Caesars Mulls Offers for Interactive Gaming Unit CIE
Caesars Entertainment Corporation (CEC) parent company of the Caesars / Harrah’s / Horseshoe family of destination casino hotels and such brands as the World Series of Poker, has acknowledged receiving offers for its Caesars Interactive Entertainment (CIE) online gaming unit.
News of the existing offers for CIE came via recent features in prominent American business outlets including Bloomberg News and the Wall Street Journal. CIE includes in its brand portfolio such social-gaming offerings as Playtika and Slotomania, in addition to WSOP.com, the online home for the World Series of Poker. Several of the unit’s brands generate solid revenue.
CIE is reportedly the most profitable division of Caesars, which remains buried in roughly $20 billion of debt. The division is largely separate from the Caesars Entertainment Operating Company (CEOC) entity, which was placed into bankruptcy last year but has encountered significant legal difficulties; those legal difficulties remain unresolved. As a result, one future possibility is a Caesars / CEC-wide bankruptcy, which would likely result in a sale of several subsidiary and offshoot Caesars units, including CIE.
The CIE unit is presently encased in a multi-layer ownership structure involving two other Caesars corporate entities Caesars Growth Partners and Caesars Acquisition Co. (CAC). The share price of CAC, which is traded separately from Caesars Entertainment stock, jumped nearly 10% on news of the feelers regarding the interactive unit.
As to who’s behind the tentative offers, Caesars officials gave no answers, though the bids are reportedly multiple and at least one of them is in excess of $4 billion. The CIE division reported year-over-year growth of 28.8% in the company’s latest filings, making it one of the brightest spots amid Caesars’ otherwise red-ink-dominated reports.
However, even assuming that Caesars wanted to divest itself of perhaps its brightest division, whether or not the company could even move forward in accepting such an offer is uncertain. The World Series of Poker and “WSOP” are among the brands now controlled within the CIE unit, and the aggrieved shareholders of whose legal actions may well derail the ongoing CEOC bankruptcy have alleged that the WSOP is among the entities whose true worth was undervalued when it was transferred over to CIE.
The complex intermingling and transferring of multiple brands and properties that marked Caesars’ 2014 restructuring left the worst of Caesars’ debt in the CEOC unit. However, if the CEOC bankruptcy is unwound, that could reverse that restructuring as well, leaving all of Caesars open to what would be a complex asset-division process.
Poker fans might wonder what could happen to the World Series of Poker amid all of Caesars’ corporate woes. The good news is that regarding the WSOP itself, not much is likely to change. The WSOP is way too profitable and valuable a brand to be split apart, and that includes the vast majority of the WSOP’s dedicated work staff, which makes all the WSOP’s offerings run.
What’s more likely is that the land-based WSOP could be moved from its current home at the Rio to another venue, if ownership of the WSOP someday passes out of Caesars’ corporate hands. That eventuality could happen in two separate ways. The CIE unit could indeed be sold off, meaning that the WSOP and its new owners would need to find a non-Rio home. Or, if the event that Caesars Entertainment Company itself is eventually forced into bankruptcy, the WSOP division could be sold off to the highest bidder. Unless that same bidder also purchased the Rio under that uncertain scenario, the WSOP again would face a move, to say nothing of the considerable restructuring that would face the WSOP’s popular Circuit series events.
Even though the WSOP and its live events are, well, live, and the WSOP.com offerings are online (read: interactive), it’s still likely that the two parts would remain coupled in any sell-off eventuality. The WSOP isn’t exactly “on the table,” but as with any good business, it’s no surprise to see that potential suitors are calling.