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 34 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 “Cautionary Statement Regarding Forward-Looking Information.” 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. in 2017, Tropicana Entertainment, Inc. in 2018, Caesars Entertainment Corporation in 2020, and William Hill PLC (the “William Hill Acquisition”) on April 22, 2021. O ur ticker symbol on the NASDAQ Stock Market is “CZR.” We currently own, lease or manage an aggregate of 52 domestic properties in 18 states with approximately 51,300 slot machines, video lottery terminals and e-tables, approximately 2,700 table games and approximately 44,700 hotel rooms as of December 31, 2023. In addition, we have other properties in North America that are authorized to use the brands and marks of Caesars Entertainment, Inc. Our primary source of revenue is generated by our casino properties’ gaming operations, which includes our retail and online sports betting and 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, 2023, we owned 22 of our casinos and leased 24 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 leased the Rio All-Suite Hotel & Casino (“Rio”) from a separate third party until October 2, 2023, at which time operations were assumed by the lessor. See descriptions below under the “GLPI Leases” and “VICI Leases.” Table of Contents 35 We operate and conduct retail and online sports wagering across 31 jurisdictions in North America, 25 of which offer online sports betting. Additionally, we operate iGaming in five jurisdictions in North America. The map below illustrates Caesars Digital’s presence as of December 31, 2023: In 2022, we partnered with NYRABets LLC, the official online wagering platform of the New York Racing Association, Inc., and have launched the Caesars Racebook app within 20 states as of December 31, 2023. Caesars Racebook also went live in Illinois in January 2024. The Caesars Racebook app provides access for pari-mutuel wagering at over 300 racetracks 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 into other states in the near term with our Caesars Sportsbook, Caesars Racebook and iGaming mobile apps as jurisdictions legalize or provide necessary approvals. No customers under 21 years old are allowed to wager on any of our Caesars Sportsbook, Caesars Racebook and iGaming mobile apps. Table of Contents 36 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, or due to regulatory requirements. The following is a summary of recently completed divestitures as of December 31, 2023: Segment Property Date Sold Sales Price 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 Louisiana Downs November 1, 2021 $22 million (a) Regional Caesars Southern Indiana September 3, 2021 $250 million N/A Caesars UK Group July 16, 2021 * N/A William Hill International July 1, 2022 £2.0 billion ____________________ * Not meaningful. (a) The proceeds of this sale were split between the Company and VICI. In addition to the divestitures above, the operations of Rio were assumed by the lessor on October 2, 2023, and we exited our management agreement with Caesars Dubai on November 16, 2023. 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 April 22, 2021, we completed the William Hill Acquisition for cash consideration of approximately £2.9 billion , or approximately $3.9 billion, based on the GBP to USD exchange rate on the closing date. We acquired William Hill PLC and its U.S. subsidiary, William Hill U.S. Holdco (“William Hill US” and together with William Hill PLC, “William Hill”) to better position the Company to address the extensive usage of digital platforms, continued legalization in additional states and jurisdictions, and growing bettor demand, which are driving the market for online sports betting platforms in the U.S. In addition, we continue to leverage the World Series of Poker (“WSOP”) brand and license the WSOP trademarks for a variety of products and services across these digital platforms. At the time that the William Hill Acquisition was consummated, our intent was to divest William Hill International and as such its results were presented in discontinued operations. 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. During the year ended December 31, 2022, we recorded impairments to assets held for sale of $503 million within discontinued operations based on the revised and final sales price. On July 1, 2022, we completed the sale of William Hill International to 888 Holdings Plc. We recognized acquisition-related transaction costs of $21 million and $68 million for the years ended December 31, 2022 and 2021, 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 on our Statements of Operations. Consolidation of Horseshoe Baltimore On August 26, 2021, we increased our ownership interest in CBAC Borrower, LLC (“Horseshoe Baltimore”), a property which we also managed, to approximately 75.8% for cash consideration of $55 million. 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. Additionally, on July 10, 2023, we completed the acquisition of the remaining 24.2% equity ownership in Horseshoe Baltimore, utilizing cash on hand, for a total of $66 million. Table of Contents 37 Investments and Partnerships We have investments in unconsolidated affiliates accounted for under the equity method which are recorded in Investment in and advances to unconsolidated affiliates on the Balance Sheets. Certain significant investments as of December 31, 2023 and 2022 are discussed below. 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 October 2023 and June 2021, the joint venture issued capital calls and we contributed $3 million each, respectively, for a total of $7 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 209 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. During the year ended December 31, 2023, the Company recorded income related to the investment of $64 million, primarily due to the joint venture’s gain on the sale of land. As of December 31, 2023 and 2022, our investment in the joint venture was $147 million and $80 million, respectively, and is recorded in Investment in and advances to unconsolidated affiliates on the Balance Sheets. 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. 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. 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. Presentation of Financial Information The financial information included in this Item 7 for the periods after our acquisition of 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 divestiture of various properties, described above, is not fully comparable to the periods prior to the date of divestiture. 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 together with our audited consolidated financial statements and the notes to those statements included in this Annual Report on Form 10-K. Table of Contents 38 Key Performance Metrics Our primary source of revenue is generated by our gaming operations, which includes our retail and online sports betting and 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 staying at, or visiting, our properties and using our sports betting, horse racing 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 10% and iGaming hold typically ranges from 3% to 5%. 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 and discounted 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, 2023, 2022 and 2021. 