Caesars Acquisition Co - FORM 10-Q

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - Caesars Acquisition Co	Financial_Report.xls
EX-32.2 - CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER - Caesars Acquisition Co	cacq-ex322cfocertification.htm
EX-99.1 - FINANCIAL INFORMATION OF CAESARS GROWTH PARTNERS, LLC - Caesars Acquisition Co	cacq-ex991cgpllc3x09financ.htm
EX-32.1 - CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER - Caesars Acquisition Co	cacq-ex321ceocertification.htm
EX-31.2 - CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER - Caesars Acquisition Co	cacq-ex312cfocertification.htm
EX-31.1 - CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER - Caesars Acquisition Co	cacq-ex311ceocertification.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

FORM 10-Q

_________________________

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2014



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission File No. 001-36207

_________________________

CAESARS ACQUISITION COMPANY

(Exact name of registrant as specified in its charter)

_________________________



Delaware		46-2672999
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One Caesars Palace Drive, Las Vegas, Nevada		89109
(Address of principal executive offices)		(Zip Code)

(702) 407-6000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

_________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	x (Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.



Class	Outstanding at November 13, 2014
Class A Common Stock, $0.001 par value	136,386,894

CAESARS ACQUISITION COMPANY

INDEX TO FINANCIAL STATEMENTS




		Page
PART I. FINANCIAL INFORMATION
Item 1.	Unaudited Financial Statements
	Caesars Acquisition Company
	Condensed Balance Sheets	3
	Condensed Statements of Comprehensive Income	4
	Condensed Statement of Stockholders’ Equity	5
	Condensed Statement of Cash Flows	6
	Notes to Condensed Financial Statements	7
	Predecessor Growth Partners
	Explanatory Note	16
	Combined Condensed Statements of Operations	17
	Combined Condensed Statements of Comprehensive Income	18
	Combined Condensed Statement of Stockholders' Equity	19
	Combined Condensed Statement of Cash Flows	20
	Notes to Combined Condensed Financial Statements	21
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	59
Item 4.	Controls and Procedures	60

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	61
Item 1A.	Risk Factors	61
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	93
Item 3.	Defaults Upon Senior Securities	93
Item 4.	Mine Safety Disclosures	93
Item 5.	Other Information	93
Item 6.	Exhibits	94

SIGNATURE		95

Caesars Growth Partners, LLC and its subsidiaries have proprietary rights to a number of trademarks used in this Quarterly Report on Form 10-Q that are important to its business, including, without limitation, World Series of Poker, Playtika Ltd., Slotomania and Bingo Blitz. In addition, Caesars Entertainment Corporation (our joint venture partner in Caesars Growth Partners, LLC) and its subsidiaries have proprietary rights to, among others, Caesars, Caesars Entertainment, Caesars Palace, Harrah’s, Total Rewards, Horseshoe, Paris Las Vegas, Flamingo and Bally's. We have omitted the registered trademark (®) and trademark (™) symbols for such trademarks named in this Quarterly Report on Form 10-Q.

PART I - FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements

CAESARS ACQUISITION COMPANY

CONDENSED BALANCE SHEETS

(UNAUDITED)

(In millions, except par value and share data)



	September 30, 2014		December 31, 2013
Assets
Current assets
Cash and cash equivalents	$	—	$	—
Receivables, net	—		2.5
Prepayments and other current assets	15.4		1.1
Total current assets	15.4		3.6

Equity method investment in Caesars Growth Partners, LLC	1,010.1		1,141.9
Deferred tax assets	—		2.1
Total assets	$	1,025.5	$	1,147.6

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	—	$	1.4
Payable to related party	—		0.1
Accrued expenses	0.1		—
Deferred tax liabilities	0.4		0.4
Total current liabilities	0.5		1.9

Deferred tax liabilities	23.8		—
Total liabilities	24.3		1.9

Commitments and contingencies (Note 6)

Equity
Common stock: $0.001 par value; 300,000,000 Class A shares and 900,000,000 Class B shares authorized; 135,771,882 Class A shares issued and outstanding at September 30, 2014 and December 31, 2013	0.1		0.1
Additional paid-in capital	983.2		1,141.1
Retained earnings	17.9		4.5
Total stockholders' equity	1,001.2		1,145.7
Total liabilities and stockholders' equity	$	1,025.5	$	1,147.6

See accompanying Notes to Condensed Financial Statements.

CAESARS ACQUISITION COMPANY

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(In millions, except per share data)



	Three Months Ended September 30, 2014			Nine Months Ended September 30, 2014
Revenues	$	—		$	—
Operating expenses	2.1			16.2
Loss from operations	(2.1		)	(16.2		)

Income from equity method investment in Caesars Growth Partners, LLC	24.9			55.5
Income before provision for income taxes	22.8			39.3
Provision for income taxes	(20.0		)	(25.9		)
Net income	2.8			13.4
Other comprehensive income, net of income taxes	—			—
Comprehensive income	$	2.8		$	13.4

Earnings per share - basic and diluted	$	0.02		$	0.10
Weighted average common shares outstanding - basic and diluted	135.8			135.8

See accompanying Notes to Condensed Financial Statements.

CAESARS ACQUISITION COMPANY

CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY

(UNAUDITED)

(In millions)



	Class A Common Stock		Additional Paid-in Capital			Retained Earnings		Total Stockholders' Equity
Balance at December 31, 2013	$	0.1	$	1,141.1		$	4.5	$	1,145.7

Net income	—		—			13.4		13.4
Stock-based compensation	—		1.8			—		1.8
Investment in notes from related party	—		(159.7		)	—		(159.7		)

Balance at September 30, 2014	$	0.1	$	983.2		$	17.9	$	1,001.2

See accompanying Notes to Condensed Financial Statements.

CAESARS ACQUISITION COMPANY

CONDENSED STATEMENT OF CASH FLOWS

(UNAUDITED)

(In millions)



	Nine Months Ended September 30, 2014
Cash flows from operating activities
Net income	$	13.4
Adjustments to reconcile net income to cash flows provided by operating activities
Income from equity method investment in Caesars Growth Partners, LLC	(55.5		)
Distribution from equity method investee Caesars Growth Partners, LLC	27.6
Stock-based compensation	1.8
Deferred income taxes	25.9
Change in assets and liabilities:
Receivables, net	2.5
Prepayments and other current assets	(14.3		)
Accounts payable	(1.4		)
Payable to related party	(0.1		)
Accrued expenses	0.1
Cash flows provided by operating activities	—
Cash flows from investing activities	—
Cash flows from financing activities	—
Net change in cash and cash equivalents	—
Cash and cash equivalents, beginning of period	—
Cash and cash equivalents, end of period	$	—

See accompanying Notes to Condensed Financial Statements.

CAESARS ACQUISITION COMPANY

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1 — Description of Business and Summary of Significant Accounting Policies

Description of Business

Organization

Caesars Acquisition Company (the "Company," "CAC," "we," "our" and "us"), a Delaware corporation, was formed on February 25, 2013 to make an equity investment in Caesars Growth Partners, LLC ("CGP LLC"), a joint venture between CAC and subsidiaries of Caesars Entertainment Corporation ("CEC" or "Caesars Entertainment"). CAC directly owns 100% of the voting membership units of CGP LLC, a Delaware limited liability company, and accounts for its ownership in CGP LLC using the hypothetical liquidation at book value ("HLBV") approach to the equity method of accounting (see Note 3 — Equity Method Investment in Caesars Growth Partners, LLC).

Basis of Presentation

Our unaudited condensed financial statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP"), which require the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of expenses during the reporting periods. Management believes the accounting estimates are appropriate and reasonably determined. However, due to the inherent uncertainties in making these estimates, actual amounts could differ.

The results for the interim periods reflect all adjustments (consisting primarily of normal recurring adjustments) that management considers necessary for a fair presentation of financial position, results of operations, and cash flows. The results of operations for our interim periods are not necessarily indicative of the results of operations that may be achieved for the 2014 fiscal year. The accompanying unaudited condensed financial statements are prepared under the rules and regulations of the Securities and Exchange Commission ("SEC") applicable for interim periods and, therefore, do not include all information and footnotes necessary for complete financial statements in conformity with GAAP.

As CAC's only material asset on the Condensed Balance Sheets is its equity method investment in CGP LLC, segment reporting is not applicable. Given the significance of the investment in CGP LLC to the financial position and results of operations of CAC, we have elected to include interim selected financial information of CGP LLC as an exhibit to this quarterly report. CAC had no activity from its formation date of February 25, 2013 through October 21, 2013, the date of the completion of the transactions described in Item 1 - Business of our Annual Report on Form 10-K for the year ended December 31, 2013.

In May 2014, indirect subsidiaries of CGP LLC acquired JCC Holding Company II, LLC and its subsidiaries (collectively known as "Harrah's New Orleans"), 3535 LV Corporation (formerly known as "The Quad" and recently rebranded as "The LINQ Hotel & Casino"), indirect subsidiaries of Parball Corporation (collectively known as "Bally's Las Vegas") and Corner Investment Company, LLC and its subsidiaries (collectively known as "Cromwell") from Caesars Entertainment Operating Company, Inc. ("CEOC"). Because these acquisitions were accounted for as transactions among entities under common control, the financial information for CGP LLC has been recast to include the financial results for these properties as if those businesses were combined into the CGP LLC reporting entity for all periods presented. Income recognized by CAC from its equity method investment in CGP LLC was not impacted or adjusted as a result of recasting the historical financial information of CGP LLC.

Significant Accounting Policies

Stock-based Compensation

CAC grants stock-based compensation awards in CAC Class A common stock, par value $0.001 per share (the "Common Stock") to certain officers, employees, directors, individual consultants and advisers of the Company and its subsidiaries under the Caesars Acquisition Company 2014 Performance Incentive Plan ("the PIP Plan"). The PIP Plan is intended to promote the success of the Company and to increase stockholder value by providing an additional means, through the grant of awards, to attract, motivate, retain and reward employees and other eligible persons. The PIP Plan provides for the plan to be administered by the Human Resources Committee of the Board of Directors of Caesars Acquisition Company (the "HRC"). Through September 30, 2014, CAC has granted restricted stock units ("RSUs") to certain of its employees and directors. The RSUs are classified as equity-classified instruments and are therefore measured at their fair value at their date of grant. A description of the components of the PIP Plan is provided in Note 8 — Stock-based Compensation.

Note 2 — Recently Issued Accounting Pronouncements

In August 2014, the Financial Accounting Standards Board ("FASB") issued authoritative guidance amending the existing requirements for disclosing information about an entity's ability to continue as a going concern. The new guidance will explicitly require management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosure in certain circumstances. The amendments in this guidance are effective for annual reporting periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. We are currently assessing the impact the adoption of this standard will have on our disclosures and results of operations and are evaluating the date of adoption.

Note 3 — Equity Method Investment in Caesars Growth Partners, LLC

We account for our investment in CGP LLC using the HLBV form of the equity method of accounting. Under HLBV accounting, we determine our share of the earnings or losses in CGP LLC by determining the difference between our claim on CGP LLC's book value of equity at the end and beginning of the period. This claim is calculated as the amount that we would receive if CGP LLC were to liquidate all of its net assets at recorded amounts determined in accordance with GAAP and distribute the resulting cash to us in accordance with our respective liquidation priorities. CAC’s claim on CGP LLC's book value of equity is based on the terms of the CGP Operating Agreement, which generally requires the allocation of the net proceeds of a liquidation of CGP LLC as follows:


1.	First, to the voting units held by CAC, to the extent of contributed capital and an annually compounded preferred return of 10.5% on the invested portion of CAC’s contributed capital (“minimum guaranteed return”);


2.	Second, to the non-voting units held by Caesars Entertainment and/or its subsidiaries until Caesars Entertainment catches up (on a per unit basis) to its respective amount distributed in provision (1) (including the 10.5% per annum return on investment); and


3.	Finally, to all unit holders on a pro-rata basis based on ownership.

Our earnings during the nine months ended September 30, 2014, were equal to our preferred return of 10.5% of capital invested by CGP LLC.

Our investee, CGP LLC, had the following financial results, recast for the May 2014 acquisitions, as of or for the periods indicated:



(In millions)	Nine Months Ended September 30, 2014
Statement of Operations
Revenues
Interactive Entertainment	$	430.4
Casino Properties and Developments	910.3
Net revenues	1,340.7
Operating expenses
Interactive Entertainment - Direct	122.0
Casino Properties and Developments - Direct	439.8
Property, general, administrative and other	505.2
Write-downs, reserves and project opening costs, net of recoveries	34.3
Management fees payable to related parties	24.7
Depreciation and amortization	98.8
Change in fair value of contingently issuable non-voting membership units	(7.9		)
Change in fair value of contingent consideration	32.7
Total operating expenses	1,249.6
Income from operations	91.1
Interest expense, net of interest capitalized	(123.8		)
Interest income	1.0
Interest income - related party	119.2
Impairment of investment in notes from related party	(63.5		)
Gain on sale of investment in notes from related party	99.4
Loss on extinguishment of debt	(23.8		)
Other expense, net	(0.1		)
Income from continuing operations before provision for income taxes	99.5
Provision for income taxes	(31.9		)
Net income from continuing operations	67.6
Discontinued operations
Loss from discontinued operations, including $1.4 million of gain on disposal	(15.7		)
Benefit from income taxes related to discontinued operations	0.1
Net loss from discontinued operations	(15.6		)
Net income	52.0
Net loss attributable to non-controlling interests	14.5
Net income attributable to Caesars Growth Partners, LLC	$	66.5



Balance Sheet Data	September 30, 2014		December 31, 2013
Current assets	$	1,134.7	$	1,206.6
Long-term assets	3,638.5		4,240.2
Current liabilities	503.9		333.6
Long-term liabilities	2,734.4		1,648.2
Redeemable non-controlling interests	2.8		3.9
Non-redeemable non-controlling interests	39.1		44.8

Correction of Prior Period Stock-based Compensation

CGP LLC includes stock-based compensation expense as a component of Property, general, administrative and other expenses in the financial statements above. In February 2014, the HRC approved a liquidity plan, setting forth the terms and conditions upon which Caesars Interactive Entertainment, Inc. ("Caesars Interactive" or "CIE") may elect to purchase, or cause to be purchased, CIE owned shares and/or shares underlying options, RSUs or warrants ("deemed held shares") held by eligible individuals, from time to time, during the term of the plan, and providing the eligible individuals with a market for their CIE shares and/or deemed held shares.

During the first and third quarters of 2014, the HRC approved, and CIE offered, certain holders of vested options the ability to exercise their options and, immediately subsequent to exercise, sell those shares back to CIE, consistent with the terms of the liquidity plan. While the offer to buy shares by CIE and the acceptance by the holders of vested options were completely discretionary, CIE concluded that, based upon these discretionary offers, certain of its options should have been modified to be accounted for as liability-classified awards during the first quarter of 2014. Effectively, we have determined to account for the subject stock options as if CIE has a conditional obligation to settle such options in cash at some future date, pursuant to the liquidity plan. However, (i) the liquidity plan is fully at CIE's discretion, (ii) requires additional approval by the HRC for all future purchases and (iii) makes no commitment that any specific employees will be permitted to participate in future shares or deemed share purchases, if any. Prior to this correction, two-thirds of these options were already being accounted for as liability-classified awards due to other terms associated with the options.

As a result of this correction, $19.6 million of expense was recorded during the third quarter of 2014 which related to the prior quarters of 2014. The correction represents a non-cash expense adjustment, therefore the correction has no impact on CGP LLC's cash flows from operations, cash flows from financing activities or Adjusted Earnings before Interest Income/Expense, Income Taxes, Depreciation and Amortization ("EBITDA") for any period presented herein. Likewise, the adjustments have no impact on the financial statements of the Company for any period presented as CAC has recorded income from its investment in CGP LLC based upon its minimum guaranteed return.

Note 4 — Stockholders’ Equity and Earnings per Share

Stockholders' Equity

Common Stock

As of both September 30, 2014 and December 31, 2013, CAC had issued a total of 135,771,882 shares of Class A common stock and no shares of Class B common stock.

Call Right

Pursuant to the certificate of incorporation of CAC and the CGP Operating Agreement, after October 21, 2016, Caesars Entertainment and/or its subsidiaries will have the right, which it may assign to any of its affiliates or to any transferee of all non-voting units of CGP LLC held by subsidiaries of Caesars Entertainment, to acquire all or a portion of the voting units of CGP LLC (or, at the election of CAC, shares of CAC’s Class A common stock) not otherwise owned by Caesars Entertainment and/or its subsidiaries at such time. The purchase consideration may be, at Caesars Entertainment’s option, cash or shares of Caesars Entertainment’s common stock valued at market value, net of customary market discount and expenses, provided that the cash portion will not exceed 50% of the total consideration in any exercise of the call right. The purchase price will be the greater of (i) the fair market value of the voting units of CGP LLC (or shares of CAC’s Class A common stock) at such time based on an independent appraisal or (ii) the initial capital contribution in respect of such units plus a minimum 10.5% per annum return on such capital contribution, subject to a maximum return on such capital contribution of 25% per annum, taking into account prior distributions with respect to such units.

Investment in Notes from Related Party

On August 6, 2014, CGP LLC effectuated a distribution of its 5.75% and 6.50% face value aggregate principal amount of notes previously issued by CEOC ("CEOC Notes") as a dividend to its members, pro-rata based upon each member’s ownership percentage in CGP LLC (the “Notes Distribution”) (see Note 9 — Related Party Transactions). In connection with the Notes Distribution, CAC, as a member of CGP LLC, received $137.5 million in aggregate principal amount of the 6.50% CEOC Notes, maturing June 1, 2016, and $151.4 million in aggregate principal amount of the 5.75% CEOC Notes, maturing October 1, 2017. Both of these notes are included as a component of Additional paid-in capital in our Condensed Balance Sheets and Condensed Statement of Stockholders' Equity along with interest receivable at the distribution date. These notes will be held at the distributed value with no subsequent fair value adjustments or recognition of interest income.

Earnings per Share ("EPS")

Basic EPS is calculated by dividing net income by the weighted average number of common stock outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock-based compensation plans using the treasury stock method.

The following table summarizes the computations of Basic EPS and Diluted EPS (in millions, except per share data):



	Three Months Ended September 30, 2014			Nine Months Ended September 30, 2014
Net income	$	2.8		$	13.4

Shares used to compute EPS:
Weighted average common stock outstanding - basic	135.8			135.8
Dilutive potential common shares	—		*	—		*
Weighted average common stock outstanding - diluted	135.8			135.8

Earnings per share:
Basic	$	0.02		$	0.10
Diluted	$	0.02		$	0.10

^{_________________________________}

^*Rounds to zero and does not change weighted average common stock outstanding - diluted total.

There was an immaterial amount of anti-dilutive shares excluded from the computation of diluted income per share for both the three and nine months ended September 30, 2014.

Note 5 — Income Taxes

Total income taxes were allocated as follows:



(In millions)	Three Months Ended September 30, 2014		Nine Months Ended September 30, 2014
Income tax provision on income before income taxes	$	20.0	$	25.9

We classify reserves for tax uncertainties separate from any related income tax payable or deferred income taxes. Reserve amounts relate to any potential income tax liabilities resulting from uncertain tax positions and potential interest or penalties associated with those liabilities. At September 30, 2014, we had no such reserves.

Income taxes are recorded under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the expected future tax consequences of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating income and tax credit carryforwards. Our equity-method investee, CGP LLC, is a partnership for income tax purposes so the deferred tax assets and liabilities recognized by CAC are also impacted by the expected future tax consequences of temporary differences at CGP LLC.

The effective tax rates for the three and nine months ended September 30, 2014 were 87.7% and 65.9%, respectively, which differ from the federal statutory tax rate of 35% primarily due to a federal valuation allowance recorded against deferred tax assets related to the basis difference in the investment in notes from related party.

We file income tax returns with federal and state jurisdictions. The 2013 tax year is open for examination for CAC's federal and state jurisdictions.

Note 6 — Litigation and Other Matters

From time to time, CAC, Predecessor Growth Partners (as defined in the unaudited combined condensed financial statements of Predecessor Growth Partners contained within this quarterly report), or CGP LLC may be subject to legal proceedings and claims in the ordinary course of business.

Baltimore, Maryland Property Development

Multiple lawsuits have been filed against CBAC Gaming, LLC and CBAC Borrower, LLC, which is wholly-owned by CBAC Gaming, LLC (collectively, "CBAC"), the joint venture that developed Horseshoe Baltimore Casino in Maryland ("Horseshoe Baltimore"), the City of Baltimore, the Maryland Department of the Environment ("MDE"), and other parties in relation to the location and the development of Horseshoe Baltimore, which opened to the public in August 2014. These cases

allege violations of various environmental laws, violations of zoning laws and public nuisance, among other claims. Although CAC, Predecessor Growth Partners, and CGP LLC believe that they have adequate defenses to these claims, an adverse judgment could result in additional costs.

In November 2012, the MDE granted approval of CBAC's amended response action plan ("RAP") under MDE's Voluntary Cleanup Program in connection with the redevelopment of the location for Horseshoe Baltimore. On February 20, 2013, a group of local residents working with the non-profit Inner Harbor Stewardship Foundation (the "Foundation") filed a complaint in the Maryland Circuit Court challenging the legality of the MDE's approval of the amended RAP. In the case, known as Ruth Sherrill, et al. v. State of Maryland Department of the Environment, et al., the Plaintiffs claimed that the amended RAP was approved without complying with the public notice and participation requirements of Maryland law. The plaintiffs sought additional public notice and participation, and to obtain an injunction on, among other things, any construction activities at the site pending the resolution of the case and later amended their complaint to add a claim of public nuisance. On March 14, 2013, the court denied the plaintiffs' motion for a Temporary Restraining Order and Preliminary Injunction ("TRO"). The plaintiffs' appeal of the TRO ruling was dismissed. CBAC filed a motion to dismiss the plaintiffs' amended complaint and a hearing was held on the motion on June 14, 2013. The amended complaint was dismissed on November 6, 2013. The plaintiffs filed a notice of appeal on December 6, 2013 and oral arguments were heard on October 3, 2014 without issuance of a decision.

The plaintiffs also filed a citizen suit on September 19, 2013, under and alleging violations of 42 U.S.C. §§ 6972(a)(1)(A) and (a)(1)(B) of the Resource Conservation and Recovery Act against CBAC, the City of Baltimore, and the Maryland Chemical Company, the former owner and operator of the site. The defendants filed motions to dismiss on October 15, 2013 for lack of subject matter jurisdiction and failure to state a claim to which plaintiffs responded on November 1, 2013. On July 16, 2014, the court granted the defendant’s respective motions to dismiss without prejudice and a notice of appeal of the dismissal was filed on August 13, 2014. A briefing or hearing schedule has not been set.

CEOC First and Second Lien Note Holder Litigation

On August 4, 2014, Wilmington Savings Fund Society, FSB, solely in its capacity as successor Indenture Trustee for the CEOC 10% Second-Priority Senior Secured Notes due 2018 (the "Notes"), on behalf of itself and, it alleges, derivatively on behalf of CEOC, filed a lawsuit in the Court of Chancery in the State of Delaware against CAC, CGP LLC, CEC, CEOC, Caesars Entertainment Resort Properties, LLC ("CERP"), Caesars Enterprise Services, LLC ("CES"), Eric Hession, Gary Loveman, Jeffrey D. Benjamin, David Bonderman, Kelvin L. Davis, Marc C. Rowan, David B. Sambur, and Eric Press. The lawsuit alleges claims for breach of contract, intentional and constructive fraudulent transfer, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and corporate waste. The lawsuit seeks (i) an award of money damages; (ii) to void certain transfers, the earliest of which dates back to 2010; (iii) an injunction directing the recipients of the assets in these transactions to return them to CEOC; (iv) a declaration that CEC remains liable under the parent guarantee formerly applicable to the Notes; (v) to impose a constructive trust or equitable lien on the transferred assets; and (vi) an award to plaintiffs for their attorneys’ fees and costs. CAC believes this lawsuit is without merit and will defend itself vigorously. A motion to dismiss this action was filed by CAC and other defendants on September 23, 2014, and plaintiff Wilmington Savings Fund responded to that motion on October 17, 2014. A hearing on defendants' motion is currently scheduled for December 5, 2014.

On August 5, 2014, CEC along with CEOC filed a lawsuit in the Supreme Court of the State of New York, County of New York, against certain institutional CEOC first and second lien note holders. The complaint states that such institutional first and second lien note holders have acted against the best interests of CEOC and other creditors, including for the purpose of inflating the value of their credit default swap positions or improving other unique securities positions. The complaint asserts claims for tortious interference with prospective economic advantage, declaratory judgment and breach of contract and seeks, among other things, (i) money damages (ii) a declaration that no default or event of default has occurred or is occurring and CEC and CEOC have not breached their fiduciary duties or engaged in fraudulent transfers or other violation of law, and (iii) a preliminary and permanent injunction prohibiting the defendants from taking further actions to damage CEC or CEOC. CEC and CEOC filed an amended complaint in September 2014 adding successor trustee Wilmington Savings Fund Society, FSB as an additional defendant, and also expanded upon certain of CEC's and CEOC's affirmative claims. The defendants moved to dismiss this action on October 15, 2014. We have been informed by CEC and CEOC that they will oppose that motion.

Note 7 — Supplemental Cash Flow Information

There was no interest expense incurred or cash paid for interest during the period presented.

CAC's expenses incurred in the normal course of business are expected to be paid by CGP LLC on behalf of CAC in accordance with the CGP Operating Agreement. During the three and nine months ended September 30, 2014, CGP LLC paid $0.7 million and $27.6 million, respectively, in tax and general expenses on behalf of CAC which were accounted for as distributions from CGP LLC to CAC.

Note 8 — Stock-based Compensation

On April 9, 2014, the Board of Directors (the "Board") of the Company approved the PIP Plan, subject to approval of the PIP Plan by the Company’s stockholders. The PIP Plan was approved by the Company's stockholders on May 8, 2014. The HRC will administer the PIP Plan. Under the PIP Plan, the Company is authorized to grant stock options, stock appreciation rights, stock bonuses, restricted stock, performance stock, stock units, phantom stock, dividend equivalents, cash awards, rights to purchase or acquire shares or similar securities in the form of or with a value related to our Common Stock, to officers, employees, directors, individual consultants and advisers of the Company and its subsidiaries. The PIP Plan will terminate ten years after approval by the Board. Subject to adjustments in connection with certain changes in capitalization, the maximum number of shares of our Common Stock that may be delivered pursuant to awards under the PIP Plan is 3,000,000.

Restricted Stock Units

On April 9, 2014, grants of RSUs to certain eligible individuals were approved by the HRC in accordance with the PIP Plan and the grants became effective based upon the May 8, 2014 stockholder approval of the PIP plan. For accounting purposes, the grants were determined to occur in connection with the stockholder approval of the PIP plan. Additionally, on July 30, 2014 another grant of RSUs to eligible individuals was approved. These grants all are subject to vesting over five-month, three-and-one-half-year or four-year vesting periods. RSUs subject to a five-month vesting period vested on October 9, 2014. RSUs subject to a three-and-one-half-year vesting period vest 25% on October 21 in each year 2014, 2015, 2016 and 2017. RSUs subject to a four-year vesting period vest 25% on each of the first four anniversaries of the grant date. The awards are considered equity-classified awards, and will be recognized as a component of Additional paid-in capital in the Condensed Balance Sheets.

The following is a summary of CAC’s RSU activity for the period January 1, 2014 through September 30, 2014:



	Shares	Fair Value⁽¹⁾
Outstanding at January 1, 2014	—
Granted (RSUs)	646,044	$	13.45
Canceled (RSUs)	—	$	—
Outstanding at September 30, 2014	646,044

^{_____________________}

⁽¹⁾Represents the weighted average grant date fair value per RSU.

As of September 30, 2014, there was approximately $6.9 million of total unrecognized compensation cost related to RSUs granted under the PIP Plan, which is expected to be recognized over a weighted average remaining period of 3.2 years using the straight-line method.

For the period May 8, 2014 through September 30, 2014, total compensation expense recorded in earnings for RSUs granted under the PIP Plan was $1.8 million, including $1.2 million for the three months ended September 30, 2014. This expense is included in Operating expenses in the Condensed Statements of Comprehensive Income.

Stock Options

On October 7, 2014, certain eligible individuals were granted a total of 725,000 options to purchase shares in accordance with the PIP Plan. See Note 10 — Recent Developments and Subsequent Events for further discussion.

Note 9 — Related Party Transactions

Management Services Agreement with CEOC

In October 2013, CAC entered into the CGP Management Services Agreement with CEOC and CGP LLC pursuant to which CEOC and its subsidiaries provide certain services. The agreement, among other things:

•

provides that CEOC and its subsidiaries provide (a) certain corporate services and back office support, including payroll, accounting, risk management, tax, finance, recordkeeping, financial statement preparation and audit support, legal, treasury functions, regulatory compliance, insurance, information systems, office space and corporate, and other centralized services and (b) certain advisory and business management services, including developing business strategies, executing financing transactions and structuring acquisitions and joint ventures;


•	allows the parties to modify the terms and conditions of CEOC’s performance of any of the services and to request additional services from time to time; and


•	provides for payment of a service fee to CEOC in exchange for the provision of services, plus a margin of 10%.

We recognized expenses of $1.4 million and $2.9 million in Operating expenses during the three and nine months ended September 30, 2014, respectively, related to the services provided in connection with the CGP Management Services Agreement. The majority of the services provided by CEOC pursuant to the CGP Management Services Agreement will be subsumed by the Omnibus License and Enterprise Services Agreement entered into in connection with the formation of CES as further discussed below.

Share-based Payments to Non-employees of CAC or CGP LLC

On April 9, 2014, the Board approved the CAC Equity-Based Compensation Plan for CEC Employees for officers and employees of CEC and its subsidiaries, as well as certain other individual consultants and advisers of the Company and its subsidiaries (the "Equity Plan"). CEC will administer the Equity Plan. Under the Equity Plan, CEC is authorized to grant stock options, stock appreciation rights, stock bonuses, restricted stock, performance stock, stock units, phantom stock, dividend equivalents, cash awards, rights to purchase or acquire shares or similar securities in the form of or with a value related to our Common Stock to officers, employees, directors, individual consultants and advisers of CEC and its subsidiaries. The Equity Plan will terminate ten years after approval by the Board. Subject to adjustments in connection with certain changes in capitalization, the maximum value of the shares of our Common Stock that may be delivered pursuant to awards under the Equity Plan is $25.0 million.

On May 8, 2014, CEC granted awards to officers, employees, directors, individual consultants and advisers of CEC and its subsidiaries in accordance with the Equity Plan to reward and provide incentive for services provided in their capacity, promote the success of CGP LLC, and more closely align the interests of such individuals with those of the stockholders of the Company. Awards under this plan vest one-third on each of October 21, 2014, 2015 and 2016. Expense associated with the vesting of such awards is recorded as management fee expense by CGP LLC, totaling $4.6 million and $7.3 million, respectively, for the three and nine months ended September 30, 2014. Upon issuance of shares pursuant to this plan, such shares will be contributed to CGP LLC by CAC as additional investment into that entity, at which time CGP LLC will settle its management fee obligation with CEC and its subsidiaries through a distribution of such shares to CEC. Also upon issuance of shares pursuant to this plan, CGP LLC will issue an equivalent number of voting units in CGP LLC and distribute those units to CAC. As CAC will receive voting units in CGP LLC in exchange for the shares of CAC issued pursuant to this plan, there is no expected dilutive impact to CAC's EPS (see Note 4 — Stockholders’ Equity and Earnings per Share and Note 10 — Recent Developments and Subsequent Events).

Formation of Caesars Enterprise Services, LLC

On May 20, 2014, CEOC, CEC, CERP, and Caesars Growth Properties Holdings, LLC ("CGPH") (together the “Members” and each a “Member”) entered into a services joint venture, CES. CES manages certain Enterprise Assets (as defined hereafter) and the other assets it owns, licenses or controls, and employs certain of the corresponding employees and other employees who previously provided services to CEOC, CERP and CGPH, their affiliates and their respective properties and systems under each property’s corresponding property management agreement. Corporate expenses that are not allocated to the properties directly are allocated by CES to CEOC, CERP, and CGPH according to their allocation percentages (initially 70.0%, 24.6% and 5.4%, respectively), subject to annual review. Operating expenses are allocated to each Member with respect to their respective properties serviced by CES in accordance with historical allocation methodologies, subject to annual revisions and certain prefunding requirements. On October 1, 2014, CES began operations in Nevada, New Jersey and certain other jurisdictions in which regulatory approval had been received or was not required. The enhancement of CES operations described above in other jurisdictions may be subject to regulatory and other approvals in such jurisdictions.

Omnibus License and Enterprise Services Agreement

On May 20, 2014, the Members entered into an Omnibus License and Enterprise Services Agreement (the “Omnibus Agreement”), which granted licenses to the Members and certain of their affiliates in connection with the implementation of CES. Initial contributions by the Members included cash contributions by CERP and CGPH of $42.5 million and $22.5 million, respectively. The Members will transition certain executives and employees to CES and the services of such employees will be available as part of CES’s provision of services to the Members and certain of their affiliates that own properties that require CES services under the Omnibus Agreement.

Under the Omnibus Agreement, CEOC, Caesars License Company, LLC (“CLC”), Caesars World, Inc. (“CWI”), CGPH and certain of their subsidiaries that are the owners of their properties granted CES a non-exclusive, irrevocable, world-wide, royalty-free license in and to all intellectual property owned or used by such licensors, including all intellectual property (a) currently used, or contemplated to be used, in connection with the properties owned by the Members and their respective affiliates, including any and all intellectual property related to the Total Rewards program, and (b) necessary for the provision of services contemplated by the Omnibus Agreement and by the applicable management agreement for any such property (collectively, the “Enterprise Assets”).

CES granted to the properties owned or controlled by the Members, and their respective affiliates, non-exclusive licenses to the Enterprise Assets. CES granted to CEOC, CLC, CWI, CGPH and the properties owned or controlled by the Members, including us, licenses to any intellectual property that CES develops or acquires in the future that is not derivative of the intellectual property licensed to it. CES also granted to CEOC, CLC, CWI and CGPH a non-exclusive license to intellectual property specific to the properties controlled by CGPH, CERP and their subsidiaries for any uses consistent with the uses made by CEOC, CLC, CWI and CGPH with respect to such intellectual property prior to the date of the Omnibus Agreement.

