Acquisitions, Investments, Dispositions and Divestitures

Acquisitions and Investments

Venture with Rock Gaming, LLC

In December 2010, we formed a venture, Rock Ohio Caesars LLC ("ROC"), with Rock Ohio Ventures, LLC (formerly Rock Gaming, LLC) (“Rock Gaming”), to pursue casino developments in Cincinnati and Cleveland. Pursuant to the agreements forming the venture, we have committed to invest up to $200.0 million for an approximate 30% interest in the venture. The casino developments will be managed by subsidiaries of CEOC.

In August 2011, Rock Gaming exercised a contractual right to buy down a portion of our interest in the venture. Pursuant to this right, Rock Gaming contributed capital to the venture disproportionately with its existing ownership interest, lowering our ownership interest in the venture to 20.0%.

During 2011, the Company contributed an additional $16.0 million into its venture with Rock Gaming, bringing its total cash contribution to the venture to $80.0 million. This contribution is included in “Investments in and advances to nonconsolidated affiliates” in our Consolidated Balance Sheets.

In August 2012, Caesars Ohio Investment, LLC (“COI”) sold a 53.39% interest in Thistledown Racetrack, LLC (“Thistledown”), a thoroughbred racing facility in Cleveland, Ohio, to Rock Gaming for $28.6 million. Effectively concurrent with this sale, COI contributed its remaining 46.61% interest in Thistledown to ROC in exchange for additional equity interests in ROC. Immediately subsequent to these transactions, Rock Gaming purchased a portion of equity interests in ROC from COI for $14.3 million in order to retain an 80% ownership interest in ROC. The Company recognized an $11.0 million gain on these transactions.

Baltimore, Maryland

In September 2011, we filed an application with the State of Maryland for the license to operate a video lottery terminal ("VLT") facility in the City of Baltimore. The application was filed on behalf of a consortium that, at the time, included Caesars Entertainment as the lead investor and facility manager, Rock Gaming, CVPR Gaming Holdings, LLC, and The Stronach Group (the "Baltimore Investors"). The consideration paid to the State of Maryland along with the bid for the license has been recorded as a non-amortizing intangible asset.

In July 2012, the consortium led by the Company was awarded the license to operate a casino in downtown Baltimore. In October 2012, Caesars entered into definitive agreements with the Baltimore Investors and Brown Capital Management to form a venture that will build and own the casino, subject to regulatory approvals and receipt of project financing. Pursuant to such definitive agreements, we committed to contribute a maximum of $78.0 million in capital to the venture, $17.7 million of which has previously been contributed, for the purpose of developing and constructing the casino. At December 31, 2012, Caesars had an approximately 52% indirect ownership interest in the venture, which was consolidated as a variable interest entity into our financial statements.

Windsor Casino Limited

In June 2012, Windsor Casino Limited ("WCL") redeemed and canceled all of the WCL shares held by HPP International Corporation (a Hilton affiliate), an unrelated third party, representing 50% of WCL's equity, for $8.7 million. The redemption of the shares increased Caesars' ownership interest to 100%. The results of WCL for the periods subsequent to the transaction are consolidated into our financial statements. Prior to June 2012, we had a 50% ownership interest in WCL that was accounted for under the equity method. We operate Caesars Windsor located in Windsor, Ontario, and the province of Ontario owns the complex through the Ontario Lottery and Gaming Commission.

Chester Downs

In January 2012, we received notice that the minority owners of Chester Downs and Marina, LLC ("Chester Downs") elected to exercise their put rights thereby requiring us to purchase from the minority owners 90% of their interest in Chester Downs for consideration of $9.6 million. We consummated this purchase in February 2012. As a result, we now have a 99.5% ownership interest in this property.

Playtika Ltd.

In May 2011, Caesars Interactive Entertainment Israel, Ltd. (“CIEI”), a subsidiary of CIE, which is a majority-owned subsidiary of Caesars Entertainment, acquired 51% of the voting equity interests of Playtika, a social games developer based in Israel. For periods subsequent to the date of acquisition, Playtika is consolidated into our financial statements.

The purchase price of Playtika was allocated based upon estimated fair values of the assets acquired and liabilities assumed, with the excess of estimated fair value over net tangible and intangible assets acquired recorded as goodwill. The purchase price allocation includes assets and liabilities of Playtika as follows:



(In millions)	May 16, 2011
Assets
Total current assets	$	6.5
Goodwill	50.7
Intangible assets other than goodwill	25.0
	82.2
Liabilities
Total current liabilities	(5.9		)
Total long term liabilities	(5.3		)
Redeemable non-controlling interests	(36.0		)
Net assets acquired	$	35.0

The Company finalized the purchase price allocations during fourth quarter 2011.

CIEI purchased the remaining 49% of Playtika in December 2011 bringing CIEI’s ownership of Playtika to 100%. The non-controlling interest acquired was adjusted to its acquisition-date fair value by recording a reduction to equity of $31.5 million. There was no gain or loss recognized as a result of remeasuring the redeemable non-controlling interests to its acquisition-date fair value.

Buffalo Studios, LLC and Bubbler Media

In December 2012, CIE purchased substantially all of the net assets of Buffalo Studios, LLC ("Buffalo"), a social and mobile games developer and owner of Bingo Blitz, for consideration of approximately $45.9 million, including the current estimate of contingent consideration. In September 2012, CIE purchased the assets of Bubbler Media ("Bubbler") a social and mobile games developer based in Belarus, for consideration of approximately $7.5 million.