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 and $68 million for the years ended December 31, 2022 and 2021, 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 consolidated 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. Additionally, on July 10, 2023, we completed the acquisition of the remaining 24.2% equity ownership in Horseshoe Baltimore, utilizing cash on hand, for a total of $66 million. Divestitures and Discontinued Operations • Divestitures and Discontinued Operations – See “ Overview ” section above for detail of properties divested, including related discontinued operations. • The operations of Rio were assumed by the lessor on October 2, 2023, and we exited our management agreement with Caesars Dubai on November 16, 2023. Financing Transactions • Debt Transactions – We continue to utilize free cash flow to reduce our leverage, extend the maturity of our outstanding debt and balance our mix of fixed and variable debt. The following are the key financing transactions and their effects on our operations, from the use of free cash flow, unless otherwise noted: ◦ Issued $2.0 billion CEI Senior Secured Notes due 2030 and amended the CEI Credit Agreement and incurred a new $2.5 billion CEI Term Loan B. Net proceeds received from these transactions were used to repay the $3.4 billion outstanding principal amount of the CRC Term Loan and the $1.0 billion outstanding principal amount of the CRC Incremental Term Loan on February 6, 2023. ◦ Fully repaid $267 million of the outstanding principal balance of the Baltimore Term Loan as of July 17, 2023. ◦ Prepaid the outstanding $400 million Forum Convention Center Mortgage Loan on May 1, 2023. Table of Contents 39 ◦ For the years ended December 31, 2023, 2022 and 2021, we recorded extinguishment charges of $200 million, $85 million and $236 million, respectively, which are recorded within Loss on extinguishment of debt on the Statements of Operations due to the aforementioned activity. ◦ Refer to the Liquidity and Capital Resources section below for further discussion of our recent debt transactions, including our financing transactions subsequent to December 31, 2023, in which we issued $1.5 billion of new CEI Senior Secured Notes due 2032 and a new $2.9 billion CEI Term Loan B-1. Net proceeds received from these transactions, together with borrowings under our CEI Revolving Credit Facility, were used to tender, redeem, repurchase, defease, and/or satisfy and discharge the CEI Senior Secured Notes due 2025 and the CRC Senior Secured Notes. Other Significant Factors • New Developments and Re-openings – During the construction of the permanent facilities for Caesars Virginia and Harrah’s Columbus Nebraska, we opened temporary gaming facilities during the second quarter of 2023. Caesars Virginia’s temporary facility opened on May 15, 2023 and Harrah’s Columbus Nebraska’s temporary facility opened on June 12, 2023. In addition to the temporary facilities, the reopening of Horseshoe Lake Charles in December 2022 has contributed to the Regional segment’s performance when compared to the prior year period. • Caesars Sportsbook, Caesars Racebook and iGaming mobile apps – During the year ended December 31, 2023, we launched Caesars Sportsbook in new jurisdictions, migrated our sports betting platform to Liberty in Nevada, and launched our new online and mobile iGaming application, Caesars Palace Online Casino. As new states and jurisdictions have legalized sports betting, we have made varying degrees of upfront investments executed through marketing campaigns and promotional incentives to acquire new customers and establish our presence. For example, in connection with the launch of our Caesars Sportsbook app in New York and Louisiana in January 2022, we experienced negative net revenue in the first quarter 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. We continue to adjust our level of investment during the launch period in new jurisdictions based, in part, on prior experience and do not expect such investment to continue at elevated levels subsequent to the initial launch period. During the year ended December 31, 2023, promotional and marketing expenses have significantly decreased as compared to the prior year period. • Income Taxes – Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use existing deferred tax assets. During the second quarter of 2023, we evaluated our forecasted adjusted taxable income and objectively verifiable evidence and placed substantial weight on our 2022 and 2023 quarterly earnings, adjusted for non-recurring items, including the interest expense disallowed under current tax law. Accordingly, we determined it was more likely than not that a portion of the federal and state deferred tax assets will be realized and, as a result, during the second quarter of 2023, we reversed the valuation allowance related to these deferred tax assets and recorded an income tax benefit of $940 million. We are still carrying a valuation allowance on certain federal and state deferred tax assets that are not more likely than not to be realized in the future. We have assessed the changes to the valuation allowance, including realization of the disallowed interest expense deferred tax asset, using the integrated approach. • Economic Factors Impacting Discretionary Spending – Gaming and other leisure activities we offer represent discretionary expenditures which may be sensitive to economic downturns, such as t he resurgence of the Omicron variant of COVID-19 that negatively impacted the first quarter of 2022. We also monitor recent trends, including higher inflation and interest rates, and the related effects on our customers, and our operations. • Impairment Charges – As a result of our finalized and approved capital and operating plans and the completion of our 2023 annual impairment testing, we recognized impairment charges during the year ended December 31, 2023 in our Regional segment. These impairments were primarily due to a decrease in projected cash flows at certain regional properties mainly due to increased competition. We identified one reporting unit where the estimated fair value of the associated gaming rights was less than the carrying value and recorded an impairment of $81 million. In addition, we identified one reporting unit with an estimated fair value below its carrying value, resulting in total impairment of $14 million to goodwill. Table of Contents 40 During the year ended December 31, 2022, the Company recognized impairment charges in our Regional segment related to goodwill and gaming rights totaling $78 million and $30 million, respectively, 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. 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. • Weather Disruption – During the first quarter of 2023, our Regional segment was negatively impacted by severe winter weather, particularly in northern Nevada, which caused poor and unsafe travel conditions reducing visitation to our Lake Tahoe and Reno properties. During the year ended December 31, 2022, we reached a final settlement agreement with the insurance carriers for the damage and disruption caused by Hurricane Laura to our Lake Charles property in 2020 for a total amount of $128 million, before our insurance deductible of $25 million. 