Investment in Notes from Related Party

On August 6, 2014, CGP LLC effectuated a distribution of its 5.75% and 6.50% face value aggregate principal amount of CEOC Notes as a dividend to its members, pro-rata based upon each member’s ownership percentage in CGP LLC. At the date of distribution, the fair value of CGP LLC's investment in the CEOC Notes was below its amortized cost basis. As a result, CGP LLC recorded an impairment charge of $63.5 million immediately prior to the Notes Distribution to release losses that had been accumulated in equity, given that CGP LLC would not recover its amortized cost basis in the CEOC Notes. In connection with the Notes Distribution, CAC, as a member of CGP LLC, received $137.5 million in aggregate principal amount of the 6.50% CEOC Notes, maturing June 1, 2016, and $151.4 million in aggregate principal amount of the 5.75% CEOC Notes, maturing October 1, 2017. Both of these notes are included as a component of Additional paid-in capital in our Condensed Balance Sheets and Condensed Statement of Stockholders' Equity along with interest receivable at the distribution date. These notes will be held at the distributed value with no subsequent fair value adjustments or recognition of interest income.

The fair value of this distribution reduces the deployed capital upon which CAC is entitled to earn a minimum guaranteed return prospectively from the August 6, 2014 distribution date.

Note 10 — Recent Developments and Subsequent Events

Because significant recent developments and subsequent events related to our equity method investee could be impactful to our financial performance, we have elected to include disclosure of such items herein.

Proposed Development of Woodbury Casino, LLC

On June 30, 2014, CGP submitted its application to the New York State Gaming Facility Location Board for a gaming license to develop Caesars New York, an $880.0 million casino resort in Woodbury, NY. If approved, the property will be managed by Caesars Entertainment and its affiliates. The proposed resort will include approximately 300 hotel rooms, suites and villas, 2,560 slot machines, 190 table games and 50 poker tables. Caesars New York will also include entertainment space, suited for business meetings, celebrations, entertainment and World Series of Poker circuit events. In addition, the resort will feature various food and beverage options that are similar to those at existing CGP LLC properties.

Equity and Equity Awards

On October 7, 2014, certain eligible individuals were granted a total of 725,000 options to purchase shares in accordance with the PIP Plan. These options have a strike price of $9.25 and 100% of these options vest on October 7, 2016. The options are considered equity-classified awards.

During October 2014, the first tranches of RSU awards under the PIP Plan and under the Equity Plan vested. Pursuant to these vesting events, CAC issued approximately 615,000 shares. In accordance with the CGP Operating Agreement, CGP LLC issued an equivalent number of Class A voting units to CAC, such that the number of shares of CAC stock outstanding equals the number of Class A voting units of CGP LLC owned by CAC. As a result, CAC's economic ownership of CGP LLC increased from approximately 42.36% to 42.47%.

COMBINED CONDENSED FINANCIAL STATEMENTS OF PREDECESSOR GROWTH PARTNERS

(UNAUDITED)

EXPLANATORY NOTE

Upon the completion of the transactions described in Item 1 - Business of our Annual Report on Form 10-K for the year ended December 31, 2013, Caesars Acquisition Company's ("CAC") only material asset is its interest in Caesars Growth Partners, LLC ("CGP LLC") which is accounted for using the equity method of accounting. The assets and entities that were acquired by or contributed to CGP LLC in connection with those transactions, as well as the Acquired Properties as defined in Note 1 — Description of Business and Summary of Significant Accounting Policies (collectively referred to as "Predecessor Growth Partners" for periods presented prior to October 21, 2013) are considered to be the predecessor to CAC. Therefore, we have included the unaudited combined condensed financial statements of Predecessor Growth Partners in this quarterly report on Form 10-Q as if those businesses and assets were combined into one reporting entity for the periods presented.

These unaudited combined condensed financial statements of Predecessor Growth Partners have been prepared on a stand-alone basis and, as these transactions have been accounted for as transactions between entities under common control, have been derived from the historical accounting records and consolidated financial statements of Caesars Entertainment Corporation ("CEC" or "Caesars Entertainment").

PREDECESSOR GROWTH PARTNERS

COMBINED CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

(In millions)



	Three Months Ended September 30, 2013			Nine Months Ended September 30, 2013
Revenues
Interactive Entertainment
Social and mobile games	$	74.7		$	212.0
WSOP and online real money gaming	4.2			9.0
	78.9			221.0
Casino Properties and Developments
Casino	156.0			493.2
Food and beverage	48.8			151.1
Rooms	56.5			180.5
Other	23.0			67.4
Less: casino promotional allowances	(37.4		)	(117.9		)
	246.9			774.3
Net revenues	325.8			995.3

Operating expenses
Interactive Entertainment
Platform fees	23.3			66.4
Casino Properties and Developments - Direct
Casino	81.4			251.8
Food and beverage	23.1			68.1
Rooms	15.9			50.3
Property, general, administrative and other	102.4			306.8
Write-downs, reserves and project opening costs, net of recoveries	4.8			15.8
Management fees payable to related parties	4.3			13.2
Depreciation and amortization	24.6			73.8
Change in fair value of contingent consideration	—			48.9
Total operating expenses	279.8			895.1
Income from operations	46.0			100.2
Interest expense, net of interest capitalized	(21.6		)	(56.2		)
Interest income - related party	44.9			128.0
Loss on extinguishment of debt	(0.3		)	(0.5		)
Other income, net	0.1			0.6
Income before provision for income taxes	69.1			172.1
Provision for income taxes	(22.3		)	(55.9		)
Net income	46.8			116.2
Less: net loss attributable to non-controlling interests	3.7			4.9
Net income attributable to Predecessor Growth Partners	$	50.5		$	121.1

See accompanying Notes to Combined Condensed Financial Statements.

PREDECESSOR GROWTH PARTNERS

COMBINED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(In millions)



	Three Months Ended September 30, 2013		Nine Months Ended September 30, 2013
Net income	$	46.8	$	116.2
Other comprehensive income, net of income taxes:
Unrealized gain on investments in notes from related party	13.7		19.1
Total other comprehensive income	13.7		19.1
Comprehensive income	60.5		135.3
Less: net loss attributable to non-controlling interests	3.7		4.9
Comprehensive income attributable to Predecessor Growth Partners	$	64.2	$	140.2

See accompanying Notes to Combined Condensed Financial Statements.

PREDECESSOR GROWTH PARTNERS

COMBINED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY

(UNAUDITED)

(In millions)



	Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income		Non-controlling Interests			Total Equity
Balance at January 1, 2013	$	2,339.8		$	102.7	$	116.0	$	14.9		$	2,573.4
Net income/(loss)	—			121.1		—		(4.4		)	116.7
Issuance of Caesars Interactive common stock	0.6			—		—		—			0.6
Purchase of Caesars Interactive common stock	(9.9		)	—		—		—			(9.9		)
Stock-based compensation	(0.2		)	—		—		—			(0.2		)
Capital contributions	38.0			—		—		31.8			69.8
Unrealized gain on investments in notes from related party, net of tax	—			—		19.1		—			19.1
Transactions with parent and affiliates, net	(61.9		)	—		—		—			(61.9		)
Balance at September 30, 2013	$	2,306.4		$	223.8	$	135.1	$	42.3		$	2,707.6

See accompanying Notes to Combined Condensed Financial Statements.

PREDECESSOR GROWTH PARTNERS

COMBINED CONDENSED STATEMENT OF CASH FLOWS

(UNAUDITED)

(In millions)



	Nine Months Ended September 30, 2013
Cash flows from operating activities
Net income	$	116.2
Adjustments to reconcile net income to cash flows provided by operating activities
Depreciation and amortization	73.8
Amortization of debt discount and deferred finance charges	17.9
Loss on extinguishment of debt	0.5
Change in fair value of contingent consideration	48.9
Accretion of discount on investments in notes from related party	(77.0		)
Paid-in-kind interest	(0.3		)
Stock-based compensation expense	12.2
Net change in deferred income taxes	(13.6		)
Net change in long-term accounts	(4.7		)
Net change in working capital accounts	(11.3		)
Transfers to parent	(23.2		)
Other non-cash items	(0.1		)
Cash flows provided by operating activities	139.3
Cash flows from investing activities
Land, buildings and equipment additions, net of change in construction payables	(133.2		)
Acquisitions of intangible assets	(0.6		)
Purchase of short-term investments	(5.0		)
Sale of short-term investments	7.5
Payments to acquire business, net of cash acquired	(7.2		)
Increase in restricted cash	(263.2		)
Decrease in restricted cash	69.4
Cash flows used in investing activities	(332.3		)
Cash flows from financing activities
Issuance of Caesars Interactive common stock and warrant	0.6
Purchase of Caesars Interactive management shares	(9.9		)
Debt issuance costs and fees	(10.8		)
Proceeds from issuance of long-term debt	218.5
Payments on long-term debt to related party	(7.0		)
Proceeds for guarantee from parent	9.1
Repayments under lending agreements	(7.2		)
Capital contributions	73.3
Distributions to parent	(38.7		)
Cash flows provided by financing activities	227.9
Net increase in cash and cash equivalents	34.9
Cash and cash equivalents, beginning of period	205.2
Cash and cash equivalents, end of period	$	240.1

See accompanying Notes to Combined Condensed Financial Statements.

PREDECESSOR GROWTH PARTNERS

NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1 — Description of Business and Summary of Significant Accounting Policies

Basis of Presentation

The unaudited combined condensed financial statements of Predecessor Growth Partners have been prepared on a stand-alone basis and, as the assets and entities that were acquired by or contributed to CGP LLC in connection with the transactions described in Item 1 - Business of our Annual Report on Form 10-K and the Acquired Properties as defined below, have been accounted for as transactions between entities under common control, include financial information derived from the historical accounting records and consolidated financial statements of Caesars Entertainment.

Because these acquisitions were accounted for as transactions among entities under common control, the financial information for CGP LLC and Predecessor Growth Partners has been recast to include the financial results for these properties as if those businesses were combined into the CGP LLC and Predecessor Growth Partners reporting entity for all periods presented. Therefore, the financial information presented provides comparable results for all periods presented.

The results for the interim periods reflect all adjustments (consisting primarily of normal recurring adjustments) that management considers necessary for a fair presentation of the combined results of operations and cash flows. The accompanying unaudited combined condensed financial statements are prepared under the rules and regulations of the Securities and Exchange Commission ("SEC") applicable for interim periods and, therefore, do not include all information and footnotes necessary for complete financial statements in conformity with accounting principles generally accepted in the United States ("GAAP").

Immaterial corrections were recorded for the periods presented which impacted Predecessor Growth Partners' financial results for the nine months ended September 30, 2013. The Combined Condensed Statements of Operations reflect decreased Net revenues of $0.5 million, decreased Total operating expenses of $4.4 million, increased Provision for income taxes of $1.5 million and increased Net loss attributable to non-controlling interests by $0.6 million resulting in an increase of $3.0 million in Net income attributable to Predecessor Growth Partners. The impact to the Combined Condensed Statement of Cash Flows was an increase in Cash flows provided by operating activities of $1.2 million, a decrease in Cash flows used in investing activities of $2.2 million and a decrease in Cash flows provided by financing activities of $1.0 million. Predecessor Growth Partners believes these corrections are not material to the previously issued interim unaudited combined condensed financial statements.

The unaudited combined condensed financial statements of Predecessor Growth Partners include all revenues, costs, assets and liabilities directly attributable to Predecessor Growth Partners. The accompanying unaudited combined condensed financial statements also include allocations of certain Caesars Entertainment general corporate expenses. These allocations of general corporate expenses may not reflect the expense Predecessor Growth Partners would have incurred if Predecessor Growth Partners were a stand-alone company nor are they necessarily indicative of Predecessor Growth Partners' future costs. Management believes the assumptions and methodologies used in the allocation of general corporate expenses from Caesars Entertainment are reasonable. Given the nature of these costs, it is not practicable for Predecessor Growth Partners to estimate what these costs would have been on a stand-alone basis.

Transactions between Caesars Entertainment and Predecessor Growth Partners have been identified in the unaudited combined condensed historical financial statements and the notes thereto as transactions between related parties (see Note 15 — Related Party Transactions).

Use of Estimates

Predecessor Growth Partners' unaudited combined condensed financial statements are prepared in accordance with GAAP, which requires management to make estimates and assumptions that affect the reported amounts in the unaudited combined condensed financial statements and notes thereto. Significant estimates and assumptions impacting the Predecessor Growth Partners' unaudited combined condensed financial statements include, but are not limited to, the estimated consumption rate of virtual goods that it uses for revenue recognition within the Interactive Entertainment segment, useful lives of property, equipment and amortizing intangible assets, income taxes, accounting for stock-based compensation, the valuation of contingent consideration and the evaluation of goodwill and long-lived assets for impairment. Management believes the accounting estimates are appropriate and reasonably determined. However, due to the inherent uncertainties in making these estimates, actual amounts could differ from such estimates.

Description of Business

CAC was formed on February 25, 2013 to make an equity investment in CGP LLC, a joint venture between CAC and subsidiaries of CEC. On October 21, 2013, in connection with the execution of a series of transactions, CGP LLC purchased or acquired from Caesars Entertainment and its subsidiaries: (a) the equity interests of PHWLV, LLC ("PHWLV"), which holds Planet Hollywood Resort and Casino ("Planet Hollywood") and a 50% interest in the management fee revenues of PHW

Manager, LLC ("PHW Manager"), which manages Planet Hollywood, (b) Caesars Baltimore Investment Company, LLC, an entity that indirectly holds interests in the joint venture owner (the "Maryland Joint Venture") of Horseshoe Baltimore Casino ("Horseshoe Baltimore") in Maryland, which opened in August 2014, and a 50% interest in the management fee revenues of Caesars Baltimore Management Company LLC which holds an agreement to manage Horseshoe Baltimore, (c) all of the shares of Caesars Interactive Entertainment, Inc.'s ("Caesars Interactive" or "CIE") outstanding common stock held by a subsidiary of Caesars Entertainment, and (d) approximately $1.1 billion in aggregate principal amount of senior notes.

On May 5, 2014, CGP LLC contributed the equity interests of PHWLV to Caesars Growth Properties Holdings, LLC (the "Borrower" or "CGPH"), a subsidiary of CGP LLC. JCC Holding Company II, LLC and its subsidiaries (collectively known as "Harrah's New Orleans"), 3535 LV Corporation (formerly known as "The Quad" and recently rebranded as "The LINQ Hotel & Casino"), indirect subsidiaries of Parball Corporation (collectively known as "Bally's Las Vegas") and Corner Investment Company, LLC and its subsidiaries (collectively known as "Cromwell") were direct wholly-owned subsidiaries of Caesars Entertainment Operating Company, Inc. ("CEOC"), which is a direct wholly-owned subsidiary of CEC. On May 5, 2014, CGPH through one or more subsidiaries acquired (i) Cromwell, The LINQ Hotel & Casino and Bally’s Las Vegas, (ii) 50% of the ongoing management fees and any termination fees payable under property management agreements entered into between an affiliate of CEOC acting as property manager and the CGPH subsidiary which owns each of these respective properties, and (iii) certain intellectual property that is specific to each of these properties. On May 20, 2014, CGPH through one or more subsidiaries acquired (i) Harrah’s New Orleans, (ii) 50% of the ongoing management fees and any termination fees payable under the property management agreement entered into between an affiliate of CEOC acting as property manager and the CGPH subsidiary which owns Harrah’s New Orleans, and (iii) certain intellectual property that is specific to the Harrah’s New Orleans ("Second Closing").

The acquisitions of Harrah's New Orleans, The LINQ Hotel & Casino, Bally's Las Vegas and Cromwell and the contribution of Planet Hollywood to CGPH are herein referred to as the "Acquired Properties."

Predecessor Growth Partners has two reportable segments: (1) Interactive Entertainment and (2) Casino Properties and Developments. Predecessor Growth Partners’ Interactive Entertainment segment consists of CIE, which is comprised of three distinct, but complementary businesses: social and mobile games, the World Series of Poker ("WSOP") and regulated online real money gaming. Predecessor Growth Partners’ Casino Properties and Developments segment consists of the Acquired Properties, and CGP LLC’s interest in the Maryland Joint Venture.

Interactive Entertainment

In May 2009, Caesars Interactive was formed by Caesars Entertainment. As of September 30, 2013, CEC indirectly owned approximately 119,047 shares of Caesars Interactive's common stock, representing approximately 89.2% of the then-outstanding shares of Caesars Interactive. The remainder of the outstanding common stock of Caesars Interactive was owned by Rock Gaming LLC ("Rock") and members of the Caesars Interactive current and former management team.

Caesars Interactive is a social and mobile games and online real money gaming provider which owns the WSOP brand. As part of its online strategy, CIE looks to grow its base of paying users of social and mobile games through development of additional games and additional content for its current games as well as acquisitions of new game studios. As new markets in the United States ("US") regulate online gaming, CIE will look to offer real money gaming in those jurisdictions. In addition, CIE licenses live WSOP tournaments in both the US and international locations.

Casino Properties and Developments

Harrah's New Orleans owns and operates an entertainment facility located in downtown New Orleans, Louisiana, composed of one casino, a hotel, multiple restaurants, and retail outlets. Planet Hollywood, The LINQ Hotel & Casino, Bally's Las Vegas and Cromwell each own and operate casino and hotel entertainment facilities located on Las Vegas Boulevard, in Las Vegas, Nevada.

In July 2012, a consortium led by Caesars Entertainment was awarded the license to operate a casino in downtown Baltimore. In October 2012, Caesars Entertainment entered into definitive agreements with its partners to form a joint venture to build Horseshoe Baltimore which opened in August 2014.

Note 2 — Recently Issued Accounting Pronouncements

Predecessor Growth Partners has assessed recently issued guidance and has determined there are no recently issued accounting pronouncements that will have a material impact on their results of operations or cash flows.

Note 3 — Development and Acquisition Activity

Horseshoe Baltimore Capital Call

Pursuant to the Maryland Joint Venture definitive agreements, capital calls were made to all members in April 2013 and June 2013 for an aggregate amount of $73.3 million to fund the ongoing development activities and capitalization requirements for financing of the joint venture. In accordance with ownership interests in the Maryland Joint Venture, Predecessor Growth Partner's portion of the capital contribution amounted to an aggregate total of approximately $38.0 million, which was paid by Caesars Entertainment and appears as a capital contribution within Additional paid-in capital on the Combined Condensed Statement of Stockholders' Equity.

Other

In May 2013, CIE acquired the WSOP social and mobile game assets and intellectual property from Electronic Arts Inc. Assets acquired and liabilities assumed in this transaction were not material to Predecessor Growth Partners' financial statements. Prior to this acquisition, CIE had licensed the WSOP brand to Electronic Arts Inc. and was earning a licensing fee which ceased on CIE's acquisition of these rights. In August 2013, CIE acquired an online gaming development business based in Ukraine. Assets acquired and liabilities assumed in these transactions were not material to Predecessor Growth Partners’ financial statements.

Note 4 — Write-downs, Reserves and Project Opening Costs, Net of Recoveries

Write-downs, reserves and project opening costs, net of recoveries include project opening costs, remediation costs, costs associated with efficiency projects, project write-offs, demolition costs, and other non-routine transactions, net of recoveries of previously recorded non-routine reserves.

The components of Write-downs, reserves and project opening costs, net of recoveries are as follows:



(In millions)	Three Months Ended September 30, 2013			Nine Months Ended September 30, 2013
Remediation costs	$	3.8		$	8.8
Project opening costs	(0.6		)	2.0
Efficiency projects	—			1.6
Divestitures and abandonments⁽¹⁾	1.7			3.2
Other	(0.1		)	0.2
Total Write-downs, reserves and project opening costs, net of recoveries	$	4.8		$	15.8

^{___________________________________________}

⁽¹⁾Divestitures and abandonments are primarily comprised of demolition costs related to projects in development.

Note 5 — Casino Promotional Allowances

The retail value of accommodations, food and beverage, and other services furnished to guests without charge is included in gross revenues and then deducted as Casino promotional allowances.

The estimated retail value of such Casino promotional allowances is included in Net revenues as follows:



(In millions)	Three Months Ended September 30, 2013		Nine Months Ended September 30, 2013
Food and beverage	$	18.9	$	59.4
Rooms	16.3		52.0
Other, net of reimbursable management costs	2.2		6.5
Total Casino promotional allowances included in Net revenues	$	37.4	$	117.9

The estimated cost of providing such promotional allowances is included in Casino expenses as follows:



(In millions)	Three Months Ended September 30, 2013		Nine Months Ended September 30, 2013
Food and beverage	$	12.1	$	35.9
Rooms	6.0		18.6
Other	1.2		3.2
Total Casino promotional allowances included in Casino expenses	$	19.3	$	57.7

Note 6 — Property, General, Administrative and Other

Property, general, administrative and other expense consisted of the following:



(In millions)	Three Months Ended September 30, 2013		Nine Months Ended September 30, 2013
Payroll costs	$	22.6	$	69.5
Corporate allocations	17.9		51.4
Advertising	15.4		41.3
Utilities	8.7		20.3
License, franchise tax and other	6.6		19.3
Rental expense	6.2		18.4
Research and development	3.0		20.3
Stock-based compensation	2.0		12.2
Other	20.0		54.1
Total property, general, administrative and other	$	102.4	$	306.8

Note 7 — Depreciation and Amortization

Depreciation expense for property and equipment is reflected in Depreciation and amortization in the Combined Condensed Statements of Operations. For the three and nine months ended September 30, 2013, the aggregate depreciation expense was $14.6 million and $45.3 million, respectively.

The aggregate amortization expense for those intangible assets that are amortized is reflected in Depreciation and amortization in the Combined Condensed Statements of Operations. For the three and nine months ended September 30, 2013 there was $9.6 million and $27.1 million, respectively, of amortization expense recorded related to intangible assets and $0.4 million and $1.4 million for the three and nine months ended September 30, 2013 related to other items.

No impairment charges were recorded for goodwill and other non-amortizing intangible assets for the three and nine months ended September 30, 2013.

Note 8 — Income Taxes

Income taxes were allocated as follows:



(In millions)	Three Months Ended September 30, 2013			Nine Months Ended September 30, 2013
Income tax provision on income before income taxes	$	(22.3	)	$	(55.9	)
Tax benefit in accumulated other comprehensive income	7.4			10.3

The effective tax rate for the three and nine months ended September 30, 2013 was 32.3% and 32.5%, respectively. The primary cause for the difference from the federal statutory rate of 35% is due to tax benefits from foreign earnings taxed at lower rates partially offset by an increase in the federal valuation allowance and tax cost of nondeductible stock-based compensation and lobbying costs.

Predecessor Growth Partners had no uncertain tax positions as of September 30, 2013. The tax years that remain open for examination for the Predecessor Growth Partners' major jurisdictions are 2010 through 2012 for the US and Canada and 2011 and 2012 for Israel.

Note 9 — Equity and Non-controlling Interests

Additional Paid-in Capital and Retained Earnings

Additional paid-in capital and Retained earnings represent the cumulative net investment by Caesars Entertainment in Predecessor Growth Partners, including any prior net income or loss or other comprehensive income or loss attributed to Predecessor Growth Partners and contributions received from or distributions made to Caesars Entertainment. Current domestic income tax liabilities were deemed to be remitted in cash to Caesars Entertainment in the period the related income tax expense was recorded. Certain transactions between Predecessor Growth Partners and other related parties that are wholly-owned subsidiaries of Caesars Entertainment, including allocated expenses and settlement of intercompany transactions, were also included in Additional paid-in capital.

Prior to the formation of CGP LLC, cash received as interest on investments in notes from related party was transferred back to Caesars Entertainment. Such transfers were recorded as equity transactions, net of associated tax, and included as a

component of Additional paid-in capital. Predecessor Growth Partners treated these net distributions to Caesars Entertainment as financing transactions in its statement of cash flows.

Non-controlling Interest

The following is a summary of Predecessor Growth Partners' net loss attributable to non-controlling interests for the three and nine months ended September 30, 2013:



(In millions)	Three Months Ended September 30, 2013			Nine Months Ended September 30, 2013
Net loss attributable to redeemable non-controlling interests	$	(0.4	)	$	(0.5	)
Net loss attributable to non-controlling interests	(3.3		)	(4.4		)
As presented on the Combined Condensed Statements of Operations
Net loss attributable to non-controlling interests	$	(3.7	)	$	(4.9	)

As of September 30, 2013, STRON-MD Limited Partnership held 4.8% of the Maryland Joint Venture. Their non-controlling interest contains an embedded put feature that may, at any time, cause Predecessor Growth Partners, together with another member of the Maryland Joint Venture, Rock Gaming LLC, to purchase all of STRON-MD Limited Partnership’s interest in Maryland Joint Venture either at cost prior to the commencement of the planned casino’s operations, or at fair market value after the commencement of operations. For accounting purposes, their ownership interest is presented as Redeemable non-controlling interest presented outside of permanent equity.

The changes in the carrying amount of Redeemable non-controlling interests were as follows:



(in millions)
Balance as of January 1, 2013	$	1.3
Net loss attributable to redeemable non-controlling interests	(0.5		)
Capital contribution to Horseshoe Baltimore	3.5
Balance as of September 30, 2013	$	4.3

Accumulated Other Comprehensive Income

Accumulated other comprehensive income consists of unrealized gains and losses on investments in notes from related party, net of taxes. For the nine months ended September 30, 2013, there were no amounts reclassified out of Accumulated other comprehensive income.

Note 10 — Litigation, Contractual Commitments and Contingent Liabilities

Litigation

From time to time, CAC, Predecessor Growth Partners, or CGP LLC may be subject to legal proceedings and claims in the ordinary course of business.

Baltimore, Maryland Property Development

Multiple lawsuits have been filed against CBAC Gaming, LLC and CBAC Borrower, LLC, which is wholly-owned by CBAC Gaming, LLC (collectively, "CBAC"), the joint venture that developed Horseshoe Baltimore, the City of Baltimore, the Maryland Department of the Environment ("MDE"), and other parties in relation to the location and the development of Horseshoe Baltimore, which opened to the public in August 2014. These cases allege violations of various environmental laws, violations of zoning laws and public nuisance, among other claims. Although CAC, Predecessor Growth Partners, and CGP LLC believe that they have adequate defenses to these claims, an adverse judgment could result in additional costs.

November 6, 2013. The plaintiffs filed a notice of appeal on December 6, 2013 and oral arguments were heard on October 3, 2014 without issuance of a decision.

Harrah's New Orleans Operating Agreement

Harrah’s New Orleans operates under a casino operating contract with the Louisiana Gaming Control Board, as amended and restated on various occasions. The initial term of the amended casino operating contract expired in July 2014 and automatically renewed for an additional 10 years. As amended, the contract requires Harrah’s New Orleans to make minimum annual payments to the Louisiana Gaming Control Board equal to the greater of 21.5% of the annual gross gaming revenues from Harrah’s New Orleans or $60.0 million. In addition, Harrah’s New Orleans is required to pay an additional percentage of gross gaming revenues equal to (i) 1.5% of gross gaming revenues between $500.0 million and $700.0 million; (ii) 3.5% for gross gaming revenues between $700.0 million and $800.0 million; (iii) 5.5% for gross gaming revenues between $800.0 million and $900.0 million; and (iv) 7.5% for gross gaming revenues in excess of $900.0 million.

Nevada Sales and Use Tax

The Supreme Court of Nevada decided in early 2008 that food purchased for subsequent use in the provision of complimentary and/or employee meals are exempt from use tax. Previously, such purchases were subject to use tax and CEC had claimed, but not recognized into earnings, a use tax refund as a result of the 2008 decision. In early 2009, the Nevada Department of Taxation ("Department”) audited CEC's refund claim, but had taken the position that those same purchases were now subject to sales tax; therefore, they subsequently issued a sales tax assessment after application of CEC's refund on use tax.

On October 21, 2010, the administrative law judge ("ALJ") issued a decision and ruled in CEC's favor on a number of key issues, including that complimentary employee meals are not subject to sales tax. Although both CEC and the Department filed an appeal of the decision with the Nevada Tax Commission ("Commission"), the case was returned to the ALJ for further factual development. The ALJ issued a second decision on March 8, 2012, reversing the previous, partially favorable ruling relating to the taxability of complimentary employee meals and affirmed the taxability of complimentary meals but limited the entire sales tax assessment to the amount of the CEC's use tax refund claims resulting in no use tax refund awarded but no sales tax amounts due. The ALJ decision was affirmed in the Commission hearing on June 25, 2012 and the Commission's final decision was issued on July 31, 2012. CEC filed a petition for judicial review with the District Court on August 7, 2012. On March 1, 2013, the District Court judge ruled that employee meals are not subject to sales tax but affirmed the application of sales tax to complimentary patron meals. Additionally, the judge ordered a refund of the portion of CEC's use tax refund claims filed prior to October 1, 2005 without any offsetting sales tax assessments relating to complimentary patron meals for those periods. CEC appealed the District Court decision to the Nevada Supreme Court.

Subsequent to a written Commission decision issued in February 2012 for another gaming company, the Department issued draft regulations requiring the collection of sales tax on the retail value of complimentary meals and the cost of employee meals. On June 6, 2012, the Department issued additional guidance regarding the payment of sales tax on complimentary and employee meals, maintaining that meals are taxable as of February 15, 2012 but that the payment of the tax is due, without penalty or interest, at the earlier of (a) one month after approval of the regulation by the Legislative Commission, (b) one month after a Nevada Supreme Court decision, (c) the effective date of any legislation or (d) June 30, 2013. The Department stated that it provided this additional guidance regarding the deferral of payment requirements because the Legislative Commission did not yet have the opportunity to approve the regulation and because there were several ongoing appeals that had not been heard by the Commission and the Nevada Supreme Court.

On May 31, 2013, CEC entered into a settlement agreement with the Department wherein CEC agreed to forgo their pending use tax refund claims, the Department agreed to abate the sales tax assessment and both parties stipulated to the dismissal of their respective cases. Additionally, during the 2013 Nevada legislative session, the legislature enacted legislation providing that the provision of complimentary meals to employees and patrons are excluded from the definition of the term "sale" for purposes of determining sales tax. As a result, Predecessor Growth Partners has reversed $2.2 million in sales tax reserves originally accrued against a loss in this matter. This credit is included in Property, general, administrative and other in the accompanying Combined Condensed Statements of Operations.

Insurance Accruals

The Acquired Properties are insured for workers’ compensation, property, general liability and other insurance coverage through Caesars Entertainment. See Note 15 — Related Party Transactions for additional information.

Planet Hollywood Participation and Servicing Agreement

In 2009, the predecessor of Planet Hollywood entered into an agreement to purchase a participation interest in certain mortgaged properties. Under the terms of this agreement, Planet Hollywood is required to pay the counterparty $5.6 million at the earlier of October 5, 2015, or on March 31 subsequent to the first year that such mortgaged property generates a positive net cash flow in excess of a pre-determined minimum amount. The mortgaged properties have not and were not expected to generate a positive net cash flow in excess of this pre-determined minimum amount within the next calendar year.

Contingent Consideration

Acquisition of Buffalo Studios LLC

As part of the preliminary purchase price allocation related to its acquisition of Buffalo Studios LLC (“Buffalo”) in December 2012, Predecessor Growth Partners recorded $5.6 million in contingent consideration which was remeasured at fair value until settlement under Accounting Standards Codification ("ASC") 805, Business Combinations. This contingent consideration was paid in 2014, based upon a multiple of Earnings before Interest Income/Expense, Income Taxes, Depreciation and Amortization ("EBITDA") for the calendar year 2013 in excess of a specified minimum threshold (generally referred to as an “earn-out” payment). This liability falls into Level 3 within the fair value hierarchy and was adjusted to its estimated fair value of $54.5 million as of September 30, 2013. The change of $48.9 million in the estimated value of the contingent consideration between the time the initial estimate was finalized and September 30, 2013 is recorded in the Change in fair value of contingent consideration line of the Combined Condensed Statements of Operations. A probability approach considering the various estimated calendar 2013 EBITDA levels and related likelihood of achieving those levels, resulting in different values for the earn-out payment was applied in estimating the fair value of this earn-out liability.

Uncertainties

Since 2009, Harrah’s New Orleans has undergone audits by state and local departments of revenue related to sales taxes on hotel rooms, parking and entertainment complimentaries. The periods that have been or are currently being audited are 2004 through 2013. In connection with these audits, certain periods have been paid under protest or are currently in various stages of litigation.

Note 11 — Leases

Predecessor Growth Partners leases both real estate and equipment used in its operations and classifies those leases as either operating or capital leases for accounting purposes. As of September 30, 2013, Predecessor Growth Partners had no material capital leases and the remaining lives of its operating leases ranged from one to 84 years with various automatic extensions.

Rent expense associated with operating leases and other month-to-month cancellable leases is charged to expense in the year incurred and are included in operating expenses in the Combined Condensed Statements of Operations. These costs amounted to $11.8 million and $27.8 million, respectively, for the three and nine months ended September 30, 2013.

See Note 15 — Related Party Transactions for additional discussion on Predecessor Growth Partners' related party leases.

Note 12 — Supplemental Cash Flow Information

Changes in Working Capital Accounts

The net change in cash and cash equivalents due to the changes in working capital accounts were as follows:



(In millions)	Nine Months Ended September 30, 2013
Receivables	$	(8.7	)
Interest receivable from related party	(16.8		)
Prepayments and other current assets	(1.2		)
Accounts payable	1.6
Payable to related parties	18.1
Accrued expenses	0.8
Foreign tax payable	(5.1		)
Net change in working capital accounts	$	(11.3	)

Significant Non-cash Transactions

Significant non-cash transactions during the nine months ended September 30, 2013 include a change in non-cash accruals for capital expenditures of $25.4 million. There were no capital expenditures funded by capital lease and financing obligations during the period. In addition, Predecessor Growth Partners recorded non-cash charges to interest expense as shown in the Cash Paid for Interest table below.

