Caesars Entertainment Corp., the global gaming operator, has received “multiple unsolicited bids” to acquire its wholly owned online subsidiary, Caesars Interactive Entertainment (CIE), according to anonymous sources who spoke to Bloomberg Technologies this week.
Bloomberg said that a potential acquisition has been valued at $4 billion, and a debt-ridden Caesars parent is understood to be giving the matter serious thought.
Should such a deal materialize, it could mean that the World Series of Poker, certainly one of the most iconic brands in the gaming universe, would also be up for sale, which could also mean an eventual change of venue for the annual summer poker tournament series from the Caesars-owned Rio Hotel and Casino in Las Vegas to another property.
Caesars has owned the WSOP since 2004 when, then known as Harrah’s, it acquired the brand from the Binion family, along with the Horseshoe Casino in downtown Las Vegas, selling the casino property itself off almost immediately. The WSOP was then passed onto CIE when the digital company was formed in 2009. In addition to the massive World Series event, CIE is primarily charged with the mission of researching and developing online gaming offerings, including social gaming.
And while the parent company is currently wrestling with “the largest and most complex bankruptcy in a generation,” in the words of one of its own attorneys, as it seeks to reorganize industry-high debt of almost $20 billion, CIE has proved to be nothing less than a success story.
The company has since become the biggest player in the social casino games market through its social and mobile brand Playtika and titles like Slotomania and Bingo Blitz. In 2015, CIE’s revenue grew 30.6 percent to a record $785.5 million for the year, with its social casino games considerably outstripping its real money offerings in Nevada and New Jersey, where it offers legal and regulated online poker. Its social casino titles grew their average daily active users by 11 percent throughout 2015.
Bankruptcy Could Impede Sale
While a sale might be attractive to Caesars, it would likely be complicated by the company’s ongoing Chapter 11 bankruptcy proceedings. The gaming operator acquired most of its debt when it was bought out by a group of venture capitalists back in 2006 in a highly leveraged $27.8 billion acquisition, just before the economic downturn struck the Vegas casino industry.
The bankruptcy reorganization of Caesars’ main operating unit, CEOC, has been disrupted by legal action launched by its junior creditors. These creditors have accused the parent company of stripping CEOC of its prize assets, leaving it with little but distressed assets and an inability to pay off its debts.
In March, a court examiner who investigated millions of pages of documents detailing Caesars’ financial dealings over the past few years concluded in his report that he believed the junior creditors were justified in those claims.
A bankruptcy judge is therefore unlikely to permit the sale of CIE without the approval of these junior creditors.