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. Results of Operations The following table highlights the results of our operations: Years Ended December 31, (Dollars in millions) 2023 2022 2021 Net revenues: Las Vegas $ 4,470 $ 4,287 $ 3,409 Regional 5,778 5,704 5,537 Caesars Digital 973 548 337 Managed and Branded 307 282 278 Corporate and Other (a) — — 9 Total $ 11,528 $ 10,821 $ 9,570 Net income (loss) $ 828 $ (910) $ (1,016) Adjusted EBITDA (b) : Las Vegas $ 2,016 $ 1,964 $ 1,568 Regional 1,962 1,985 1,979 Caesars Digital 38 (666) (476) Managed and Branded 76 84 87 Corporate and Other (a) (154) (124) (168) Total $ 3,938 $ 3,243 $ 2,990 Net income (loss) margin 7.2 % (8.4) % (10.6) % Adjusted EBITDA margin 34.2 % 30.0 % 31.2 % ___________________ (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, 2023, 2022 and 2021 The following table highlights the results of our operations: Comparisons between 2023 and 2022 are described below. A discussion of changes in our results of operations between year ended December 31, 2022 compared to 2021 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, 2022 Compared to the Year Ended December 31, 2021 ” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Table of Contents 41 Net Revenues Net revenues were as follows: Years Ended December 31, Variance Percent Change Variance Percent Change (Dollars in millions) 2023 2022 2021 2023 vs 2022 2022 vs 2021 Casino $ 6,367 $ 5,997 $ 5,827 $ 370 6.2 % $ 170 2.9 % Food and beverage 1,728 1,596 1,140 132 8.3 % 456 40.0 % Hotel 2,090 1,957 1,551 133 6.8 % 406 26.2 % Other 1,343 1,271 1,052 72 5.7 % 219 20.8 % Net Revenues $ 11,528 $ 10,821 $ 9,570 $ 707 6.5 % $ 1,251 13.1 % Consolidated net revenues increased for the year ended December 31, 2023 primarily due to higher gaming revenues in the Caesars Digital segment resulting from higher sports betting hold and additional state launches of our online and retail Caesars Sportsbooks. Promotional allowances offered during launches in new jurisdictions were significantly reduced year over year. Hotel occupancy rates within the Las Vegas segment continued to improve as compared to the same prior year periods and also contributed to the increase in net revenues. The Regional segment benefited from the opening of two temporary gaming facilities, Caesars Virginia on May 15, 2023 and Harrah’s Columbus Nebraska on June 12, 2023, as well as the reopening of Horseshoe Lake Charles in December 2022. Further, the Omicron variant of COVID-19 negatively impacted prior year results during the first quarter of 2022 across substantially all of our properties, including disruptions to group and conventions, banquets, and scheduled concert events. These improved results were partially offset by increased competition associated with new casino resorts opening in some of our regional markets, construction disruptions, and inclement weather across the country, particularly in northern Nevada, which restricted travel in the first quarter of 2023. The Company continues to expand partnerships with iconic entertainers to host concerts and performances, and celebrity chefs to offer new food and beverage venues to drive new and repeat visitation to our properties. Operating Expenses Operating expenses were as follows: Years Ended December 31, Variance Percent Change Variance Percent Change (Dollars in millions) 2023 2022 2021 2023 vs 2022 2022 vs 2021 Casino $ 3,342 $ 3,526 $ 3,129 $ (184) (5.2) % $ 397 12.7 % Food and beverage 1,049 935 707 114 12.2 % 228 32.2 % Hotel 570 529 438 41 7.8 % 91 20.8 % Other 434 411 373 23 5.6 % 38 10.2 % General and administrative 2,012 2,068 1,782 (56) (2.7) % 286 16.0 % Corporate 306 286 309 20 7.0 % (23) (7.4) % Impairment charges 95 108 102 (13) (12.0) % 6 5.9 % Depreciation and amortization 1,261 1,205 1,126 56 4.6 % 79 7.0 % Transaction and other costs, net (13) 14 144 (27) * (130) (90.3) % Total operating expenses $ 9,056 $ 9,082 $ 8,110 $ (26) (0.3) % $ 972 12.0 % ___________________ * Not meaningful. 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 expenses decreased for the year ended December 31, 2023 as compared to the same prior year period due to a reduction in advertising costs from the promotion of our Caesars Sportsbook app and Caesars Digital’s expansion into new jurisdictions, particularly in the first quarter of 2022. Food and beverage and hotel expenses have increased in connection with increased revenues; however, we continue to focus on labor efficiencies to manage rising labor costs and strategically manage our marketing and advertising spend to reduce our casino expenses. Similarly, we continue to manage recent increases in food costs by focusing on efficiencies within food and beverage venues and menu options. Table of Contents 42 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. 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. Transaction and other costs, net for the year ended December 31, 2023 primarily includes non-cash changes in equity method investments and a gain of $29 million associated with proceeds received from the sale of a potential insurance recovery. Offsetting these costs are non-cash losses on the write down and disposal of assets and pre-opening costs in connection with new temporary facility openings. Transaction and other costs, net for the year ended December 31, 2022 primarily represents professional services for integration activities and various contract exit or termination costs, offset by a $38 million gain in the first quarter of 2022 resulting from insurance proceeds received in excess of the respective carrying value of damaged assets associated with our Lake Charles property. Other Expense Other expense was as follows: Years Ended December 31, Variance Percent Change Variance Percent Change (Dollars in millions) 2023 2022 2021 2023 vs 2022 2022 vs 2021 Interest expense, net $ (2,342) $ (2,265) $ (2,295) $ (77) (3.4) % $ 30 1.3 % Loss on extinguishment of debt (200) (85) (236) (115) (135.3) % 151 64.0 % Other income (loss) 10 46 (198) (36) (78.3) % 244 * Benefit for income taxes 888 41 283 847 * (242) (85.5) % ___________________ * Not meaningful. For the year ended December 31, 2023, interest expense, net increased year over year due to annual escalators in our financing obligations related to our VICI Leases, including escalators based on the Consumer Price Index (“CPI”) that take effect in November of each year. In addition, although we have reduced our outstanding debt, rising interest rates have negatively impacted our borrowing rates and resulted in interest expense related to debt service to be flat compared to the prior year. For the years ended December 31, 2023 and 2022, loss on extinguishment of debt was primarily related to the prepayments of the Caesars Resort Collection (“CRC”) Term Loan and the CRC Incremental Term Loan. In addition, on July 17, 2023, we repaid the Baltimore Term Loan. Other income decreased for the year ended December 31, 2023, as compared to prior year, mainly due to a change in the fair value of foreign exchange forward contracts and a gain related to the resolution of a disputed claims liability, offset by the change in fair value of investments, all of which were recorded in the prior year. The income tax benefit was $888 million for 2023 and $41 million for 2022. The reported income tax benefit in 2023 differed from the statutory income tax benefit primarily due to the partial release of federal and state valuation allowances. During the second quarter of 2023, we reversed the valuation allowance related to certain deferred tax assets and recorded a one-time income tax benefit of $940 million, as we determined it was more likely than not that a portion of our federal and state deferred tax assets would be realized. Refer to Item 8. - Note 17 for the effective income tax rate reconciliation. Table of Contents 43 Segment comparison for the years ended December 31, 2023, 2022 and 2021 Las Vegas Segment Years Ended December 31, Variance Percent Change Variance Percent Change (Dollars in millions) 2023 2022 2021 2023 vs 2022 2022 vs 2021 Revenues: Casino $ 1,212 $ 1,247 $ 1,226 $ (35) (2.8) % $ 21 1.7 % Food and beverage 1,152 1,063 702 89 8.4 % 361 51.4 % Hotel 1,447 1,341 968 106 7.9 % 373 38.5 % Other 659 