Cash Paid for Interest

The following table reconciles Interest expense, net of interest capitalized, per the Combined Condensed Statements of Operations, to cash paid for interest:



(In millions)	Nine Months Ended September 30, 2013
Interest expense, net of interest capitalized	$	56.2
Adjustments to reconcile to cash paid for interest:
Net amortization of debt discounts and deferred finance charges	(17.9		)
Equitized intercompany loan interest	(7.5		)
Prepaid bond interest	(0.2		)
Capitalized interest	4.9
Net change in accruals	6.9
Cash paid for interest	$	42.4

Cash payments for income taxes, net	$	9.2

Note 13 — Stock-based Compensation

Caesars Entertainment grants stock-based compensation awards in Caesars Entertainment common stock to certain employees that work for the management companies of Predecessor Growth Partners' casino properties under the Caesars 2012 Performance Incentive Plan. See Equity Incentive Awards in Note 15 — Related Party Transactions.

Caesars Interactive grants stock-based compensation awards in Caesars Interactive common stock to certain of its employees and service providers in accordance with the Caesars Interactive Entertainment, Inc. Amended and Restated Management Equity Incentive Plan (the "Plan") which is intended to promote the interests of Caesars Interactive and its stockholders by providing key employees, directors, service providers and consultants with an incentive to encourage their continued employment or service and improve the growth and profitability of Caesars Interactive.

The following is a description of the components of these programs under the Plan.

Stock Options and Warrants

Time-based stock options have been granted to certain Caesars Interactive employees and non-employees, and time-based warrants have been granted to certain non-employees. Historically, both the options and warrants were generally subject to a five-year vesting period; vesting 20% per year on each anniversary of its effective date, until 100% of the options or warrants are fully vested and exercisable. Vesting is subject to the participant’s continued employment or service for non-employees, through the applicable vesting date.

Certain Caesars Interactive employees have been granted Caesars Interactive stock options, and one service provider has been granted a warrant to purchase common stock of Caesars Entertainment, with vesting conditions associated with the legalization and implementation of online gaming in the US. These stock options and warrants vest based on conditions other than market, performance or service conditions and therefore have been recorded as liability-classified instruments and are remeasured at their estimated fair value at each reporting date for accounting purposes. Predecessor Growth Partners is recognizing the stock-based compensation expense associated with these awards over the 10-year contractual life of each of the awards.

All warrants to Caesars Interactive non-employees and the majority of the stock options to employees and non-employees contain a call option, at a fixed amount, which is exercisable by Caesars Interactive. Since the embedded call feature is at a fixed price, the call feature could potentially result in a repurchase amount that is less than the fair value of the underlying shares. Therefore, these options and warrants are liability-classified instruments and are remeasured at fair value at each reporting date for accounting purposes. Options without this call provision are equity-classified instruments and are measured at their fair value at the date of grant for accounting purposes. All unexercised options and warrants expire on the tenth anniversary of the grant date.

The following is a summary of Caesars Interactive's stock option and warrant activity for the nine months ended September 30, 2013:



	Shares		Weighted Average Exercise Price		Fair Value ⁽¹⁾		Weighted Average Remaining Contractual Term (years)
Outstanding at January 1, 2013	12,916		$	1,999.7	$	386.2	7.2
Granted (employee time-based stock options)	4,160		$	5,560.5	$	2,629.0
Exercised (employee time-based stock options)	(365	)	$	1,586.5	$	82.1
Canceled (employee time-based stock options)	(1,265	)	$	2,500.0	$	724.9
Outstanding at September 30, 2013	15,446		$	2,965.0	$	969.7	7.3
Vested and expected to vest at September 30, 2013	13,648		$	2,943.3	$	956.8	7.3
Exercisable at September 30, 2013	7,590		$	1,610.3	$	147.1	5.7

^{_____________________}

⁽¹⁾Represents the weighted average grant date fair value per option, using a Monte Carlo model.

When information is available, Caesars Interactive uses historical stock option and warrant holder behavioral data to estimate the option or warrant exercise and termination rates used in the option-pricing model. As CIE does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term, it was calculated through the Monte Carlo model assuming that the options and warrants will be disposed of either post-vesting but prior to a liquidity event, at the date of a liquidity event or after a liquidity event. Expected volatility was based on the historical volatility of the common stock of CIE’s competitor peer group for a period approximating the expected life. Caesars Interactive has no current intention to pay dividends on its common stock. The risk-free interest rate within the expected term was based on the US Treasury yield curve in effect at the time of grant. Valuation assumptions for Caesars Interactive’s stock options and warrants for the nine months ended September 30, 2013 are presented below:



Expected range of volatility	51.1 - 61.3%
Expected dividend yield	—%
Expected range of term (in years)	3.3 - 7.7
Risk-free interest rate range	0.6 - 2.2%

For the three and nine months ended September 30, 2013 the compensation cost that has been charged against earnings for stock options and warrants was approximately $1.5 million and $5.0 million, respectively, which was included in Property, general, administrative and other in the Combined Condensed Statements of Operations.

Restricted Shares and Restricted Stock Units

For the three and nine months ended September 30, 2013 total compensation expense that was recorded in earnings for restricted shares and restricted stock units, including amounts incurred in connection with the resignation of a senior management member was approximately $0.3 million and $7.2 million, respectively. This expense is included in Property, general, administrative and other in the Combined Condensed Statements of Operations.

Management Shares

In October 2011, certain key CIE employees purchased common stock of Caesars Interactive ("Management Shares"). Management Shares are equity-classified instruments for accounting purposes.

In January 2013 and July 2013, CIE offered to purchase a portion of the Management Shares owned by certain members of CIE management at a price of $5,221 per share and $5,446 per share, respectively. Aggregate consideration paid by Caesars Interactive for all shares purchased in these transactions amounted to $2.7 million and $7.2 million, respectively.

Valuation of Caesars Interactive Common Stock

Caesars Interactive determines the value of its common stock in accordance with the guidelines outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation (the "Practice Aid"). The valuations of CIE's common stock were performed retrospectively by an internal valuation specialist for valuation dates of March 31, 2012 and earlier. The valuations of CIE's common stock were performed contemporaneously by this same internal valuation specialist for the valuation dates between March 31, 2012 and June 30, 2012. Valuations subsequent to June 30, 2012 were determined with the assistance of a third-party valuation firm.

In performing these valuations, the valuation specialists considered the appropriate valuation methodology to use based on the stage of development of CIE at each valuation date, in accordance with the Practice Aid. The valuation specialists considered a number of significant valuation events including, but not limited to, voluntary redemptions of shares by management stockholders electing to redeem such shares, exercises of options by third-party investors to purchase shares of common stock, recent initial public offerings in the social and mobile gaming segment, independent third-party valuations of the WSOP trade name and exclusive rights to host the WSOP tournaments, and recent acquisitions.

Note 14 — Segments

For financial reporting purposes, Predecessor Growth Partners has two reportable segments: (1) Interactive Entertainment and (2) Casino Properties and Developments. Predecessor Growth Partners’ Interactive Entertainment segment consists of Caesars Interactive, which is comprised of three distinct, but complementary businesses that reinforce, cross-promote and build upon each other: social and mobile games, the WSOP and regulated online real money gaming. Predecessor Growth Partners’ Casino Properties and Developments segment consists of the Acquired Properties and CGP LLC’s interest in Horseshoe Baltimore which opened in August 2014.

Amounts not aggregated with either the Interactive Entertainment reportable segment or the Casino Properties and Developments segment relate to the Investments in notes from related party and related tax impacts, and are reported separately in the Other column in the tables below.

The following EBITDA information is presented based on the reporting segments:



	Three Months Ended September 30, 2013
(In millions)	Interactive Entertainment		Casino Properties and Developments		Other			Total
Net income	$	16.2	$	1.4	$	29.2		$	46.8
Provision for income taxes	5.7		0.9		15.7			22.3
Income before income taxes	21.9		2.3		44.9			69.1
Interest expense, net of interest capitalized	0.8		20.8		—			21.6
Interest income, including related party	—		—		(44.9		)	(44.9		)
Depreciation and amortization	4.8		19.8		—			24.6
EBITDA	$	27.5	$	42.9	$	—		$	70.4



	Nine Months Ended September 30, 2013
(In millions)	Interactive Entertainment			Casino Properties and Developments		Other			Total
Net income	$	1.3		$	31.7	$	83.2		$	116.2
Provision for/(benefit from) income taxes	(7.5		)	18.6		44.8			55.9
(Loss)/income before income taxes	(6.2		)	50.3		128.0			172.1
Interest expense, net of interest capitalized	1.9			54.3		—			56.2
Interest income, including related party	—			—		(128.0		)	(128.0		)
Depreciation and amortization	12.6			61.2		—			73.8
EBITDA	$	8.3		$	165.8	$	—		$	174.1

Revenue attributed to the reportable segments is as follows:



(In millions)	Three Months Ended September 30, 2013			Nine Months Ended September 30, 2013
Interactive Entertainment
Social and mobile games	$	74.7		$	212.0
WSOP and online real money gaming	4.2			9.0
	78.9			221.0
Casino Properties and Developments
Casino	156.0			493.2
Food and beverage	48.8			151.1
Rooms	56.5			180.5
Other	23.0			67.4
Less: casino promotional allowances	(37.4		)	(117.9		)
	246.9			774.3
Net revenues	$	325.8		$	995.3

The following geographical segment information is presented based on the geographical region of each subsidiary’s country of domicile:



(In millions)	Three Months Ended September 30, 2013		Nine Months Ended September 30, 2013
Revenues
United States	$	271.7	$	837.9
Israel	54.1		157.4
Net revenues	$	325.8	$	995.3

Note 15 — Related Party Transactions

WSOP Trade Name

In 2009, Caesars Interactive acquired the WSOP trademarks and associated rights from CEOC for $15.0 million. At the same time, Caesars Interactive entered into a Trademark License Agreement with CEOC, pursuant to which CEOC acquired an exclusive, perpetual, royalty-free license to use the WSOP trademarks in connection with hosting the WSOP tournaments, operating WSOP branded poker rooms and selling certain WSOP branded retail items. This agreement remains in effect indefinitely, unless earlier terminated pursuant to the agreement's terms.

In 2011, Caesars Interactive entered into a series of transactions pursuant to which Caesars Interactive effectively repurchased the exclusive rights to host the WSOP tournaments from CEOC for $20.5 million. The 2009 Trademark License Agreement remains in effect with respect to WSOP branded poker rooms and retail items, but the rights to host WSOP tournaments are owned by Caesars Interactive. As part of the 2011 transactions, Caesars Interactive entered into a Trademark License Agreement with CEC pursuant to which Caesars Interactive granted CEC the right to host the WSOP tournaments at the Rio Hotel in Las Vegas or at such other property agreed to by the parties, in exchange for a $2.0 million per year fee. Simultaneously, Caesars Interactive entered into a Circuit Event Agreement with CEC pursuant to which Caesars Interactive granted CEC the right to host a certain number of WSOP circuit events at various properties of CEC for a price of $75,000 per event. Both agreements are in effect until September 1, 2016, unless earlier terminated pursuant to the agreements' respective

terms. Revenues under the agreement associated with the WSOP circuit events amounted to $0.2 million and $1.2 million, respectively, for the three and nine months ended September 30, 2013.

Cross Marketing and Trademark License Agreement

In 2011, Caesars Interactive entered into a Cross Marketing and Trademark License Agreement with Caesars World, Inc., Caesars License Company, LLC, Caesars Entertainment and CEOC. In addition to granting Caesars Interactive the exclusive rights to use various brands of Caesars Entertainment in connection with social and mobile games and online real money gaming in exchange for a 3% royalty, this agreement also provides that CEOC will provide certain marketing and promotional activities for Caesars Interactive, including participation in Caesars Entertainment's Total Rewards loyalty program, and Caesars Interactive will provide certain marketing and promotional activities for Caesars Entertainment and CEOC. The agreement also provides for certain revenue share arrangements where Caesars Interactive pays CEOC for customer referrals. This agreement is in effect until December 31, 2026, unless earlier terminated pursuant to the agreement’s terms. For the three and nine months ended September 30, 2013, Caesars Interactive paid $0.2 million and $0.6 million, respectively, pursuant to the terms of the Cross Marketing and Trademark License Agreement.

Use of Bally's and Harrah's Trademarks

Bally's Las Vegas and Harrah’s New Orleans have historically used the Bally’s and Harrah’s trademarks, which are owned by CEOC. CEOC has not and is unlikely to charge a royalty fee for the use of these trademarks. Accordingly, no such charges are recorded in the combined condensed financial statements. Management agreements were entered into with CEOC in connection with the purchase of Cromwell, The LINQ Hotel & Casino and Bally’s Las Vegas (together, the "Acquired Properties Transaction") and the purchase of Harrah’s New Orleans (the "Harrah's Transaction") from CEOC, which among other services, includes the use of CEOC-owned trademarks.

Cash Activity with Affiliates

Prior to the May 2014 purchase of these properties by CGPH, Harrah’s New Orleans, Bally’s Las Vegas and The LINQ Hotel & Casino transferred cash in excess of operating loan requirements and regulatory needs to CEOC on a daily basis. Cash transfers from CEOC to these properties were also made based upon needs to fund daily operations, including accounts payable, payroll and capital expenditures. The net of these transfers is reflected in Transfers to parent in the Cash flows from operating activities section of the Combined Condensed Statement of Cash Flows and Transactions with parent and affiliates, net in the Combined Condensed Statement of Stockholders' Equity. Subsequent to the May 2014 purchase of these properties by CGPH, the transfers of cash in excess of operating loan requirements and regulatory needs to CEOC and cash transfers from CEOC to fund daily operations no longer occur.

As of September 30, 2013, the assets of Harrah’s New Orleans, Bally’s Las Vegas and The LINQ Hotel & Casino, were pledged as collateral for certain of CEOC’s outstanding debt securities.

Allocation of Centralized Services

Prior to the May 2014 transactions described in Note 1 — Description of Business and Summary of Significant Accounting Policies, Harrah’s New Orleans, Bally’s Las Vegas, The LINQ Hotel & Casino, and Cromwell functioned as part of the larger group of companies controlled by CEOC. Prior to the formation transaction on October 21, 2013 described in Item 1 — Business of the CAC Annual Report on Form 10-K for the year ended December 31, 2013, Planet Hollywood functioned as part of the larger group of companies controlled by CEOC. CEOC performed certain corporate overhead functions for these properties. These functions included, but were not limited to, payroll, accounting, risk management, tax, finance, recordkeeping, financial statement preparation and audit support, legal, treasury functions, regulatory compliance, insurance, information systems, office space and corporate and other centralized services. Costs associated with centralized services have been allocated based on a percentage of revenue, or on another basis (such as headcount), depending upon the nature of the general corporate expense being allocated.

Management believes such allocations are reasonable; however, they may not be indicative of the actual expense that would have been incurred had these properties been operating as a separate entity apart from CEOC. Management believes that participating in these consolidated programs is beneficial in comparison to the cost and terms for similar programs that it could negotiate on a stand-alone basis. The cost allocated for these functions is included in operating expenses in the Combined Condensed Statements of Operations for the historical periods presented. For the three and nine months ended September 30, 2013, allocated general corporate expenses and directly billed expenses totaling $23.9 million and $71.4 million, respectively, were recorded.

Insurance Accruals

The Acquired Properties are insured for workers’ compensation, property, general liability and other insurance coverage through Caesars Entertainment and are charged premiums by Caesars Entertainment based on claims activity. Predecessor

Growth Partners is self-insured for employee health, dental, vision and other insurance and our insurance claims and reserves include accruals of estimated settlements for known claims, as well as accruals of actuarial estimates of incurred but not reported claims. In estimating these reserves, historical loss experience and judgments about the expected levels of costs per claim are considered. These claims are accounted for based on actuarial estimates of the undiscounted claims, including those claims incurred but not reported. The use of actuarial methods to account for these liabilities provides a consistent and effective way to measure these highly judgmental accruals and are believed to be reasonable.

Management Fees

PHW Manager, a wholly-owned subsidiary of CEOC, manages the operations of Planet Hollywood. Fees paid to PHW Manager for such services include a base management fee calculated at 3.0% of adjusted gross operating revenue plus net casino wins, and an incentive fee calculated at 4.5% of EBITDA less the base management fee. For the three and nine months ended September 30, 2013, the fees were $4.3 million and $13.2 million, respectively.

During the periods presented, no management fees were charged to Bally’s Las Vegas, Cromwell, The LINQ Hotel & Casino, Harrah’s New Orleans and Horseshoe Baltimore.

Long-term Debt to Related Party

Caesars Interactive has entered into an unsecured credit facility with Caesars Entertainment (the "Credit Facility") whereby Caesars Entertainment provided to Caesars Interactive unsecured intercompany loans as approved by Caesars Entertainment on an individual transaction basis. No principal payments are required under the Credit Facility until its maturity date of November 29, 2016. The unsecured intercompany loans bear interest on the unpaid principal amounts at a rate per annum equal to London Inter-Bank Offered Rate ("LIBOR") plus 5%. For the three and nine months ended September 30, 2013, CIE recorded $0.8 million and $1.9 million, respectively, of interest expense associated with this debt. The Credit Facility does not have any restrictive or affirmative covenants.

During the nine months ended September 30, 2013, Predecessor Growth Partners made principal payments on the Credit Facility aggregating $7.0 million.

Investments in Notes and Interest Receivable from Related Party

Predecessor Growth Partners' investments in notes from related party consisted solely of senior notes previously issued by CEOC and acquired by Caesars Entertainment. All investments in notes from related party were classified as available for sale and were recorded as non-current assets.

For the three and nine months ended September 30, 2013, interest income from related parties included $17.0 million and $50.7 million of income based on the stated interest rate, $27.8 million and $77.0 million of accretion of discount, and $0.1 million and $0.3 million of interest income related to the paid-in-kind notes, each respectively.

Harrah's New Orleans Promissory Note

In December 2002, Harrah's New Orleans entered into a $123.7 million unsecured promissory note, payable on demand to CEOC bearing interest at 8% with no scheduled repayment terms. There were no financial covenants required under the note. Any amount of principal and interest not paid when due bore additional interest at 2%. Accrued interest was settled on a monthly basis with charges to Transactions with parent and affiliates, net.

Employee Benefit Plans

Caesars Entertainment maintains a defined contribution savings and retirement plan in which employees of Predecessor Growth Partners' properties may participate. The plan, among other things, provides for pre-tax and after-tax contributions by employees. Under the plan, participating employees may elect to contribute up to 50% of their eligible earnings, provided that participants who are designated as highly compensated will have their contributions limited to ensure the plan does not discriminate in their favor. In April 2012, Caesars Entertainment reinstated a limited employer match. Predecessor Growth Partners’ reimbursement for Caesars Entertainment’s contribution expense was $0.3 million and $1.6 million for the three and nine months ended September 30, 2013, respectively.

Caesars Entertainment also maintained deferred compensation plans, stock option plans and an executive supplemental savings plan under which certain employees of Predecessor Growth Partners could defer a portion of their compensation. The expenses charged by Caesars Entertainment to Predecessor Growth Partners for employees' participation in these programs are included in the Allocation of Centralized Services charge discussed above and are reflected in Property, general, administrative and other in the Combined Condensed Statements of Operations.

Multiemployer Benefit Plans

Certain employees of Predecessor Growth Partners are covered by union sponsored, collectively bargained, health and welfare multiemployer benefit plans. Predecessor Growth Partner’s reimbursement for Caesars Entertainment’s contributions and charges for these plans was $6.7 million and $19.6 million for the three and nine months ended September 30, 2013, respectively. These expenses are included in Property, general, administrative and other in the Combined Condensed Statements of Operations.

Equity Incentive Awards

Caesars Entertainment grants stock-based compensation awards in Caesars Entertainment common stock to certain employees that work for the management companies of Predecessor Growth Partners' casino properties under the Caesars 2012 Performance Incentive Plan. Allocations from Caesars Entertainment were not considered material to the unaudited combined condensed financial statements for the periods presented.

Lease Agreements

On April 25, 2011, The LINQ Hotel & Casino entered into an agreement pursuant to which it will lease a land parcel from Caesars LINQ LLC ("The LINQ"), an indirect wholly owned subsidiary of Caesars Entertainment, under an operating lease with an expiration date of April 25, 2026. The land parcel is used by The LINQ Hotel & Casino for gaming and other space. Pursuant to the terms of the agreement, The LINQ Hotel & Casino is required to pay The LINQ rent equal to approximately $1.3 million per month beginning on January 1, 2014.

Bally’s Las Vegas leases land to JGB Vegas Retail Lessee, LLC ("JGB Lessee") under a ground lease that commences on the sooner of the Opening Date as defined in the Ground Lease as amended or February 28, 2015 and includes annual and monthly base rents with annual escalations as well as an annual percentage of revenue payable should JGB Lessee revenues exceed a Breakpoint as defined in the lease agreement. GB Investor, LLC, a wholly-owned subsidiary of Caesars Entertainment, has an approximate 10% ownership interest in JGB Lessee. Monthly revenues from the ground lease are currently $0.4 million and are included in Other revenue in the Combined Condensed Statements of Operations.

Note 16 — Recent Developments

CEOC First and Second Lien Note Holder Litigation

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the financial position and operating results of Caesars Acquisition Company (the "Company," "CAC," "we," "our" and "us") and Caesars Growth Partners, LLC ("CGP LLC") for the three and nine months ended September 30, 2014 and the assets and entities that were acquired by or contributed to CGP LLC (collectively referred to as "Predecessor Growth Partners") for the three and nine months ended September 30, 2013, should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations presented in the Company's Annual Report on Form 10-K for the year ended December 31, 2013.

Basis of Presentation and Discussion

CAC was incorporated under the laws of the State of Delaware on February 25, 2013 and was formed to directly own 100% of the voting membership units in CGP LLC, a joint venture between CAC and subsidiaries of Caesars Entertainment Corporation ("CEC" or "Caesars Entertainment"). On October 21, 2013, the joint venture was formed between subsidiaries of Caesars Entertainment and CAC. Following consummation of those transactions, CAC serves as CGP LLC’s managing member and sole holder of all of its outstanding voting units, and subsidiaries of Caesars Entertainment hold all of CGP LLC’s outstanding non-voting units. However, based upon the structure of CGP LLC and the related economics, CGP LLC has been determined to be a variable interest entity of which Caesars Entertainment is the primary beneficiary. Therefore, CAC does not consolidate CGP LLC into its financial statements. Instead, CAC accounts for its investment in CGP LLC using a balance sheet approach to the equity method of accounting, referred to as hypothetical liquidation at book value ("HLBV") accounting.

CAC's only material asset is its membership interest in CGP LLC. Predecessor Growth Partners is considered to be the predecessor to CAC. The unaudited combined condensed historical financial statements of Predecessor Growth Partners have been prepared on a stand-alone basis and, as transactions between CGP LLC and Caesars Entertainment and its subsidiaries are considered to be reorganizations of entities under common control, have been derived from the historical accounting records and consolidated financial statements of Caesars Entertainment. The unaudited combined condensed financial statements reflect the results of operations and cash flows of the businesses and assets contributed to or acquired by CGP LLC and its subsidiaries in the transactions described previously as if those businesses were combined into a reporting entity for the period presented.

As our investment in CGP LLC is considered to be significant, CGP LLC's annual financial statements are required to be included as an exhibit to each CAC Annual Report on Form 10-K in accordance with Securities and Exchange Commission ("SEC") Rule 3-09 of Regulation S-X. Given the significance of this investment to the financial position and results of operations of CAC, we have elected to include selected financial information of CGP LLC in this Quarterly Report on Form 10‑Q. As the basis of presentation for all items other than income taxes, non-controlling interests and senior notes returned to Caesars Entertainment related to the subscription right restoration is the same between Predecessor Growth Partners and CGP LLC, and because we believe that the comparative information for CAC's investment in CGP LLC is material to investors in CAC, we have presented information for both CGP LLC and Predecessor Growth Partners in this management's discussion and analysis of financial condition and results of operations.

CAESARS ACQUISITION COMPANY

Operating Results

Other Expenses

CAC incurred direct expenses of $2.1 million and $16.2 million, respectively, during the three and nine months ended September 30, 2014 primarily related to professional services fees, mainly for the preparation for the Acquired Properties Transaction and Harrah’s Transaction as described below in CGP LLC and Predecessor Growth Partners—Other Factors Affecting Net Income, as well as general liability insurance, licenses and fees.

Income from Equity Method Investment

For the three and nine months ended September 30, 2014, CAC recognized $24.9 million and $55.5 million of income from the equity method investment in CGP LLC, which equals the amount of income that CAC was entitled to under its minimum guaranteed return. The minimum guaranteed return for the three and nine months ended September 30, 2014 includes the result of capital deployed in connection with the May 2014 acquisitions of JCC Holding Company II, LLC and its subsidiaries (collectively known as "Harrah's New Orleans"), 3535 LV Corporation (formerly known as "The Quad" and recently rebranded as "The LINQ Hotel & Casino"), indirect subsidiaries of Parball Corporation (collectively known as "Bally's Las Vegas") and Corner Investment Company, LLC and its subsidiaries, (collectively known as "Cromwell") by indirect subsidiaries of CGP LLC. The minimum guaranteed return for the three and nine months ended September 30, 2014 also reflects a reduction in the amount of deployed capital upon which such return is earned, equal to the fair value of senior notes distributed from CGP LLC to CAC on August 6, 2014.

Provision for Income Taxes

The provision for income taxes for the three and nine months ended September 30, 2014 was $20.0 million and $25.9 million, respectively. The provision for income taxes for the periods presented differ from the expected benefit for income taxes at the federal tax rate of 35% applied to CAC's pre-tax income primarily due to a federal valuation allowance recorded against deferred tax assets related to the basis difference in the investment in notes from related party.

Liquidity and Capital Resources

Capital Spending

CAC has not incurred, nor is it expected to incur, material capital expenditures in the normal course of business or to pursue acquisition opportunities other than through CGP LLC. See Liquidity and Capital Resources for CGP LLC and Predecessor Growth Partners below.

Capital Resources

CAC's primary source of funds is distributions from CGP LLC. To the extent that CAC requires additional funds, CAC may borrow funds or issue additional equity. However, as CAC does not have operations of its own, it is expected that CAC will not have a significant need for additional liquidity.

CAC's expenses incurred in the normal course of business, including income tax obligations, are expected to be paid by CGP LLC on behalf of CAC. These transactions are accounted for as distributions from CGP LLC to CAC.

Liquidity

Pursuant to the certificate of incorporation of CAC and the CGP Operating Agreement, after October 21, 2016 Caesars Entertainment and/or its subsidiaries will have the right, which it may assign to any of its affiliates or to any transferee of all non-voting units of CGP LLC held by subsidiaries of Caesars Entertainment, to acquire all or a portion of the voting units of CGP LLC (or, at the election of CAC, shares of CAC’s Class A common stock) not otherwise owned by Caesars Entertainment and/or its subsidiaries at such time.

Following October 21, 2018 and until April 21, 2022, our Board of Directors (the "Board") will have the right to cause a liquidation of CGP LLC, including the sale or winding up of CGP LLC, or other monetization of all of its assets and the distribution of the proceeds remaining after satisfaction of all liabilities of CGP LLC to the holders of CGP LLC's units according to the terms of the CGP Operating Agreement. On April 21, 2022 (unless otherwise agreed by Caesars Entertainment and CAC), if our Board has not previously exercised its liquidation right, the CGP Operating Agreement provides that CGP LLC shall, and our Board shall cause CGP LLC to effect a liquidation.

Off-balance Sheet Arrangements

CAC did not have any off-balance sheet arrangements at September 30, 2014 or December 31, 2013.

Critical Accounting Policies and Estimates

Stock-based Compensation

CAC grants stock-based compensation awards in CAC Class A common stock, par value $0.001 per share ("Common Stock") to certain officers, employees, directors, individual consultants and advisers of the Company and its subsidiaries under the Caesars Acquisition Company 2014 Performance Incentive Plan ("the PIP Plan") which is intended to promote the success of the Company and to increase stockholder value by providing an additional means, through the grant of awards, to attract, motivate, retain and reward employees and other eligible persons. The PIP Plan provides for the plan to be administered by the Human Resources Committee of the Board of Directors of Caesars Acquisition Company (the "HRC"). CAC has granted restricted stock units ("RSUs") and stock options to certain of its employees.

Recent Accounting Pronouncements

CAESARS GROWTH PARTNERS, LLC AND PREDECESSOR GROWTH PARTNERS

Overview

On May 5, 2014, CGP LLC contributed the equity interests of PHWLV, LLC ("PHWLV"), which holds Planet Hollywood Resort and Casino ("Planet Hollywood") and a 50% interest in the management fee revenues of PHW Manager, LLC to Caesars Growth Properties Holdings, LLC an indirect, wholly-owned subsidiary of CGP LLC. Harrah's New Orleans, The LINQ Hotel & Casino, Bally's Las Vegas and Cromwell were direct wholly-owned subsidiaries of Caesars Entertainment Operating Company, Inc. ("CEOC"), which is a direct wholly-owned subsidiary of CEC. On May 5, 2014, Caesars Growth Properties Holdings, LLC (the "Borrower" or "CGPH") through one or more subsidiaries acquired (i) Cromwell, The LINQ Hotel & Casino and Bally’s Las Vegas, (ii) 50% of the ongoing management fees and any termination fees payable under the property management agreements entered between a property manager and the owners of each of these properties, and (iii) certain intellectual property that is specific to each of these properties. On May 20, 2014, CGPH through one or more subsidiaries acquired (i) Harrah’s New Orleans, (ii) 50% of the ongoing management fees and any termination fees payable under the Louisiana Property Management Agreement, and (iii) certain intellectual property that is specific to Harrah's New Orleans ("Second Closing").

The acquisitions of Harrah's New Orleans, The LINQ Hotel & Casino, Bally's Las Vegas and Cromwell and the contribution of Planet Hollywood to CGPH are herein referred to as the "Acquired Properties."

Presentation

The financial information for the three and nine months ended September 30, 2014 reflects the financial statements of CGP LLC on a consolidated basis, giving regard to all impacts of the October 21, 2013 formation transactions. The financial information for the three and nine months ended September 30, 2013 does not reflect the impacts of those transactions, including the recording of non-controlling interest or the determination of taxes in accordance with the LLC structure of CGP LLC. Instead, this financial information, referred to herein as Predecessor Growth Partners, presents the combination of those assets and entities that were purchased by or contributed to CGP LLC, with financial information derived from the historical accounting records and consolidated financial statements of Caesars Entertainment.

As a result of the transactions in May 2014 described above, one or more indirect subsidiaries of CGP LLC acquired Bally’s Las Vegas, Cromwell, The LINQ Hotel & Casino and Harrah’s New Orleans from CEOC. Because these acquisitions were accounted for as transactions among entities under common control, the financial information herein includes the financial results for these properties as if those businesses were combined into the CGP LLC and Predecessor Growth Partners reporting entities for all periods presented. Therefore, the financial information contained herein provides comparable results for all periods presented.

Segment Description

For financial reporting purposes, CGP LLC has two reportable segments: (1) Interactive Entertainment and (2) Casino Properties and Developments. CGP LLC’s Interactive Entertainment segment consists of Caesars Interactive Entertainment, Inc. ("CIE" or "Caesars Interactive"), which is comprised of three distinct, but complementary businesses that reinforce, cross-promote and build upon each other: social and mobile games, the World Series of Poker ("WSOP") and regulated online real money gaming. CGP LLC’s Casino Properties and Developments segment consists of Planet Hollywood, Caesars Baltimore Investment Company, LLC, the entity that indirectly holds interests in the joint venture owner (the "Maryland Joint Venture") of Horseshoe Baltimore Casino ("Horseshoe Baltimore"), which opened in August 2014, Harrah's New Orleans, The LINQ Hotel & Casino, Bally's Las Vegas and Cromwell.

Operating Results of CGP LLC and Predecessor Growth Partners



	CGP LLC			Predecessor Growth Partners					CGP LLC			Predecessor Growth Partners
	Three Months Ended September 30,								Nine Months Ended September 30,
(In millions)	2014			2013		Change			2014			2013		Change
Net revenues	$	485.8		$	325.8	$	160.0		$	1,340.7		$	995.3	$	345.4
Income from operations	82.1			46.0		36.1			91.1			100.2		(9.1		)
Net income from continuing operations	70.7			46.8		23.9			67.6			116.2		(48.6		)
Net loss from discontinued operations	(14.6		)	—		(14.6		)	(15.6		)	—		(15.6		)
Adjusted EBITDA⁽¹⁾	105.4			78.7		26.7			312.8			254.0		58.8

^{_____________________________________________________}

⁽¹⁾See Reconciliations of Net Income/(Loss) from Continuing Operations to Adjusted EBITDA for a reconciliation of net (loss)/income from continuing operations to Adjusted Earnings before Interest Income/Expense, Income Taxes, Depreciation and Amortization ("EBITDA").

Three months ended September 30, 2014 compared to September 30, 2013

Net revenues for the third quarter 2014 increased by $160.0 million, or 49.1%, compared with same period in 2013, driven by strong performance in both operating segments, including CIE's first quarter 2014 acquisition of Pacific Interactive, the opening of Cromwell in May 2014 and the opening of Horseshoe Baltimore in August 2014. Income from operations for the third quarter 2014 was $82.1 million as compared to $46.0 million for the same period in 2013. The increase in income from operations is primarily attributable to a decrease in the fair value of contingently issuable non-voting membership units. Adjusted EBITDA increased $26.7 million, or 33.9%, in the third quarter 2014 as compared with the third quarter of 2013, primarily driven by the income impact of increased revenues.

Nine months ended September 30, 2014 compared to September 30, 2013

Net revenues for the nine months ended September 30, 2014 increased by $345.4 million, or 34.7%, compared with the same period in 2013, driven by organic growth in both operating segments, and by CIE's first quarter 2014 acquisition of Pacific Interactive, the opening of Cromwell in May 2014 and the opening of Horseshoe Baltimore in August 2014.

