020 Reimbursable management revenue $ 198 $ 191 $ 73 $ 7 3.7 % $ 118 161.6 % Reimbursable management cost 198 191 73 7 3.7 % 118 161.6 % Corporate & Other Years Ended December 31, Variance Percent Change Variance Percent Change (Dollars in millions) 2022 2021 2020 2022 vs 2021 2021 vs 2020 Revenues: Casino $ (3) $ — $ — $ (3) * $ — * Other 3 9 15 (6) (66.7) % (6) (40.0) % Net revenues $ — $ 9 $ 15 $ (9) (100.0) % $ (6) (40.0) % Adjusted EBITDA $ (124) $ (168) $ (101) $ 44 26.2 % $ (67) (66.3) % ___________________ * Not meaningful. Supplemental Unaudited Presentation of Consolidated Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) for the Years Ended December 31, 2022, 2021 and 2020 Adjusted EBITDA (described below), a non-GAAP financial measure, has been presented as a supplemental disclosure because it is a widely used measure of performance and basis for valuation of companies in our industry and we believe that this non-GAAP supplemental information will be helpful in understanding our ongoing operating results. Management has historically used Adjusted EBITDA when evaluating operating performance because we believe that the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide a full understanding of our core operating results and as a means to evaluate period-to-period results. Adjusted EBITDA represents net income (loss) 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, 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 transaction costs associated with our acquisitions and divestitures such as (gain) loss on sale, sign-on and retention bonuses, severance expense, business integration and optimization costs, contract exit or termination costs, certain litigation awards and settlements, losses on inventory associated with properties temporarily closed as a result of Table of Contents 45 the COVID-19 public health emergency, 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 VICI Properties Inc. and GLPI and certain regulatory gaming assessments, which can be significant. As a result, Adjusted EBITDA should not be considered as a measure of our liquidity. Other companies that provide EBITDA information may calculate Adjusted EBITDA differently than we do. The definition of Adjusted EBITDA may not be the same as the definitions used in any of our debt agreements. The following table summarizes our Adjusted EBITDA for the years ended December 31, 2022, 2021 and 2020, respectively, in addition to reconciling net income (loss) to Adjusted EBITDA in accordance with GAAP (unaudited): Years Ended December 31, (In millions) 2022 2021 2020 Net loss attributable to Caesars $ (899) $ (1,019) $ (1,757) Net income (loss) attributable to noncontrolling interests (11) 3 (1) Discontinued operations, net of income taxes 386 30 20 (Benefit) provision for income taxes (41) (283) 132 Other (income) loss (a) (46) 198 (176) Loss on extinguishment of debt 85 236 197 Interest expense, net 2,265 2,295 1,202 Impairment charges 108 102 215 Depreciation and amortization 1,205 1,126 583 Transaction costs and other (b) 90 220 300 Stock-based compensation expense 101 82 79 Adjusted EBITDA 3,243 2,990 794 Pre-consolidation, pre-acquisition, and pre-disposition EBITDA, net (c) — 3 261 Total Adjusted EBITDA $ 3,243 $ 2,993 $ 1,055 ____________________ (a) Other (income) loss primarily includes the net changes in fair value of (i) investments held by the Company (ii) foreign exchange forward contracts (iii) the disputed claims liability related to Former Caesars’ bankruptcy prior to the Merger, and (iv) the derivative liability related to the 5% Convertible Notes, which were fully converted during the year ended December 31, 2021, and the change in the foreign exchange rate associated with restricted cash held in GBP associated with our acquisition of William Hill. (b) Transaction costs and other primarily includes costs related to the William Hill Acquisition, the Merger, various contract or license termination exit costs, professional services for integration activities and non-cash changes in equity method investments partially offset by gains resulting from insurance proceeds received in excess of the respective carrying value of the assets damaged at Lake Charles by Hurricane Laura. (c) 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, William Hill prior to its acquisition on April 22, 2021, and Former Caesars prior to the Merger on July 20,2020 are added to Adjusted EBITDA. The results of operations for certain properties divested prior to divestiture are subtracted from Adjusted EBITDA. See Item 7 - Overview above. Such figures are based on unaudited internal financial statements and have not been reviewed by the Company’s auditors for the periods presented. The additional financial information is included to enable the comparison of current results with results of prior periods. 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 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. Table of Contents 46 As of December 31, 2022, our cash on hand and revolving borrowing capacity were as follows: (In millions) December 31, 2022 Cash and cash equivalents $ 1,038 Revolver capacity (a) 2,220 Revolver capacity committed to letters of credit (82) Revolver capacity committed as regulatory requirement (48) Total $ 3,128 ___________________ (a) Revolver capacity includes $2.25 billion under our CEI Revolving Credit Facility, as amended, maturing in January 2028, less $40 million reserved for specific purposes, and $10 million under our Baltimore Revolving Credit Facility, as amended maturing in July 2023. During the year ended December 31, 2022, our operating activities generated operating cash inflows of $1.0 billion, as compared to operating cash inflows of $1.2 billion during the year ended December 31, 2021 due to the results of operations described above. 