636 513 23 3.6 % 123 24.0 % Net revenues $ 4,470 $ 4,287 $ 3,409 $ 183 4.3 % $ 878 25.8 % Table game drop $ 3,428 $ 3,464 $ 3,088 $ (36) (1.0) % $ 376 12.2 % Table game hold % 22.2 % 22.0 % 20.2 % 0.2 pts 1.8 pts Slot handle $ 11,057 $ 10,718 $ 10,309 $ 339 3.2 % $ 409 4.0 % Hotel occupancy 96.8 % 92.2 % 82.1 % 4.6 pts 10.1 pts Adjusted EBITDA $ 2,016 $ 1,964 $ 1,568 $ 52 2.6 % $ 396 25.3 % Adjusted EBITDA margin 45.1 % 45.8 % 46.0 % (0.7) pts (0.2) pts Net income attributable to Caesars $ 1,042 $ 1,021 $ 641 $ 21 2.1 % $ 380 59.3 % The Las Vegas segment’s net revenues, net income and Adjusted EBITDA increased year over year primarily due to higher hotel, food and beverage and entertainment revenues. The increase in food and beverage revenues was mainly driven by higher restaurant covers and improved product mix associated with the additions of new casual and premier dining venues. Other revenue increased primarily due to entertainment revenues attributable to an increase in both the quality and number of headliner performances in the current year compared to prior year. In addition, during the first quarter of 2022, the resurgence of the Omicron variant of COVID-19 had a significant negative impact on visitation, group and conventions, and scheduled concert events. As a result, the Las Vegas segment experienced increased visitation during 2023 compared to the prior year which has driven higher hotel occupancy, improved room rates, higher food and beverage revenues and additional entertainment revenues. The increases in net revenues, net income and Adjusted EBITDA were partially offset by growth in overall union and non-union wages and headcount. Additionally, our Las Vegas segment experienced challenges in the middle of 2023, related to construction disruption and roadwork on the Las Vegas Strip. As a result, the Las Vegas segment’s Adjusted EBITDA margin decreased slightly as compared to the prior year. Slot win percentage in the Las Vegas segment during the year ended December 31, 2023 was within our typical range. Table of Contents 44 Regional Segment Years Ended December 31, Variance Percent Change Variance Percent Change (Dollars in millions) 2023 2022 2021 2023 vs 2022 2022 vs 2021 Revenues: Casino $ 4,272 $ 4,291 $ 4,305 $ (19) (0.4) % $ (14) (0.3) % Food and beverage 576 533 438 43 8.1 % 95 21.7 % Hotel 643 616 583 27 4.4 % 33 5.7 % Other 287 264 211 23 8.7 % 53 25.1 % Net revenues $ 5,778 $ 5,704 $ 5,537 $ 74 1.3 % $ 167 3.0 % Table game drop $ 4,188 $ 4,270 $ 4,163 $ (82) (1.9) % $ 107 2.6 % Table game hold % 21.7 % 22.0 % 21.0 % (0.3) pts 1 pts Slot handle $ 43,211 $ 42,853 $ 42,873 $ 358 0.8 % $ (20) — % Adjusted EBITDA $ 1,962 $ 1,985 $ 1,979 $ (23) (1.2) % $ 6 0.3 % Adjusted EBITDA margin 34.0 % 34.8 % 35.7 % (0.8) pts (0.9) pts Net income attributable to Caesars $ 377 $ 463 $ 637 $ (86) (18.6) % $ (174) (27.3) % The Regional segment’s net revenues increased for the year ended December 31, 2023 compared to the same prior year period, primarily related to incremental net revenues generated from the reopening of Horseshoe Lake Charles in the fourth quarter of 2022 and the opening of our temporary gaming facilities at Caesars Virginia on May 15, 2023 and Harrah’s Columbus Nebraska on June 12, 2023. These increases were partially offset by competition associated with new casino resorts opening in some of our regional markets, construction disruption from renovation projects at certain of our properties and inclement weather across the country, particularly in northern Nevada, which restricted travel in the first quarter of 2023. In addition, wage and headcount increases resulted in higher labor costs during the current year. Increased interest expense associated with our VICI Leases and additional depreciation expense related to our new gaming facilities led to a decline in net income as compared to the same prior year period. As a result, Adjusted EBITDA decreased as compared to the prior year. Slot win percentage in the Regional segment during the year ended December 31, 2023 was within our typical range. Table of Contents 45 Caesars Digital Segment Years Ended December 31, Variance Percent Change Variance Percent Change (Dollars in millions) 2023 2022 2021 2023 vs 2022 2022 vs 2021 Revenues: Casino (a) $ 886 $ 462 $ 296 $ 424 91.8 % $ 166 56.1 % Other 87 86 41 1 1.2 % 45 109.8 % Net revenues $ 973 $ 548 $ 337 $ 425 77.6 % $ 211 62.6 % Sports betting handle (b) $ 12,089 $ 12,801 $ 6,046 $ (712) (5.6) % $ 6,755 111.7 % Sports betting hold % 6.3 % 5.4 % 4.3 % 0.9 pts 1.1 pts iGaming handle $ 10,622 $ 8,073 $ 5,621 $ 2,549 31.6 % $ 2,452 43.6 % iGaming hold % 3.1 % 3.2 % 3.3 % (0.1) pts (0.1) pts Adjusted EBITDA $ 38 $ (666) $ (476) $ 704 * $ (190) (39.9) % Adjusted EBITDA margin 3.9 % (121.5) % (141.2) % * 19.7 pts Net loss attributable to Caesars $ (91) $ (790) $ (580) $ 699 88.5 % $ (210) (36.2) % ___________________ * Not meaningful. (a) Includes total promotional and complimentary incentives related to sports betting, iGaming, and poker of $253 million, $542 million and $187 million for the year ended December 31, 2023, 2022 and 2021, respectively. Promotional and complimentary incentives for poker were $14 million, $21 million and $18 million for the year ended December 31, 2023, 2022 and 2021, respectively. (b) Caesars Digital generated an additional $1.1 billion, $1.2 billion and $706 million of sports betting handle for the year ended December 31, 2023, 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 10.4%, 11.0% and 9.7% for the year ended December 31, 2023, 2022 and 2021, respectively. Sports betting handle includes $45 million, $50 million and $40 million for the year ended December 31, 2023, 2022 and 2021, respectively, related to horse racing and pari-mutuel wagers. Caesars Digital reflects the operations for retail and mobile sports betting, iGaming, poker, and horse racing, which includes our Caesars Sportsbook, Caesars Racebook and iGaming mobile apps. Caesars Digital’s net revenues, net loss, Adjusted EBITDA, and Adjusted EBITDA margin improved for the year ended December 31, 2023, as compared to prior year, primarily due to higher sports betting hold combined with lower year over year promotional and marketing expenses for launches in new states and jurisdictions in 2023. The increase in iGaming handle was slightly offset by decreased hold during the period. During the third quarter of 2023, we completed the migration of sports betting operations in Nevada to the Liberty platform and launched our new Caesars Palace Online Casino application in states and territories where we operate iGaming. We experienced negative net revenue in the first quarter of 2022 as a result of increased promotional offerings for new state launches in New York and Louisiana. We have refined our promotional intensity during the launch period in new jurisdictions based, in part, on prior experience and do not expect such investments to continue at elevated levels subsequent to initial launch periods. As sports betting and online casinos expand through increased state or jurisdictional legalization, new product launches, and customer adoption, variations in hold percentages and increases in promotional and marketing expenses in highly competitive markets during promotional periods may negatively impact Caesars Digital’s net revenues, net income, Adjusted EBITDA and Adjusted EBITDA margin in comparison to current or prior periods. Sports betting and iGaming hold percentages for the year ended December 31, 2023 were within our typical range. Table of Contents 46 Managed and Branded Segment Years Ended December 31, Variance Percent Change Variance