Income from operations for the nine months ended September 30, 2014 was $91.1 million as compared to $100.2 million for the same period in 2013. This decrease in income from operations is primarily due to increased pre-opening expenses associated with Cromwell and Horseshoe Baltimore and increased operating expenses at The LINQ Hotel & Casino, primarily due to its strip-front lease. The decrease in income from operations was partially offset by the income impact of strong revenue growth from CIE. Certain pre-opening expenses are not included in Adjusted EBITDA, therefore Adjusted EBITDA increased $58.8 million, or 23.1%, for the nine months ended September 30, 2014 as compared with the same period in 2013.

Reportable Segments Operating Results

Interactive Entertainment



	CGP LLC			Predecessor Growth Partners					CGP LLC			Predecessor Growth Partners
	Three Months Ended September 30,								Nine Months Ended September 30,
(In millions)	2014			2013		Change			2014			2013			Change
Net revenues	$	161.6		$	78.9	$	82.7		$	430.4		$	221.0		$	209.4
Income/(loss) from operations	20.1			22.7		(2.6		)	21.0			(4.4		)	25.4
Net income/(loss) from continuing operations	(2.9		)	16.2		(19.1		)	(2.2		)	1.3			(3.5		)
Net loss from discontinued operations	(14.6		)	—		(14.6		)	(15.6		)	—			(15.6		)
Adjusted EBITDA⁽¹⁾	53.4			30.6		22.8			129.1			71.9			57.2

^{___________________________________________}

⁽¹⁾See Reconciliations of Net Income/(Loss) from Continuing Operations to Adjusted EBITDA for a reconciliation of net (loss)/income from continuing operations to Adjusted EBITDA.

Three months ended September 30, 2014 compared to September 30, 2013

Interactive Entertainment net revenues increased by $82.7 million for the third quarter of 2014 as compared to the same period in 2013, as a result of the first quarter 2014 acquisition of Pacific Interactive and organic growth in the social and mobile games business. Income from operations for the three months ended September 30, 2014 was $20.1 million, compared with income from operations of $22.7 million for the same period in 2013. Adjusted EBITDA increased in the third quarter of 2014 as compared with the third quarter of 2013, driven by the income impact of increased revenues, partially offset by increased marketing and operating expenses associated with real money online gaming.

In June 2014, CIE concluded that, effective August 2014, it would suspend operations of CIE RMG BEL, LLC, an indirectly wholly-owned subsidiary in Minsk, Belarus. As a result, CIE recorded a $15.5 million impairment in the second quarter of 2014. In the third quarter of 2014, CIE settled its accrued contingent consideration liability for $4.5 million and recognized a gain of $1.4 million on the final disposition of the entity. We have presented the operations of CIE RMG BEL, LLC as discontinued operations in CGP LLC's Combined and Consolidated Condensed Statements of Operations.

Nine months ended September 30, 2014 compared to September 30, 2013

Interactive Entertainment's net revenues increased by $209.4 million for the nine months ended September 30, 2014 compared to the same period in 2013 as a result of organic growth and the Pacific Interactive acquisition. Income/(loss) from operations for the nine months ended September 30, 2014 and 2013 was $21.0 million and $(4.4) million, respectively. The increase in income from operations is a direct result of the income impact of increased revenues. Adjusted EBITDA increased in

the nine months ended September 30, 2014 as compared with the same period in 2013 driven by the income impact of increased revenues, partially offset by the increase in marketing expenses.

Performance Metrics - Social and Mobile Games

We measure the performance of our social and mobile games business by using several key financial metrics, including revenue, Adjusted EBITDA and operating metrics, including Daily Active Users, Monthly Active Users, Monthly Unique Users, Average Revenue per User and Monthly Unique Payers. Our operating metrics help us to understand and measure the engagement levels of our players, the size of our audience and our reach.

Key Financial Metrics

The tables below show the results of CIE's business based upon the financial metrics for the periods indicated.



	For the Three Months Ended
	Sept. 30,		Jun. 30,		Mar. 31,		Dec. 31,		Sept. 30,		Jun. 30,		Mar. 31,
(In millions)	2014		2014⁽²⁾		2014⁽²⁾		2013⁽¹⁾		2013		2013		2013
Revenues
Social and mobile games	$	151.3	$	134.4	$	115.7	$	90.7	$	74.7	$	70.7	$	66.6
WSOP and online real money gaming	10.3		10.2		8.5		4.9		4.2		3.3		1.5
Total	$	161.6	$	144.6	$	124.2	$	95.6	$	78.9	$	74.0	$	68.1

Adjusted EBITDA	$	53.4	$	44.6	$	31.1	$	25.2	$	30.6	$	20.1	$	21.2

^{___________________________________________}

⁽¹⁾Presents the aggregate of Predecessor Growth Partners for the period from October 1 through October 21, 2013, and CGP LLC for the period from October 22 through December 31, 2013.

⁽²⁾ Adjusted EBITDA has been recasted to reflect discontinued operations related to CIE.

The table below shows the revenue generated from our social and mobile games business by geographic region for the periods indicated.



	For the Three Months Ended
	Sept. 30,		Jun. 30,		Mar. 31,		Dec. 31,		Sept. 30,		Jun. 30,		Mar. 31,
(In millions)	2014		2014		2014		2013⁽¹⁾		2013		2013		2013
North America	$	103.4	$	92.8	$	80.2	$	60.9	$	50.1	$	47.8	$	43.2
South America	1.1		1.0		0.7		0.6		0.6		0.6		0.4
Europe	13.9		11.8		10.0		8.9		8.1		7.8		8.7
Asia/Pacific	31.9		28.2		24.3		20.0		15.7		14.3		14.0
Africa and Rest of the World	1.0		0.6		0.5		0.3		0.2		0.2		0.3
Social and mobile games revenue	$	151.3	$	134.4	$	115.7	$	90.7	$	74.7	$	70.7	$	66.6

^{___________________________________________}

⁽¹⁾Presents the aggregate of Predecessor Growth Partners for the period from October 1 through October 21, 2013, and CGP LLC for the period from October 22 through December 31, 2013.

Key Operating Metrics

The following operating metrics help us to understand and measure the engagement levels of our players, the size of our audience and our reach.

Daily Active Users. CIE defines Daily Active Users ("DAU") as the number of individuals who played one of its games during a particular day on a particular platform. Under this metric, an individual who plays two different games on the same day is counted as two Daily Active Users. Similarly, an individual who plays the same game on two different platforms (e.g., web and mobile) or on two different social networks on the same day would be counted as two Daily Active Users. Average Daily Active Users for a particular period is the average of the Daily Active Users for each day during that period. CIE uses Daily Active Users as a measure of audience engagement.

Monthly Active Users. CIE defines Monthly Active Users ("MAU") as the number of individuals who played a particular game in the 30-day period ending with the measurement date on a particular platform. Under this metric, an individual who plays two different games in the same 30-day period is counted as two Monthly Active Users. Similarly, an individual who plays the same game on two different platforms (e.g., web and mobile) or on two different social networks in a 30-day period would be counted as two Monthly Active Users. Average Monthly Active Users for a particular period is the average of the

Monthly Active Users at each month-end during that period. CIE uses Monthly Active Users as a measure of total game audience size.

Monthly Unique Users. CIE defines Monthly Unique Users ("MUU") as the number of unique individuals who played any of its games on a particular platform in the 30-day period ending with the measurement date. An individual who plays more than one of CIE’s games in a given 30-day period would be counted as a single monthly unique user. However, because CIE cannot always distinguish unique individuals playing across multiple platforms, an individual who plays any of its games on two different platforms (e.g., web and mobile) in a given 30-day period may be counted as two Monthly Unique Users in the event that CIE does not have data that allows it to identify and separate the player. Because many of CIE's players play more than one game in a given 30-day period, Monthly Unique Users are always lower than Monthly Active Users in any given time period. Average Monthly Unique Users for a particular period is the average of the Monthly Unique Users at each month-end during that period. CIE tracks Monthly Unique Users as a measure of total audience reach across its network of games.

Monthly Unique Payers. CIE defines Monthly Unique Payers ("MUP") as the number of unique individuals who purchased virtual currency in any of its games on a particular platform in the 30-day period ending with the measurement date. An individual who makes multiple purchases of virtual currency on more than one of CIE's games on a particular platform in a given 30-day period would be counted as a single Monthly Unique Payer. However, because CIE cannot always distinguish unique individuals purchasing virtual currency across multiple platforms, an individual who makes a purchase of virtual currency on any of CIE's games on two different platforms (e.g., web and mobile) in a given 30-day period may be counted as two Monthly Unique Payers in the event that CIE does not have data that allows it to identify and separate the paying user. Average Monthly Unique Payers for a particular period is the average of the Monthly Unique Payers at each month-end during that period. CIE uses Monthly Unique Payers as a measure of monetization across all of its players through the sale of virtual goods.

Average Revenue per User. CIE defines Average Revenue per User ("ARPU") as (i) the total revenue in a given period, (ii) divided by the number of days in that period, (iii) divided by the average Daily Active Users during the period. CIE believes that Average Revenue per User provides useful information to investors and others in understanding and evaluating its results in the same manner as the Company's management and Board of Directors. CIE uses Average Revenue per User as a measure of overall monetization across all of its players through the sale of virtual goods.

The table below shows the results of CIE's social and mobile games business using operating metrics for the periods indicated. User statistics are presented in thousands of users, and average revenues per user is presented in dollars.



	For the Three Months Ended
	Sept. 30,		Jun. 30,		Mar. 31,		Dec. 31,		Sept. 30,		Jun. 30,		Mar. 31,
	2014		2014		2014⁽¹⁾		2013⁽²⁾		2013		2013		2013
Average Daily Active Users ⁽³⁾	5,640		5,681		5,704		4,639		4,803		4,952		5,259
Average Monthly Active Users ⁽³⁾	17,767		18,575		19,597		15,914		16,354		16,962		17,695
Average Monthly Unique Users ⁽³⁾	16,472		16,794		17,370		13,908		14,615		14,941		16,052
Average Monthly Unique Payers ⁽³⁾	595		539		511		322		293		279		292
Average Revenue per User	$	0.29	$	0.26	$	0.24	$	0.21	$	0.17	$	0.16	$	0.14

^{_____________________________________________________}

⁽¹⁾Operating metrics include numbers from Pacific Interactive only after its February 2014 acquisition by CIE.

⁽²⁾Presents the aggregate of Predecessor Growth Partners for the period from October 1 through October 21, 2013, and CGP LLC for the period from October 22 through December 31, 2013.

⁽³⁾CIE systems cannot always distinguish unique individuals playing games in multiple sessions in the same day or in a 30-day period ending with the measurement date, playing the same game across multiple platforms, or playing different titles offered by CIE. Thus, users who play multiple titles or multiple platforms may be counted as more than one user within the respective operating metrics.

Consistent with the social and mobile business model, only a small portion of CIE’s social and mobile games players pay for virtual goods. During the three months ended September 30, 2014, CIE’s social and mobile games business had approximately 595 thousand average Monthly Unique Payers, or 3.6% of the total number of Average Monthly Unique Users on the social and mobile platforms during this period, purchase virtual goods, which was an increase of approximately 160 basis points year over year. Because the opportunity for social interactions and player generated promotion through playing platforms increases as the overall number of players increases, CIE believes that maintaining and growing its total number of players, including the number of players who may not purchase virtual goods, is important to the success of its business. The sale of virtual goods, however, constitutes the primary source of revenue for CIE's social and mobile games business. The degree to which game players choose to pay for virtual goods in the games is driven by CIE's ability to create content that enhances the game-play experience. CIE's revenue and overall financial performance are affected by the number of players and the effectiveness of its monetization of players through the sale of virtual goods.

CIE's user metrics are impacted by several factors that cause them to fluctuate on a quarterly basis. Growth in the performance metrics is largely attributable to the February 2014 acquisition of Pacific Interactive and the May 2013 acquisition of the World Series of Poker social and mobile game assets and intellectual property from Electronic Arts Inc., combined with continued growth of the Slotomania and Bingo Blitz games on mobile platforms and increased popularity of the Caesars Casino game, effective marketing efforts and new content. Future growth in audience and engagement will depend on CIE's ability to retain current players, attract new players, launch new games and expand into new markets and onto new distribution platforms.

Casino Properties and Developments



	CGP LLC		Predecessor Growth Partners					CGP LLC		Predecessor Growth Partners
	Three Months Ended September 30,							Nine Months Ended September 30,
(In millions)	2014		2013		Change			2014		2013		Change
Net revenues	$	324.2	$	246.9	$	77.3		$	910.3	$	774.3	$	136.0
Income from operations	10.8		23.3		(12.5		)	74.0		104.6		(30.6		)
Adjusted EBITDA⁽¹⁾	56.3		48.1		8.2			194.6		182.1		12.5

^{_____________________________________________________}

⁽¹⁾See Reconciliations of Net Income/(Loss) from Continuing Operations to Adjusted EBITDA for a reconciliation of net income/(loss) from continuing operations to Adjusted EBITDA.

Three months ended September 30, 2014 compared to September 30, 2013

Net revenues for the three months ended September 30, 2014 increased by $77.3 million when compared to the same period in 2013. Gaming revenues increased to $196.9 million in the third quarter 2014 from $156.0 million for the same period in 2013 due primarily to the opening of Cromwell in May 2014 and the opening of Horseshoe Baltimore in August 2014.

Food and beverage revenues for the three months ended September 30, 2014 and 2013 were $63.7 million and $48.8 million, respectively. This increase in food and beverage revenues was driven largely by new offerings that opened in 2014, such as various new venues by celebrity chefs at Horseshoe Baltimore and Giada at Cromwell.

Rooms revenues for the three months ended September 30, 2014 and 2013 were $59.2 million and $56.5 million, respectively. This increase in rooms revenues was driven largely by the renovated Jubilee Tower which opened in the fourth quarter of 2013 at Bally's Las Vegas and the opening of Cromwell in May 2014. This increase was partially offset by decreased rooms revenue at The LINQ Hotel & Casino due to room renovations at the property.

Other revenues for the three months ended September 30, 2014 and 2013 were $49.6 million and $23.0 million, respectively. This increase in other revenues is primarily due to the opening of Drai's at Cromwell and enhanced entertainment options at the new Axis Theater at Planet Hollywood.

Income from operations decreased to $10.8 million in the three months ended September 30, 2014, from $23.3 million in the same period of 2013 as the income impact of increased revenues was more than offset by the combination of increased expenses at The LINQ Hotel & Casino, primarily due to its strip-front lease, and increased pre-opening expenses associated with Horseshoe Baltimore. Certain pre-opening expenses associated with Horseshoe Baltimore are not a component of Adjusted EBITDA; therefore, Adjusted EBITDA increased for the three months ended September 30, 2014 when compared with the same period in 2013.

Nine months ended September 30, 2014 compared to September 30, 2013

Revenues for the nine months ended September 30, 2014 and 2013 were $910.3 million and $774.3 million, respectively. This increase in revenues was primarily driven by the openings of Cromwell and Horseshoe Baltimore in May and August 2014, respectively, as well as Planet Hollywood's new restaurant offerings and enhanced entertainment options at the new Axis Theater.

Food and beverage revenues for the nine months ended September 30, 2014 increased by $26.6 million as compared to the same period in 2013. This increase in food and beverage revenues was driven largely by new restaurants at Planet Hollywood which opened after the first quarter of 2013, as well as Giada and Drai's at Cromwell and O'Sheas at The LINQ Hotel & Casino, which all opened in 2014.

Rooms revenues for the nine months ended September 30, 2014 and 2013 were $193.8 million and $180.5 million, respectively. This increase in rooms revenues was driven largely by the renovated Jubilee Tower which opened in the fourth quarter of 2013 at Bally's Las Vegas and the opening of Cromwell in May 2014. This increase was partially offset by decreased rooms revenue at The LINQ Hotel & Casino due to room renovations at the property.

Other revenues for the nine months ended September 30, 2014 and 2013 were $118.5 million and $67.4 million, respectively. This increase is primarily due to enhanced entertainment options at the Axis Theater at Planet Hollywood and the opening of Drai’s at Cromwell.

Income from operations decreased in the nine months ended September 30, 2014 as compared to the same period in 2013 as the income impact of increased revenues was more than offset by the combination of increased pre-opening expenses associated with Cromwell and Horseshoe Baltimore and decreased room revenue at The LINQ Hotel & Casino due to renovations, coupled with increased operating expenses at The LINQ Hotel & Casino, primarily due to its strip-front lease. Certain pre-opening expenses are not a component of Adjusted EBITDA; therefore, Adjusted EBITDA increased for the nine months ended September 30, 2014 when compared with the nine months ended September 30, 2013.

CGP LLC often provides incentives for customers to stay and play at their properties. CGP LLC provides such incentives to customers based on a number of factors such as marketing plans, competitive factors, economic conditions, and regulations. These incentives come in a variety of different forms including free and discounted product, gaming credits, food and beverage, hotel room credits, and other forms. The retail value of accommodations, food and beverage, and other services furnished to casino guests is included in gross revenue and then deducted as promotional allowances. Hence, net revenues as discussed above exclude all promotional allowances. CGP LLC believes the allocation of promotional allowances to be within industry standards and appropriate for the various brands and the competitive environment.

Key Performance Indicators

Performance of the Casino Properties and Developments segment is measured in part through tracking of trips by rated customers, which means a customer whose gaming activity is tracked through Caesars Entertainment’s Total Rewards system, referred to as "trips," and spend per rated customer trip, referred to as "spend per trip." A trip is created by a Total Rewards card holder engaging in one or more of the following activities while at CGP LLC's properties (1) hotel stay, (2) gaming activity or (3) a comp redemption, which means the receipt of a complimentary item given out by the casino. Lodgers are guests registered with the total rewards program who stay at the property and non-lodgers are guests registered with the total rewards program not staying at the property. Customer spend means the cumulative rated theoretical spend (which is the amount of money expected to be retained by the casino based upon the mathematics underlying the particular game as a fraction of the amount of money wagered by the customer) across all game types for a specific customer. The average combined gross hold is the percentage of the amount wagered across all game types (including table games and slot machines) that the casino retained.

During the three and nine months ended September 30, 2014, total trips increased by approximately 39.2% and 19.2%, respectively, from the same periods in 2013, driven by 44.8% and 23.7% increases in trips by non-lodgers, respectively, primarily due to the openings of Cromwell and Horseshoe Baltimore, partially offset by decreases in trips by lodgers during the nine months ended September 30, 2014 versus the same period in 2013. Total spend per trip decreased by 5.4% and 4.3% in the three and nine months ended September 30, 2014, respectively, versus the same periods in 2013, driven by an increase in trips from non-lodgers which depressed the overall average. Gross casino hold decreased slightly and stayed consistent from 11.6% and 11.4%, in the three and nine months ended September 30, 2013, respectively, to 11.3% and 11.4%, in the three and nine months ended September 30, 2014, respectively.

Cash average daily room rates for the three months ended September 30, 2014 increased to approximately $103, or by 21%, when compared to approximately $85 for the same period in 2013, primarily due to the opening of Cromwell, fewer rooms available due to the renovations at The LINQ Hotel & Casino, and the renovated Jubilee Tower which opened in the fourth quarter of 2013 at Bally's Las Vegas. Average daily occupancy was 89.5% in the three months ended September 30, 2014 and 89.7% in the three months ended September 30, 2013. Revenue per available room ("RevPar") for the three months ended September 30, 2014 and 2013 was approximately $93 and $81, respectively. The revenue impact of favorable trends in room metrics was partially offset by a lower number of rooms available due to room renovations at The LINQ Hotel & Casino.

Other Factors Affecting Net Income



	CGP LLC			Predecessor Growth Partners						CGP LLC			Predecessor Growth Partners
	Three Months Ended September 30,									Nine Months Ended September 30,
(In millions)	2014			2013			Change			2014			2013			Change
Interest expense, net of interest capitalized	$	(44.2	)	$	(21.6	)	$	(22.6	)	$	(123.8	)	$	(56.2	)	$	(67.6	)
Interest income	—			—			—			1.0			—			1.0
Interest income - related party	19.1			44.9			(25.8		)	119.2			128.0			(8.8		)
Impairment of investment in notes from related party	(63.5		)	—			(63.5		)	(63.5		)	—			(63.5		)
Gain on sale of investment in notes from related party	99.4			—			99.4			99.4			—			99.4
Loss on extinguishment of debt	—			(0.3		)	0.3			(23.8		)	(0.5		)	(23.3		)
Other income/(expense), net	(0.1		)	0.1			(0.2		)	(0.1		)	0.6			(0.7		)
Provision for income taxes ⁽¹⁾	(22.1		)	(22.3		)	0.2			(31.9		)	(55.9		)	24.0
Net loss from discontinued operations	(14.6		)	—			(14.6		)	(15.6		)	—			(15.6		)
Net loss attributable to non-controlling interests ⁽²⁾	5.1			3.7			1.4			14.5			4.9			9.6

^{_____________________________________________________}

⁽¹⁾

CGP LLC’s provision for income taxes represents the income taxes from its corporate subsidiary, CIE, which is taxed as a corporation for federal, state and foreign income tax purposes. CGP LLC’s provision for income taxes also includes the allocated income taxes from the consolidated Caesars Entertainment provision for income taxes for the period up to the date of acquisition by CGP LLC for the properties acquired from Caesars Entertainment in the second quarter of 2014. CGP LLC does not record a provision for income taxes for properties included within the Casino Properties and Developments segment that were acquired by CGP LLC in 2013 as such entities are pass-through entities for income tax purposes. Predecessor Growth Partners’ provision for income taxes represent the allocated income taxes from the consolidated Caesars Entertainment provision for income taxes as if Predecessor Growth Partners filed separate United States ("US") federal, state and foreign income tax returns, and does not recognize the pass through entity structure of CGP LLC.

⁽²⁾

CGP LLC's non-controlling interest reflects the non-controlling interest associated with consolidating CIE and the Maryland Joint Venture into CGP LLC. As the financial statements of Predecessor Growth Partners were prepared on a combined basis rather than a consolidated basis, the non-controlling interest associated with CIE is not included within the financial statements of Predecessor Growth Partners.

Interest Expense, Net of Interest Capitalized

Interest expense, net of interest capitalized for the three and nine months ended September 30, 2014 primarily relates to the debt incurred in May 2014 by CGPH to fund the purchase of Cromwell, The LINQ Hotel & Casino and Bally’s Las Vegas (together, the "Acquired Properties Transaction") and the purchase of Harrah’s New Orleans (the "Harrah's Transaction") from CEOC. Interest expense, net of interest capitalized due to these transactions was $36.5 million and $89.9 million, respectively, for the three and nine months ended September 30, 2014.

Interest expense associated with the Planet Hollywood secured loan decreased from $9.8 million in the three months ended September 30, 2013, to zero in the three months ended September 30, 2014 and from $29.0 million in the nine months ended September 30, 2013 to $14.9 million in the nine months ended September 30, 2014. Decreases to the interest expense for Planet Hollywood in both periods resulted from the repayment of the Planet Hollywood Loan Agreement, as defined below, in conjunction with the Second Closing as described in Liquidity and Capital Resources-Escrow Release below.

In July 2013, CBAC Borrower LLC ("CBAC Borrower") entered into a credit agreement (the "Baltimore Credit Facility"). Interest expense associated with this facility for the three and nine months ended September 30, 2014 was $6.1 million and $17.9 million, respectively, and was offset by capitalized interest for the three and nine months ended September 30, 2014 of $4.3 million and $13.9 million, respectively, related to the construction of the facility. Interest expense, net of interest capitalized for both the three and nine months ended September 30, 2013 was $5.2 million.

Additional interest expense, net of interest capitalized, totaled $5.9 million and $6.6 million for the three months ended September 30, 2014 and 2013, respectively, and $15.0 million and $22.0 million for the nine months ended September 30, 2014 and 2013, respectively.

Interest expense associated with capital lease obligations was not material to any period presented.

Interest Income

Interest income for the three and nine months ended September 30, 2014 and 2013 was not material to the respective periods.

Interest Income - Related Party

CGP LLC received interest income on its portfolio of approximately $1.1 billion face value of aggregate principal amount of notes previously issued by CEOC ("CEOC Notes"). The CEOC Notes had fixed interest rates ranging from 5.625% to 6.50% and maturities ranging from 2015 to 2017. Interest income - related party decreased in the three months ended September 30, 2014 when compared to the same period in 2013 as well as in the nine months ended September 30, 2014 when compared to the same period in 2013. In each case, the decrease was due to the sale or transfer in the form of dividends of the entire portfolio of CEOC Notes during the third quarter of 2014.

Impairment of Investment in Notes from Related Party

On August 6, 2014, CGP LLC effectuated a distribution of its 5.75% and 6.50% CEOC Notes as a dividend to its members, pro-rata based upon each member’s ownership percentage in CGP LLC (the "Notes Distribution"). Immediately prior to the Notes Distribution, CGP LLC recorded an impairment charge of $63.5 million to release losses that had been accumulated in equity, given that CGP LLC would not recover its amortized cost basis in the CEOC Notes.

Gain on Sale of Investment in Notes from Related Party

On May 5, 2014 CGP LLC entered into a note purchase agreement to sell a portion of its CEOC Notes back to CEOC. On July 29, 2014, CGP LLC received $451.9 million of consideration (including accrued and unpaid interest) in connection with the CEOC Notes purchase transaction and recognized a gain of $99.4 million.

Loss on Extinguishment of Debt

The Planet Hollywood secured loan contained excess cash flow provisions which required mandatory prepayments when certain conditions were met. Prepayments not attributable to principal were recorded in Loss on extinguishment of debt in the Combined and Consolidated Condensed Statements of Operations of CGP LLC and Combined Condensed Statements of Operations for Predecessor Growth Partners. Inclusive of the impact of the loan payoff in conjunction with the Second Lien Intercreditor Agreement, as defined in the Intercreditor Agreement and Collateral Agreements section below, Loss on extinguishment of debt for the three months ended September 30, 2014 and 2013 was zero and $0.3 million, respectively, and for the nine months ended September 30, 2014 and 2013 was $23.8 million and $0.5 million, respectively.

Other Income/(Expense), Net

Other income/(expense), net for the three and nine months ended September 30, 2014 and 2013 was not material to the respective periods' results.

Provision for Income Taxes

CGP LLC

The provision for income taxes for CGP LLC for 2014 represents the income taxes from its corporate subsidiary, CIE, which is taxed as a corporation for federal, state and foreign income tax purposes. CGP LLC’s provision for income taxes also includes the allocated income taxes from the consolidated Caesars Entertainment provision for income taxes for the period up to the date of acquisition by CGP LLC for the properties acquired from CEOC in the second quarter of 2014. No provision for income taxes is reported for properties within the Casino Properties and Developments segment of CGP LLC that were acquired in 2013 as such properties are taxed as a partnership for federal and state income tax purposes whereby any income or losses were allocated to the CGP LLC owners and taxed by each owner. The provision for income taxes for CGP LLC differs from the expected federal tax rate of 35% primarily due to CGP LLC income not taxed at the CGP LLC entity level.

Predecessor Growth Partners

Provision for income taxes represents the allocated income taxes from the consolidated Caesars Entertainment provision for income taxes as if Predecessor Growth Partners filed separate US federal, state and foreign income tax returns. The provision for income taxes for the period presented differs from expected federal tax rate of 35% primarily due to tax benefits from foreign operations partially offset by an increase in federal valuation allowance and the tax cost of non-deductible stock-based compensation and other non-deductible expenses.

Loss from Discontinued Operations, Net of Income Tax

In June 2014, CIE concluded that, effective August 2014, it would suspend operations of CIE RMG BEL, LLC, an indirectly wholly owned subsidiary in Minsk, Belarus. As a result, CIE recorded a $15.5 million impairment in the second quarter of 2014. In the third quarter of 2014, CIE settled its accrued contingent consideration liability for $4.5 million and recognized a gain of $1.4 million on the final disposition of the entity. We have presented the operations of CIE RMG BEL, LLC as discontinued operations in CGP LLC's Combined and Consolidated Condensed Statements of Operations.

Net Loss Attributable to Non-controlling Interests

CGP LLC

Caesars Interactive Entertainment

For both the three and nine months ended September 30, 2014, net loss of $1.8 million was attributable to non-controlling interests in CIE.

Certain key Caesars Interactive employees were granted RSUs. In September 2014, the first tranche of RSU grants vested and resulted in an increase of 0.19% increase in the non-controlling interest ("NCI") ownership of CIE.

Maryland Joint Venture

For the three and nine months ended September 30, 2014 net losses of $3.3 million and $12.7 million, respectively, were attributable to non-controlling interests in the Maryland Joint Venture.

In February 2014, CGP LLC's joint venture with Rock Gaming LLC ("Rock"), who is the majority member of CR Baltimore Holdings ("CRBH"), sold a portion of its interest in CBAC Gaming LLC ("CBAC Gaming") to an existing joint venture partner of CBAC Gaming, Caves Valley Partners ("CVP"). CGP LLC received $12.8 million of the proceeds from the sale. Following the closing of the sale, CGP LLC maintained its 58.5% ownership of CRBH, while CRBH reduced its ownership of CBAC Gaming to approximately 70%, resulting in a decline of CGP LLC's indirect ownership in CBAC Gaming to approximately 41%.

Predecessor Growth Partners

Caesars Interactive Entertainment

As the financial statements of Predecessor Growth Partners were prepared on a combined basis rather than a consolidated basis, the non-controlling interest associated with CIE is not included within the financial statements of Predecessor Growth Partners.

Maryland Joint Venture

For the three and nine months ended September 30, 2013, net losses attributed to non-controlling interests in the Maryland Joint Venture were $3.7 million and $4.9 million, respectively.

Reconciliations of Net Income/(Loss) from Continuing Operations to Adjusted EBITDA

CGP LLC and Predecessor Growth Partners use Adjusted EBITDA as a supplemental measure of its performance. EBITDA is comprised of net income before (i) interest expense, net of capitalized interest, (ii) interest income, (iii) provision for income taxes, and (iv) depreciation and amortization expense. Adjusted EBITDA is comprised of EBITDA, further adjusted for certain items that CGP LLC and Predecessor Growth Partners do not consider indicative of its ongoing operating performance.

The unaudited financial statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). Adjusted EBITDA is a non-GAAP financial measure that is defined and reconciled to its most comparable GAAP measure below. Adjusted EBITDA is included because management believes that Adjusted EBITDA provides investors with additional information that allows a better understanding of the results of operational activities separate from the financial impact of capital investment decisions made for the long-term benefit of CGP LLC and Predecessor Growth Partners.

Because not all companies use identical calculations, the presentation of CGP LLC's and Predecessor Growth Partners' EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures of other companies.



	For the Three Months Ended September 30, 2014
(In millions)	Interactive Entertainment			Casino Properties and Developments			Other			Total
Net income/(loss) from continuing operations	$	(2.9	)	$	(33.3	)	$	106.9		$	70.7
Provision for income taxes	21.1			1.0			—			22.1
Income/(loss) from continuing operations before income taxes	18.2			(32.3		)	106.9			92.8
Interest expense, net of interest capitalized	1.8			43.1			(0.7		)	44.2
Interest income, including related party	—			—			(19.1		)	(19.1		)
Depreciation and amortization	7.3			30.5			—			37.8
EBITDA	27.3			41.3			87.1			155.7
Other expense, net	0.1			—			—			0.1
Write-downs, reserves and project opening costs, net of recoveries ^(b)	2.5			9.8			—			12.3
Change in fair value of contingently issuable non-voting membership units ^(c)	—			—			(56.4		)	(56.4		)
Change in fair value of contingent consideration ^(d)	0.1			—			—			0.1
Acquisition and integration costs	0.3			4.3			0.9			5.5
Gain on sale of investment in notes from related party	—			—			(99.4		)	(99.4		)
Impairment on investment in notes from related party	—			—			63.5			63.5
Stock-based compensation ^(e)	22.0			0.6			—			22.6
Other ^(f)	1.1			0.3			—			1.4
Adjusted EBITDA	$	53.4		$	56.3		$	(4.3	)	$	105.4



	For the Three Months Ended September 30, 2013
(In millions)	Interactive Entertainment		Casino Properties and Developments			Other			Total
Net income from continuing operations	$	16.2	$	1.4		$	29.2		$	46.8
Provision for income taxes	5.7		0.9			15.7			22.3
Income from continuing operations before income taxes	21.9		2.3			44.9			69.1
Interest expense, net of interest capitalized	0.8		20.8			—			21.6
Interest income, including related party	—		—			(44.9		)	(44.9		)
Depreciation and amortization	4.8		19.8			—			24.6
EBITDA	27.5		42.9			—			70.4
Other income, net	—		(0.1		)	—			(0.1		)
Loss on extinguishment of debt ^(a)	—		0.3			—			0.3
Write-downs, reserves and project opening costs, net of recoveries ^(b)	—		4.8			—			4.8
Acquisition and integration costs	0.3		—			—			0.3
Stock-based compensation ^(e)	1.8		0.2			—			2.0
Other ^(f)	1.0		—			—			1.0
Adjusted EBITDA	$	30.6	$	48.1		$	—		$	78.7

^{_____________________________________________________}

^{(a) - (f)} See footnotes following at the end of this section.