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 the acquisition date, our intent was to divest William Hill International, which was held for sale as of the date of the closing of the William Hill Acquisition with such operations reflected within discontinued operations. On April 22, 2021, we completed the acquisition of William Hill PLC for £2.9 billion , or approximately $3.9 billion . On September 8, 2021, we entered into an agreement to sell William Hill International to 888 Holdings Plc for approximately £2.2 billion. In order to manage the risk of changes in the GBP denominated sales price and expected proceeds, the Company entered into foreign exchange forward contracts. On April 7, 2022, we amended the agreement to sell William Hill International to 888 Holdings Plc for a revised enterprise value of approximately £2.0 billion. The amended agreement reflected a £250 million reduction in consideration payable at closing and up to £100 million as deferred consideration to be paid to us, subject to 888 Holdings Plc meeting certain 2023 financial targets. During the year ended December 31, 2022, the Company recorded impairments to assets held for sale of $503 million within discontinued operations based on the revised and final sales prices. On July 1, 2022, we completed the sale of William Hill International to 888 Holdings Plc and outstanding borrowings under the Bridge Credit Agreement were immediately repaid. After the repayment of the Bridge Credit Agreement, other permitted leakage, and the settlement of related forward contracts, we received net proceeds of $730 million. Including open market repurchases and repayments, we utilized all $730 million to reduce our outstanding debt. On October 5, 2022, we entered into a third amendment to the CEI Credit Agreement (the “Third Amendment”) which provided for an aggregate principal amount of $750 million senior secured term loan (the “CEI Term Loan A” and together with the CEI Revolving Credit Facility, as so amended, the “Amended CEI Revolving Credit Facility,” the “Senior Credit Facilities”) as a new term loan under the credit agreement, increased the aggregate principal amount of the CEI Revolving Credit Facility to $2.25 billion and made certain other amendments to the credit agreement. Both the Amended CEI Revolving Credit Facility and the CEI Term Loan A mature on January 31, 2028, subject to a springing maturity in the event our certain other long-term debt is not extended or repaid. The Amended CEI Revolving Credit Facility includes a letter of credit sub-facility of $388 million. Concurrently with the closing of the Senior Credit Facilities, we terminated the CRC Revolving Credit Facility and utilized the entire proceeds of the CEI Term Loan A of $750 million to make a partial prepayment of the outstanding principal balance of the CRC Term Loan. On February 6, 2023, the Company issued $2.0 billion in aggregate principal amount of 7.00% senior secured notes (the “CEI Senior Secured Notes due 2030”) pursuant to an indenture by and among the Company, the subsidiary guarantors party thereto from time to time, U.S. Bank Trust Company, National Association, as trustee, and U.S. Bank National Association, as collateral agent. The CEI Senior Secured Notes due 2030 rank equally with all existing and future first-priority lien obligations of the Company and the subsidiary guarantors. The CEI Senior Secured Notes due 2030 will mature in February 2030, with interest paid semi-annually on February 15 and August 15 of each year, commencing August 15, 2023. Table of Contents 47 Additionally, on February 6, 2023, Caesars entered into an Incremental Assumption Agreement No. 2 pursuant to which the Company incurred a new senior secured term loan facility in an aggregate principal amount of $2.5 billion (the “CEI Term Loan B”) as a new term loan under the CEI Credit Agreement. The Term Loan B requires scheduled quarterly amortization payments in amounts equal to 0.25% of the original aggregate principal amount of the CEI Term Loan B, with the balance payable at maturity. Borrowings under the CEI Term Loan B bear interest at a rate equal to, at the Company’s option, either (a) a forward-looking term rate based on the secured overnight financing rate for the applicable interest period plus an adjustment of 0.10% per annum (“Adjusted Term SOFR”), subject to a floor of 0.50% or (b) a base rate (the “Base Rate”) determined by reference to the highest of (i) the rate of interest per annum last quoted by The Wall Street Journal as the “Prime Rate” in the United States, (ii) the federal funds rate plus 0.50% per annum and (iii) the one-month Adjusted Term SOFR plus 1.00% per annum, in each case, plus an applicable margin. Such applicable margin is 3.25% per annum in the case of any Adjusted Term SOFR loan and 2.25% per annum in the case of any Base Rate loan, subject to one 0.25% step-down based on the Company’s net total leverage ratio. The CEI Term Loan B was issued at a price of 99.0% of the principal amount and will mature in February 2030. The net proceeds from the issuance of the CEI Senior Secured Notes due 2030 and the net proceeds from the CEI Term Loan B were used to repay the outstanding principal balance, including accrued and unpaid interest, of both the CRC Term Loan and the CRC Incremental Term Loan. The remaining net proceeds were to be used to pay related fees, or for general corporate use. Upon the termination of the CRC Term Loan and the CRC Incremental Term Loan, the Company recorded a loss on extinguishment of debt of approximately $200 million. 