Percent Change (Dollars in millions) 2023 2022 2021 2023 vs 2022 2022 vs 2021 Revenues: Other $ 307 $ 282 $ 278 $ 25 8.9 % $ 4 1.4 % Net revenues $ 307 $ 282 $ 278 $ 25 8.9 % $ 4 1.4 % Adjusted EBITDA $ 76 $ 84 $ 87 $ (8) (9.5) % $ (3) (3.4) % Adjusted EBITDA margin 24.8 % 29.8 % 31.3 % (5) pts (1.5) pts Net income (loss) attributable to Caesars $ 101 $ (301) $ 68 $ 402 * $ (369) * ___________________ * 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. In September 2023, we recorded $25 million of additional other revenue related to the termination of the Caesars Dubai management agreement, which has been excluded from Adjusted EBITDA. Years Ended December 31, Variance Percent Change Variance Percent Change (Dollars in millions) 2023 2022 2021 2023 vs 2022 2022 vs 2021 Reimbursable management revenue $ 206 $ 198 $ 191 $ 8 4.0 % $ 7 3.7 % Reimbursable management cost 206 198 191 8 4.0 % 7 3.7 % Corporate & Other Years Ended December 31, Variance Percent Change Variance Percent Change (Dollars in millions) 2023 2022 2021 2023 vs 2022 2022 vs 2021 Revenues: Casino $ (3) $ (3) $ — $ — — % $ (3) * Other 3 3 9 — — % (6) (66.7) % Net revenues $ — $ — $ 9 $ — * $ (9) (100.0) % Adjusted EBITDA $ (154) $ (124) $ (168) $ (30) (24.2) % $ 44 26.2 % ___________________ * Not meaningful. Supplemental Unaudited Presentation of Consolidated Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) for the Years Ended December 31, 2023, 2022 and 2021 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, depreciation and amortization, stock-based compensation expense, (gain) loss on extinguishment of debt, impairment charges, other (income) loss, net income (loss) attributable to noncontrolling interests, transaction costs associated with our acquisitions, developments, and divestitures, and non-cash changes in equity method investments. 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 Table of Contents 47 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, and payments under our leases with affiliates of VICI Properties Inc. and GLPI, 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, 2023, 2022 and 2021 in addition to reconciling net income (loss) to Adjusted EBITDA in accordance with GAAP (unaudited): Years Ended December 31, (In millions) 2023 2022 2021 Net income (loss) attributable to Caesars $ 786 $ (899) $ (1,019) Net income (loss) attributable to noncontrolling interests 42 (11) 3 Discontinued operations, net of income taxes — 386 30 Benefit for income taxes (888) (41) (283) Other (income) loss (a) (10) (46) 198 Loss on extinguishment of debt 200 85 236 Interest expense, net 2,342 2,265 2,295 Impairment charges 95 108 102 Depreciation and amortization 1,261 1,205 1,126 Transaction costs and other (b) 6 90 220 Stock-based compensation expense 104 101 82 Adjusted EBITDA 3,938 3,243 2,990 Pre-consolidation, pre-acquisition, and pre-disposition EBITDA, net (c) (15) (20) (23) Total Adjusted EBITDA $ 3,923 $ 3,223 $ 2,967 ____________________ (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) a disputed claims liability, 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 (i) net proceeds received in exchange for participation rights in a potential insurance recovery, (ii) proceeds received for the termination of the Caesars Dubai management agreement, (iii) insurance proceeds received in excess of the respective carrying value of damaged assets associated with the Lake Charles property, (iv) costs related to non-cash losses on the write down and disposal of assets, professional services for transaction and integration costs, various contract exit or termination costs, and pre-opening costs in connection with new temporary facility openings, and (v) non-cash changes in equity method investments. (c) Results of operations for Horseshoe Baltimore prior to its consolidation on August 26, 2021 and William Hill prior to its acquisition on April 22, 2021 are added to Adjusted EBITDA. The results of operations of divested properties prior to their respective divestiture dates 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, 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 facility, 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 48 As of December 31, 2023, our cash on hand and revolving borrowing capacity were as follows: (In millions) December 31, 2023 Cash and cash equivalents $ 1,005 Revolver capacity (a) 2,210 Revolver capacity committed to letters of credit (70) Revolver capacity committed as regulatory requirement (46) Total $ 3,099 ___________________ (a) Revolver capacity includes $2.25 billion under our CEI Revolving Credit Facility, maturing in January 2028, less $40 million reserved for specific purposes. During the year ended December 31, 2023, our operating activities generated operating cash inflows of $1.8 billion, as compared to operating cash inflows of $1.0 billion during the year ended December 31, 2022 due to the results of operations described above. On February 6, 2023, we entered into an Incremental Assumption Agreement No. 2 pursuant to which we incurred a new senior secured term loan facility in an aggregate principal amount of $2.5 billion (the “CEI Term Loan B” and, together with the CEI Term Loan A, the “CEI Term Loans”) as a new term loan under the CEI Credit Agreement. The CEI Term Loan B requires scheduled quarterly principal 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, paid monthly, at a rate equal to, at our option, either (a) a forward-looking term rate based on the Adjusted Term SOFR, subject to a floor of 0.50% or (b) a base rate (the “TLB Base Rate”) determined by reference to the highest of (i) 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 TLB Base Rate loan, subject to one 0.25% step-down based on our 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. On February 6, 2023, concurrently with the issuance of the CEI Term Loan B, we 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. The net proceeds from the CEI Term Loan B, along with the net proceeds from the issuance of the CEI Senior Secured Notes due 2030 described above, 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. Upon the termination of the CRC Term Loan and the CRC Incremental Term Loan, we recorded a loss on extinguishment of debt of $197 million. On May 1, 2023, we elected to prepay the outstanding $400 million Convention Center Mortgage Loan utilizing cash on hand. On July 10, 2023, we completed the acquisition of the remaining 24.2% equity ownership in Horseshoe Baltimore, utilizing cash on hand, for a total of $66 million. On July 17, 2023, we permanently repaid the outstanding principal balance of the Baltimore Term Loan. In connection with the repayment, we recognized a $3 million loss on the early extinguishment of debt. On February 6, 2024, we entered into an Incremental Assumption Agreement No. 3 pursuant to which we incurred a new senior secured incremental term loan in an aggregate principal amount of $2.9 billion (the “CEI Term Loan B-1”) under the CEI Credit Agreement. The CEI Term Loan B-1 requires quarterly principal payments in amounts equal to 0.25% of the original aggregate principal amount of the CEI Term Loan B-1, with the balance payable at maturity. Borrowings under the CEI Term Loan B-1 bear interest at a rate equal to, at our option, either (a) a forward-looking term rate based on the Term SOFR, subject to a floor of 0.50% or (b) a base rate (the “TLB-1 Base Rate”) determined by reference to the highest of (i) the “Prime Rate” in the United States, (ii) the federal funds rate plus 0.50% per annum and (iii) the one-month Term SOFR plus 1.00% per annum, in each case, plus an applicable