	For the Nine Months Ended September 30, 2014
(In millions)	Interactive Entertainment			Casino Properties and Developments			Other			Total
Net income/(loss) from continuing operations	$	(2.2	)	$	(84.0	)	$	153.8		$	67.6
Provision for income taxes	19.3			12.6			—			31.9
Income/(loss) from continuing operations before income taxes	17.1			(71.4		)	153.8			99.5
Interest expense, net of interest capitalized	3.8			121.6			(1.6		)	123.8
Interest income, including related party	—			—			(120.2		)	(120.2		)
Depreciation and amortization	20.9			77.9			—			98.8
EBITDA	41.8			128.1			32.0			201.9
Other expense, net	0.1			—			—			0.1
Loss on extinguishment of debt ^(a)	—			23.8			—			23.8
Write-downs, reserves and project opening costs, net of recoveries^(b)	2.5			31.8			—			34.3
Change in fair value of contingently issuable non-voting membership units^(c)	—			—			(7.9		)	(7.9		)
Change in fair value of contingent consideration ^(d)	32.7			—			—			32.7
Acquisition and integration costs	0.9			9.7			0.9			11.5
Gain on sale of investment in notes from related party	—			—			(99.4		)	(99.4		)
Impairment on investment in notes from related party	—			—			63.5			63.5
Stock-based compensation ^(e)	48.4			0.6			—			49.0
Other ^(f)	2.7			0.6			—			3.3
Adjusted EBITDA	$	129.1		$	194.6		$	(10.9	)	$	312.8



	For the Nine Months Ended September 30, 2013
(In millions)	Interactive Entertainment			Casino Properties and Developments			Other			Total
Net income from continuing operations	$	1.3		$	31.7		$	83.2		$	116.2
(Benefit from)/provision for income taxes	(7.5		)	18.6			44.8			55.9
Income/(loss) from continuing operations before income taxes	(6.2		)	50.3			128.0			172.1
Interest expense, net of interest capitalized	1.9			54.3			—			56.2
Interest income, including related party	—			—			(128.0		)	(128.0		)
Depreciation and amortization	12.6			61.2			—			73.8
EBITDA	8.3			165.8			—			174.1
Other income, net	(0.1		)	(0.5		)	—			(0.6		)
Loss on extinguishment of debt^(a)	—			0.5			—			0.5
Write-downs, reserves and project opening costs, net of recoveries ^(b)	—			15.8			—			15.8
Change in fair value of contingent consideration ^(d)	48.9			—			—			48.9
Acquisition and integration costs	0.5			—			—			0.5
Stock-based compensation ^(e)	12.2			0.3			—			12.5
Other ^(f)	2.1			0.2			—			2.3
Adjusted EBITDA	$	71.9		$	182.1		$	—		$	254.0

^{_____________________________________________________}


^(a)	Amounts represent the difference between the fair value of consideration paid and the book value, net of deferred financing costs, of debt retired through debt extinguishment transactions, which are capital structure-related, rather than operational-type costs.


^(b)	Amounts primarily represent development costs related to the construction of Horseshoe Baltimore, Cromwell and The LINQ Hotel & Casino.


^(c)	Amounts represent the change in fair value of contingently issuable membership units associated with the CIE earn-out calculation related to the transactions establishing CGP LLC. The total liability represents the estimated fair value of CGP LLC non-voting membership units to be issued to a subsidiary of Caesars Entertainment.


^(d)	Amounts represent the change in fair value of contingent consideration for CIE acquisitions.


^(e)	Amounts represent non-cash stock-based compensation expense related to stock options, restricted shares and restricted stock units. Stock-based compensation expense for the three months ended September 30, 2014 includes $19.6 million of expense related to earlier quarters of 2014. See Note 3 — Equity Method Investment in Caesars Growth Partners, LLC to CAC's condensed financial statements.


^(f)	Amounts represent other add-backs and deductions to arrive at Adjusted EBITDA but not separately identified, such as lobbying expenses.

Liquidity and Capital Resources

Capital Spending

CGP LLC incurs capital expenditures in the normal course of business, performs ongoing refurbishment and maintenance at its existing casino entertainment facilities and performs ongoing maintenance and enhancements to its social and mobile games to maintain their quality standards. CGP LLC may also pursue development and acquisition opportunities for additional businesses or social or mobile games that meet its strategic and return on investment criteria. Cash used for capital expenditures in the normal course of business is typically made available from cash flows generated by operating activities while cash used for development projects is typically funded from established debt programs, specific project financing, and additional debt offerings.

Future development projects could require, individually and in the aggregate, significant capital commitments and, if completed, may result in significant additional revenues. The commitment of capital, the timing of completion, and the commencement of operations of development projects are contingent upon, among other things, negotiation of final agreements and receipt of requisite approvals from the applicable political and regulatory bodies. Excluding amounts spent for the purchases of businesses, CGP LLC's cash used for capital spending for the three and nine months ended September 30, 2014 was $187.8 million and $480.0 million, respectively. The majority of the 2014 and 2013 capital spending relates to Horseshoe Baltimore which opened in August 2014, Cromwell which was completed and reopened in the second quarter of 2014, and the ongoing renovation of The LINQ Hotel & Casino. Estimated total capital expenditures for the remainder of 2014 are expected to be between approximately $106.0 million and $156.0 million.

CGP LLC’s near term residual capital requirements for Horseshoe Baltimore are expected to be funded by the Baltimore Credit Facility, as further discussed in the Capital Resources section below.

Liquidity

CGP LLC's primary sources of liquidity include currently available cash and cash equivalents, cash flows generated from its operations and borrowings under CIE’s credit facility with Caesars Entertainment. CGP LLC's cash and cash equivalents totaled $989.2 million and $1,032.0 million at September 30, 2014 and December 31, 2013, respectively.

Payments of short-term debt obligations and other commitments are expected to be made from operating cash flows. CGP LLC's operating cash inflows are used for operating expenses, debt service costs, working capital needs and capital expenditures in the normal course of business. Long-term obligations are expected to be paid through operating cash flows, refinancing of existing debt or the issuance of new debt, or, if necessary, additional investments from its equity holders. CGP LLC's ability to refinance debt will depend upon numerous factors such as market conditions, our financial performance, and the limitations applicable to such transactions under CGP LLC's and its subsidiaries' financing documents. Additionally, CGP LLC's ability to fund operations, pay debt obligations, and fund planned capital expenditures depends, in part, upon economic and other factors that are beyond CGP LLC's control, and disruptions in capital markets and restrictive covenants related to CGP LLC's existing debt could impact CGP LLC's ability to fund liquidity needs, pay indebtedness and secure additional funds through financing activities.

CGP LLC’s Restricted cash totaled $39.6 million and $359.8 million at September 30, 2014 and December 31, 2013, respectively. Restricted cash and cash equivalents include amounts restricted under the terms of the Baltimore Credit Facility and Cromwell Credit Facility, as defined below, at both September 30, 2014 and December 31, 2013, as well as the Planet Hollywood debt agreement at December 31, 2013. The Planet Hollywood debt agreement required that CGP LLC and Predecessor Growth Partners maintain certain reserves for payment of property taxes, insurance, interest and ongoing furniture, fixtures and equipment purchases, or property development. In connection with the Second Closing, as described in Escrow Release below, the Planet Hollywood debt agreement was paid in full. Restricted cash is classified as current or long-term depending upon its intended use.

At September 30, 2014 and December 31, 2013, Caesars Interactive had cash balances in its subsidiary located in Israel of $45.0 million and $24.4 million, respectively. Additionally, the subsidiary had $15.0 million in short-term investments at December 31, 2013 and no short-term investments at September 30, 2014. CIE may use the cash in the Playtika Ltd. ("Playtika") subsidiary to repay debt payable to related parties, fund operations at Playtika, pursue international acquisitions or repatriate the cash to CIE.

CGPH and Caesars Growth Properties Finance, Inc. (together, the "Issuers"), issued $675.0 million aggregate principal amount of their 9.375% second-priority senior secured notes due 2022 (the "2022 Notes") pursuant to an indenture dated as of April 17, 2014, among the Issuers and US Bank National Association, as trustee (the "Indenture"). On May 8, 2014, CGPH closed on $1.175 billion of term loans (the "Term Loan") pursuant to a credit agreement.

As of both September 30, 2014 and December 31, 2013, CIE had $39.8 million of book value of indebtedness outstanding and payable to Caesars Entertainment. Horseshoe Baltimore had $266.4 million and $217.7 million, respectively,

and Cromwell had $180.2 million and $179.8 million, respectively, of book value of indebtedness outstanding to third-party lenders for the same periods. At December 31, 2013, Planet Hollywood had $462.5 million of book value of indebtedness outstanding and payable to third-party lenders. Cash paid for interest for the nine months ended September 30, 2014 and 2013 was $60.4 million and $42.4 million, respectively.

CGP LLC believes that its cash and cash equivalents and its cash flows from operations will be sufficient to meet its normal operating and debt service requirements during the next 12 months and the foreseeable future and to fund capital expenditures expected to be incurred in the normal course of business.

As of September 30, 2014, the assets of Harrah’s New Orleans, Bally’s Las Vegas, Planet Hollywood and The LINQ Hotel & Casino were pledged as collateral for certain of CGPH’s outstanding debt securities.

Intercreditor Agreement and Collateral Agreements

On May 20, 2014, in connection with the Second Closing, as described in Escrow Release below, US Bank National Association, as trustee under the 2022 Notes (in such capacity, the "Trustee"), entered into a second lien intercreditor agreement (the "Second Lien Intercreditor Agreement") with Credit Suisse AG, Cayman Islands Branch, as collateral agent under the First Lien Collateral Agreement (as defined below) (in such capacity, the "First Lien Collateral Agent") that establishes the subordination of the liens securing the 2022 Notes to the liens securing first priority lien obligations, including the $1.325 billion Senior Secured Credit Facilities and certain other matters relating to the administration of security interests.

On May 20, 2014, the Borrower, the subsidiary guarantors and the First Lien Collateral Agent also entered into the collateral agreement (first lien) (the "First Lien Collateral Agreement") and other security documents defining the terms of the security interests that secure the Senior Secured Credit Facilities, the related guarantees and Other First Priority Lien Obligations (as defined therein). These security interests will secure the payment and performance when due of all of the obligations of the Borrower and the subsidiary guarantors under the Senior Secured Credit Facilities, the related guarantees and the security documents.

Additionally, the Issuers, the subsidiary guarantors and the Trustee also entered into the collateral agreement (second lien) (the "Second Lien Collateral Agreement") and other security documents defining the terms of the security interests that secure the 2022 Notes, the related guarantees and Other Second Lien Obligations (as defined therein). These security interests will secure the payment and performance when due of all of the obligations of the Issuers and the subsidiary guarantors under the 2022 Notes, the related guarantees, the indenture governing the 2022 Notes and the security documents.

Subject to the terms of the security documents described above, including the First Lien Collateral Agreement and the Second Lien Collateral Agreement, the Borrower (or Issuers, as applicable) and the subsidiary guarantors have the right to remain in possession and retain exclusive control of the collateral securing the 2022 Notes and the Senior Secured Credit Facilities (other than any cash, securities, obligations and cash equivalents constituting part of the collateral and deposited with the First Lien Collateral Agent in accordance with the provisions of the security documents and other than as set forth in such security documents), to freely operate the collateral and to collect, invest and dispose of any income therefrom.

Debt

The following is a description of the components of CGP LLC's debt with third parties:



		Rates at	Face Value at			Book Value at
(In millions)	Final Maturity	September 30, 2014	September 30, 2014			September 30, 2014			December 31, 2013
Secured debt
Caesars Growth Properties Holdings Term Loan	2021	6.25%	$	1,172.1		$	1,139.9		$	—
Caesars Growth Properties Holdings 2022 Notes	2022	9.375%	675.0			660.4			—
Planet Hollywood Loan Agreement	2015	—%	—			—			462.5
Baltimore Credit Facility	2020	8.25%	272.5			262.9			214.4
Cromwell Credit Facility	2019	11.00%	185.0			180.2			179.8
Capital lease obligations	2015 - 2017	Various	4.6			4.6			2.1
Unsecured debt
Special Improvement District Bonds	2037	5.30%	14.5			14.5			14.8
Other financing obligations	2016 - 2018	0.00% - 6.00%	9.8			8.5			10.0
Total debt			2,333.5			2,271.0			883.6
Current portion of long-term debt			(18.3		)	(18.3		)	(4.0		)
Long-term debt			$	2,315.2		$	2,252.7		$	879.6

Caesars Growth Properties Holdings Term Facility

The purchase price of the acquisition of Cromwell, The LINQ Hotel & Casino, Bally’s Las Vegas, 50% of the ongoing management fees and any termination fees payable for each of these properties, and certain intellectual property that is specific to each of these properties (collectively referred to as the "First Closing") was funded by CGPH with cash on hand contributed by CGP LLC and the proceeds of $700.0 million of term loans (the "First Closing Term Loan"). CGPH closed on the First Closing Term Loan on May 5, 2014. CGPH repaid in full the First Closing Term Loan in connection with the Second Closing.

Caesars Growth Properties Holdings Term Loan

On May 8, 2014, Borrower closed on $1.175 billion of term loans (the "Term Loan") pursuant to a First Lien Credit Agreement among Caesars Growth Properties Parent, LLC ("Parent"), the Borrower, the lenders party thereto, Credit Suisse AG, Cayman Islands Branch, as Administrative Agent (the "Administrative Agent"), and Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., UBS Securities LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Macquarie Capital (USA) Inc. and Nomura Securities International, Inc., as Co-Lead Arrangers and Bookrunners (the "Credit Agreement"). The Credit Agreement also provides for a $150.0 million revolving credit agreement (the "Revolving Credit Facility" and, together with the Term Loan, the "Senior Secured Credit Facilities"). As of September 30, 2014, no borrowings were outstanding under the Revolving Credit Facility, and $0.1 million is committed to outstanding letters of credit.

Pursuant to an escrow agreement, dated as of May 8, 2014, among US Bank National Association, as escrow agent and securities intermediary, the Administrative Agent and the Borrower, the Borrower deposited the gross proceeds of the Term Loan, together with additional amounts necessary to repay the First Closing Term Loan, if applicable, into a segregated escrow account until they were satisfied on May 20, 2014.

Full details of this transaction, including additional information on the terms of the Term Loan and Revolving Credit Facility can be obtained from the Form 8-K filed with the SEC on May 9, 2014.

The CGPH Term Loans are guaranteed by the Parent and the material, domestic wholly-owned subsidiaries of CGPH (subject to exceptions), and are secured by a pledge of the equity interest of CGPH directly held by the Parent and substantially all of the existing and future property and assets of CGPH and the subsidiary guarantors (subject to exceptions).

The CGPH Term Loans include negative covenants, subject to certain exceptions, restricting or limiting CGPH's ability and the ability of its restricted subsidiaries to, among other things: (i) incur additional debt or issue certain preferred shares; (ii) pay dividends on or make distributions in respect of their capital stock or make other restricted payments; (iii) make certain investments; (iv) sell certain assets; (v) create liens on certain assets to secure debt; (vi) consolidate, merge, sell, or otherwise dispose of all or substantially all of their assets; (vii) enter into certain transactions with their affiliates and (viii) designate their subsidiaries as unrestricted subsidiaries. The CGPH Term Loans also contain customary affirmative covenants and customary events of default, subject to customary or agreed-upon exceptions, baskets and thresholds (including equity cure provisions).

The CGPH Term Loans require that CGPH maintains a senior secured leverage ratio ("CGPH SSLR") of no more than 6.0 to 1.0, which is the ratio of first lien senior secured net debt to earnings before interest, taxes, depreciation and amortization, adjusted as defined ("CGPH Adjusted EBITDA"). As of September 30, 2014, the CGPH SSLR was 3.14 to 1.00.

Caesars Growth Properties Holdings Notes

CGPH and Caesars Growth Properties Finance, Inc. (together, the "Issuers"), issued $675.0 million aggregate principal amount of 9.375% second-priority senior secured notes due 2022 (the "2022 Notes") pursuant to an indenture dated as of April 17, 2014, among the Issuers and US Bank National Association, as trustee (the "Indenture"). The Issuers deposited the gross proceeds of the offering of the 2022 Notes, together with additional amounts necessary to redeem the 2022 Notes, if applicable, into a segregated escrow account until the escrow conditions were satisfied on May 20, 2014.

Planet Hollywood Loan Agreement

In connection with the acquisition of Planet Hollywood by Caesars Entertainment in 2010 and the assumption of debt, PHW Las Vegas, LLC entered into the Amended and Restated Loan Agreement (the "Planet Hollywood Loan Agreement") with Wells Fargo Bank, N.A., as trustee for The Credit Suisse First Boston Mortgage Securities Corp. Commercial Mortgage Pass-Through Certificates, Series 2007-TFL2. On October 26, 2011, Caesars Entertainment exercised its option to extend the Planet Hollywood Loan Agreement to 2013. On December 5, 2013 the loan maturity was again extended to April 2015.

The book value of outstanding debt under the Planet Hollywood Loan Agreement was $462.5 million at December 31, 2013 and bore interest on the unpaid principal balance at a rate per annum equal to London Inter-Bank Offered Rate ("LIBOR") plus 2.859%. In connection with the Second Closing in May 2014, the $476.9 million senior secured term loan of PHWLV was paid in full.

CIE Credit Facility

Caesars Interactive has entered into an unsecured credit facility with Caesars Entertainment (the "Credit Facility") whereby Caesars Entertainment provided to Caesars Interactive unsecured intercompany loans as requested by CIE and approved by Caesars Entertainment on an individual transaction basis. No principal payments are required on the unsecured intercompany loans until their maturity date of November 29, 2016. The unsecured intercompany loans bear interest on the unpaid principal amounts at a rate per annum equal to LIBOR plus 5%. This credit facility does not have any restrictive or affirmative covenants. The outstanding balance on the Credit Facility was $39.8 million as of September 30, 2014.

Rock Promissory Notes

In March 2012, Rock and CIE entered into an agreement pursuant to which Rock purchased approximately 6,155 shares of CIE common stock for $30.4 million in cash and agreed to purchase additional shares of CIE common stock on or before July 2, 2012. CIE used the proceeds from this sale to prepay a portion of the then outstanding balance on the credit facility.

In June 2012, CIE and Rock modified the agreement with Rock such that CIE issued to Rock approximately 382 shares of CIE common stock and a promissory note for $28.5 million in exchange for $30.4 million in cash. The promissory note is convertible into approximately 5,773 shares of CIE common stock. In November 2012, CIE issued to Rock an additional promissory note for $19.2 million in exchange for $19.2 million in cash. The additional promissory note is convertible into approximately 3,140 shares of CIE common stock. The ability to convert the promissory notes into shares is subject to the satisfaction of certain specified criteria. Both promissory notes automatically convert into shares of CIE common stock in November 2014, unless both parties agree to amend the notes. As the notes are expected to be converted into equity, both promissory notes are classified as long-term in CGP LLC's Combined and Consolidated Condensed Balance Sheets at September 30, 2014 and December 31, 2013.

Baltimore Credit Facility

CBAC Borrower, a joint venture among Caesars Baltimore Investment Company, LLC ("CBIC"), Rock Gaming Mothership LLC, CVPR Gaming Holdings, LLC, STRON-MD Limited Partnership and PRT Two, LLC, entered into the Baltimore Credit Facility to finance the acquisition of land in Baltimore, Maryland and the construction of Horseshoe Baltimore. The Baltimore Credit Facility provides for (i) a $300.0 million senior secured term facility with a seven-year maturity, which is comprised of a $225.0 million facility that was funded upon the closing of the Baltimore Credit Facility, a $37.5 million delayed draw facility available from the closing of the Baltimore Credit Facility until July 2014, which was drawn in June 2014 in accordance with the agreement, and a $37.5 million delayed draw facility available until January 2015, of which $10.0 million was drawn as of September 30, 2014 and (ii) a $10.0 million senior secured revolving facility with a five-year maturity. The Baltimore Credit Facility is secured by substantially all material assets of CBAC Gaming and its wholly-owned domestic subsidiaries. In connection with the foregoing, CBIC and the other joint venture partners each provided, on a several and not joint basis, a completion guarantee with respect to Horseshoe Baltimore, which guarantees completion of the construction of Horseshoe Baltimore, availability of contemplated working capital and the discharge, bonding or insuring over of certain liens in

connection with Horseshoe Baltimore. The maximum liability of CBIC under its completion guarantee is approximately $9.0 million.

Concurrently with the closing of the Baltimore Credit Facility, CBAC Borrower entered into an equipment financing term loan facility for up to $30.0 million (the "Baltimore FF&E Facility"). Under the Baltimore FF&E Facility, CBAC Gaming, LLC and CBAC Borrower, LLC, which is wholly-owned by CBAC Gaming, LLC (collectively, "CBAC") may use funds from the facility to finance or reimburse the purchase price and certain related costs of furniture, furnishings, and equipment (referred to as "FF&E") to be used in Horseshoe Baltimore. Proceeds of the Baltimore FF&E Facility will also be available to refinance the purchase price of FF&E purchased with other amounts available to CBAC. Draws under the Baltimore FF&E Facility may be made after the closing date and prior to January 2015, provided that a final draw of the unused commitment amount will be deposited into an escrow account pledged to the collateral agent for the Baltimore FF&E Facility at the end of the commitment period, and such funds will be available for subsequent financing of FF&E purchases. CBAC is not permitted to reduce the commitments under the FF&E Facility, however it remained undrawn as of September 30, 2014. The Baltimore FF&E Facility will mature in January 2019.

The Baltimore FF&E Facility has covenants and events of default substantially consistent with the Baltimore Credit Facility, and other restrictive covenants customary for FF&E facilities of this type.

Cromwell Credit Facility

In November 2012, Cromwell entered into a $185.0 million, seven-year senior secured credit facility bearing interest at LIBOR plus 9.75% with a LIBOR floor of 1.25% (the "Cromwell Credit Facility") to fund the renovation of the former Bill's Gamblin' Hall and Saloon into a boutique lifestyle hotel, rebranded as Cromwell. The renovation included a complete remodeling of the guest rooms, casino floor, and common areas, the addition of a second floor restaurant, and the construction of an approximately 65,000 square foot rooftop pool and dayclub/nightclub. Cromwell owns the property and operates the casino, hotel, and food and beverage operations, while the dayclub/nightclub is leased to a third party. The proceeds of the Cromwell Credit Facility were funded during the fourth quarter of 2012 and are included as Restricted cash on the Combined and Consolidated Condensed Balance Sheets until drawn to pay for costs incurred in the renovation. Cromwell’s gaming floor opened on April 21, 2014 and its 188 hotel rooms became available to guests starting on May 21, 2014.

The Cromwell Credit Facility also contains certain affirmative and negative covenants and requires Cromwell maintain, for each of the second and third full fiscal quarters following the renovated Project's opening date, at least $7.5 million in consolidated EBITDA from Cromwell, including the third-party leased dayclub/nightclub operations (the "Consolidated Cromwell EBITDA"). In addition, beginning in the fourth full fiscal quarter after the renovated Project's opening date and for the three full fiscal quarters thereafter, the Cromwell Credit Facility also requires Cromwell to maintain a senior secured leverage ratio ("Cromwell SSLR") of no more than 5.25 to 1.0, which is the ratio of Cromwell's first lien senior secured net debt to Consolidated Cromwell EBITDA. Upon the second anniversary date of the Project's opening, the Cromwell SSLR for the following four fiscal quarters may not exceed 5.00 to 1.00, until the third anniversary of the Project's opening and for each fiscal quarter thereafter in which the Cromwell SSLR may not exceed 4.75 to 1.00.

Capital Leases

CGP LLC has entered into multiple capital leases for gaming and wireless internet equipment. The leases have an outstanding liability balance of $4.6 million as of September 30, 2014 and are included in Land, property and equipment, net in CGP LLC's Combined and Consolidated Condensed Balance Sheet.

Special Improvement District Bonds

In 2008 Bally's Las Vegas entered into a District Financing Agreement with Clark County, Nevada (the "County"). In accordance with the agreement, the County issued Special Improvement District Bonds to finance land improvements at Bally's Las Vegas and at an affiliate casino property, Caesars Palace. Of the total bonds issued by the county, $16.5 million was related to Bally's Las Vegas. These bonds bear interest at 5.30% have principal and interest payments on June 1st of every year and interest only payments on December 1st of every year. The Special Improvement District Bonds mature on August 1, 2037.

Harrah's New Orleans and Cromwell Promissory Notes

In November 2013, Cromwell entered into a $15.5 million unsecured promissory note, payable to Caesars Entertainment, bearing interest at 11%. Interest payments were made semi-annually in June and December. There were no financial covenants required under the note.

On March 31, 2014, these notes, including accrued interest, were settled with CEOC. The settlement was accounted for as a net equity contribution from CEOC in the amount of $139.9 million.

Escrow Release

In connection with the Second Closing, CGPH repaid in full the $700.0 million First Closing Term Loan and the $476.9 million senior secured term loan of PHWLV. The purchase price of the Second Closing and the repayment of these loans were funded by the Borrower with the proceeds of the 2022 Notes and Term Loans of the Borrower, which were previously held in escrow. The terms of the indenture for the 2022 Notes and credit agreement for the Term Loans are as described in CAC's Current Reports on Form 8-K filed on April 17, 2014 and May 9, 2014, respectively.

As previously disclosed, the Issuers were, prior to the release of such proceeds from escrow, not in compliance with the covenant in the indenture governing the 2022 Notes stating that they will not own, hold or otherwise have any interest in any assets other than the escrow account and cash or cash equivalents prior to the expiration of the Escrow Period (as defined in the indenture governing the 2022 Notes). Upon the release of the proceeds of the 2022 Notes from escrow, the Issuers cured such default.

Funds held in escrow under this agreement were classified as restricted cash, the result of which were large increases and decreases in restricted cash for the nine months ended September 30, 2014 as presented in CGP LLC's Combined and Consolidated Condensed Statement of Cash Flows.

Contingently Issuable Non-voting Membership Units

Pursuant to the terms of the CGP Operating Agreement, in conjunction with CGP LLC's acquisition of CIE from Caesars Entertainment, CGP LLC is obligated to issue additional non-voting membership units to Caesars Entertainment to the extent that the earnings from CIE's social and mobile games business exceeds a specified threshold amount in 2015. The number of units to be issued is capped at a value of $225 million divided by the value of the non-voting units on October 21, 2013. Therefore, on October 21, 2013, CGP LLC recorded a liability of $167.8 million representing the estimated fair value of additional non-voting membership units contingently issuable to Caesars Entertainment in 2016. The contingently issuable non-voting membership units' estimated fair value is based upon a multiple of EBITDA for the calendar year 2015 in excess of a specified minimum threshold and includes a maximum payout threshold. The estimated fair value of the contingently issuable non-voting membership units at September 30, 2014 and December 31, 2013 was $298.6 million and $306.5 million, respectively. The change in fair value of $7.9 million is reported within the CGP LLC Combined and Consolidated Condensed Statements of Operations.

Other Obligations and Commitments

Material changes to CGP LLC's aggregate indebtedness are described in Debt above. As of September 30, 2014, debt payments and estimated interest payments are as follows:



	Payments Due by Period
(In millions)	Total		Remainder of 2014		1-3 years		4-5 years		After 5 years
Debt payable to related parties, face value	$	39.8	$	—	$	39.8	$	—	$	—
Debt payable to third parties, face value⁽¹⁾	2,333.5		4.4		55.9		214.4		2,058.8
Estimated interest payments to related parties⁽²⁾	5.1		0.5		4.6		—		—
Estimated interest payments to third parties⁽²⁾	1,358.6		64.2		562.6		406.7		325.1
Convertible note, face value⁽³⁾	47.7		47.7		—		—		—

^{-------------------------------------------}

⁽¹⁾Includes a capital lease obligation of $4.6 million.

⁽²⁾Estimated interest for variable rate debt included in this table is based on rates at September 30, 2014.

⁽³⁾CGP LLC intends to settle the convertible note through the issuance of Caesars Interactive common stock.

Off-balance Sheet Arrangements

CGP LLC did not have any off-balance sheet arrangements at September 30, 2014 or December 31, 2013.

Recent Accounting Pronouncements

In April 2014, the FASB issued authoritative guidance amending existing requirements for reporting discontinued operations. Under the new guidance, discontinued operations reporting will be limited to disposal transactions that represent strategic shifts having a major effect on operations and financial results. The amended guidance also enhances disclosures and requires assets and liabilities of a discontinued operation to be classified as such for all periods presented in the financial statements. Public entities will apply the amended guidance prospectively to all disposals occurring within annual periods

beginning on or after December 15, 2014, and interim periods within those years. We will adopt this standard effective January 1, 2015. Due to the change in requirements for reporting discontinued operations described above, presentation and disclosures of future transactions after adoption may be different than under current standards.

In May 2014, the FASB issued authoritative guidance amending the FASB Accounting Standards Codification and creating a new Topic 606, Revenue from Contracts with Customers. The new guidance is expected to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP applicable to revenue transactions. This guidance provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Existing industry guidance, including revenue recognition guidance specific to the gaming industry will be eliminated. In addition, interim and annual disclosures will be substantially revised. The amendments in this guidance are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. We will adopt this standard effective January 1, 2017. We are currently assessing the impact the adoption of this standard will have on our disclosures and results of operations.

In August 2014, the FASB issued authoritative guidance amending the existing requirements for disclosing information about an entity's ability to continue as a going concern. The new guidance will explicitly require management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosure in certain circumstances. The amendments in this guidance are effective for annual reporting periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. We are currently assessing the impact the adoption of this standard will have on our disclosures and results of operations and are evaluating the date of adoption.

Other Items

CIE Share Repurchases

During the first quarter of 2014, 2,394 shares of CIE stock were issued pursuant to the exercise of stock options, and those shares were subsequently repurchased by CIE. These transactions resulted in a $3.9 million decrease in equity, which is the net difference between the gross repurchase amount of $19.1 million and the aggregate of $3.8 million in exercise proceeds and $11.4 million related to the fair value of liability-classified awards reclassified to equity upon exercise. Net cash outflow for these transactions was $15.3 million. During the second quarter of 2014, CIE issued 1,416 shares and repurchased 1,168 shares resulting in a $1.3 million increase in equity. Net cash outflow for these transactions was $6.3 million. During the third quarter of 2014, CIE issued 2,022 shares and repurchased 1,738 shares resulting in a $2.6 million decrease in equity. Net cash outflow for these transactions was $13.6 million.

Share-based Payments to Non-Employees of CAC or CGP LLC

On April 9, 2014, the Board approved the CAC Equity-Based Compensation Plan for CEC Employees for officers and employees of CEC and its subsidiaries as well as certain other individual consultants and advisers of the Company and its subsidiaries (the "Equity Plan"). CEC will administer the Equity Plan. Under the Equity Plan, CEC is authorized to grant stock options, stock appreciation rights, stock bonuses, restricted stock, performance stock, stock units, phantom stock, dividend equivalents, cash awards, rights to purchase or acquire shares or similar securities in the form of or with a value related to our Common Stock to officers, employees, directors, individual consultants and advisers of CEC and its subsidiaries. The Equity Plan will terminate ten years after approval by the Board. Subject to adjustments in connection with certain changes in capitalization, the maximum value of the shares of our Common Stock that may be delivered pursuant to awards under the Equity Plan is $25.0 million.

On May 8, 2014, CEC granted awards to officers, employees, directors, individual consultants and advisers of CEC and its subsidiaries in accordance with the Equity Plan to reward and provide incentive for services provided in their capacity, promote the success of CGP LLC and more closely align the interests of such individuals with those of the stockholders of the Company. Awards under this plan vest one-third on each of October 21, 2014, 2015 and 2016. Expense associated with the vesting of such awards is recorded as management fee expense by CGP LLC, totaling $4.6 million and $7.3 million, respectively, for the three and nine months ended September 30, 2014. Upon issuance of shares pursuant to this plan, such shares will be contributed to CGP LLC by CAC as additional investment into that entity, at which time CGP LLC will settle its management fee obligation with CEC and its subsidiaries through a distribution of such shares to CEC. Also upon issuance of shares pursuant to this plan, CGP LLC will issue an equivalent number of voting units in CGP LLC and distribute those units to CAC. As CAC will receive voting units in CGP LLC in exchange for the shares of CAC issued pursuant to this plan, there is no expected dilutive impact to CAC's Earnings per Share ("EPS") (see Note 4 — Stockholders’ Equity and Earnings per Share).

Formation of Caesars Enterprise Services, LLC

On May 20, 2014, CEOC, CEC, Caesars Entertainment Resort Properties ("CERP"), and CGPH (together the “Members” and each a “Member”) entered into a services joint venture, Caesars Enterprise Services, LLC (“CES”). CES

manages certain Enterprise Assets (as defined hereafter) and the other assets it owns, licenses or controls, and employs certain of the corresponding employees and other employees who previously provided services to CEOC, CERP and CGPH, their affiliates and their respective properties and systems under each property’s corresponding property management agreement. Corporate expenses that are not allocated to the properties directly are allocated by CES to CEOC, CERP, and CGPH according to their allocation percentages (initially 70.0%, 24.6% and 5.4%, respectively), subject to annual review. Operating expenses are allocated to each Member with respect to their respective properties serviced by CES in accordance with historical allocation methodologies, subject to annual revisions and certain prefunding requirements. On October 1, 2014, CES began operations in Nevada, New Jersey and certain other jurisdictions in which regulatory approval had been received or was not required. The enhancement of CES operations described above in other jurisdictions may be subject to regulatory and other approvals in such jurisdictions.

Omnibus License and Enterprise Services Agreement

Recent Developments and Subsequent Events for CGP LLC

Proposed Development of Woodbury Casino, LLC

On June 30, 2014, CGP submitted its application to the New York State Gaming Facility Location Board for a gaming license to develop Caesars New York, an $880.0 million casino resort in Woodbury, NY. If approved, the property will be managed by Caesars Entertainment and its affiliates. The proposed resort will include approximately 300 hotel rooms, suites and villas, 2,560 slot machines, 190 table games and 50 poker tables. Caesars New York will also include entertainment space, suited for business meetings, celebrations, entertainment and WSOP circuit events. In addition, the resort will feature various food and beverage options that are similar to those at existing CGP LLC properties.