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 2023 include 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. We continue to expand into new markets with projects such as our partnership with the Eastern Band of Cherokee Indians to build and develop Caesars Virginia which is estimated to open in late 2024. The development has a budget of $650 million and is expected to include a premier destination resort casino along with a 500-room hotel and world-class casino floor including 1,300 slot machines, 85 live table games, a WSOP Poker Room, a Caesars Sportsbook, a live entertainment theater and 40,000 square feet of meeting and convention space. Additionally, Caesars announced plans to expand into Nebraska with the development of a Harrah’s casino and racetrack. The casino development is expected to feature a new one-mile horse racing surface, a 40,000-square-foot-casino and sportsbook with more than 400 slot machines and 20 table games, as well as a restaurant and retail space. During the construction of Caesars Virginia and Harrah’s in Nebraska, we anticipate opening and operating temporary facilities during 2023 while the permanent facilities are completed. 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, 2022, our restricted cash balance in the escrow account was $118 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. The capital investment is expected to include a renovation and full interior and exterior redesign, updated casino floor, new culinary experiences and a new 340-room hotel tower as we are also in the process of rebranding the property as Caesars New Orleans. The project has a current capital plan of approximately $430 million as of December 31, 2022. Total capital expenditures have been $112 million since the project began. On August 27, 2020 , Hurricane Laura made landfall on Lake Charles as a Category 4 storm, severely damaged the Isle of Capri Casino Hotel Lake Charles. During the year ended December 31, 2022, we reached a final settlement agreement with the insurance carriers for a total amount of $128 million, before our insurance deductible of $25 million. We have received a total of $103 million related to damaged fixed assets, remediation costs and business interruption. The construction of our new land-based casino Horseshoe Lake Charles was completed and reopened in December 2022. Table of Contents 48 Cash spent for capital expenditures totaled $952 million, $520 million, $164 million for the years ended December 31, 2022, 2021 and 2020, respectively, related to our growth, renovation, maintenance, and other capital projects. The following table summarizes our estimates for 2023 capital expenditures: (In millions) Low High Atlantic City $ 118 $ 118 Indiana racing operations — 10 Total estimated capital expenditures from restricted cash 118 128 Growth and renovation projects 445 465 Caesars Digital 105 115 Maintenance projects 250 310 Total estimated capital expenditures from unrestricted cash 800 890 Caesars Virginia (a) 200 285 Total $ 1,118 $ 1,303 ___________________ (a) We expect to receive approximately $200 million from the combination of our temporary casino operations and contributions from our joint venture partners to support the development of Caesars Virginia. A significant portion of our liquidity needs are for debt service and payments associated with our leases. Our estimated debt service (including principal and interest) is approximately $1.0 billion for 2023 . We also lease certain real property assets from third parties, including VICI and GLPI. Our leases with VICI are subject to annual escalations based on the Consumer Price Index (“CPI”). The increase in the CPI over the prior year resulted in an increase in our annual lease payments to VICI, which took effect in November 2022. We estimate our lease payments to VICI and GLPI to be approximately $1.3 billion for 2023 . We have periodically divested assets to raise capital or, in previous cases, to comply with conditions, terms, obligations or restrictions imposed by antitrust, gaming and other regulatory entities. In addition to the divestiture of William Hill International, as described above, on May 5, 2022, we consummated the sale of the equity interests of Baton Rouge to CQ Holding Company, Inc. On April 6, 2021, the Company consummated the sale of the equity interests of MontBleu for $15 million. The purchase price was collected in April 2022. 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, 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. Debt and Master Lease Covenant Compliance The Senior Credit Facilities, the Baltimore Term Loan, the Baltimore Revolving Credit Facility and the indentures related to the CEI Senior Secured Notes, the CEI Senior Notes due 2027, the CRC Senior Secured Notes and the CEI Senior Notes due 2029 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 Amended CEI Revolving Credit Facility and the CEI Term Loan A include a maximum net total leverage ratio financial covenant of 7.25:1 until December 31, 2024 and 6.50:1 from and after December 31, 2024. In addition, the Amended CEI Revolving Credit Facility and the CEI Term Loan A include a minimum fixed charge coverage ratio financial covenant of 1.75:1 until December 31, 2024 and 2.00:1 from and after December 31, 2024. From and after the repayment of the CEI Term Loan A, the financial covenants applicable to the Amended CEI Revolving Credit Facility will be tested solely to the extent that certain testing conditions are satisfied. The Baltimore Revolving Credit Facility includes a net 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. Table of Contents 49 As of December 31, 2022, we were in compliance with all of the applicable financial covenants described above. Share Repurchase Program 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. There is no minimum number of shares of common stock that we are required to repurchase under the