margin. Such applicable margin is 2.75% per annum in the case of any Term SOFR loan and 1.75% per annum in the case of any TLB-1 Base Rate loan. The CEI Term Loan B-1 was issued at a price of 99.75% of the principal amount and will mature on February 6, 2031. Table of Contents 49 Additionally, on February 6, 2024, we issued $1.5 billion in aggregate principal amount of 6.50% senior secured notes due 2032 (the “CEI Senior Secured Notes due 2032”) pursuant to an indenture by and among the Company, the subsidiary guarantors party thereto, U.S. Bank Trust Company, National Association, as trustee, and U.S. Bank National Association, as collateral agent. The CEI Senior Secured Notes due 2032 rank equally with all existing and future first-priority lien obligations of the Company and the subsidiary guarantors. The CEI Senior Secured Notes due 2032 will mature on February 15, 2032, with interest paid semi-annually on February 15 and August 15 of each year, commencing August 15, 2024. The net proceeds from the issuance of the CEI Senior Secured Notes due 2032 and the net proceeds from the CEI Term Loan B-1, together with borrowings under the CEI Revolving Credit Facility, were used to tender, redeem, repurchase, defease, and/or satisfy and discharge any and all of the principal amounts, including accrued and unpaid interest, related expenses and fees of both the 5.75% Senior Secured Notes due 2025 (the “CRC Senior Secured Notes”) and the 6.25% Senior Secured Notes due 2025 (the “CEI Senior Secured Notes due 2025”). As a result of these transactions, we estimate that we will incur approximately $50 million of loss on early extinguishment of debt. 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 2024 include expansion projects, hotel renovations 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 or prepay our outstanding indebtedness. Any such purchases or prepayments 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 have agreements with certain professional sports leagues and teams, sporting event facilities and media companies for tickets, suites, and advertising, marketing, promotional and sponsorship opportunities including communication with partner customer databases. Additionally, a selection of such partnerships provide us with exclusivity to access the aforementioned rights within the casino and/or sports betting category. As of December 31, 2023 and 2022 , obligations related to these agreements were $605 million and $898 million, respectively, with contracts extending through 2040. These obligations include leasing of event suites that are generally considered short term leases for which we do not record a right of use asset or lease liability. We recognize expenses in the period services are received in accordance with the various agreements. In addition, assets or liabilities may be recorded related to the timing of payments as required by the respective agreement. 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 a permanent facility in late 2024. The permanent development has a budget of $650 million and is expected to include a premier destination resort casino along with a 320-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, we are developing Harrah’s Columbus Nebraska which is a casino development 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, with an official opening in the second quarter of 2024. In the second quarter of 2023, temporary gaming facilities for Caesars Virginia and Harrah’s Columbus Nebraska opened while the permanent facilities are being constructed. In 2020, we funded $400 million into escrow for a three year capital expenditure plan in the state of New Jersey. The capital plan included significant room renovations at both Caesars Atlantic City and Harrah’s Atlantic City, as well as the addition of new restaurants with celebrity partners. During the year ended December 31, 2023, we met our commitment and exhausted the remaining funds in the escrow account. 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 on or around Harrah’s New Orleans by July 15, 2024. The capital investment involves the rebranding of the property to Caesars New Orleans which includes a renovation and full interior and exterior redesign, an updated casino floor, new culinary experiences and a new 340-room hotel tower. The project has a current capital plan of approximately $430 million and, as of December 31, 2023, total capital expenditures have been $289 million since the project began. Table of Contents 50 Cash used for capital expenditures totaled $1.3 billion, $952 million and $520 million for the years ended December 31, 2023, 2022 and 2021, respectively, related to our growth, renovation, maintenance, and other capital projects. The following table summarizes our estimates for 2024 capital expenditures: (In millions) Low High Growth and renovation projects $ 325 $ 375 Caesars Digital 95 115 Maintenance projects 300 400 Total estimated capital expenditures from unrestricted cash 720 890 Caesars Virginia (a) 300 350 Total $ 1,020 $ 1,240 ___________________ (a) We expect the joint venture to enter into a new credit facility, of approximately $375 million to $425 million, to fund future Caesars Virginia capital expenditures alongside ongoing cash flows from the temporary casino’s operations. 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 $915 million for 2024 . We also lease certain real property assets from third parties, including VICI and GLPI. The VICI Leases are subject to annual escalations, that take effect in November of each year, based on the CPI. We estimate our lease payments to VICI and GLPI to be approximately $1.3 billion for 2024 . 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. If an 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, including availability of borrowings under our committed credit facility and cash flows from operations 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 CEI Term Loan B, and the indentures governing the CRC Senior Secured Notes, the CEI Senior Secured Notes due 2025, the CEI Senior Secured Notes due 2030, the CEI Senior Notes due 2027, 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. Following the Third Amendment, 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 2.0:1 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. Failure to comply with such covenants could result in an acceleration of the maturity of indebtedness outstanding under the relevant debt document. As of December 31, 2023, we were not subject to any debt covenants with respect to the new CEI Term Loan B-1 or the CEI Senior Secured Notes due 2032. 