CEOC First and Second Lien Note Holder Litigation

On August 4, 2014, Wilmington Savings Fund Society, FSB, solely in its capacity as successor Indenture Trustee for the CEOC 10% Second-Priority Senior Secured Notes due 2018 (the "Notes"), on behalf of itself and, it alleges, derivatively on behalf of CEOC, filed a lawsuit in the Court of Chancery in the State of Delaware against CAC, CGP LLC, CEC, CEOC, CERP, CES, Eric Hession, Gary Loveman, Jeffrey D. Benjamin, David Bonderman, Kelvin L. Davis, Marc C. Rowan, David B. Sambur, and Eric Press. The lawsuit alleges claims for breach of contract, intentional and constructive fraudulent transfer, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and corporate waste. The lawsuit seeks (i) an award of money damages; (ii) to void certain transfers, the earliest of which dates back to 2010; (iii) an injunction directing the recipients of the assets in these transactions to return them to CEOC; (iv) a declaration that CEC remains liable under the parent guarantee formerly applicable to the Notes; (v) to impose a constructive trust or equitable lien on the transferred assets; and (vi) an award to plaintiffs for their attorneys’ fees and costs. CAC believes this lawsuit is without merit and will defend itself vigorously. A motion to dismiss this action was filed by CAC and other defendants on September 23, 2014, and plaintiff Wilmington Savings Fund responded to that motion on October 17, 2014. A hearing on defendants' motion is currently scheduled for December 5, 2014.

first and second lien note holders have acted against the best interests of CEOC and other creditors, including for the purpose of inflating the value of their credit default swap positions or improving other unique securities positions. The complaint asserts claims for tortious interference with prospective economic advantage, declaratory judgment and breach of contract and seeks, among other things, (i) money damages (ii) a declaration that no default or event of default has occurred or is occurring and CEC and CEOC have not breached their fiduciary duties or engaged in fraudulent transfers or other violation of law, and (iii) a preliminary and permanent injunction prohibiting the defendants from taking further actions to damage CEC or CEOC. CEC and CEOC filed an amended complaint in September 2014 adding successor trustee Wilmington Savings Fund Society, FSB as an additional defendant, and also expanded upon certain of CEC's and CEOC's affirmative claims. The defendants moved to dismiss this action on October 15, 2014. We have been informed by CEC and CEOC that they will oppose that motion.

CAUTIONARY STATEMENT PURSUANT TO THE PRIVATE

SECURITIES LITIGATION REFORM ACT OF 1995

This Form 10-Q contains or may contain "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements contain words such as "may," "will," "project," "might," "expect," "believe," "anticipate," "intend," "could," "would," "estimate," "continue," or "pursue," or the negative of these words or other words or expressions of similar meaning may identify forward-looking statements and are found at various places throughout this release. These forward-looking statements, including, without limitation, those relating to future actions, new projects, strategies, future performance, the outcome of contingencies such as legal proceedings, and future financial results, wherever they occur in this Form 10-Q, are based on our current expectations about future events and are necessarily estimates reflecting the best judgment of management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements.

Investors are cautioned that forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that cannot be predicted or quantified, and, consequently, the actual performance of CAC and CGP LLC may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors, as well as other factors described from time to time in the Company’s reports filed with the Securities and Exchange Commission (including the sections entitled "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" contained herein and therein):


•	construction factors, including delays, increased costs of labor and materials, availability of labor and materials, zoning issues, environmental restrictions, soil and water conditions, weather and other hazards, site access matters, and building permit issues, including the renovation of The LINQ Hotel & Casino;


•	CAC and CGP LLC's dependence on Caesars Entertainment and its subsidiaries to provide support and services, as well as CGP LLC's dependence on Caesars Entertainment’s senior management’s expertise and its participation in Caesars Entertainment’s Total Rewards loyalty program;


•	the adverse effects if Caesars Entertainment or any of its subsidiaries were to default on certain debt obligations;


•	the adverse effects if Caesars Entertainment or any of its subsidiaries were to file for bankruptcy or be subjected to an involuntary bankruptcy by its creditors;


•	Caesars Entertainment's interests may conflict with CGP LLC’s interests and Caesars Entertainment may possibly keep all potential development opportunities for itself;


•	the effects if a third-party successfully challenges Caesars Entertainment or its affiliates ownership of, or right to use, the intellectual property owned or used by subsidiaries of Caesars Entertainment, which CIE licenses for use in its businesses;


•	CIE's reliance on its affiliate relationship with subsidiaries of Caesars Entertainment to obtain and/or maintain online gaming licenses by virtue of such subsidiaries ownership of a physical gaming facility in certain jurisdictions, such as New Jersey;


•	the difficulty of operating CGP LLC’s business separately from Caesars Entertainment and managing that process effectively could take up a significant amount of management’s time;


•	CGP LLC's business model and short operating history;


•	CGP LLC's ability to realize the anticipated benefits of current or potential future acquisitions and the ability to timely and cost-effectively integrate assets and companies that CGP LLC acquires into its operations;


•	the adverse effects of extensive governmental regulation and taxation policies, which are applicable to CGP LLC;


•	the effects of local and national economic, credit and capital market conditions on the economy in general, and on the gaming and interactive gaming industries in particular;


•	the sensitivity of CGP LLC’s business to reductions in discretionary consumer spending;


•	the rapidly growing and changing industry in which CGP LLC operates, such as CIE's social and mobile games business and internet gaming business;


•	any failure to protect CGP LLC’s trademarks or other intellectual property, such as CIE's ownership of the WSOP trademark;


•	abnormal gaming holds ("gaming hold" is the amount of money that is retained by the casino from wagers by customers);


•	the effects of competition, including locations of competitors and operating and market competition, particularly the intense competition our Las Vegas assets face from other hotel casino resorts in Las Vegas and the competition Horseshoe Baltimore faces from other regional casinos and resorts;


•	the uncertainty surrounding whether CIE’s games, such as Slotomania, will retain their popularity;


•	CIE's ability to launch new games on new and emerging platforms;


•	CIE's reliance on a small portion of its total players for nearly all of its revenue from its social and mobile games;


•	evolving regulations concerning the social and mobile games industry as well as data privacy, including, but not limited to, the effect of U.S. and foreign laws, some of which are unsettled and still developing;


•	the low barriers to entry and intense competition of social and mobile games industry could have adverse effect on CIE and CGP LLC;


•	the effect on CGP LLC's business strategy if real money online poker is not legalized in states other than Delaware, Nevada or New Jersey in the United States; and


•	political and economic uncertainty created by terrorist attacks and other acts of war or hostility.

Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. CAC disclaims any obligation to update the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated or, if no date is stated, as of the date of this Form 10-Q.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

CAESARS ACQUISITION COMPANY

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, currency exchange rates and commodity prices.

Market Risks Related to Interest Rates

CAC's primary exposure to market risk is related to interest rate risk associated with its investments in debt securities included as a component of equity in our Condensed Balance Sheets. As these investments are not diversified across industries or companies, CAC is subject to a significant concentration of credit risk.

CAC does not purchase or hold any derivative financial instruments for hedging or trading purposes.

CAESARS GROWTH PARTNERS, LLC

Market Risks Related to Interest Rates

CGPH has an interest rate cap agreement for a notional amount of $501.4 million at a LIBOR cap rate of 7.0%, which matures on April 9, 2015. Caesars Interactive has an unsecured credit facility with Caesars Entertainment with an outstanding balance of $39.8 million at a rate of LIBOR plus 5%, which matures on November 29, 2016. Assuming a constant outstanding balance for our variable rate debt with both third parties and with related parties, a hypothetical 1% increase in interest rates would increase interest expense for the next twelve months by $2.2 million. At September 30, 2014, the weighted average USD LIBOR rate on our variable rate debt was 0.18%. A hypothetical reduction of this rate to 0% would immaterially decrease interest expense for the next twelve months.

CGP LLC does not purchase or hold any derivative financial instruments for trading purposes.

Market Risks Related to Foreign Currency

CGP LLC’s foreign currency risk primarily relates to social and mobile games revenue generated outside of the United States, operating expenses of CIE's offices in Montreal, Tel Aviv, Belarus, Ukraine, and the United Kingdom ("UK"), and cash denominated in foreign currencies. Approximately 39% of CIE’s year-to-date social and mobile games revenue is generated outside of the United States, and approximately 3% of CGP LLC’s Cash and cash equivalents balance is denominated in currencies other than the US Dollar.

For the three and nine months ended September 30, 2014, CGP LLC recognized a loss of $2.6 million in each period related to transactions denominated in foreign currencies. This loss is primarily associated with the strength of the US Dollar when compared to the Israeli New Shekel during the three months ended September 30, 2014. For the three and nine months ended September 30, 2013, Predecessor Growth Partners recognized a gain of $0.2 million in each period related to transactions denominated in foreign currencies.

The SEC staff has indicated that the Belarus economy should be treated as highly inflationary as defined under GAAP. While we have operations in Belarus, we do not consider them to be material to our financial results.

Item 4. Controls and Procedures

Our principal executive officer and principal financial officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act")), as of September 30, 2014, including controls and procedures to timely alert management to material information relating to the Company required to be included in our periodic SEC filings. Based on such evaluation, they have concluded that, as of such date, our disclosure controls and procedures were effective.

There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

There have been no material changes in our legal proceedings from those described in Legal Proceedings disclosed in our Annual Report on Form 10-K for the year ended December 31, 2013 except as described below.

CEOC First and Second Lien Note Holder Litigation

On August 4, 2014, Wilmington Savings Fund Society, FSB, solely in its capacity as successor Indenture Trustee for the Notes, on behalf of itself and, it alleges, derivatively on behalf of CEOC, filed a lawsuit in the Court of Chancery in the State of Delaware against CAC, CGP LLC, CEC, CEOC, CERP, CES, Eric Hession, Gary Loveman, Jeffrey D. Benjamin, David Bonderman, Kelvin L. Davis, Marc C. Rowan, David B. Sambur, and Eric Press. The lawsuit alleges claims for breach of contract, intentional and constructive fraudulent transfer, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and corporate waste. The lawsuit seeks (i) an award of money damages; (ii) to void certain transfers, the earliest of which dates back to 2010; (iii) an injunction directing the recipients of the assets in these transactions to return them to CEOC; (iv) a declaration that CEC remains liable under the parent guarantee formerly applicable to the Notes; (v) to impose a constructive trust or equitable lien on the transferred assets; and (vi) an award to plaintiffs for their attorneys’ fees and costs. CAC believes this lawsuit is without merit and will defend itself vigorously. A motion to dismiss this action was filed by CAC and other defendants on September 23, 2014, and plaintiff Wilmington Savings Fund responded to that motion on October 17, 2014. A hearing on defendants' motion is currently scheduled for December 5, 2014.

See Item 1A. Risk Factors—Risks Related to Caesars Growth Partners, LLC's Business—We are, or may become involved, in legal proceedings that if adversely adjudicated or settled, could impact our financial condition.

Item 1A. Risk Factors

Risks Related to CGP LLC's Continued Dependence on Caesars Entertainment

The implementation of a new services joint venture is subject to regulatory and other approvals, which may be delayed or which may not be received.

We previously announced the formation of a new services joint venture, CES, the purpose of which includes the common management of intellectual property owned by CEOC. CEOC and CERP, each a wholly-owned subsidiary of Caesars Entertainment, and a subsidiary of CGP LLC are members in CES, and, upon the implementation of CES, CES will provide subsidiaries of CGP LLC with intellectual property licenses and property management services, among other services. We and CGP LLC will not control CES, and in the event that our interests do not align with those of CEOC or CERP, the interests of CEOC or CERP may be met before ours. The implementation of CES’s contemplated activities is subject to regulatory and other approvals, which may be delayed, not received or following receipt, subsequently revoked.

The property management agreements have been assigned to CES, and CES will perform the obligations of the property managers at each of the respective Acquired Properties. Before CES can be implemented and commence these activities, however, CES, and the assumption of property manager’s duties under the property management agreements must receive regulatory approvals. We cannot be sure when, or if, we will receive such approvals.

In the event CES or the activities described above are delayed or are not implemented for any other reason, we will continue to rely on CEOC and its subsidiaries to provide us with licenses to necessary intellectual property, property management services and other various services. We do not exercise any control over CEOC and cannot guarantee that it will protect our interests in continuing to provide these services. In addition, if CEOC or its subsidiaries were to become debtors operating under the protection of the Bankruptcy Code, they could exercise certain rights that would adversely affect our contractual rights and obligations related to the intellectual property licenses or property management services.

We do not control CES, and the interests of our co-investors may not align with our interests.

CEOC, CERP and a subsidiary of CGP LLC are members of CES, and, upon the implementation of CES, each of us and our subsidiaries will rely on CES to provide us with intellectual property licenses and property management services, among other services. Each member of CES is required to contribute as necessary to fund CES’s operating costs and capital requirements and at least annually, in accordance with the terms of the operating agreement that will govern CES. The amount we will be required to fund following our initial contribution may be greater than our initial contribution, and will be subject to the review and approval of the CES steering committee. A subsidiary of CGP LLC, CEOC and CERP control CES through its steering committee, which will be comprised of one representative from each of CGP LLC, CEOC and CERP. In the event that our interests do not align with those of CEOC or CERP, the interests of CEOC or CERP may be met before ours. In addition, certain decisions by CES may not be made without unanimous consent of the Members, including our consent. These actions include any decision with respect to liquidation or dissolution of CES, merger, consolidation or sale of all or substantially all the assets of CES, usage of CES assets in a manner inconsistent with the purposes of CES, material amendment to CES’s operating agreement, admission of new investors to CES and filing of any bankruptcy or similar action by CES. Thus, any Member of CES may block those actions requiring unanimous consent of the Members of CES notwithstanding that such actions are in our interest.

CGP LLC is dependent on the expertise of Caesars Entertainment's senior management, who may not be directly invested in CGP LLC's success, which may have an adverse effect on CGP LLC and/or CAC’s business, financial condition and operating results.

CGP LLC relies a great deal on the expertise and guidance of Caesars Entertainment's senior management who do not receive direct compensation from CGP LLC. As a result, Caesars Entertainment's senior management may devote substantially less time to the business and operations of CGP LLC than were they to be employed by CGP LLC. Senior management that is not invested in the success of CGP LLC's business may have an adverse effect on CGP LLC and/or CAC’s business, financial condition and operating results.

Loss of the services of any key personnel from Caesars Entertainment could have a material adverse effect on the business of CGP LLC.

The leadership of Caesars Entertainment's chief executive officer, Mr. Gary Loveman, and other executive officers, has been a critical element of Caesars Entertainment's success. The advisory and management services provided to CGP LLC depend on these key executive officers. The death or disability of Mr. Loveman or other extended or permanent loss of his services, or any negative market or industry perception with respect to him or arising from his loss, could have a material adverse effect on CGP LLC's business. Caesars Entertainment's other executive officers and other members of senior management have substantial experience and expertise in the casino and online entertainment business. The unexpected loss of services of one or more of these individuals could also adversely affect CGP LLC. CGP LLC is not protected by key man insurance or similar life insurance covering members of Caesars Entertainment's senior management, nor does CGP LLC have employment agreements with any of Caesars Entertainments executive officers.

A default by Caesars Entertainment on certain of its debt obligations could adversely affect CGP LLC's business, financial condition and operating results.

Caesars Entertainment is a highly leveraged company and has pledged a significant portion of its assets and the assets of its subsidiaries as collateral under certain of its debt obligations, including the trademarks for which CAC and its subsidiaries, CGP LLC and its subsidiaries, and CIE and its subsidiaries have licensed the right to use, including "Caesars," "Total Rewards" and "Harrah's." The stock of CEOC is also pledged to secure these debt obligations. If Caesars Entertainment or its subsidiaries were to default on these obligations, its lenders could exercise significant influence over CGP LLC's business. CGP LLC is dependent on a number of services from Caesars Entertainment, CEOC, and other subsidiaries of Caesars Entertainment, pursuant to the CGP Management Services Agreement and CIE's Shared Services Agreement. If Caesars Entertainment and/or its subsidiaries file for bankruptcy protection under the US bankruptcy code, their filing may materially and adversely affect CGP LLC’s assets and operations. For example, in the event of a default by Caesars Entertainment, its lenders or their successors may elect to reject either or both of the CGP Management Services Agreement and CIE's Shared Services Agreement as an executory contract in a bankruptcy proceeding. Furthermore, in the event of such a default, Caesars Entertainment's lenders also may seek to reject CIE's cross marketing and trademark license agreement with Caesars Entertainment in connection with a bankruptcy proceeding and, as a result, CIE would no longer have licenses to use certain trademarks owned by Caesars Entertainment or its subsidiaries. The result of this influence and any related disruption in CGP LLC's business could have a material adverse effect on CGP LLC's business, financial condition and operating results.

The value of the CEOC Notes held by CAC would be impaired in the event of a default by Caesars Entertainment on certain of its debt obligations and such impairment could adversely affect the market price of our Class A common stock.

Caesars Entertainment is a highly leveraged company and has significant obligations for interest payments and restrictions due to its indebtedness. If Caesars Entertainment or CEOC is unable to pay the interest when due under their outstanding indebtedness, or otherwise defaults on their debt obligations, the value of the CEOC Notes held by CAC would be impaired. Because the CEOC Notes constitute a significant portion of the value of CAC, an impairment in the value of the CEOC Notes could adversely affect the market price of our Class A common stock.

CGP LLC has an obligation to give a right of first offer for any development opportunities to Caesars Entertainment, but Caesars Entertainment has no obligation to give any development opportunities to CGP LLC. Caesars Entertainment may keep all potential development opportunities for itself. CGP LLC would need to rely on a separate party to pursue any opportunities without the approval and assistance of Caesars Entertainment.

CGP LLC is required to first provide any potential development opportunities to Caesars Entertainment to be considered by a committee of the Caesars Entertainment board of directors comprised of disinterested directors. CGP LLC can only proceed with such investment or opportunity to the extent such Caesars Entertainment committee declines the opportunity for itself or CEOC. If the committee provides and CGP LLC accepts the opportunity, CGP LLC will retain a 50% interest in the management fee to be received by Caesars Entertainment, unless otherwise agreed. However, because each opportunity will be negotiated as a separate transaction, there can be no assurances that CGP LLC and Caesars Entertainment will share equally (or that CGP LLC will share at all) in the management fee. If the committee does not provide the opportunity to CGP LLC, the Caesars Entertainment committee can also decide to keep the opportunity for Caesars Entertainment. No assurances can be provided that the Caesars Entertainment committee will ever provide an opportunity to CGP LLC.

Although certain employees of each of Apollo Global Management, LLC ("Apollo") and of TPG Global, LLC ("TPG" and, together with Apollo, the "Sponsors") are on the boards of directors of Caesars Entertainment and CAC, the certificates of incorporation of both companies provide that neither the Sponsors nor directors have any obligation to present any corporate opportunity to Caesars Entertainment or CAC. Accordingly, the Sponsors may pursue gaming, entertainment or other activities outside of Caesars Entertainment or CAC and have no obligation to present such opportunity to Caesars Entertainment or CAC; however, if any choose to present such opportunity to Caesars Entertainment or CAC, then such opportunity must follow the rights of first offer.

If the committee declines an opportunity altogether and CGP LLC pursues the opportunity without the support of Caesars Entertainment, CGP LLC will be required to identify and obtain the necessary services from a third-party. No assurances can be provided that CGP LLC will be able to find a third-party to pursue an opportunity without Caesars Entertainment and any services provided may be more expensive than, or of lesser quality than, those that are provided by Caesars Entertainment, and as a result, could have a material adverse impact on the success of the opportunity.

Caesars Entertainment's interests may conflict with CGP LLC’s interests.

The interests of Caesars Entertainment could conflict with CGP LLC's interests. Caesars Entertainment is in a casino and entertainment business similar to CGP LLC and may, from time to time in the future, pursue for itself acquisitions that would be complementary to CGP LLC's business, in which case, and as a result, those acquisition opportunities would not be available to us. Without access to acquisition opportunities, CGP LLC will be limited in growing its business.

The success of CGP LLC's business depends in part on its continued participation in Caesars Entertainment's Total Rewards loyalty program. If CIE, the Acquired Properties and Horseshoe Baltimore are unable to access the Total Rewards loyalty program database, it could have a material adverse impact on CGP LLC's business.

The success of CGP LLC's business depends in part on its ability to direct targeted marketing efforts to important casino, online-gaming and hospitality customers. The ability of CGP LLC's business to undertake those marketing efforts depends to a significant extent on its continued participation in the Total Rewards loyalty program owned and maintained by Caesars Entertainment and following its implementation, licensed to CES. In connection with this program, CIE, the Acquired Properties and Horseshoe Baltimore can develop information which allows them to track casino play and award complimentaries and other promotional opportunities to their customers. Complimentaries and other similar rewards are customarily offered by casino and gaming facilities to their customers and are important incentives to those customers. If CIE, Horseshoe Baltimore and the Acquired Properties are unable to access the Total Rewards loyalty program database, it could have a material adverse impact on CGP LLC's business. Participation in the Total Rewards loyalty program is one of our competitive strengths and our business and growth strategy are, in part, based on tracked play and targeted marketing efforts.

In the past, the removal of the Total Rewards loyalty program from a casino property has resulted in negative impacts on such property’s financial results. Similarly, if we are unable to access the Total Rewards loyalty program database, we expect our annual revenue would decline, which could have a material adverse impact on our business and results of operations.

CIE and CGP LLC license their respective right to use and sublicense various trademarks and service marks from Caesars Entertainment and certain of its affiliates. Accordingly, if a third-party successfully challenges Caesars Entertainment or its affiliates' ownership of, or right to use, the Caesars-related marks or if CIE or CGP LLC is unable to stop unauthorized use of such marks, or if Caesars Entertainment or its affiliates use such marks in a way that negatively impacts the value of such marks, CGP LLC’s, and CIE's, and therefore CGP LLC's, business or results of operations could be harmed.

CGP LLC and CIE have each licensed the right to use certain trademarks and service marks owned or used by various affiliates of Caesars Entertainment, including Caesars World, Inc., Caesars License Company, LLC and CEOC. These licensed trademarks and service marks include, among others, "Caesars," "Harrah’s" "Bally’s" and "Total Rewards." CGP LLC’s rights and CIE's rights to use these trademarks and service marks are among each company’s most valuable assets.

If the existing licensing arrangements were terminated and CGP LLC or CIE, as applicable, fails to enter into new arrangements in respect of these marks, CGP LLC or CIE could lose its respective rights to use these marks and the corresponding domain names, which could have a material adverse effect on its business, financial condition and operating results. If a third-party successfully challenges Caesars Entertainment or its affiliates’ ownership of, or right to use, these marks (including, for example, due to Caesars Entertainment or its affiliates’ failure to file for protection of such marks), such a challenge could also have a material adverse effect on CGP LLC’s and CIE's, and therefore CGP LLC's, business, financial condition and operating results. Furthermore, if any of the entities from whom CGP LLC or CIE licenses the right to use such marks enters into a bankruptcy proceeding, its rights to use some or all of such marks could be terminated, which could also have a material adverse effect on CGP LLC’s and CIE's, and therefore CGP LLC's, business, financial condition and operating results.

In addition, these trademarks and service marks are used by Caesars Entertainment and its affiliates around the United States and internationally. Any negative events associated with the use of these marks by Caesars Entertainment or its affiliates may be out of CGP LLC's control, and may negatively impact the "Caesars," "Harrah’s" "Bally’s" or "Total Rewards" brands, which could harm CGP LLC’s and CIE's, and therefore CGP LLC's, business and results of operations

Failure by CES or CEOC and its subsidiaries to protect the trademarks, technology and other intellectual property that we use could have a negative impact on the value of our brand names and adversely affect our business. In addition, CES or CEOC and its subsidiaries may have the right to limit the expansion of scope or usage of our intellectual property.

We currently license from CES and CEOC and its subsidiaries, intellectual property and technology material to our overall business strategy, and we regard such intellectual property and technology to be an important element of our success. We rely on CES and CEOC and its subsidiaries to seek to establish and maintain proprietary rights in such intellectual property and technology through the use of patents, copyrights, trademarks and trade secret laws. In addition, we rely on CES and CEOC and its subsidiaries to maintain the trade secrets and confidential information licensed to us by nondisclosure policies and through the use of appropriate confidentiality agreements. Despite these efforts to protect the proprietary rights on which we rely, parties may infringe such intellectual property and use licensed information and technology that we regard as proprietary and our rights may be invalidated or unenforceable. Monitoring the unauthorized use of our licensed intellectual property and technology is difficult. Litigation by CEOC and its subsidiaries or CES, as applicable, may be necessary to enforce the intellectual property rights and other rights on which we rely or to determine the validity and scope of the proprietary rights of others. Litigation of this type could result in substantial costs and diversion of resources. We cannot assure you that all of the steps that we, CEOC and its subsidiaries or CES have taken or will take to protect the licensed trademarks that we use in the United States will be adequate to prevent imitation of such trademarks by others. The unauthorized use or reproduction of the trademarks that we use could diminish the value of our brand and our market acceptance, competitive advantages or goodwill, which could adversely affect our business. In addition, the expansion of the scope or use of our intellectual property licensed from CEOC or CES, as applicable, in many cases is subject to the consent of CEOC or CES. Accordingly, we may not be able to take advantage of new applications or uses of these licensed trade names, trademarks or other intellectual property without the consent of CEOC or CES, which may adversely affect our ability to compete or expand our business scope.

CIE may be reliant on Caesars Entertainment to obtain online gaming licenses in many commercial jurisdictions and if the affiliation is terminated, or costs to maintain such affiliation exceed revenue generated from such affiliation, it would adversely affect CIE's, and therefore CGP LLC's, business and result of operations.

Nevada, Delaware and New Jersey have enacted laws that require online casinos to also have a license to operate a brick-and-mortar casino, either directly or indirectly through an affiliate. If, like Nevada, Delaware and New Jersey, other US jurisdictions enact legislation legalizing real money casino gaming subject to this brick-and-mortar requirement, CIE may be unable to offer online real money gaming in such jurisdictions if CIE does not have or is unable to establish an affiliation with a brick-and-mortar casino in such jurisdiction. If CIE is able to offer online real money gaming in such jurisdictions because of CIE's affiliation with Caesars Entertainment, CIE may be reliant on continuing its relationship with Caesars Entertainment, and there can be no assurances that Caesars Entertainment will continue to maintain such affiliation. If CIE's affiliation with Caesars

Entertainment is terminated or the costs to maintain such affiliation exceed revenue generated from online real money gaming, it would adversely affect CIE's, and therefore CGP LLC's, business and result of operations.

A bankruptcy court may conclude that each of the transactions as described in Item 1 - Business of our Annual Report on Form 10-K for the year ended December 31, 2013, the Acquired Properties Transaction or the Harrah’s Transaction constitutes a financing rather than a true sale and as a result we would no longer have ownership and control over assets sold or contributed to CGP LLC to the same extent as we do now.

For the nine months ended September 30, 2014 and 2013, Caesars Entertainment and its consolidated subsidiaries reported a net loss of $1,795.7 million and $1,187.8 million, respectively, and CEOC and its consolidated subsidiaries separately reported a net loss of $1,651.2 million and $1,679.0 million, respectively. Furthermore, Caesars Entertainment and its consolidated subsidiaries, as well as CEOC and its consolidated subsidiaries, have reported significant net losses during the past three fiscal years. In a bankruptcy of Caesars Entertainment or any of its subsidiaries that sold or contributed assets to CGP LLC, including CEOC, the court may conclude that each of the transactions as described in Item 1 - Business of our Annual Report on Form 10-K for the year ended December 31, 2013, the Acquired Properties Transaction or the Harrah's Transaction constitutes a disguised financing rather than a true sale. In such case, the court would deem CGP LLC's assets as belonging to Caesars Entertainment, and consider us to be a lender to Caesars Entertainment or its subsidiaries to the extent of the purchase price CGP LLC paid for those assets. While we should have a claim against Caesars Entertainment and its subsidiaries for the amounts paid to them for the assets, we would no longer have ownership and control over the assets to the same extent as we do now. Moreover, if our claim against Caesars Entertainment and its subsidiaries is considered a financing, no guaranty exists that our claim will be deemed a secured claim entitled to a priority right of repayment from the assets, rather than a general unsecured claim against Caesars Entertainment’s bankruptcy estate that shares pro-rata with other creditors in any recovery from the residual value of the bankruptcy estate. Finally, a risk exists that any such claim might be primed in favor of a debtor-in-possession financing, or that the court might equitably subordinate our claim to those of other creditors, recharacterize the claim as equity or otherwise not allow the claim (including on equitable grounds).

A bankruptcy court may substantively consolidate the bankruptcy estates of Caesars Entertainment and its debtor subsidiaries with CGP LLC, which would, among other things, allow the creditors of the bankrupt entities to satisfy their claims from the combined assets of the consolidated entities, including CGP LLC.

Even though CGP LLC has certain bankruptcy remote features that restrict its ability to file for bankruptcy relief, there can be no assurance that a bankruptcy court will not direct CGP LLC's or any of its subsidiaries' substantive consolidation with Caesars Entertainment or a subsidiary of Caesars Entertainment in a bankruptcy case of Caesars Entertainment or such subsidiary even if CGP LLC or its subsidiaries do not themselves file a bankruptcy petition. CGP LLC's or its subsidiaries' substantive consolidation with Caesars Entertainment or its subsidiaries in their bankruptcy cases would, among other things, allow the creditors of the bankrupt entities to satisfy their claims from the combined assets of the consolidated entities, including CGP LLC and its subsidiaries. This may dilute the value of distributions available for recovery to CGP LLC's creditors, and may prevent recovery by our stockholders of any value at all if the combined creditor claims exceed the combined value of the entities. In addition, substantive consolidation with Caesars Entertainment or its subsidiaries’ bankruptcies may subject our assets and operations to the automatic stay, and may impair CGP LLC's ability to operate independently, as well as otherwise restrict our operations and capacity to function as a standalone enterprise.

A Caesars Entertainment or CEOC bankruptcy filing might trigger an independent investigation of the transactions as described in Item 1 - Business of our Annual Report on Form 10-K for the year ended December 31, 2013 ("Transactions"), the Acquired Properties Transaction or the Harrah’s Transaction, and expose our and CGP LLC's contractual relationships with Caesars Entertainment and its subsidiaries to heightened scrutiny.

If Caesars Entertainment or its subsidiaries, including CEOC, file for bankruptcy relief, it may result in an independent investigation of the transactions as described in Item 1 - Business of our Annual Report on Form 10-K for the year ended December 31, 2013, the Acquired Properties Transaction or the Harrah’s Transaction, including the formation of CES. For example, a trustee or examiner may be appointed in the Caesars Entertainment bankruptcy case with the power to investigate the Transactions and the Acquired Properties Transaction and Harrah’s Transaction and determine, with the benefit of hindsight, whether such transactions overall, and their constituent parts (including the formation of CES), were fair and equitable and otherwise beneficial to Caesars Entertainment or any bankrupt subsidiary. Additionally, any committees appointed in such bankruptcy case could conduct a similar investigation. Any such investigations may impose significant costs and expense on us and CGP LLC, and may divert management from its ability to conduct our business. In addition, we would expect that stakeholders of Caesars Entertainment and its subsidiaries, including any committee appointed in such bankruptcy cases, would re-evaluate all of our and CGP LLC's contractual and business relationships with Caesars Entertainment and its subsidiaries, and with CES. This may result in materially altered terms and conditions that may be economically unfavorable to investors in CAC, and may divert significant management resources.

We are subject to fraudulent transfer litigation that, if adversely decided, may require us to return the assets acquired in the transactions as described in Item 1 - Business of our Annual Report on Form 10-K for the year ended December 31, 2013 and the Acquired Properties Transaction and Harrah’s Transaction, or their value, to Caesars Entertainment and its subsidiaries.

Creditors of Caesars Entertainment and its subsidiaries have sued us and CGP LLC under state law in an effort to recover, for their benefit, the assets we acquired in the transactions as described in Item 1 - Business of our Annual Report on Form 10-K for the year ended December 31, 2013 and the Acquired Properties Transaction and Harrah’s Transaction as fraudulent transfers. See Item 1. Legal Proceedings above for a discussion of these proceedings. As a general matter, fraudulent transfer law allows a creditor to recover assets, or their value, from an initial or subsequent transferee if the debtor conveyed the assets with an actual intent to hinder, delay or defraud its creditors, or if the transfer was a constructive fraud. A constructive fraud exists even in the absence of an actual intent to defraud creditors. The principal elements of a constructive fraud are a transfer, made while a debtor was insolvent or that rendered a debtor insolvent, for less than reasonably equivalent value or fair consideration or that left the debtor with less than sufficient capital with which to conduct its business. A court may "collapse" the component steps of the restructuring into a single set of integrated transactions to determine whether the restructuring overall effected a fraudulent transfer. If a decision rendered in the previously described litigation is adverse to CAC and/or CGP LLC, it is possible that we and/or CGP LLC may have to return the assets subject to such legal proceedings, or their value to Caesars Entertainment and its subsidiaries, or be forced to pay additional amounts therefor.

CAC and CGP LLC strongly believe there is no merit to the actions identified in Item 1. Legal Proceedings and will defend themselves vigorously and seek appropriate relief should any action be brought. If a court were to order rescission or termination of such transactions, that could cause CEOC and CERP to default under existing debt agreements, and there can be no assurance that CEOC’s or CERP’s assets would be sufficient to repay the applicable debt. In addition, if a court were to find that those transfers were improper, that could trigger a default under the debt that CGP LLC raised to finance these transfers. These consequences could have a material adverse effect on our business, financial condition, results of operations and prospects.

CES may be subject to fraudulent transfer or other litigation that may result in its unwinding, or its licensing agreements with CEOC may otherwise be rescinded or terminated.

Creditors of Caesars Entertainment, CEOC and their subsidiaries may commence an action against CES under state or federal bankruptcy law in an effort to rescind, avoid or otherwise terminate, for their benefit, the licensing agreements CEOC entered into with CES. Alternatively, if Caesars Entertainment, CEOC or their subsidiaries file bankruptcy, they may reject their licensing agreements with CES. If CES can no longer enforce such licensing agreements, it may be unable to perform under its licensing agreements with CGP LLC and its subsidiaries. As a result, among other things, CGP LLC and its subsidiaries may no longer have access to the Total Rewards loyalty program and may no longer be able to use certain intellectual property, such as the Caesars trademark, which could have a material adverse effect on CAC and CGP LLC’s business, financial condition and operating results.

Our operations depend on material contracts with third parties, including Caesars Entertainment, the continued enforcement of which may be adversely impacted by a bankruptcy of Caesars Entertainment or CES.

