Litigation, Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation, Commitments and Contingencies | Litigation, Commitments and Contingencies Litigation General We are party to various legal proceedings, which have arisen in the normal course of our business. Such proceedings can be costly, time consuming and unpredictable and, therefore, no assurance can be given that the final outcome of such proceedings will not materially impact our consolidated financial condition or results of operations. Estimated losses are accrued for these proceedings when the loss is probable and can be estimated. While we maintain insurance coverage that we believe is adequate to mitigate the risks of such proceedings, no assurance can be given that the amount or scope of existing insurance coverage will be sufficient to cover losses arising from such matters. The current liability for the estimated losses associated with these proceedings is not material to our consolidated financial condition and those estimated losses are not expected to have a material impact on our results of operations. COVID-19 Insurance Claims The COVID-19 public health emergency had a significant impact on the Company’s business and employees, as well as the communities where the Company operates and serves. The Company purchased broad property insurance coverage to protect against “all risk of physical loss or damage” and resulting business interruption, unless specifically excluded by policies. The Company submitted claims for losses incurred as a result of the COVID-19 public health emergency which exceed $2 billion. The insurance carriers under the Company’s insurance policies have asserted that the policies do not cover losses incurred by the Company as a result of the COVID-19 public health emergency and have refused to make payments under the applicable policies. In March of 2021, the Company filed a lawsuit against certain of its insurance carriers in the state court in Clark County, Nevada relating to insurance policies that were potentially governed by Nevada law. The Company’s lawsuit was stayed pending the outcome of a separate but similar lawsuit pending in the Nevada Supreme Court. In September of 2023, the Nevada Supreme Court issued an adverse ruling in the separate but similar lawsuit. The Nevada Supreme Court decision negatively affects the Company’s claims in its Nevada lawsuit and will likely result in a dismissal of the Company’s claims with respect to insurance policies that are governed by Nevada law. There are other insurance policies issued to the Company that are governed by other state laws, including, but not limited to, New York and New Jersey. The viability of potential claims under those policies will depend on the result of decisions from the courts in those jurisdictions in lawsuits brought by other claimants. There can be no assurance as to the outcome of any such proceedings. Cybersecurity Incident On September 14, 2023, we announced that an unauthorized actor had gained access to our information technology network as a result of a social engineering attack on an outsourced IT support vendor used by the Company, and acquired a copy of, among other data, our loyalty program database (“Data Incident”). As a result of the Data Incident, we have become subject to multiple lawsuits. Between September 15 and October 26, 2023, thirteen class actions have been filed against us in U.S. federal and state courts in Nevada, New Jersey, and California, purporting to represent various classes of persons whose personal information was affected by the Data Incident. These class actions assert a variety of common law and statutory claims based on allegations that the Company failed to use reasonable security procedures and practices to safeguard customers’ personal information, and seek monetary and statutory damages, injunctive relief and other related relief. Caesars is seeking consolidation of the cases that have been filed into a single case. In addition, the Company has received inquiries from state regulators related to the Data Incident. We are responding to these inquiries and cooperating fully with regulators. While we believe it is reasonably possible that we may incur losses associated with the above described proceedings, it is not possible to estimate the amount of loss or range of loss, if any, that might result from adverse judgments, settlements, or other resolution given the stage of these proceedings, the absence of specific allegations regarding the alleged damages, the uncertainty as to the certification of a class or classes and the size of any certified class, if applicable, and/or the lack of resolution of significant factual and legal issues. Additional lawsuits and claims related to the Data Incident may be asserted by or on behalf of customers, shareholders or others seeking damages or other related relief, and governmental agencies may open additional inquiries or investigations into the Data Incident. The Company is pursuing insurance coverage in relation to costs and liabilities incurred due to the Data Incident. We have incurred, and may continue to incur, certain expenses related to the Data Incident, including expenses to respond to, remediate and investigate this matter. The full scope of the costs and related impacts of this incident, including the extent to which these costs will be offset by our cybersecurity insurance or potential indemnification claims against third parties, has not been determined. We are unable to predict the full impact of this incident and its impact on guest behavior in the future, including whether a change in our guests’ behavior could negatively impact our financial condition and results of operations on an ongoing basis. As of the date of this report, there has not been a material effect on the Company’s financial condition and results of operations and we currently do not expect that it will have such an effect in the future. Contractual Commitments Capital Commitments Harrah’s New Orleans In April 2020, the Company and the State of Louisiana, by and through the Louisiana Gaming Control Board, entered into an Amended and Restated Casino Operating Contract. Additionally, the Company, New Orleans Building Corporation and the City entered into a Second Amended and Restated Lease Agreement. Based on these amendments related to Harrah’s New Orleans, the Company is required to make a capital investment of $325 million on or around Harrah’s New Orleans by July 15, 2024. The capital investment will involve the rebranding of the property to Caesars New Orleans which includes a renovation and full interior and exterior redesign, 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 September 30, 2023, total capital expenditures have been $239 million since the project began. Atlantic City As required by the New Jersey Gaming Control Board, in 2020, the Company funded $400 million in escrow to provide funds for a three year capital expenditure plan in the state of New Jersey. The capital plan includes significant room renovations at both Caesars Atlantic City and Harrah’s Atlantic City, as well as the addition of new restaurants with celebrity partners. As of September 30, 2023 and December 31, 2022, the restricted cash balance remaining in the escrow account was $21 million and $118 million, respectively. This amount is currently included in restricted cash in Other assets, net. Sports Sponsorship/Partnership Obligations The Company has agreements with certain professional sports leagues and teams, sporting event facilities and media companies for tickets, suites, advertising, marketing, promotional and sponsorship opportunities including communication with partner customer databases. Additionally, a selection of such partnerships provides Caesars with exclusivity to access the aforementioned rights within the casino and/or sports betting category. As of September 30, 2023 and December 31, 2022, obligations related to these agreements were $639 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 the Company does not record a right of use asset or lease liability. The Company recognizes 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. Self-Insurance The Company is self-insured for workers compensation and other risk insurance, as well as health insurance and general liability. The Company’s total estimated self-insurance liability as of September 30, 2023 and December 31, 2022, was $208 million and $203 million, respectively, which is included in Accrued other liabilities in our 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.
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