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. As of December 31, 2023, we were in compliance with all of the applicable financial covenants described above. Share Repurchase Program In November 2018, the Board 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. Table of Contents 51 As of December 31, 2023, we have acquired 223,823 shares of common stock 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, 2023 or 2022. Debt Obligations and Leases CEI Term Loans 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, as amended, provides for the CEI Revolving Credit Facility in an aggregate principal amount of $2.25 billion (the “CEI Revolving Credit Facility”). The CEI Revolving Credit Facility contains reserves of $40 million which are available only for certain permitted uses. On October 5, 2022, Caesars entered into a third amendment to the CEI Credit Agreement (the “Third Amendment”) pursuant to which we (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. We 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, paid monthly, at a rate equal to, at our option, either (a) a forward-looking term rate based on Secured Overnight Financing Rate (“Term 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 our net total leverage ratio. In addition, on a quarterly basis, we are 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 our net total leverage ratio. On February 6, 2023, Caesars entered into an Incremental Assumption Agreement No. 2 pursuant to which we incurred a new senior secured term loan facility in an aggregate principal amount of $2.5 billion (the “CEI Term Loan B” and, together with the CEI Term Loan A, the “CEI Term Loans”) as a new term loan under the CEI Credit Agreement. The CEI Term Loan B requires scheduled quarterly principal 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, paid monthly, at a rate equal to, at the our option, either (a) a forward-looking term rate based on the Adjusted Term SOFR, subject to a floor of 0.50% or (b) a base rate (the “TLB Base Rate”) determined by reference to the highest of (i) 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 TLB Base Rate loan, subject to one 0.25% step-down based on our 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 CEI Term Loan B, along with the net proceeds from the issuance of the CEI Senior Secured Notes due 2030 described below, 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. During the year ended December 31, 2023, we utilized and fully repaid the CEI Revolving Credit Facility. Such activity is presented in the financing section in the Statements of Cash Flows. As of December 31, 2023, we had $2.1 billion of available borrowing capacity under the CEI Revolving Credit Facility, after consideration of $70 million in outstanding letters of credit, $46 million committed for regulatory purposes and the reserves described above. Table of Contents 52 Subsequent Amendment to the CEI Credit Agreement and issuance of New Senior Secured Notes On February 6, 2024, we entered into an Incremental Assumption Agreement No. 3 pursuant to which we incurred a new senior secured incremental term loan in an aggregate principal amount of $2.9 billion (the “CEI Term Loan B-1”) under the CEI Credit Agreement. The CEI Term Loan B-1 requires quarterly principal payments in amounts equal to 0.25% of the original aggregate principal amount of the CEI Term Loan B-1, with the balance payable at maturity. Borrowings under the CEI Term Loan B-1 bear interest at a rate equal to, at our option, either (a) a forward-looking term rate based on the Term SOFR, subject to a floor of 0.50% or (b) a base rate (the “TLB-1 Base Rate”) determined by reference to the highest of (i) the “Prime Rate” in the United States, (ii) the federal funds rate plus 0.50% per annum and (iii) the one-month Term SOFR plus 1.00% per annum, in each case, plus an applicable margin. Such applicable margin is 2.75% per annum in the case of any Term SOFR loan and 1.75% per annum in the case of any TLB-1 Base Rate loan. The CEI Term Loan B-1 was issued at a price of 99.75% of the principal amount and will mature on February 6, 2031. Additionally, on February 6, 2024, we issued $1.5 billion in aggregate principal amount of 6.50% of senior secured notes due 2032 (the “CEI Senior Secured Notes due 2032”) pursuant to an indenture by and among the Company, the subsidiary guarantors party thereto, U.S. Bank Trust Company, National Association, as trustee, and U.S. Bank National Association, as collateral agent. The CEI Senior Secured Notes due 2032 rank equally with all existing and future first-priority lien obligations of the Company and the subsidiary guarantors. The CEI Senior Secured Notes due 2032 will mature on February 15, 2032, with interest paid semi-annually on February 15 and August 15 of each year, commencing August 15, 2024. The net proceeds from the issuance of the CEI Senior Secured Notes due 2032 and the net proceeds from the CEI Term Loan B-1, together with borrowings under the CEI Revolving Credit Facility, were used to tender, redeem, repurchase, defease, and/or satisfy and discharge any and all of the principal amounts, including accrued and unpaid interest, related expenses and fees of both the 5.75% Senior Secured Notes due 2025 (the “CRC Senior Secured Notes”) and the 6.25% Senior Secured Notes due 2025 (the “CEI Senior Secured Notes due 2025”). As a result of these transactions, we estimate that it will incur approximately $50 million of loss on early extinguishment of debt. 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 the CRC Senior Secured Notes pursuant to an indenture, dated July 6, 2020, by and among the Escrow Issuer, U.S. Bank National Association, as trustee and Credit Suisse AG, Cayman Islands Branch, as collateral agent. The CRC Senior Secured Notes ranked equally with all existing and future first priority lien obligations of CRC, CRC Finco, Inc. and the subsidiary guarantors. The CRC Senior Secured Notes were set to mature on July 1, 2025 with interest payable semi-annually in cash in arrears on January 1 and July 1 of each year. On February 16, 2024, we completed the tender and/or redemption of the CRC Senior Secured Notes with proceeds from a new CEI Term Loan B-1, new CEI Senior Secured Notes due 2032, and borrowings under the CEI Revolving Credit Facility, as needed. See “Subsequent Amendment to the CEI Credit Agreement and issuance of New Senior Secured Notes” above. CEI Senior Secured Notes due 2025 On July 6, 2020, the Escrow Issuer issued $3.4 billion in aggregate principal amount of the CEI Senior Secured Notes due 2025 pursuant to an indenture, dated July 6, 2020, by and among the Escrow Issuer, U.S. Bank National Association, as trustee, and U.S. Bank National Association, as collateral agent. The CEI Senior Secured Notes due 2025 ranked equally with all existing and future first-priority lien obligations of the Company and the subsidiary guarantors. The CEI Senior Secured Notes due 2025 were set to mature on July 1, 2025 with interest payable semi-annually in cash in arrears on January 1 and July 1 of each year. On April 5, 2023, we purchased $1 million in principal amount of the CEI Senior Secured Notes due 2025. On February 7, 2024, we completed the tender, redemption, and/or satisfaction and discharge of the CEI Senior Secured Notes due 2025 with proceeds from a new CEI Term Loan B-1, new CEI Senior Secured Notes due 2032, and borrowings under the CEI Revolving Credit Facility, as needed. See “Subsequent Amendment to the CEI Credit Agreement and issuance of New Senior Secured Notes” above. Table of Contents 53 CEI Senior Secured Notes due 2030 On February 6, 2023, concurrently with the issuance of the CEI Term Loan B, we 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. Baltimore Term Loan and Baltimore Revolving Credit Facility On July 17, 2023, following the acquisition of the remaining 24.2% equity interest in Horseshoe Baltimore, we permanently repaid the outstanding principal balance of Horseshoe Baltimore’s senior secured term loan facility (the “Baltimore Term Loan”). In connection with the repayment, we recognized a $3 million loss on the early extinguishment of debt. The Baltimore Term Loan was subject to a variable rate of interest calculated as London Interbank Offered Rate (“LIBOR”) plus 4.00% until May 1, 2023, when the Baltimore Term Loan’s benchmark interest rate was amended from LIBOR to the Adjusted Term SOFR plus an applicable adjustment. In addition, Horseshoe Baltimore’s senior secured revolving credit facility (the “Baltimore Revolving Credit Facility”) matured on July 7, 2023. The Baltimore Revolving Credit Facility had borrowing capacity of up to $10 million, subject to a variable rate of interest calculated as Term SOFR plus 4.00%. 