If Caesars Entertainment, CEOC, subsidiaries of CEOC that manage CGP LLC's properties or other third parties with whom we have entered into material contracts with were to become debtors operating under the protection of the Bankruptcy Code, they could exercise certain rights that would adversely affect our contractual rights and obligations. A debtor operating under the protection of the Bankruptcy Code may exercise certain rights that may adversely affect our contractual relations and ability to participate in the Caesars Entertainment system. For example, the protection of the statutory automatic stay which arises by operation of section 362 of the Bankruptcy Code upon the commencement of a bankruptcy case by CEC or any of its subsidiaries or by CEC, respectively, would prohibit us from terminating a contract with Caesars Entertainment or any of its debtor subsidiaries, or any contract with CES. The Bankruptcy Code also invalidates clauses that permit the termination of contracts automatically upon the filing by one of the parties of a bankruptcy petition or which are conditioned on a party’s insolvency. Meanwhile in this circumstance, we would ordinarily be required to continue performing our obligations under such agreement. As a practical matter, legal proceedings to obtain relief from the automatic stay and to enforce rights to payments or terminate agreements can be time consuming, costly and uncertain as to outcome.

In addition, under section 365 of the Bankruptcy Code, a debtor may decide whether to assume or reject an executory contract, including the CGP Management Services Agreement, the management contracts for Horseshoe Baltimore and the Acquired Properties, the shared service agreement with CIE, the CGP Operating Agreement or the agreements completed in connection with the formation and implementation of CES. Assumption of a contract would permit the debtor to continue operating under the assumed contract; provided that the debtor (i) immediately cures all existing defaults thereunder or provides adequate assurance that such defaults will be promptly cured, (ii) compensates the non-debtor party for any actual monetary loss incurred as a result of the debtor’s default or provides adequate assurance that such compensation will be forthcoming and (iii)

provides the non-debtor party with adequate assurance of future performance under the contract. As a general matter, a bankruptcy court approves a debtor’s assumption of a contract as long as assumption appears to be in the best interest of the debtor's estate, the debtor is able to perform and it is a good business decision to assume the contract. Subject to bankruptcy court approval and satisfaction of the "business judgment" rule, a debtor in chapter 11 may reject an executory contract, and rejection of an executory contract in a chapter 7 case may occur automatically by operation of law. If a debtor rejects an executory contract, the non-debtor party to the contract generally has an unsecured claim against the debtor’s bankruptcy estate for breach of contract damages arising from the rejection. On request of any party to such contract, a bankruptcy court may order the debtor to determine within a specific period of time whether to assume or reject an executory contract.

Further, Caesars Entertainment or any of its subsidiaries, as debtors, or upon its implementation, CES, as a debtor, may seek bankruptcy court approval to assume material contracts, including among others, the CGP Management Services Agreement or other valuable license agreements under section 365 of the Bankruptcy Code and may also seek to assign such agreement to a third-party. A debtor may also seek to reject such contracts. If Caesars Entertainment or an applicable debtor subsidiary, or upon its implementation, CES, rejects as may be applicable, the CGP Management Services Agreement or other license agreements, we may no longer have access to the operational support and management expertise provided by Caesars Entertainment and its subsidiaries, or upon its implementation, CES, with the result that we may lack sufficient support to manage our operations, and may no longer be able to use certain licensed intellectual property, such as certain trademarks.

In addition, Caesars Entertainment, as a debtor, may attempt to reject the CGP Operating Agreement as an executory contract. This might affect our continued existence, and other corporate governance rights. It may also relieve Caesars Entertainment from performing its obligations under CGP LLC's limited liability company agreement, including honoring its obligations under the liquidation right and call right.

In a bankruptcy of CEOC, CEOC could attempt to transfer licensed trademarks and copyrighted materials licensed to CGP LLC or CES to a purchaser and/or seek to reject any related license.

Upon the implementation of CES, we will rely on the Cross-License Agreement among us, CEOC, CERP, CES and others in order to use Caesars Entertainment’s and its subsidiaries’ brand names, such as "Harrah’s," "Bally’s" and "Total Rewards." These brand names have global recognition and attract customers to CGP LLC's properties. We would be adversely affected if the Cross-License Agreement were terminated.

If CEOC were to become a debtor in a case under the Bankruptcy Code, it (or a bankruptcy trustee if one is appointed) could seek to sell its trademarks and copyright assets in a bankruptcy case, free and clear of all interests of third parties such as CGP LLC or CES, or could seek to reject the Cross-License Agreement as an executory contract, in each case, pursuant to the Bankruptcy Code.

Although Section 365(n) of the Bankruptcy Code gives a licensee of intellectual property, such as copyrighted materials, the ability to retain its rights under such license notwithstanding the bankrupt debtor’s rejection of such license, Section 365(n) does not explicitly apply to licensees of trademarks. Because trademarks will be licensed under the Cross-License Agreement, there is a possibility that CEOC will be able to reject the Cross-License Agreement as an executory contract in bankruptcy, even if we try to assert, among other things, that it is not subject to rejection because it is not executory and/or claim protection under Section 365(n). If CEOC (or a bankruptcy trustee if one is appointed) is successful in rejecting the Cross-License Agreement in bankruptcy, we may no longer be able to use the valuable trademarks and other intellectual property licensed to us under the Cross-License Agreement. Such a course of action could have a material, adverse effect on CGP LLC’s business, financial condition, results of operations and prospects and on CGP LLC’s ability to pay outstanding principal of and interest on the Notes.

In addition, there can be no assurance that CEOC (or a bankruptcy trustee if one is appointed) would not attempt to sell the licensed trademarks and copyrighted materials licensed to CGP LLC, or CES, as applicable, free and clear of a licensee’s rights under the Bankruptcy Code, which may adversely affect our ability to exploit and use such intellectual property assets. Such a course of action could cause actual results to differ materially and adversely from the projected financial information contained in this offering memorandum and have a material, adverse effect on CGP LLC’s business, financial condition, results of operations and prospects and on CGP LLC’s ability to pay outstanding principal of and interest on the Notes.

Claims of our stockholders and CGP LLC against Caesars Entertainment or its subsidiaries in a Caesars Entertainment bankruptcy might be equitably subordinated or disallowed.

Bankruptcy law allows the court to equitably subordinate claims to those of other creditors or equity holders based on inequitable conduct. A bankruptcy court may also recharacterize a claim for debt as equity, or not allow a claim for other reasons including on equitable grounds. Claims of insiders, including stockholders, are subject to heightened scrutiny and a court may find inequitable conduct in the form of overreaching or self-dealing transactions. If a claim is subordinated to those of other creditors or equity holders, or recharacterized as equity, the claim will likely receive no distribution from the bankruptcy estate unless the estate has enough assets to satisfy the non-subordinated creditors in full; a claim that is disallowed would not share in

recoveries from the estate to the extent of such disallowance. The equitably subordinated or disallowed claim need not necessarily relate to the inequitable conduct. Therefore, a damages claim arising from the rejection of an executory contract may be subordinated or disallowed based on conduct wholly unrelated to the contractual relationship itself. Under these principles, should a court determine that they are triggered in a bankruptcy of Caesars Entertainment or its subsidiaries, claims of our stockholders and CGP LLC, including claims based on notes issued by Caesars Entertainment or CEOC or guarantees by Caesars Entertainment, may not share ratably with claims from other general unsecured creditors or may be disallowed.

The SEC's investigation of a retired Deloitte & Touche ("Deloitte") partner who was formerly the advisory partner on Deloitte's audit engagement for Caesars Entertainment could result in a determination that Deloitte was not independent of Caesars Entertainment, which could also affect Deloitte's independence as it relates to CAC and CGP LLC, which may adversely affect CAC's ability to comply with certain obligations imposed by federal securities law and certain debt agreements.

Deloitte is the independent registered public accounting firm for both Caesars Entertainment and CAC and their audits report on the financial statements of CAC, CGP LLC and Predecessor Growth Partners, included within the annual report on Form 10-K and its exhibits. In April 2013, Deloitte advised Caesars Entertainment that a retired Deloitte partner who was formerly the advisory partner on Deloitte’s audit engagement for Caesars Entertainment during most of 2009 (a period not covered in this filing) is the subject of a formal investigation by the SEC. During 2009, this individual engaged in gaming activities at a Caesars Entertainment casino. Deloitte conducted a review of these gaming activities and this individual’s role as advisory partner and reported to the Audit Committee of Caesars Entertainment its conclusion that the individual’s activities did not at any time impair Deloitte's independence, because, among other considerations, these activities were not inconsistent with the SEC's independence rules and furthermore he had no substantive role in any audit or review concerning Caesars Entertainment. After Caesars Entertainment conducted its own independent review with the assistance of outside counsel, the Caesars Entertainment Audit Committee, in early May 2013, accepted Deloitte's report and concurred with Deloitte's conclusion that Deloitte's independence was and is not impaired.

If regulatory authorities were to determine that Deloitte was not independent of Caesars Entertainment and, as a result, CAC and CGP LLC, such determination may adversely affect Caesars Entertainment’s and CAC’s ability to comply with certain obligations imposed by federal securities laws and certain debt agreements, which would have a material adverse effect on CAC’s business and financial condition.

Following assignment of the agreements to CES upon its implementation as of October 1, 2014 we are dependent upon CES to operate CGP LLC's properties.

Each of CGP LLC's properties is managed by CES. We are dependent upon CES to provide the services necessary to operate CGP LLC's properties. We do not have a history of operating casinos. Therefore, CGP LLC's properties are dependent on the services provided by CES and we cannot operate CGP LLC's properties without these services. If the quality of the services provided by CES deteriorates, or the terms under which CES provides services changes in a manner that is adverse to us, it could have a material adverse effect on our business, financial condition and operating results. Following the implementation and receipt of regulatory approvals for CES, at CGP LLC’s request, the property management agreements were assigned to CES. CES is a newly formed entity and will not receive the management fees under the property management agreements. Furthermore, CES is dependent upon its members (a subsidiary of CGP LLC, CEOC and CERP) to provide it with the operating funds and capital requirements (the allocation of which shall be based on each member’s ownership interest in CES) necessary to provide services under the property management agreements. If any of the members of CES fail to provide it with the operating funds necessary to operate CES, CES may not be able to fully provide the services required by the property management agreements to operate CGP LLC's properties.

In addition, if the property management agreements were to be terminated, or if CES were to suffer significant liquidity or operational difficulties, becoming incapable of providing property management services (or unable to provide such services at agreed upon level) to us or cease operations altogether, we may be unable to continue to operate CGP LLC's properties, which would have a material adverse effect on our business, financial condition and operating results.

Risks Related to Caesars Growth Partners, LLC's Business

CGP LLC may not realize all of the anticipated benefits of current or potential future acquisitions.

On March 1, 2014, we entered into a definitive agreement whereby CGP LLC (or one or more of its designated direct or indirect subsidiaries) agreed to acquire from Caesars Entertainment certain of its properties and related assets as more fully described further in Item 1 - Business of our Annual Report on Form 10-K for the year ending December 31, 2013. On May 5, 2014, we consummated the Acquired Properties Transaction. On May 20, 2014, we consummated the Harrah’s Transaction.

CGP LLC's ability to realize the anticipated benefits of acquisitions, including, but not limited to the Acquired Properties Transaction and the Harrah’s Transaction, will depend, in part, on its ability to integrate the businesses of such

acquired companies with its business. The combination of two independent companies is a complex, costly and time consuming process. This process may disrupt the business of either or both of the companies, and may not result in the full benefits expected. The difficulties of combining the operations of two companies include, among others:


•	coordinating marketing functions;


•	undisclosed liabilities;


•	unanticipated issues in integrating information, communications and other systems;


•	unanticipated incompatibility of purchasing, marketing and administration methods;


•	retaining key employees;


•	consolidating corporate and administrative infrastructures;


•	the diversion of management’s attention from ongoing business concerns;


•	coordinating geographically separate organizations; and


•	obtaining all necessary gaming regulatory approvals.

For instance, CIE has been highly reliant on its acquisition of Playtika and other companies, including Buffalo Studios LLC ("Buffalo"), to generate revenues. CGP LLC may not realize the expected benefits of future CIE acquisitions, if any, and may not continue to realize the benefits of the Buffalo acquisition, due to one or more of the difficulties listed above or other difficulties associated with the combination of the operations of two or more companies. If CGP LLC is unable to realize in whole or in part the benefits anticipated for any current or future acquisitions, it could have a material adverse effect on its, and therefore CGP LLC's, business, financial condition and operating results.

CGP LLC may require additional capital to support business growth, and this capital might not be available on acceptable terms or at all.

CGP LLC intends to continue to make significant investments to support its business growth and may require additional funds to respond to business challenges, including the need to complete the consummation of the Acquired Properties Transaction and Harrah’s Transaction, expand into new markets, develop new games and features or enhance CIE’s existing games, improve its operating infrastructure or acquire complementary businesses, personnel and technologies. Accordingly, CAC and CGP LLC may need to engage in equity or debt financings to secure additional funds. If CAC raises additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our Class A common stock. Any debt financing we or CGP LLC secure in the future could involve restrictive covenants relating to capital raising activities and other financial and operational matters, which may make it more difficult to obtain additional capital and to pursue business opportunities, including potential acquisitions. CAC and CGP LLC are newly formed entities and may not be able to obtain additional financing on favorable terms, if at all. For instance, the lack of operating history and relationship with Caesars Entertainment may impede CGP LLC's ability to raise debt or equity financing on acceptable terms, if at all, and there can be no assurances that we could pursue a future offering of securities at an appropriate price to raise the necessary financing. If CAC and CGP LLC are unable to obtain adequate financing or financing on terms satisfactory to them when they require it, their ability to continue to support CGP LLC's business growth and to respond to business challenges could be significantly impaired, which could have a material adverse effect on CGP LLC's, business, financial condition and operating results.

CAC and CGP LLC do not have restrictions on their ability to raise debt and may highly leverage their capital structure, which could adversely affect CGP LLC's ability to pursue certain opportunities.

CAC and CGP LLC are newly formed companies without any restrictions on their ability to raise a significant amount of debt financing and/or alter their capital structures. Should CAC or CGP LLC significantly leverage themselves, CAC or CGP LLC will be subject to considerable interest payment expenses that could adversely affect our ability to obtain additional financing. Further, once CAC has a highly leveraged capital structure, CGP LLC may lose certain advantages it has against competitors that have similar capital structures that makes pursuing new, capital-intensive, opportunities more challenging.

We may not realize any or all of our projected cost savings, which would have a negative effect on our results of operations.

As part of our business strategy, we have implemented certain cost savings programs and are in the process of identifying opportunities to improve profitability by reducing costs. For example, Caesars Entertainment is currently in the process of reviewing its corporate level expenses and has identified cost savings, a portion of which would directly reduce our expenses. Any cost savings that we realize from such efforts may differ materially from our estimates. In addition, any cost savings that we realize may be offset, in whole or in part, by reductions in revenues, or through increases in other expenses. For example, cutting advertising or marketing expenses may have an unintended negative affect on our revenues. Our cost savings

plans are subject to numerous risks and uncertainties that may change at any time. We cannot assure you that cost-savings initiatives will be completed as anticipated or that the benefits we expect will be achieved on a timely basis or at all.

Our historical financial information may not be a reliable indicator of our future results.

The historical financial information we have included in this Form 10-Q has been prepared using assumptions and allocations that we believe are reasonable. However, such historical financial information does not necessarily reflect what our financial position, results of operations and cash flows would have been as a stand-alone entity separate from Caesars Entertainment during the periods presented. In addition, the historical information is not necessarily indicative of what our results of operations, financial position and cash flows will be in the future.

CGP LLC's business may be subject to seasonal fluctuations which could result in volatility or have an adverse effect on the market price of our Class A common stock.

CGP LLC's business may be subject to some degree of seasonality. For example, in the case of CIE, it may experience seasonality based on the playing habits of its players. As the growth of CIE's business stabilizes, the seasonal fluctuations may become more evident. In the case of any of CGP LLC’s bricks and mortar casinos, weather conditions may deter or prevent customers from reaching the affected facility or undertaking day trips. Such conditions would particularly affect customers who are traveling longer distances to visit the affected facility. We believe the number of customer visits to our gaming facilities will fluctuate based on the season, with winter months experiencing lower turnout. Seasonality may cause CIE and each respective gaming facility’s working capital cash flow requirements to vary from quarter to quarter depending on the variability in the volume and timing of sales. These factors, among other things, make forecasting more difficult and may adversely affect CIE and our gaming facilities ability to manage working capital and to predict financial results accurately, which could adversely affect the market price of our Class A common stock.

There may be a significant degree of difficulty in operating CGP LLC's businesses separately from Caesars Entertainment, and managing that process effectively could require a significant amount of management’s time.

The separation from Caesars Entertainment could cause an interruption of, or loss of momentum in, the operation of CGP LLC's businesses. Management may be required to devote considerable amounts of time to the separation, which will decrease the time they will have to manage their ordinary responsibilities. If management is not able to manage the separation effectively, or if any significant business activities are interrupted as a result of the separation, CGP LLC's businesses and operating results could suffer.

CGP LLC may be unable to achieve some or all of the benefits that it expects to achieve from the separation of its operations from Caesars Entertainment.

As a company with operations separate from Caesars Entertainment, we believe that CGP LLC will benefit from, among other things, allowing its businesses to better focus their financial and operational resources on their specific businesses and be better positioned to dedicate resources to pursue appropriate growth opportunities and execute strategic plans best suited to their business in an efficient manner. We believe the separation will allow the management of CIE and CGP LLC’s properties to design and implement corporate strategies and policies that are based primarily on the business characteristics and strategic decisions of their respective business, allowing them to more effectively respond to industry dynamics and allowing the creation of effective incentives for their management and employees that are more closely tied to their respective business performance. However, CGP LLC may not be able to achieve some or all of the benefits that we expect it to achieve as a company with operations separate from Caesars Entertainment in the time we expect, if at all.

We will be allocated taxable income from CGP LLC for US federal income tax purposes regardless of whether we receive corresponding cash distributions from CGP LLC to pay our tax liability.

Because CGP LLC is a partnership for US federal income tax purposes, we will be allocated taxable income from CGP LLC for US federal income tax purposes for each fiscal year according to the terms of the CGP Operating Agreement. We will be required to pay US federal income tax on such income at the current US federal corporate income tax rate, regardless of whether CGP LLC makes corresponding cash distributions to us to pay our tax liability. The CGP Operating Agreement provides for quarterly cash tax distributions (other than in connection with a liquidation or certain partial liquidations) to be made to us and Caesars Entertainment, but there is no guarantee that such tax distributions (or other cash distributions from CGP LLC) will be sufficient for us to pay our tax liabilities.

There are no assurances that there will be future development opportunities for CGP LLC or that CGP LLC will obtain a development project.

CGP LLC's ability to expand into new markets to pursue development opportunities depends on passage of legislation that legalizes gambling in new markets and Caesars Entertainment not exercising its right of first offer under the CGP Operating Agreement. Although in the past few years a number of states have passed legislation permitting the development of gaming facilities, there can be no assurances that such trend will continue, and it is possible that legislatures and public sentiment will

turn against permitting the development of gaming facilities. Should the states pass no additional legislation for issuing licenses or permitting the development of gaming facilities, CGP LLC will be unable to pursue development opportunities in new markets. Moreover, even if new markets open up, there can be no assurances that Caesars Entertainment and/or CGP LLC will be successful in the bid process for any new development opportunities; therefore, there can be no assurances that CGP LLC will be able to enter those new markets. Further, there can be no assurances that Caesars Entertainment will not exercise its right of first refusal, thereby depriving CGP LLC of access to any potential development project.

The fixed rate securities we hold are sensitive to fluctuations in interest rates and would decrease in value if the interest rate increases.

Fixed rate securities are sensitive to fluctuations in market interest rates and if interest rates increase, the fixed rate securities held by CGP LLC will decrease in value. Currently, market interest rates have been at record low rates. Accordingly, an increase in market interest rates from current levels could cause the value of the fixed rate securities to decrease significantly.

CGP LLC and CAC are subject to extensive governmental regulation and taxation policies, the enforcement of which could adversely impact CGP LLC’s business, financial condition and results of operations.

CGP LLC and CAC are subject to extensive gaming regulations and political and regulatory uncertainty. Regulatory authorities in the jurisdictions where CGP LLC operates have broad powers with respect to the licensing of casino operations and may revoke, suspend, condition or limit the gaming or other licenses of CGP LLC's casino properties or developments, impose substantial fines and take other actions, any one of which could adversely impact CGP LLC's business, financial condition and results of operations. In addition, regulatory authorities in one or more jurisdictions may require CGP LLC or CAC to obtain new licenses in connection with the transactions as described in Item 1 - Business of our Annual Report on Form 10-K for the year ended December 31, 2013 or due to future changes in regulation. For instance, the Missouri Gaming Commission is requiring that CAC obtain certain licenses after the closing of the transactions as described in Item 1 - Business of our Annual Report on Form 10-K for the year ended December 31, 2013 even though CGP LLC does not operate in Missouri. The failure of CAC to obtain a license from the Missouri Gaming Commission could adversely impact Caesars Entertainment’s gaming license in Missouri. If other jurisdictions require CGP LLC or CAC to obtain new licenses in connection with the transactions as described in Item 1 - Business of our Annual Report on Form 10-K for the year ended December 31, 2013 or due to future changes in regulation, and CGP LLC or CAC is unable to obtain those licenses, it could adversely impact CGP LLC's business, financial condition and results of operations. Another example, our ability to expand our operations at Harrah’s New Orleans, which could include increasing the number of rooms at the hotel or opening new restaurants at the complex, is subject to regulatory approval, and any such proposal may or may not be approved.

Furthermore, interpretations of laws and local regulations and ordinances on which we rely may change or be made conditional on certain other factors, which could adversely impact our business, financial condition and results of operations. For example, Harrah’s New Orleans is currently subject to a local ordinance in New Orleans related to the minimum number of people who must be employed at Harrah’s New Orleans. If CGP LLC acquires Harrah’s New Orleans, a change in the interpretation of this ordinance or a change in this ordinance could force a reevaluation of staffing at that property in a manner that could adversely affect the financial results of Harrah’s New Orleans.

As a result of CIE holding an online gaming license, its operations and activities are subject to various gaming laws and laws in New Jersey and Nevada. We also expect CIE to be subject to these or a similar law as CIE seeks licenses for online real money gaming in the United States. For example, CIE holds a license in Nevada as an "operator of an interactive gaming system." In addition, CIE holds a casino license in New Jersey to operate internet gaming in New Jersey. Among these laws are various "suitability" requirements which could limit CIE's ability to conduct business with certain third parties, make certain acquisitions and otherwise freely conduct its business. The results of such restrictions could have a material adverse effect on CIE's, and therefore CGP LLC's, business, financial condition and operating results.

Furthermore, because we are subject to regulation in each jurisdiction in which we operate, and because regulatory agencies within each jurisdiction review our compliance with gaming laws in other jurisdictions, it is possible that gaming compliance issues in one jurisdiction may lead to reviews and compliance issues in other jurisdictions. For example, recent events in connection with the proposed development of a casino gaming facility by Sterling Suffolk Racecourse, LLC ("Sterling Suffolk"), owner of Suffolk Downs racecourse in East Boston, Massachusetts, have resulted in reviews in several other jurisdictions arising out of a report issued to the Massachusetts Gaming Commission from the Director of the Investigations and Enforcement Bureau for the Massachusetts Gaming Commission (the "Bureau") in October 2013. That report raised certain issues for consideration when evaluating CEC's suitability as a qualifier in Massachusetts and made a recommendation that CEC had not met their burden by clear and convincing evidence to establish their suitability. Although CEC strongly disagrees with the director’s recommendation, CEC withdrew their application as a qualifier in Massachusetts at the request of Sterling Suffolk. Neither CEC nor their affiliates were found unsuitable by any licensing authority, but other gaming regulatory agencies have asked for information about the issues raised in the report from the Bureau, and CEC is in the process of providing that information. We cannot assure you that existing or future jurisdictions would not raise similar questions with respect to our

suitability arising out of the Bureau’s report because we are affiliated with Caesars Entertainment, or with respect to matters that may arise in the future, and we cannot assure you that such issues will not adversely affect us or our financial condition.

From time to time, individual jurisdictions have also considered legislation or referendums, such as bans on smoking in casinos and other entertainment and dining facilities, which could adversely impact the operations of CGP LLC's casino properties. For example, Maryland law prohibits smoking at Horseshoe Baltimore. The likelihood or outcome of similar legislation in such jurisdictions and referendums in the future cannot be predicted, though any smoking ban would be expected to negatively impact CGP LLC's financial performance.

The casino entertainment industry represents a significant source of tax revenues to the various jurisdictions in which casinos operate. From time to time, various state and federal legislators and officials have proposed changes in tax laws, or in the administration of such laws, including increases in tax rates, which would affect the industry. If adopted, such changes could adversely impact CGP LLC's business, financial condition and results of operations.

Acts of terrorism, natural disasters, severe weather and political, economic and military conditions may impede CGP LLC's ability to operate or harm its financial results.

Terrorist attacks and other acts of war or hostility have created many economic and political uncertainties. For example, a substantial number of the customers of CGP LLC’s properties in Las Vegas use air travel. As a result of terrorist acts, domestic and international travel was severely disrupted, which resulted in a decrease in customer visits to Las Vegas. We cannot predict the extent to which disruptions in air or other forms of travel as a result of any further terrorist act, security alerts or war, uprisings, or hostilities in places such as Iraq and Afghanistan, or other countries throughout the world, will continue to directly or indirectly impact CGP LLC's business and operating results. As a consequence of the threat of terrorist attacks and other acts of war or hostility in the future, premiums for a variety of insurance products have increased, and some types of insurance are no longer available. If any such event were to affect CGP LLC's properties, we would likely be adversely impacted.

Political, economic and military conditions may directly affect CGP LLC's business by impeding its operations or player demand. In particular, a significant portion of the operations and personnel of Playtika, a subsidiary of CIE and the operator of Slotomania, are located in Israel, a country located in a particularly volatile region. CIE also has approximately 340 employees and contractors in Ukraine, a country currently facing political unrest. Any hostilities, or any future armed conflicts, political or economic instability or violence in the Middle East or further disruptions in Ukraine could have a material adverse effect on CIE's, and therefore CGP LLC's, business, financial condition and operating results.

In addition, natural and man-made disasters such as major fires, floods, hurricanes, earthquakes and oil spills, or severe or inclement weather affecting the ability of CGP LLC's properties’ customers to travel can have a negative impact on its results of operations. In most cases, we have insurance that covers portions of any losses from a natural disaster, but it is subject to deductibles and maximum payouts in many cases. Although we may be covered by insurance from a natural disaster, the timing of our receipt of insurance proceeds, if any, is out of our control. In some cases, however, we may receive no proceeds from insurance. Additionally, a natural disaster affecting one or more of CGP LLC's properties may affect the level and cost of insurance coverage we may be able to obtain in the future, which may adversely affect our financial position. As our operations depend in part on our customers’ ability to travel, severe or inclement weather can also have a negative impact on our results of operations.

Any violation of the Foreign Corrupt Practices Act or other similar laws and regulations could have a negative impact on us.

CGP LLC is subject to risks associated with doing business outside of the United States, which exposes CGP LLC to complex foreign and US regulations inherent in engaging in a cross-border business and in each of the countries in which CGP LLC and its businesses transacts business. CGP LLC is subject to requirements imposed by the Foreign Corrupt Practices Act ("FCPA") and other anti-corruption laws that generally prohibit US companies and their affiliates from offering, promising, authorizing or making improper payments to foreign government officials for the purpose of obtaining or retaining business. Violations of FCPA and other anti-corruption laws may result in severe criminal and civil sanctions as well as other penalties and the SEC and US Department of Justice have increased their enforcement activities with respect to the FCPA. Policies and procedures and employee training and compliance programs that CGP LLC has implemented to deter prohibited practices may not be effective in prohibiting our employees, contractors or agents from violating or circumventing our policies and the law. If the employees, contractors or agents of Caesars Entertainment, CGP LLC’s properties and CIE fail to comply with applicable laws or company policies governing its international operations, CGP LLC may face investigations, prosecutions and other legal proceedings and actions which could result in civil penalties, administrative remedies and criminal sanctions. Any determination that we have violated any anti-corruption laws could have a material adverse effect on CGP LLC's financial condition. Compliance with international and US laws and regulations that apply to CGP LLC's international operations increase CGP LLC's cost of doing business in foreign jurisdictions. CGP LLC and its businesses also deal with significant amounts of cash in its operations and are subject to various reporting and anti-money laundering regulations. Any violation of anti-money laundering laws ("AML") or regulations, on which in recent years, governmental authorities have been increasingly focused, with a particular focus on the gaming industry, by any of our resorts could have a negative effect on our results of operations. As

an example, a major gaming company recently settled a US Attorney investigation into its AML practices. On October 11, 2013, a subsidiary of Caesars Entertainment received a letter from the Financial Crimes Enforcement Network of the United States Department of the Treasury ("FinCEN"), stating that FinCEN is investigating Desert Palace, Inc. (the owner of Caesars Palace) for alleged violations of the Bank Secrecy Act ("BSA") based on a BSA examination of Caesars Palace previously conducted by the Internal Revenue Service to determine whether it is appropriate to assess a civil penalty and/or take additional enforcement action against Caesars Palace. Additionally, Caesars Entertainment has been informed that a federal grand jury investigation related to these matters is on-going. While not the subject of these investigations, we intend to cooperate fully with both the FinCEN and grand jury investigations. Based on proceedings to date, we are currently unable to determine the probability of the outcome of these matters, the range of reasonably possible loss, if any or the extent to which the outcome of these matters will impact our businesses.

Compromises of our information systems or unauthorized access to confidential information or our customers’ personal information could materially harm our reputation and business.

We collect and store confidential, personal information relating to our customers for various business purposes, including marketing and financial purposes, and credit card information for processing payments. For example, we handle, collect and store personal information in connection with our customers staying at our hotels and enrolling in the Total Rewards loyalty program. We may share this personal and confidential information with vendors or other third parties in connection with processing of transactions, operating certain aspects of our business or for marketing purposes. Our collection and use of personal data are governed by state and federal privacy laws and regulations as well as the applicable laws and regulations in other countries in which we operate. Privacy law is an area that changes often and varies significantly by jurisdiction. We may incur significant costs in order to ensure compliance with the various applicable privacy requirements. In addition, privacy laws and regulations may limit our ability to market to our customers.

We assess and monitor the security of collection, storage and transmission of customer information on an ongoing basis. We utilize commercially available software and technologies to monitor, assess and secure our network. Further, the systems currently used for transmission and approval of payment card transactions, and the technology utilized in payment cards themselves, all of which can put payment card data at risk, are determined and controlled by the payment card industry, not us. Although we have taken steps designed to safeguard our customers’ confidential personal information, our network and other systems and those of third parties, such as service providers, could be compromised by a third-party breach of our system security or that of a third-party provider or as a result by purposeful or accidental actions of third parties, the employees at CGP LLC's properties or those employees of a third party. Advances in computer and software capabilities and encryption technology, new tools and other developments may increase the risk of such a breach. As a result of any security breach, customer information or other proprietary data may be accessed or transmitted by or to a third party. Despite these measures, there can be no assurance that we are adequately protecting our information.

Any loss, disclosure or misappropriation of, or access to, customers’ or other proprietary information or other breach of our information security could result in legal claims or legal proceedings, including regulatory investigations and actions, or liability for failure to comply with privacy and information security laws, including for failure to protect personal information or for misusing personal information, which could disrupt our operations, damage our reputation and expose us to claims from customers, financial institutions, regulators, payment card associations, employees and other persons, any of which could have an adverse effect on our financial condition, results of operations and cash flow.

Our reliance on our computer systems and software could expose us to great financial harm if any of our computer systems or software were subject to any material disruption or corruption.

We rely significantly on our computer systems and software to receive and properly process internal and external data, including data related to the Total Rewards loyalty program. A disruption or corruption of the proper functioning of our computer systems or software could cause us to lose data or record erroneous data, which could result in material losses. We cannot guarantee that our efforts to maintain competitive computer systems and software will be successful. Our computer systems and software may fail or be subject to bugs or other errors, resulting in service interruptions or other unintended consequences. If any of these risks materialize, they could have a material adverse effect on our business, financial condition and results of operations.

We, or our subsidiaries, may not be able to protect the intellectual property rights we own or may be prevented from using intellectual property necessary for our business.

We rely primarily on trade secret, trademark, domain name, copyright and contract law to protect the intellectual property and proprietary technology we own. It is possible that third parties may copy or otherwise obtain and use our intellectual property or proprietary technology without authorization or otherwise infringe on our rights. For example, while we have a policy of entering into confidentiality, intellectual property invention assignment and/or non-competition and non-solicitation agreements or restrictions with our independent contractors and business partners, such agreements may not provide adequate protection or may be breached, or our proprietary technology may otherwise become available to or be independently

developed by our competitors. Third parties have alleged and may in the future allege that we are infringing, misappropriating or otherwise violating their intellectual property rights. Third parties may initiate litigation against us without warning, or may send us letters or other communications that make allegations without initiating litigation. We may elect not to respond to these letters or other communications if we believe they are without merit, or we may attempt to resolve these disputes out of court by negotiating a license, but in either case it is possible that such disputes will ultimately result in litigation. Any such claims could interfere with our ability to use technology or intellectual property that is material to the operation of our business. Such claims may be made by competitors seeking to obtain a competitive advantage or by other parties, such as entities that purchase intellectual property assets for the purpose of bringing infringement claims. We also periodically employ individuals who were previously employed by our competitors or potential competitors, and we may therefore be subject to claims that such employees have used or disclosed the alleged trade secrets or other proprietary information of their former employers.

In the future, we may have to rely on litigation to enforce our intellectual property rights, protect our trade secrets, determine the validity and scope of the proprietary rights of others or defend against claims of infringement or invalidity. Any such litigation, whether successful or unsuccessful, could result in substantial costs and the diversion of resources and the attention of management. If unsuccessful, such litigation could result in the loss of important intellectual property rights, require us to pay substantial damages, subject us to injunctions that prevent us from using certain intellectual property, require us to make admissions that affect our reputation in the marketplace and require us to enter into license agreements that may not be available on favorable terms or at all. Finally, even if we prevail in any litigation, the remedy may not be commercially meaningful or fully compensate us for the harm we suffer or the costs we incur. Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

We are, or may become involved, in legal proceedings that if adversely adjudicated or settled, could impact our financial condition.