Share Repurchase Program. As of December 31, 2022, we have acquired 223,823 shares of common stock under the program at an aggregate value of $9 million and an average of $40.80 per share. No shares were repurchased during the years ended December 31, 2022 or 2021. Debt Obligations and Leases 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 July 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, subject to a variable rate of interest calculated as Term SOFR plus 4.00% subject to one 0.25% step-down based on senior secured leverage ratio, the ratio of first lien senior secured net debt to Adjusted EBITDA. On June 24, 2022, we entered into an amendment related to the Baltimore Revolving Credit Facility to extend the maturity date to July 7, 2023. As of December 31, 2022, there was $10 million of available borrowing capacity under the Baltimore Revolving Credit Facility. On November 14, 2022, we made partial prepayment of $10 million of the outstanding principal balance of the Baltimore Term Loan. CRC Term Loans and CRC Revolving Credit Facility The CRC Term Loan, the CRC Incremental Term Loan and the CRC Revolving Credit Facility were subject to the terms described below prior to termination or repayment. The CRC Revolving Credit Facility was terminated in October 2022 and on February 6, 2023, the Company repaid the CRC Term Loan and the CRC Incremental Term Loan with proceeds from a new CEI Term Loan B and new CEI Senior Secured Notes, both due 2030. See “Subsequent Amendment to the CEI Credit Agreement and issuance of New Senior Secured Notes” below. CRC was party to a credit agreement, dated as of December 22, 2017 (as amended, the “CRC Credit Agreement”), which provided for a $1.0 billion five-year revolving credit facility (the “CRC Revolving Credit Facility”) an initial $4.7 billion seven-year senior secured term loan (the “CRC Term Loan”), and an incremental $1.8 billion five-year senior secured term loan that was incurred in connection with the Merger (the “CRC Incremental Term Loan”). The CRC Term Loan had a maturity date in December 2024 and the CRC Incremental Term Loan had a maturity date in July 2025. The CRC Term Loan and the CRC Incremental Term Loan required scheduled quarterly principal payments in amounts equal to 0.25% of the original aggregate principal amount, with the balances due at maturity. The CRC Credit Agreement also included customary voluntary and mandatory prepayment provisions, subject to certain exceptions. The CRC Revolving Credit Facility contained a maturity date in December 2022 and included a $400 million letter of credit sub-facility. Borrowings under the CRC Credit Agreement were subject to 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, and (b) with respect to the CRC Incremental Term Loan, 3.50% per annum in the case of any LIBOR loan or 2.50% in the case of any base rate loan. The CRC Term Loan and the CRC Incremental Term Loan were LIBOR based loans as of December 31, 2022. During the year ended December 31, 2022, the Company utilized and fully repaid borrowings on the CRC Revolving Credit Facility, prior to its termination. Additionally, the Company made several partial prepayments of outstanding principal of the CRC Term Loan utilizing operating cash flows totaling $300 million, excluding the prepayments resulting from the proceeds of Table of Contents 50 the CEI Term Loan A described below, and recognized a related $16 million loss on the early extinguishment of debt during the year ended December 31, 2022. Following the closing of the sale of William Hill International, we utilized the proceeds from the sale, as well as cash on hand to make partial prepayments totaling $755 million of the outstanding principal of the CRC Incremental Term Loan and recognized a $27 million loss on the early extinguishment of debt during the year ended December 31, 2022. On October 5, 2022, in connection with the Third Amendment (as defined below) to the CEI Credit Agreement, we utilized the entire proceeds of a new $750 million CEI Term Loan A (as defined below) to make a partial prepayment of the outstanding principal of the CRC Term Loan, as well as terminate the CRC Revolving Credit Facility. As a result of the partial prepayment, we recognized a $41 million loss on the early extinguishment of debt. See below. CEI Term Loan A and CEI Revolving Credit Facility CEI is party to a credit agreement, dated as of July 20, 2020, 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 (the “CEI Credit Agreement”) which provided for a five-year CEI Revolving Credit Facility in an aggregate principal amount of $1.2 billion (the “CEI Revolving Credit Facility”). The CEI Revolving Credit Facility contained reserves of $190 million which are available only for certain permitted uses. On May 23, 2022, the Company obtained approval for a reduction of $150 million in required reserves. Prior to the amendment described below, the CEI Revolving Credit Facility was scheduled to mature in July 2025 and included a letter of credit sub-facility of $250 million. Prior to the Third Amendment (as defined below) of the CEI Credit Agreement on October 5, 2022, 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) rate of interest per annum last quoted by The Wall Street Journal as the “Prime Rate” in the United States and (iii) the one-month adjusted LIBOR rate plus 1.00%, in each case plus an applicable margin. Such applicable margin was 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 net total leverage ratio. Additionally, prior to the Third Amendment (as defined below) of the CEI Credit Agreement, we were required to pay a commitment fee in respect of any unused commitments under the CEI Revolving Credit Facility in the amount of 0.50% per annum, subject to a step-down to 0.375% per