The purchase prices of Buffalo and Bubbler were allocated based on estimated fair values of the assets acquired and liabilities assumed, with the excess of the purchase price over the estimated fair value of the net tangible and intangible assets acquired recorded as goodwill. The preliminary purchase price allocations include total assets, liabilities and net assets acquired of Buffalo of $48.1 million, $2.2 million and $45.9 million, respectively. The preliminary purchase price allocations include net assets acquired of Bubbler of $7.5 million. The Company has not yet finalized its purchase price allocations for either of these transactions. The most significant of the items not finalized is the determination of contingent consideration incurred in connection with the Buffalo acquisition, and deferred tax balances associated with differences between the estimated fair values and the tax bases of assets acquired and liabilities assumed for both transactions.

Suffolk Downs

In March 2011, we acquired an interest in Sterling Suffolk Racecourse, LLC ("Suffolk Downs"), which owns a horse-racing track in Massachusetts, along with an option to purchase additional interests and the right to manage a potential future gaming facility. The consideration paid for this investment has been recorded as an amortizing intangible asset, representing the right to manage a potential future gaming facility, with amortization commencing upon the future opening date of such facility.

During 2012, the Company acquired a $28.1 million preferred equity interest in Suffolk Downs. This investment has been recorded as an investment in non-consolidated affiliates and is accounted for using the equity method of accounting.

Dispositions and Divestitures

Harrah's St. Louis

In May 2012, the Company, along with certain of its wholly-owned subsidiaries, entered into an equity interest purchase agreement with Penn National Gaming, Inc. (“Penn”) whereby the Company agreed to sell its Harrah's St. Louis casino to Penn for a purchase price of $610.0 million. The sale closed on November 2, 2012 and the Company recorded a pre-tax gain of $9.3 million on the sale. The Company has been using and continues to expect to use the net proceeds from the sale to fund capital expenditures of CEOC. All assets and liabilities sold pursuant to the purchase agreement have been classified as held for sale in our Consolidated Balance Sheets at December 31, 2011, and we have presented the operations of the Harrah's St. Louis casino as discontinued operations in our Consolidated Statements of Comprehensive Loss for the years ended December 31, 2012, 2011, and 2010. See “Discontinued Operations” below.

Macau Land Concession

During the second quarter of 2012, we determined that it is more likely than not that we will divest of our investment in subsidiaries that hold a land concession in Macau prior to the end of the remaining 35-year term of the concession. As a result, we performed an impairment assessment on the land concession and recorded an impairment charge of $101.0 million. In the fourth quarter of 2012, the Company began discussions with interested investors regarding a sale of the subsidiaries that hold the land concession. As a result of this plan of disposal, the assets and liabilities have been classified as held for sale in our Consolidated Balance Sheets at December 31, 2012 and 2011. At December 31, 2012, the carrying value of the net assets held for sale was lower than their estimated fair value less the estimated costs to sell. We have presented the operations of the business as a discontinued operation in the Consolidated Statements of Comprehensive Loss for the years ended December 31, 2012, 2011, and 2010. See “Discontinued Operations” below.

Discontinued Operations

Assets and liabilities classified as held for sale at December 31, 2012 and 2011 are as follows:



	2012		2011
(In millions)	Macau		Harrah's St. Louis		Macau		Total
Assets
Cash and cash equivalents	$	4.7	$	10.0	$	3.4	$	13.4
Other current assets	0.4		1.6		0.5		2.1
Assets held for sale, current	$	5.1	$	11.6	$	3.9	$	15.5

Property and equipment, net	$	471.2	$	196.1	$	584.3	$	780.4
Goodwill	—		104.4		—		104.4
Intangible assets other than goodwill	—		292.7		—		292.7
Other long-term assets	—		0.2		—		0.2
Assets held for sale, non-current	$	471.2	$	593.4	$	584.3	$	1,177.7

Liabilities
Accounts payable and accrued expenses	$	3.8	$	10.1	$	3.4	$	13.5
Liabilities held for sale, current	$	3.8	$	10.1	$	3.4	$	13.5

Deferred credits and other	$	0.2	$	—	$	0.1	$	0.1
Deferred income taxes	51.9		—		66.2		66.2
Liabilities held for sale, non-current	$	52.1	$	—	$	66.3	$	66.3

Net revenues, (loss)/income from operations before income taxes, and net (loss)/income presented as discontinued operations are as follows:



	Year ended December 31,
(In millions)	2012			2011			2010
Net revenues
Harrah's St. Louis	$	208.4		$	257.7		$	262.4
Macau	3.6			3.5			3.0
Total net revenues	$	212.0		$	261.2		$	265.4

Pre-tax (loss)/income from operations
Harrah's St. Louis	$	62.2		$	75.3		$	65.7
Macau	(121.6		)	(16.1		)	(15.8		)
Total pre-tax (loss)/income from discontinued operations	$	(59.4	)	$	59.2		$	49.9

(Loss)/income, net of income taxes
Harrah's St. Louis	$	(1.7	)	$	45.8		$	39.8
Macau	(107.8		)	(14.4		)	(13.7		)
Total (loss)/income from discontinued operations, net of income taxes	$	(109.5	)	$	31.4		$	26.1

Conrad Punta Del Este Resort and Casino

In November 2012, we entered into a definitive agreement with Enjoy S.A. (“Enjoy”) to form a strategic relationship in Latin America. Under the terms of the agreement, Enjoy will acquire 45% of Baluma S.A., our subsidiary which owns and operates the Conrad Punta Del Este Resort and Casino in Punta Del Este, Uruguay (the “Conrad”), for approximately $140.0 million in cash and stock, and we will become a 10% shareholder in Enjoy. Upon the closing of the transaction, which is subject to certain conditions, including the receipt of all regulatory and governmental approvals, Enjoy will assume primary responsibility for management of the Conrad and will have the option to acquire the remaining stake in Baluma S.A. between years three and five of the relationship.