Proposed Sale of Caesars Interactive Puts WSOP In Limbo

Steve Ruddock July 25, 2016
Proposed Sale of Caesars Interactive Puts WSOP In Limbo

A group of Chinese businesses has entered into exclusive talks to purchase Caesars Interactive Entertainment (CIE), according to Reuters,

According to the report, Caesars Acquisition Company (CAC) would spin off the bulk of its interactive division to a group led by Giant Interactive Games for some $4 billion. GIG is a private Chinese-based gaming company that focuses on social games.

Bankruptcy proceedings complicate sale

Even if the two sides can reach an agreement, a deal will not be an easy one to finalize, considering the numerous complaints creditors have lodged against Caesars’ convoluted corporate structure and history of moving assets around.

Without getting too deep into the minutiae of Caesars’ complex corporate structure, CAC owns 50 percent of CIE, with Caesars Entertainment owning the other 50 percent. Should the sale go through the two companies would become one according to Reuters.

Online Poker Report’s Joss Wood provides a more in-depth breakdown of the multiple companies that bear the Caesars name, and how these company’s fit into Caesars Entertainment Operating Company’s (CEOC) ongoing bankruptcy proceedings. That company has accumulated an estimated $20 billion of debt.

The numerous spin-off companies and subsidiaries, along with numerous asset sales and transfers between them, have complicated Caesars’ previous efforts to restructure their debt, and will likely complicate the chances of this deal coming to fruition.

Social, not online gambling, impetus for sale

It shouldn’t be a surprise that CIE would be targeted.

CIE’s Playtika social games (acquired in 2011) are one of the lone bright spots in the Caesars portfolio in recent years. It is fast approaching $1 billion in annual revenue, thanks to popular games like Slotomania. In 2015, CIE’s social games generated $723 million in revenue, with 23 percent year-over-year growth.

According to Reuters, GIG and the other investors are not interested in the CIE-owned World Series of Poker, or its associated real-money online gambling sites. Per Reuters reporting, the company would  only acquire CIE’s extensive suite of social games, which account for over 95 percent of CIE’s total revenue.

What happens to the WSOP?

It’s likely the WSOP brand (both the famed tournament series which recently wrapped up its 47th annual installment, and the real money US online poker sites) would be rolled into the new company made up of the remains of Caesars Entertainment and CAC.

Alternatively, the WSOP itself or WSOP NV /WSOP NJ could be spun off in a separate deal to another interested party.

How Caesars acquired the WSOP

Caesars acquired the World Series of Poker in 2004, when the company (then Harrah’s) purchased Binion’s Horseshoe in Las Vegas for a reported price tag of $50 million in early 2004.

The purchase of Binion’s Horseshoe, owned by Becky Behnen-Binion, consolidated the Binion’s name under the Harrah’s umbrella. The company had purchased Jack Binion’s non-Las Vegas Horseshoe properties the previous year, in a blockbuster $917 million deal.

At the time of the sale, the WSOP was seen as little more than a throw-in asset that was part of Harrah’s purchase of Binion’s. Without a casino to host the series, Binion’s would have little use for the WSOP brand. However, then CEO Gary Loveman was adamant that Harrah’s would have Binion’s Horseshoe reopened in time for the 2004 WSOP, as ABC News Las Vegas affiliate noted at the time:

“Loveman said Harrah’s will promote the 35th annual World Series of Poker, which will begin April 22. Last year, 839 players vied for a top prize of $2.5 million.”

The sale happened before the gaming industry (including Binions and Harrah’s) realized poker was about to explode in a big way, and that the WSOP brand would be among the greatest beneficiaries of this explosion. In fact, as Nolan Dalla has noted, the 2004 WSOP was almost cancelled.

Following the 2004 WSOP, Harrah’s realized it had a very valuable asset. With the explosion of poker, thanks in large part to the popularity of the 2003 WSOP, this “throw-in” later proved to be the most valuable asset in the deal.

It was far more valuable than the Binion’s Horseshoe Casino itself. Had Harrah’s just given Binion’s Horseshoe back to Becky Behnen-Binion, and kept the WSOP, they still would have gotten the best of the deal.

Privacy Policy