annum based upon the Company’s net total leverage ratio. We were 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% per annum of the daily stated amount of such letter of credit. On October 5, 2022, Caesars entered into a Third Amendment to the CEI Credit Agreement pursuant to which the Company (a) incurred a senior secured term loan in an aggregate principal amount of $750 million (the “CEI Term Loan A”) as a new term loan under the credit agreement, (b) amended and extended the CEI Revolving Credit Facility under the CEI Credit Agreement (the CEI Revolving Credit Facility, as so amended, the “Amended CEI Revolving Credit Facility” and, together with the CEI Term Loan A, the “Senior Credit Facilities”), (c) increased the aggregate principal amount of the CEI Revolving Credit Facility to $2.25 billion, and (d) made certain other amendments to the CEI Credit Agreement. Both the Amended CEI Revolving Credit Facility and the new CEI Term Loan A mature on January 31, 2028, subject to a springing maturity in the event certain other long-term debt of Caesars is not extended or repaid. The Amended CEI Revolving Credit Facility includes a letter of credit sub-facility of $388 million. The CEI Term Loan A requires scheduled quarterly payments in amounts equal to 1.25% of the original aggregate principal amount of the CEI Term Loan A, with the balance payable at maturity. The Company may make voluntary prepayments of the CEI Term Loan A at any time prior to maturity at par. Borrowings under the Senior Credit Facilities bear interest at a rate equal to, at the Company’s option, either (a) a forward-looking term rate based on the secured overnight financing rate (“SOFR”) for the applicable interest period plus an adjustment of 0.10% per annum (“Adjusted Term SOFR”), subject to a floor of 0% or (b) a base rate (the “Base Rate”) determined by reference to the highest of (i) the rate of interest per annum last quoted by The Wall Street Journal as the “Prime Rate” in the United States, (ii) the federal funds rate plus 0.50% per annum and (iii) the one-month Adjusted Term SOFR plus 1.00% per annum, in each case, plus an applicable margin. Such applicable margin is 2.25% per annum in the case of any Adjusted Term SOFR loan and 1.25% per annum in the case of any Base Rate loan, subject to three 0.25% step-downs based on the Company’s net total leverage ratio. In addition, on a quarterly basis, the Company is required to pay each lender under the Amended CEI Revolving Credit Facility a commitment fee in respect of any unused commitments under the Amended CEI Revolving Credit Facility in the amount of 0.35% per annum of the principal amount of the unused commitments of such lender, subject to three 0.05% step-downs based on the Company’s net total leverage ratio. Table of Contents 51 As a December 31, 2022, we had $2.1 billion of available borrowing capacity under the Amended CEI Revolving Credit Facility, after consideration of $82 million in outstanding letters of credit, $48 million committed for regulatory purposes and the reserves described above. Subsequent Amendment to the CEI Credit Agreement and issuance of New Senior Secured Notes On February 6, 2023, the Company issued new $2.0 billion in aggregate principal amount of 7.00% senior secured notes (the “CEI Senior Secured Notes due 2030”) pursuant to an indenture by and among the Company, the subsidiary guarantors party thereto from time to time, U.S. Bank Trust Company, National Association, as trustee, and U.S. Bank National Association, as collateral agent. The CEI Senior Secured Notes due 2030 rank equally with all existing and future first-priority lien obligations of the Company and the subsidiary guarantors. The CEI Senior Secured Notes due 2030 will mature in February 2030, with interest paid semi-annually on February 15 and August 15 of each year, commencing August 15, 2023. Additionally, on February 6, 2023, Caesars entered into an Incremental Assumption Agreement No. 2 pursuant to which the Company incurred a new senior secured term loan facility in an aggregate principal amount of $2.5 billion (the “CEI Term Loan B”) as a new term loan under the CEI Credit Agreement. The CEI Term Loan B was issued at a price of 99.0% of the principal amount and will mature in February 2030. Interest under the CEI Term Loan B is based on the forward looking SOFR plus an adjustment of 0.10%, subject to a floor of 0.50%, plus an applicable margin of 3.25% which is subject to one 0.25% step-down based on the Company’s net total leverage ratio. The net proceeds from the issuance of the CEI Senior Secured Notes due 2030 and the net proceeds from the CEI Term Loan B, were used to repay the outstanding principal balance, including accrued and unpaid interest, of both the CRC Term Loan and the CRC Incremental Term Loan. The remaining net proceeds were to be used to pay related fees, or for general corporate use. Upon the termination of the CRC Term Loan and the CRC Incremental Term Loan, the Company recorded a loss on extinguishment of debt of approximately $200 million. CRC Senior Secured Notes due 2025 On July 6, 2020, Colt Merger Sub, Inc. (the “Escrow Issuer”) issued $1.0 billion in aggregate principal amount of 5.75% Senior Secured 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. 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 rank equally with all existing and future first priority lien obligations of CRC, CRC Finco, Inc. and the subsidiary guarantors. 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. During the year ended December 31, 2022, we purchased a total of $11 million in principal amount of the CRC Senior Secured Notes. CEI Senior Secured Notes due 2025 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. 