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 was set to escalate annually on the anniversary of the closing date up to a maximum interest rate of 8.3% per annum. On May 1, 2023, we elected to prepay the outstanding $400 million Mortgage Loan utilizing cash on hand. In connection with the repayment, we extended VICI’s call right relating to the CAESARS FORUM convention center from December 31, 2026 to December 31, 2028. CRC Term Loan and CRC Incremental Term Loan Caesars Resort Collection (“CRC”) was party to a credit agreement, dated as of December 22, 2017 (as amended, the “CRC Credit Agreement”), which provided for, among other things, 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 (the “CRC Incremental Term Loan”). The CRC Term Loan and the CRC Incremental Term Loan were subject to the terms described below prior to repayment. We repaid the $3.4 billion outstanding principal amount of the CRC Term Loan and the $1.0 billion outstanding principal amount of the CRC Incremental Term Loan on February 6, 2023, with proceeds from a new CEI Term Loan B and new CEI Senior Secured Notes due 2030, both of which are described above. Upon the termination of the CRC Term Loan and the CRC Incremental Term Loan, we recorded a loss on extinguishment of debt of $197 million. 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 was (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. 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. 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. Table of Contents 54 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 us 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. 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 (the “Joliet Lease”), collectively, VICI Leases. The lease agreements, inclusive of all amendments, include (i) a 15-year initial term with four five-year renewal options, (ii) initial annual fixed rent payments of $1.1 billion, subject to annual escalation provisions based on the CPI and a 2% floor which commenced in lease year two of the initial terms 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 Right Agreement whereby we may require VICI to purchase and lease back (as lessor) or whereby VICI may require us 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 Horseshoe Indianapolis (the “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 and leased back to CEI in accordance to the terms and conditions of the Put-Call Right Agreement. Our VICI Leases are accounted for as a financing obligation and totaled $11.4 billion as of December 31, 2023. 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, 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 our option, (ii) annual land and building base rent of $24 million and $63 million, respectively, (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 GLPI Master Lease does not provide us with an option to purchase the leased property or the ability to terminate its obligations under the GLPI Master Lease prior to its expiration without GLPI’s consent. On May 5, 2022, we consummated the sale of the equity interests of Baton Rouge. On November 13, 2023, a third amendment to the GLPI Master Lease was entered into as a result of the sale and removal of Baton Rouge from the properties included under the GLPI Master Lease. The Lumière Lease was entered into by us and GLPI, whereby we 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 $1.3 billion as of December 31, 2023. 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. 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 55 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 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: 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. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use existing deferred tax assets. During the second quarter of 2023, we evaluated our forecasted adjusted taxable income and objectively verifiable evidence and placed substantial weight on our 2022 and 2023 quarterly earnings, adjusted for non-recurring items, including the interest expense disallowed under current tax law. Accordingly, we determined it was more likely than not that a portion of the federal and state deferred tax assets will be realized and, as a result, during the second quarter of 2023, we reversed the valuation allowance related to these deferred tax assets and recorded an income tax benefit of $940 million. We are still carrying a valuation allowance on certain federal and state deferred tax assets that are not more likely than not to be realized in the future. We have assessed the changes to the valuation allowance, including realization of the disallowed interest expense deferred tax asset, using the integrated approach. As of December 31, 2023, the Company had federal and state net operating loss carryforwards of $872 million and $9.0 billion, respectively, and federal general business tax credit and research tax credit carryforwards of $145 million, which will expire on various dates as follows: Year of Expiration Net Operating Losses Tax Credits (In millions) Federal States Federal 2024-2028 $ — $ 604 $ 8 2029-2033 238 1,590 39 2034-2043 168 4,560 98 Do not expire 466 2,279 — $ 872 $ 9,033 $ 145 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 Table of Contents 56 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 effects of changes in the competitive environment, capital projects and new developments which may not be realized at the projected rate. We completed our annual impairment tests as of October 1, 2023. The estimated fair values of certain of our indefinite lived intangible assets and reporting units decreased primarily due to a decrease in projected future cash flows at certain regional properties due to increased competition. Accordingly, we identified one reporting unit with which the estimated fair value of the associated gaming rights was less than the carrying value and recorded an impairment of $81 million. In addition, we identified one reporting unit where the estimated fair value of the respective reporting unit was below the carrying value and recorded a total impairment of $14 million to goodwill. These reporting units are within the Regional segment. As of October 1, 2023, three reporting units in the Regional segment with goodwill totaling $1.1 billion had fair values that did not significantly exceed their respective carrying values. In addition, we identified a trademark totaling $114 million in the Las Vegas segment and a gaming right totaling $91 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, 2023 was approximately 10.5%. 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 impairments of approximately $40 million on the assets that do not significantly exceed their carrying values. In addition, $1.0 billion of goodwill within our Regional segment is associated with reporting units with zero or negative carrying values. 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. Table of Contents 57 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, 2023, 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 within Accrued other liabilities on the Balance Sheets. The assumptions utilized by our actuaries are subject to significant uncertainty and if outcomes differ from these assumptions or events develop or progress in a negative manner, the Company could experience a material adverse effect and additional liabilities may be recorded in the future. 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. 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.