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 rank equally with all existing and future first-priority lien obligations of the Company and the subsidiary guarantors. 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. Convention Center Mortgage Loan On September 18, 2020, we entered into a loan agreement with VICI to borrow a 5-year, $400 million Forum Convention Center mortgage loan (the “Mortgage Loan”). The Mortgage Loan bears interest at a rate of, initially, 7.7% per annum, which escalates annually on the anniversary of the closing date to a maximum interest rate of 8.3% per annum. CEI Senior Notes due 2027 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 due 2027”), 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 due 2027 and the indenture governing such notes on July 20, 2020. The CEI Senior Notes due 2027 rank equally with all existing and future senior unsecured indebtedness of the Company and the subsidiary guarantors. The CEI Senior Notes due 2027 will mature on July 1, 2027 with interest payable semi-annually in cash in arrears on January 1 and July 1 of each year. During the year ended December 31, 2022, we purchased a total of $89 million in principal amount of the CEI Senior Notes due 2027. Table of Contents 52 CEI Senior Notes due 2029 On September 24, 2021, we issued $1.2 billion in aggregate principal amount of 4.625% Senior Notes due 2029 (the “CEI Senior Notes due 2029”) pursuant to an indenture dated as of September 24, 2021 between the Company and U.S. Bank National Association, as Trustee. The CEI Senior Notes due 2029 rank equally with all existing and future senior unsecured indebtedness of the Company and the subsidiary guarantors. The CEI Senior Notes due 2029 will mature on October 15, 2029 with interest payable on April 15 and October 15 of each year, which began on April 15, 2022. VICI Leases 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. Our VICI Leases are accounted for as a financing obligation and totaled $11.3 billion as of December 31, 2022. See Note 10 to our Financial Statements for additional information about our VICI Leases and related matters. GLPI Leases 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 Horseshoe St. Louis, formerly known as 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, 2022. 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, 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 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. Risk Factors—Risks Related to Our Business ” which is included elsewhere in this Annual Report on Form 10-K. Table of Contents 53 Critical Accounting Policies and Estimates We prepare our financial statements in conformity with GAAP. In preparing our financial statements, we have made our best estimates and judgments of the amounts and disclosures included in the financial statements, giving regard to materiality. When more than one accounting principle, or method of its application, is generally accepted, we select the principle or method that we consider to be the most appropriate under specific circumstances. Application of these accounting principles requires us to make estimates about the future resolution of existing uncertainties. Certain of our accounting policies, including those in connection with business combinations, income taxes, goodwill and indefinite lived intangible assets, long-lived assets, allowance for doubtful accounts related to certain gaming receivables, self-insurance reserves, and litigation, claims and assessments require that we apply significant judgment in defining the appropriate assumptions for calculating financial estimates. We consider accounting estimates to be critical accounting policies when: • the estimates involve matters that are highly uncertain at the time the accounting estimate is made; and • different estimates or changes to estimates could have a material impact on the reported financial position, changes in financial position, or results of operations. By their nature, these judgments and estimates are subject to an inherent degree of uncertainty. Our judgments and estimates are based on our historical experience, terms of existing contracts, observance of trends in the industry, information gathered from customer behavior, and information available from other outside sources, as appropriate. Due to the inherent uncertainty involving judgments and estimates, actual results may differ from those estimates. Our most critical accounting estimates and assumptions are in the following areas: Business Combinations 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. Goodwill as of the respective acquisition dates was measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Goodwill is generally the result of expected synergies of the combined company or an assembled workforce. Indefinite-lived intangible assets acquired primarily include trademarks, Caesars Rewards acquired in the Merger and gaming rights. The fair value for these intangible assets was determined using either the relief from royalty method and excess earnings method under the income approach or a replacement cost market approach. 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. The incremental cash flow method compares the prospective cash flows with and without the customer relationships in place to estimate the fair value of the customer relationships, with the fair value assumed to be equal to the discounted cash flows of the business that would be lost if the customer relationships were not in place and needed to be replaced. Gaming rights include our gaming licenses in various jurisdictions and may have indefinite lives or an estimated useful life. The fair value of the gaming rights was determined using the excess earnings or replacement cost methodology, based on whether the license resides in gaming jurisdictions where competition is limited to a specified number of licensed gaming operators. The excess earnings methodology is an income approach 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. Trade receivables and payables and other current and noncurrent assets and liabilities were valued at the existing carrying values as they represented the estimated fair value of those items at the acquisition date. Assets and liabilities held for sale were recorded at fair value, less costs to sell, based on the agreements reached as of the acquisition date, or an income approach. Table of Contents 54 The fair value of the financing obligations was 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. 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. The value of building and site improvements was estimated via the income approach. Other personal property assets such as furniture, gaming and computer equipment, fixtures, computer software, and restaurant equipment were valued using the cost approach which is based on replacement or reproduction costs of the asset. The cost approach is an estimation of fair value developed by computing the current cost of replacing a property and subtracting any depreciation resulting from one or more of the following factors: physical deterioration, functional obsolescence, and/or economic obsolescence. 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. These inputs involve significant assumptions including the future effects of COVID-19 as well as the realization of synergies anticipated from a business combination, which may not be realized as projected. Certain assumptions may be beyond our control. Income Taxes We and our subsidiaries file income tax returns with federal, state and foreign jurisdictions. Our income tax returns are subject to examination by the Internal Revenue Service (“IRS”) and other tax authorities. Positions taken in tax returns are sometimes subject to uncertainty in the tax laws and may not ultimately be accepted by the IRS or other tax authorities. See Note 17 in the accompanying consolidated financial statements for a discussion of the status and impact of examinations by tax authorities. We record income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the expected future tax consequences of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and as attributable to operating loss and tax credit carryforwards. We reduce the carrying amounts of deferred tax assets by a valuation allowance if, based on the available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed periodically based on the “more likely than not” realization threshold. This assessment considers, among other matters, the nature, frequency, and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, our experience with operating loss and tax credit carryforwards not expiring unused, and tax planning alternatives. When there is a recent history of operating losses and negative normalized earnings and a return to operating profitability has not yet been demonstrated, we cannot rely on projections of future taxable earnings for purposes of assessing recoverability of our deferred tax assets. In such cases, we use systematic and logical methods to estimate when deferred tax liabilities will reverse and generate taxable income and when deferred tax assets will reverse and generate tax deductions. Our most significant deferred tax asset relates to the failed sale-leaseback obligation with VICI and GLPI (see Note 10). The reversal of this deferred tax asset requires judgment and estimates and has a material impact on the determination of the amount of valuation allowance required. Table of Contents 55 As of December 31, 2022, the Company had federal and state net operating loss carryforwards of $1.9 billion and $9.2 billion, respectively and federal general business tax credit and research tax credit carryforwards of $129 million, which will expire on various dates as follows: Year of Expiration Net Operating Losses Tax Credits (In millions) Federal States Federal 2023-2027 — 530 — 2028-2032 914 1,376 39 2033-2042 589 5,030 90 Do not expire 437 2,219 — $ 1,940 $ 9,155 $ 129 As of December 31, 2022, total federal and state deferred tax assets are $4.2 billion of which we believe it is more likely than not that a portion of the associated benefit will not be realized and, as a result, we have provided for a valuation allowance of $1.8 billion. However, we have recently observed positive trends in our operating results and if these trends continue, in the foreseeable future we may determine that we will be able to realize a significant portion of these deferred tax assets. A future reversal of the valuation allowance on our deferred tax assets could result in an income tax benefit of $0.9 billion to $1.2 billion. Under the applicable accounting standards, we may recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The accounting standards also provide guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and disclosure requirements for uncertain tax positions. Goodwill and Other Indefinite-lived Intangible Assets Assessing goodwill and indefinite-lived intangible assets for impairment is a process that requires significant judgment and involves detailed qualitative and quantitative business-specific analysis and many individual assumptions which fluctuate between assessments. We determine the estimated fair value of each reporting unit based on a combination of EBITDA, valuation multiples, and estimated future cash flows discounted at rates commensurate with the capital structure and cost of capital of comparable market participants, giving appropriate consideration to the prevailing borrowing rates within the casino industry in general. We also evaluate the aggregate fair value of all of our reporting units and other non-operating assets in comparison to our aggregate debt and equity market capitalization at the test date. EBITDA multiples and discounted cash flows are common measures used to value businesses in our industry. 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, 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 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 completed our annual impairment tests as of October 1, 2022. The estimated fair values of certain of our indefinite lived intangible assets and reporting units decreased primarily due to an increase in the related discount rates, which represents the higher required cost of capital as a result of the macroeconomic environment and projected outlook. Accordingly, we identified one reporting unit with which the estimated fair value of the associated gaming rights was less than the carrying value and we recorded an impairment of $30 million. In addition, we identified two reporting units with which the estimated fair value of the respective reporting unit was below the carrying value and we recorded a total impairment of $78 million to goodwill. These reporting units are all within the Regional segment. As of October 1, 2022, one reporting unit in the Las Vegas segment and four reporting units in the Regional segment with goodwill totaling $625 million and $1.1 billion, respectively, had fair values that did not significantly exceed their respective Table of Contents 56 carrying values. In addition, we identified trademarks totaling $286 million in the Las Vegas segment, $180 million in the Caesars Digital segment, and gaming rights totaling $173 million in the Regional segment that do not significantly exceed their respective carrying values. The reporting units and indefinite lived intangible assets with carrying values that do not significantly exceed their estimated fair values are primarily assets acquired in the Merger when our discount rate was approximately 9.5%. The discount rate used in our annual impairment testing as of October 1, 2022 was approximately 11.5%. 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. The discount rate represents the most sensitive input in our estimates and an increase of 1% to the discount rate would result in additional impairments of approximately $125 million on the assets that do not significantly exceed their carrying values. In addition, $468 million of goodwill within our Regional segment is associated with reporting units with zero or negative carrying value. See Note 7 for additional information. Long-Lived Assets We have significant capital invested in our long-lived assets, and judgments are made in determining the estimated useful lives of assets, salvage values to be assigned to assets, and if or when an asset has been impaired. The accuracy of these estimates affects the amount of depreciation and amortization expense recognized in our financial results and whether we have a gain or loss on the disposal of an asset. We assign lives to our assets based on our standard policy, which is established by management as representative of the useful life of each category of asset. We review the carrying value of our long-lived assets whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. The factors considered by management in performing this assessment include current operating results, trends and prospects, planned construction and renovation projects, as well as the effect of obsolescence, demand, competition, and other economic, legal, and regulatory factors. In estimating expected future cash flows for determining whether an asset is impaired, assets are grouped at the lowest level of identifiable cash flows, which, for most of our assets, is the individual property. See Note 6 for additional information. Allowance for Doubtful Accounts - Gaming We reserve an estimated amount for gaming receivables that may not be collected to reduce the Company’s receivables to their net carrying amount. Methodologies for estimating the allowance for doubtful accounts range from specific reserves to various percentages applied to aged receivables. Historical collection rates and reasonable forecasts are considered, as are customer relationships, in determining specific reserves to reflect current expected credit loss. As with many estimates, management must make judgments about potential actions by third parties in establishing and evaluating our reserves for allowance for doubtful accounts. As of December 31, 2022, a 5% increase or decrease to the allowance determined based on a percentage of aged receivables would change the reserve by approximately $15 million. Self-Insurance Reserves We are self-insured for various levels of general liability, employee medical insurance coverage and workers’ compensation coverage. Insurance claims and reserves include accruals of estimated settlements for known claims, as well as accruals of estimates for claims incurred but not yet reported. We utilize independent consultants to assist management in its determination of estimated insurance liabilities. 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, 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 We utilize estimates for litigation, claims and assessments. These estimates are based on our knowledge and experience regarding current and past events, as well as assumptions about future events. If our assessment of such a matter should change, we may have to change the estimates, which may have an adverse effect on our financial position, results of operations or cash flows. Actual results could differ from these estimates. Table of Contents 57 Recently Issued Accounting Pronouncements 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.