From time to time, we are defendants in various lawsuits or other legal proceedings relating to matters incidental to our business. The nature of our business subjects us to the risk of lawsuits filed by customers, past and present employees, competitors, business partners, and others in the ordinary course of business. As with all legal proceedings, however, no assurance can be provided as to the outcome of these matters and in general, legal proceedings can be expensive and time consuming. We may not be successful in the defense or prosecution of these lawsuits, which could result in settlements or damages that could significantly impact our business, financial condition and results of operations.

We, CGP LLC, Caesars Entertainment, CEOC and CERP are defendants in certain legal proceedings as discussed above in PART II. Item 1. Legal Proceedings. If a court were to find in favor of the claimants in these proceedings, such determination could have a material adverse effect on CGP LLC’s business, financial condition, results of operations and prospects and on the ability of the lenders and noteholders to recover on claims under the senior secured credit facilities and the Notes.

Risks Related to CGP LLC’s Interactive Entertainment Business

One game has historically generated the majority of CIE's revenue, and CIE must continue to launch and enhance games that attract and retain a significant number of players in order to grow its revenue and sustain its competitive position.

Historically, CIE has depended on one game for the majority of its revenue and we expect that this dependency will likely continue for the foreseeable future. Specifically, Slotomania accounted for 51% and 52%, respectively, of CIE's social and mobile online game revenue for the three and nine months ended September 30, 2014. CIE's growth depends on its ability to increase interest in key established game, Slotomania or Bingo Blitz, and by continually enhancing these games or launching new games that achieve significant popularity. Each of CIE's existing games and newly-developed games requires significant engineering, marketing and other resources to enhance, develop, launch and sustain via regular upgrades and expansions, and such costs on average have increased and are likely to continue to increase in the future. CIE's ability to successfully launch, sustain and expand games and attract and retain players largely depends on its ability to:


•	anticipate and effectively respond to changing player interests and preferences;


•	anticipate and respond to changes in the competitive landscape, including any future legalization of online real money gaming in the United States and other jurisdictions;


•	attract, retain and motivate talented game designers, product managers and engineers;


•	develop, sustain and expand games that are fun, interesting and compelling to play;


•	effectively market new games and enhancements to CIE's existing players and new players;


•	minimize launch delays and cost overruns on new games and game expansions;


•	minimize downtime and other technical difficulties; and


•	acquire high quality assets, personnel and companies.

It is difficult to consistently anticipate player demand on a large scale, particularly as CIE develops new games in new markets, including international markets and mobile platforms. If CIE does not successfully launch and sustain games that attract and retain a significant number of players and extend the life of CIE's existing games, it could have a material adverse effect on CIE's, therefore CGP LLC's, business, financial condition and operating results.

If CIE's top game, Slotomania, does not maintain its popularity, CIE’s results of operations could be harmed.

In addition to creating new games that are attractive to a significant number of players, CIE must extend the life of its existing games, in particular its most successful game, Slotomania. For a game to remain popular, CIE must routinely enhance, expand and/or upgrade the game with new features and content that players find attractive. Such enhancement requires the investment of significant resources, integration into new platforms, introduction of new languages, expansion into new jurisdictions and often presents new marketing and other challenges. CIE may not be able to successfully enhance, expand or upgrade CIE's current library of games. Any decrease in the popularity of CIE's social and mobile games, or any other adverse developments relating to CIE's most popular game, Slotomania, could have a material adverse effect on it's, and therefore CGP LLC's, business, financial condition and operating results.

CIE relies on a small portion of its total players for nearly all of its revenue from social and mobile games and if CIE fails to grow or sustain its player base, its results of operations could be adversely affected.

Consistent with the social and mobile games business model, only a small portion of CIE’s social and mobile games players pay for virtual goods. During the three months ended September 30, 2014, CIE’s social and mobile games business had approximately 595 thousand average Monthly Unique Payers, or 3.6% of the total number of CIE's average Monthly Unique Users on its social and mobile platforms. In order to sustain and increase CIE's revenue levels, CIE must attract, retain and increase the number of players that are payers. To retain players, CIE must devote significant resources so that the games they play retain their interest and attract them to CIE's other games. If CIE fails to grow or sustain its player base, or if the rates at which CIE attracts and retain players declines or if the average amount of revenue CIE receives from its players declines, it could have a material adverse effect on CIE's, therefore CGP LLC's, business, financial condition and operating results.

The social and mobile games industry is rapidly growing and changing, which makes it difficult to evaluate CIE's business and prospects.

Social and mobile games, from which CGP LLC derived 93.6% of the revenue for the Interactive Entertainment business for the three months ended September 30, 2014, is a rapidly growing and evolving industry. The growth of the industries and the level of demand and market acceptance of CIE's games are subject to a high degree of uncertainty. CIE's future operating results will depend on numerous factors affecting the social and mobile games industry, many of which are beyond CIE's control, including, among others:


•	the occurrence and manner of legalization of online real money gaming in the United States beyond Nevada, Delaware and New Jersey;


•	continued worldwide growth in the adoption and use of Facebook, other social networks and mobile platforms;


•	changing rules and requirements on social networks, like Facebook and mobile platforms, like Android and Apple iOS;


•	changes in consumer demographics and public tastes and preferences;


•	changing laws and regulations affecting social and mobile games;


•	the availability and popularity of other forms of entertainment;


•	the worldwide growth of personal computer, broadband Internet and mobile device users, and the rate of any such growth; and


•	general economic conditions, particularly economic conditions adversely affecting discretionary consumer spending.

CIE's ability to plan for game development, distribution and promotional activities will be significantly affected by its ability to anticipate and adapt to relatively rapid changes in the tastes and preferences of its current and potential players. New and different types of entertainment may increase in popularity at the expense of social and mobile games. A decline in the popularity of social or mobile games in general, or CIE's games in particular, could have a material adverse effect on its, and therefore CGP LLC's, business, financial condition and operating results.

CIE has a new business model and a short operating history, which makes it difficult to evaluate its prospects and future financial results and may increase the risk that it will not be successful.

CIE's business was formed in May 2009, and CIE's business changed significantly with the acquisition of Playtika in 2011. Consequently, CIE has a short operating history and a new business model, both of which make it difficult to effectively assess its future prospects. Today, CIE’s business model is largely based on offering games that are free to play on social and

mobile platforms, regulated online real money gaming in Nevada and New Jersey and its WSOP sponsorship and licensing businesses. However, we expect CIE's business model to evolve as other states legalize online poker or online gambling. Moreover, to date, CIE's social and mobile games business only earns revenue from a small portion of its players. In addition, CIE's experience in the complex business of online real money gaming is limited. CIE's future prospects are particularly difficult to assess because it has derived the majority of its historical revenue from its acquisition of Playtika in 2011. You should consider CIE's business and prospects in light of the challenges it faces, any one, or the combination, of which could have material adverse effect on CIE's, and therefore CGP LLC's, business, financial condition and operating results.

The low barriers to entry and intense competition that characterizes the social and mobile games industry could have an adverse effect on CIE's, and therefore CGP LLC's, business financial condition and results of operations.

The social and mobile games industry has low barriers to entry and we expect more companies to enter the sector and a wider range of social and mobile games to be introduced. The industry is also highly competitive. CIE's competitors that develop social and mobile games vary in size and include publicly traded companies such as Zynga Inc. ("Zynga"), Glu Mobile, International Game Technology ("IGT"), and King Digital ("King"). In addition, online game developers and distributors who are primarily focused on specific international markets, such as Tencent Holdings Limited in Asia, and high-profile companies with significant online presences that to date have not developed social and mobile games, such as Amazon.com, Inc., Apple Inc. ("Apple"), Facebook, Google Inc. ("Google"), Microsoft and Yahoo! Inc., may decide to develop social and mobile games in the future. Some of these current and potential competitors have significant resources for developing or acquiring additional games, may be able to incorporate their own highly recognized brands and assets into their games, have a more diversified set of revenue sources than CIE currently does and may be less severely affected by changes in consumer preferences, regulations or other developments that may impact the social and mobile games industry. As CIE continues to devote significant resources to developing games for social and mobile platforms, CIE will face significant competition from established companies that may have far greater experience than CIE, including Zynga and Electronic Arts. Moreover, there exists in the social and mobile games industry a significant "first mover" advantage. CIE's ability to compete effectively in respect to a particular style of game may be premised on introducing a game in that style before CIE's competitors. We cannot assure you that CIE will be able to continue to compete effectively or that CIE will be capable of maintaining or further increasing its current market share. CIE's failure to compete successfully in its various markets could have a material adverse effect on CIE's, and therefore CGP LLC's, business, financial condition and results of operations.

If CIE fails to effectively manage its growth, CIE's, and therefore CGP LLC's, business and operating results could be harmed.

CIE continues to experience rapid growth in its headcount and operations, which will continue to place significant demands on its management and operational, financial and technological infrastructure. As of September 30, 2014, approximately 43% of CIE's employees have been with CIE for less than one year and approximately 76% for less than two years. Moreover, a number of the individuals CIE relies on for its operations are consultants, not full-time employees on CIE's payroll. As CIE continues to grow, it must expend significant resources to identify, hire, integrate, develop and motivate a large number of qualified employees. If CIE fails to effectively manage its hiring needs and successfully integrate its new hires, CIE's ability to continue launching new games and enhance existing games could suffer.

To effectively manage the growth of CIE's business and operations, it will need to continue spending significant resources to improve its technology infrastructure, its operational, financial and management controls, and its reporting systems and procedures by, among other things:


•	monitoring and updating CIE's technology infrastructure to maintain high performance and minimize down time;


•	enhancing information and communication systems to ensure that CIE's employees and offices around the world are well-coordinated and can effectively communicate with each other; and


•	appropriately documenting CIE's information technology systems and business processes.

If CIE fails to successfully do these things, it could have a material adverse effect on its, and therefore CGP LLC's, business, financial condition and operating results.

CIE's growth prospects will suffer if it is unable to develop successful games for new and emerging platforms.

We expect CIE to devote substantial resources to the development of its social online and mobile games on new and emerging platforms, and its limited experience makes it difficult to know whether CIE will succeed in developing such games that appeal to players or advertisers on such new and emerging platforms. The uncertainties CIE faces include:


•	its experience in developing social games for use primarily on Facebook and Apple iOS may not be relevant for developing games for new and emerging platforms;


•	many new and emerging platforms are located in countries where CIE has no or limited operating experience;


•	new and emerging platforms may require different technological requirements to adapt CIE's games than its current platforms, which may require significant expense;


•	CIE has limited experience working with wireless carriers, new and emerging platform providers and other partners whose cooperation CIE may need in order to be successful; and


•	CIE will need to move beyond payment methods provided by social networks and successfully allow for a variety of payment methods and systems based on new mobile platforms, geographies and other factors.

These and other uncertainties make it difficult to know whether CIE will succeed in developing commercially viable games for new and emerging social and mobile platforms. If CIE does not succeed in doing so, it could have a material adverse effect on its, and therefore CGP LLC's, business, financial condition and operating results.

If CIE is unable to maintain a good relationship with Facebook, Apple and/or Google, or if Facebook, Apple or Google were to change their respective terms of service in ways unfavorable to CIE, CIE's business may suffer.

Facebook, Apple iOS and Android are significant distribution, marketing, promotion and payment platforms for CIE's games. During the nine months ended September 30, 2014, CIE generated approximately 96% of its social and mobile games revenue and 92% of its social and mobile games users through the Facebook, Apple iOS and Android platforms and we expect CIE to continue to do so for the foreseeable future. CIE is subject to Facebook's, Apple's and Google's respective standard terms and conditions for application developers, which govern the promotion, distribution and operation of games and other applications on the Facebook, Apple iOS and Android platforms.

CIE has benefited from Facebook's, Apple's and Google's strong brand recognition and large user bases. If Facebook, Apple iOS and/or Google loses its market position or otherwise falls out of favor with Internet users, CIE would need to identify alternative channels for marketing, promoting and distributing CIE's social and mobile games, which would consume substantial resources and may not be effective. In addition, Facebook, Apple and Google each have broad discretion to change their respective terms of service and other policies, without CIE's consent and without notice, with respect to CIE and other developers, and those changes may be unfavorable to CIE. Facebook, Apple and/or Google may also change their respective fee structures, add fees associated with access to and use of the Facebook, Apple iOS and Android platforms, change how the personal information of their respective users is made available to application developers on the Facebook, Apple iOS or Android platforms, restrict how Facebook, Apple iOS or Android users can share information with friends on their respective platforms, restrict or discontinue access for consumers from certain countries, discontinue or limit access to their respective platforms by CIE and other game developers or develop their own competitive offerings. If any of these events were to materialize, it could have a material adverse effect on CIE's, and therefore CGP LLC's, business, financial condition and operating results.

The loss of the services of key personnel at CIE could have a material adverse effect on its business.

The leadership of CIE's chief executive officer, Mitch Garber, and other executive officers has been a critical element of its success. The death or disability of Mitch Garber or other extended or permanent loss of his services, or any negative market or industry perception with respect to him or arising from his loss, could have a material adverse effect on CIE's, therefore CGP LLC’s, business. CIE's other executive officers and other members of senior management, including Robert Antokol, co-founder of Playtika, have substantial experience and expertise in the social and mobile games industry and have made significant contributions to CIE's growth and success. The unexpected loss of services of one or more of these individuals could have a material adverse effect on CIE's, and therefore CGP LLC's, business, financial condition and operating results. CIE is not protected by key man or similar life insurance covering members of its senior management. CIE has employment agreements with certain of its executive officers, but these agreements do not guarantee that any given executive will remain with CIE.

If CIE is unable to attract, retain and motivate employees, it may not be able to compete effectively and may not be able to successfully expand its businesses.

CIE's success and ability to grow are dependent, in part, on its ability to hire, retain and motivate sufficient numbers of talented people, with the increasingly diverse skills needed to serve and expand its business. Such employees, particularly game designers, product managers and engineers, are in high demand, and CIE devotes significant resources to identifying, hiring, training, integrating and retaining these employees. These efforts place significant demands on CIE's resources. Historically, CIE has hired a number of key personnel through strategic acquisitions, such as our acquisition of Playtika, and as competition with other social and mobile games companies increases, CIE may incur significant expenses in continuing this practice. The inability to attract qualified employees in sufficient numbers to meet particular demands or the loss of a significant number of CIE's employees could have a material adverse effect on CIE's, therefore CGP LLC’s, business, financial condition and operating results.

Expansion into international markets is important for CIE's growth, and as CIE expands internationally it faces additional business, political, regulatory, operational, financial and economic risks, any of which could increase its costs and hinder its growth.

Continuing to expand CIE's business to attract players in countries other than the United States is a critical element of CIE's business strategy. An important part of targeting international markets is developing offerings that have localized content and are customized for the players in those markets. We expect to continue to devote significant resources to international expansion through acquisitions, the establishment of additional offices and development studios, and increasing CIE's foreign language strategic offerings. CIE's ability to expand its business and to attract talented employees and players in an increasing number of international markets requires considerable management attention and resources and is subject to the particular challenges of supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal systems, alternative dispute systems, regulatory systems and commercial infrastructures. Expanding CIE's international focus may subject it to risks that it has not faced before or increase risks that CIE currently faces, including risks associated with:


•	recruiting and retaining talented and capable management and employees in foreign countries;


•	challenges caused by distance, language and cultural differences;


•	developing and customizing games and other offerings that appeal to the tastes and preferences of players in international markets;


•	competition from local game makers with significant market share in those markets and with a better understanding of local player preferences;


•	protecting and enforcing CIE's intellectual property rights;


•	negotiating agreements with local distribution platforms that are economically beneficial to CIE and protective of its rights;


•	the inability to extend proprietary rights in CIE's brand, content or technology into new jurisdictions;


•	implementing alternative payment methods for virtual goods in a manner that complies with local laws and practices and protects CIE from fraud;


•	compliance with applicable foreign laws and regulations, including privacy laws and laws relating to content;


•	compliance with anti-bribery laws, including, without limitation, compliance with the FCPA;


•	credit risk and higher levels of payment fraud;


•	currency exchange rate fluctuations;


•	protectionist laws and business practices that favor local businesses in some countries;


•	foreign tax consequences, including the requirement to pay value added tax, or VAT, in certain jurisdictions;


•	foreign exchange controls or US tax restrictions that might restrict or prevent CIE from repatriating income earned in countries outside the US; and


•	political, economic and social instability.

Entering new international markets can be expensive, CIE's ability to successfully gain market acceptance in any particular market is uncertain and the distraction of CIE's senior management team could mean that it is unable to capitalize on other strategic opportunities. If CIE is unable to successfully expand into new international markets, it could have a material adverse effect on CIE's, therefore CGP LLC's, business, financial condition and operating results.

The value of CIE's virtual goods is highly dependent on how CIE manages the economies in its games. If CIE fails to manage its game economies properly, its business may suffer.

Players from whom CIE derives revenue purchase virtual goods in CIE's games because of the perceived value of these goods, which is dependent on the relative ease of securing an equivalent good via non-paid means within the game. The perceived value of these virtual goods can be impacted by various actions that CIE takes in the games, including offering discounts for virtual goods, giving away virtual goods in promotions or providing easier non-paid means to secure these goods. If CIE fails to manage its virtual economies properly, players may be less likely to purchase virtual goods, which could have a material adverse effect on its, and therefore CGP LLC's business, financial condition and operating results.

The proliferation of hacking, security breaches, computer malware, "cheating" programs and scam offers that seek to exploit CIE's games and players affects the game-playing experience and may lead players to stop playing CIE's games.

Security breaches, computer malware and computer hacking attacks have become more prevalent in CIE's industry and may occur on its systems in the future. Because of CIE’s prominence in the social and mobile game industry, CIE's affiliation with one of the largest gaming entertainment companies in the world, and because of the prominence of the brands CIE uses in its businesses, including Caesars, WSOP, Slotomania and Bingo Blitz, we believe CIE is a particularly attractive target for hackers. Though it is difficult to determine what harm may exactly result from any specific interruption or breach, any failure to maintain performance, reliability, security and availability of CIE's network infrastructure to the satisfaction of its players may harm CIE's reputation and its ability to retain existing players and attract new players. CIE is particularly exposed to these risks in its online real money gaming business where players place an especially high value on the proper functioning of CIE's games. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses could have a material adverse effect on CIE's, and therefore CGP LLC's business, financial condition and operating results.

Unrelated third parties have developed, and may continue to develop, "cheating" programs and activities that enable players to exploit CIE's games, play them in an automated way or obtain unfair advantages over other players who do play fairly, including through the unauthorized sale of CIE’s virtual goods. These programs and activities harm the experience of players who play fairly and may disrupt the real money operations and virtual economies of CIE's games. CIE devotes significant resources to discover and disable these programs and activities, but if CIE is unable to do so quickly its operations may be disrupted, its reputation damaged and players may stop playing its games. This may lead to lost revenue from paying players, increased cost of developing technological measures to combat these programs and activities, legal claims relating to the diminution in value of CIE's real money gaming credits, virtual currency and increased customer service costs needed to respond to dissatisfied players.

CIE is subject to payment-related risks, such as risk of fraudulent use of credit or debit cards, which could have adverse effects on CIE's business or results of operations due to unusually large or frequent chargebacks from customers.

CIE accepts payments using a variety of methods, including PayPal, credit and debit cards. As CIE continues to introduce new payment options to its players, CIE may be subject to additional regulatory and compliance requirements. CIE also may be subject to the risk of fraudulent use of credit or debit cards, or other payment options. For certain payment methods, including credit and debit cards, CIE pays interchange and other fees, which may increase over time and, therefore, raise operating costs and reduce profitability. CIE relies on third parties to provide payment processing services and it could disrupt CIE’s business if these companies become unwilling or unable to provide these services to CIE. CIE is also subject to rules and requirements governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for CIE to comply. If CIE fails to comply with these rules or requirements, CIE may be subject to fines and higher transaction fees and lose its ability to accept PayPal, credit card, debit card, or other payments from consumers which could have a material adverse effect on its, and therefore CGP LLC's business, financial condition and operating results. In addition, depending on the merchant category code assigned to CIE by the credit card associations, especially for its online real money gaming business, CIE may be subject to a higher percentage of declined transactions which could reduce the amount of money deposited.

Chargebacks occur when customers seek to void credit card or other payment transactions. Cardholders are intended to be able to reverse card transactions only if there has been unauthorized use of the card or the services contracted for have not been provided. In CIE’s business, players occasionally seek to reverse their online real money gaming losses or purchases of virtual goods through chargebacks. Although CIE places great emphasis on control procedures to protect from chargebacks, these control procedures may not be sufficient to protect CIE from adverse effects on its business or results of operations due to unusually large or frequent chargebacks.

Programming errors or flaws in CIE's social and mobile games, or on its regulated online real money gaming websites, could harm CIE's reputation or decrease market acceptance of CIE's games, which could have a material adverse effect on its, and therefore CGP LLC's, business, financial condition and operating results.

CIE’s social and mobile games, and its regulated online real money gaming websites, may contain errors, bugs, flaws or corrupted data, and these defects may only become apparent after their launch, particularly as CIE launches new games and rapidly releases new features to existing games under tight time constraints. We believe that if CIE's players have a negative experience with its games, they may be less inclined to continue or resume playing CIE's games or recommend its games to other potential players. Undetected programming errors, game defects and data corruption can disrupt CIE's operations, adversely affect the game experience of CIE's players by allowing players to gain unfair advantage, harm CIE’s reputation, cause CIE's players to stop playing its games, divert CIE's resources and delay market acceptance of CIE's games, any of which could have a material adverse effect on its, and therefore CGP LLC's, business, financial condition and operating results.

Companies and governmental agencies may restrict access to Facebook, CIE's websites or the internet generally, which could lead to the loss or slower growth of CIE's player base.

CIE's online players need to access the Internet to play CIE's games. Companies and governmental agencies could block access to the Internet generally or the particular platform on which a player wishes to play CIE's games (e.g., Facebook) for a number of reasons such as security or confidentiality concerns or regulatory reasons, or they may adopt policies that prohibit employees from accessing Facebook, CIE's website, CIE's online gaming websites or other social platforms for work related efficiency reasons. For example, the government of the People’s Republic of China has blocked access to Facebook in China and, according to an article in The Wall Street Journal, Proctor & Gamble recently implemented a policy restricting employee access to a number of popular entertainment websites. If companies or governmental entities block or limit access to Facebook, CIE's website, CIE's online gaming websites or otherwise adopt policies restricting players from playing CIE's games, it could have a material adverse effect on CIE's, and therefore CGP LLC's, business, financial condition and operating results.

Evolving regulations concerning data privacy may result in increased regulation and different industry standards, which could prevent CIE from providing its current games to its players or require CIE to modify its games, thereby harming its business.

The regulatory framework for privacy issues worldwide is currently in flux and is likely to remain so for the foreseeable future. Practices regarding the collection, use, storage, transmission and security of personal information by companies operating over the Internet and mobile platforms have recently come under increased public scrutiny. The US government, including the Federal Trade Commission and the Department of Commerce, has announced that it is reviewing the need for greater regulation for the collection of information concerning consumer behavior on the Internet, including regulation aimed at restricting certain targeted advertising practices. In addition, the European Union is in the process of proposing reforms to its existing data protection legal framework, which may result in a greater compliance burden for companies with users in Europe. Various government and consumer agencies have also called for new regulation and changes in industry practices.

CIE's business, including its ability to operate and expand internationally, could be adversely affected if laws or regulations are adopted, interpreted or implemented in a manner that is inconsistent with CIE's current business practices and that require changes to these practices, the design of CIE's website, games, features or its privacy policy. In particular, the success of CIE's business has been, and we expect will continue to be, driven by CIE's ability to responsibly use the data that CIE's players share with it. Therefore, CIE's business could be harmed by any significant change to applicable laws, regulations or industry practices regarding the use or disclosure of data CIE's players choose to share with it, or regarding the manner in which the express or implied consent of consumers for such use and disclosure is obtained. Such changes may require CIE to modify its games and features, possibly in a material manner, and may limit CIE's ability to develop new games and features that make use of the data that CIE's players voluntarily share with it.

CIE's business is subject to a variety of other US and foreign laws, many of which are unsettled and still developing and which could subject CIE to claims or otherwise harm its business.

It is possible that a number of laws and regulations may be adopted or construed to apply to CIE in the United States and elsewhere that could restrict the social and mobile industry, including player privacy, advertising, taxation, content suitability, copyright, distribution and antitrust. For example, certain jurisdictions in the United States and elsewhere may deem CIE's social and mobile games to be gambling or marketing gambling to underage persons and therefore in violation of the laws of such jurisdictions. Furthermore, the growth and development of electronic commerce and virtual goods may prompt calls for more stringent consumer protection laws that may impose additional burdens on companies such as CIE conducting business through the Internet and mobile devices. We anticipate that scrutiny and regulation of CIE's industry will increase and that CIE will be required to devote legal and other resources to address such regulation. For example, existing laws or new laws regarding the regulation of currency and banking institutions may be interpreted to cover real money gaming credits, virtual currency or virtual goods. If that were to occur CIE may be required to seek licenses, authorizations or approvals from relevant regulators, the granting of which may be dependent on CIE meeting certain capital and other requirements and CIE may be subject to additional regulation and oversight, all of which could significantly increase CIE’s operating costs. Changes in current laws or regulations or the imposition of new laws and regulations in the United States or elsewhere regarding these activities may lessen the growth of social or mobile games or online real money gaming services and impair CIE's, and therefore CGP LLC's, business, financial condition, and operating results.

Any failure to protect CIE's trademarks or other intellectual property could have a negative impact on the value of CIE's brand names and adversely affect its business.

The development of intellectual property is part of CIE’s overall business strategy and CIE regards its intellectual property to be an important element of its success. For example, CIE owns and manages the WSOP tournaments and circuit, and CIE licenses or sublicenses trademarks for a variety of products and businesses related to this brand. CIE also owns the Slotomania brand. CIE seeks to establish and maintain its proprietary rights in its business operations and technology through the use of patents, copyrights, trademarks and trade secret laws. CIE files applications for and obtains copyrights and trademarks

in the United States and in foreign countries where CIE believes filing for such protection is appropriate. CIE also seeks to maintain its trade secrets and confidential information by nondisclosure policies and through the use of appropriate confidentiality agreements. Despite CIE's efforts to protect its proprietary rights, parties may infringe its copyrights and trademarks and use information that CIE regards as proprietary and CIE’s rights may be invalidated or unenforceable. In addition, parties may challenge CIE's copyright or trademark applications in the United States or other jurisdictions. The laws of some foreign countries do not protect proprietary rights to as great an extent as do the laws of the United States. Monitoring the unauthorized use of CIE's intellectual property is difficult. Litigation may be necessary to enforce CIE's intellectual property rights or to determine the validity and scope of the proprietary rights of others. Litigation of this type could result in substantial costs and diversion of CIE's resources. The unauthorized use or reproduction of CIE's trademarks could diminish the value of its brand and its market acceptance, competitive advantages or goodwill, which could have a material adverse effect on CIE's, therefore CGP LLC's, business, financial condition and operating results.

In the future, it is possible that CIE will face allegations that it has infringed the trademarks, copyrights, patents and other intellectual property rights of third parties, including from its competitors, non-practicing entities and former employers of its personnel. Patent and other intellectual property litigation may be protracted and expensive, and the results are difficult to predict. As the result of any court judgment or settlement, CIE may be obligated to cancel the launch of a new game, stop offering certain features, pay royalties or significant settlement costs, purchase licenses or modify its games and features while it develops substitutes.

The Leahy-Smith America Invents Act (the "Leahy-Smith Act"), was adopted in September 2011. The Leahy-Smith Act includes a number of significant changes to United States patent law, including provisions that affect the way patent applications will be prosecuted and may also affect patent litigation. The United States Patent and Trademark Office is currently developing regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act did not become effective until up to 18 months after its enactment. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of CIE's business. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of CIE's patent applications and the enforcement or defense of its issued patents, all of which could harm its business.

CIE's business strategy is premised, in part, on the legalization of online real money gaming in the United States and its ability to predict and capitalize on any such legalization.

In the last few years, California, Florida, Pennsylvania, New York, Mississippi, Hawaii, Massachusetts, Iowa, Illinois, Washington D.C. and the federal government have considered legislation that would legalize online real money gaming. To date, only Nevada, Delaware and New Jersey have enacted such legislation. If a large number of additional states or the federal government fail to enact online real money gaming legislation or CIE is unable to obtain the necessary licenses to operate online real money gaming websites in United States jurisdictions where such games are legalized, CIE's future growth could be materially impaired as CIE would be limited to offering online real money gaming to players in jurisdictions outside the United States where legal. In addition, states or the federal government may legalize online real money gaming in a manner that is unfavorable to CIE. For example, several states and the federal government are considering draft laws that require online casinos to also have a license to operate a brick-and-mortar casino, either directly or indirectly through an affiliate. If, like Nevada and New Jersey, US jurisdictions enact legislation legalizing real money casino gaming subject to this brick-and-mortar requirement, CIE may be unable to offer online real money gaming in such jurisdictions if CIE is unable to establish an affiliation with a brick-and-mortar casino in such jurisdiction. If, however, legislation is enacted legalizing real money casino gaming without this requirement, CIE would lose its advantage over some of its potential competitors that do not have an affiliate with a brick-and-mortar casino operation. The loss of this or other similar advantages CIE receives as an affiliate of Caesars Entertainment could materially impair its ability to grow its online real money gaming business in the future.

There also exists in the online real money gaming industry a significant "first mover" advantage. CIE's ability to compete effectively in respect of a particular style of online real money gaming in the United States may be premised on introducing a style of gaming before its competitors. CIE's failure to do so could materially impair its ability to grow its online real money gaming business in the future.

In addition to the risk that online real money gaming will be legalized in a manner unfavorable to CIE, CIE may fail to accurately predict when online real money gaming will be legalized in significant jurisdictions. The legislative process in each US state and at the federal level is unique and capable of rapid, often unpredictable change. If CIE fails to accurately forecast when and how, if at all, online real money gaming will be legalized in additional US jurisdictions, such failure could impair CIE's readiness to introduce online real money gaming offerings in such jurisdictions, which could have a material adverse effect on CIE's, and therefore CGP LLC's, business, financial condition and operating results.

Nevada, Delaware and New Jersey are the only US jurisdictions that have affirmatively legalized online real money gaming and are small jurisdictions that may not yield significant revenue.

Nevada, Delaware and New Jersey are the only US jurisdictions that have enacted legislation legalizing online real money gaming. Both Nevada and Delaware are relatively small jurisdictions in terms of population compared to the rest of the United States and there may be significant competition for online real money gaming in these jurisdictions, and as a result, CIE may not be able to obtain a significant amount of revenue in these jurisdictions.

Individuals may seek to participate in online real money gaming in jurisdictions where it is illegal. If CIE is unsuccessful in blocking such individuals, CIE may suffer legal penalties or an impairment of its ability to offer online real money gaming in general.

Individuals in jurisdictions in which online real money gaming is illegal may nonetheless seek to engage CIE's online real money gaming offerings. While CIE will take steps to block access by individuals in such jurisdictions, those steps may be unsuccessful. In the event that individuals in jurisdictions in which online real money gaming is illegal engage CIE's online real money gaming offerings, CIE may be subject to criminal sanctions, regulatory penalties, the loss of existing or future licenses necessary to offer online real money gaming or other legal liabilities, any one of which could have a material adverse effect on CIE's, and therefore CGP LLC's, business, financial condition and operating results. For example, gambling laws and regulations in many jurisdictions require gaming industry participants to maintain strict compliance with various laws and regulations. If CIE is unsuccessful in blocking access to its online real money gaming offerings by individuals in a jurisdiction where such offerings are illegal, CIE could lose or be prevented from obtaining a license necessary to offer online real money gaming in a jurisdiction in which such offerings are legal and CGP LLC's other gaming licenses may be materially impacted.

Social and mobile games may become subject to regulation or prohibition in certain jurisdictions, which could increase CIE's compliance costs or limit the number of jurisdictions in which CIE is able to offer social and mobile games.

Certain jurisdictions may seek to regulate social and mobile games. For example, the UK Gambling Commission publicly indicated that it will consider whether to regulate social and mobile games in the future after considering the issues of consumer protection. Under recent proposed legislation in Australia, certain online social games with a paid-for element would fall under the Interactive Gambling Act and by being considered gambling would be at risk of outright ban. Thus far, in considering whether regulation or restriction is necessary, most jurisdictions have been interested in understanding the games and whether they constitute gambling under their laws or otherwise require regulation to protect the consumer. If the UK, Australia, or another jurisdiction important to CIE's social and mobile games business regulates or restricts the business, it could have material impacts on how we market our product, on the cost of associated with compliance with such regulation or, depending on the nature of the regulation, CIE could be prohibited from providing social and mobile games, all of which could have material adverse impacts on CIE's, and therefore CGP LLC's, business, financial condition and operating results.

CIE is dependent on a small number of third parties for its online real money gaming platforms.

CIE contracts with a small number of third-party partners to develop, launch, maintain and operate its software platforms for online real money gaming, including its relationship with 888 poker software ("888") and Amaya Gaming Group, Inc. In addition, CIE enters into license agreements and pays license fees for certain intellectual property rights for the development, launch, maintenance and operation of CIE's real money gaming services. If, in the future, these third parties choose not to provide such services or licenses to CIE on terms acceptable to it, CIE will have to seek alternative means of securing comparable services or licenses, which may be on terms that are not as favorable as the current terms. With respect to CIE's platforms for online real money gaming, the termination of these services or licenses by any of these third parties could delay the launch of CIE's real money online poker operations in the United States if such operations are legalized. For example, if CIE's agreement with 888 related to online gaming services in the United States under the WSOP and Harrah's brands were to be breached, CIE would not be able to offer online poker in Nevada and/or New Jersey. The occurrence of such events could have a material adverse effect on CIE's, and therefore CGP LLC's, business, financial condition and operating results.

Recent changes in US tax laws, the enactment of future legislation implementing changes in the US taxation of international business activities, a change in the application of the tax laws of various jurisdictions or the adoption of other tax reform policies could materially impact CIE's financial position and results of operations.

Recent changes to US tax laws, including limitations on the ability of taxpayers to claim and utilize foreign tax credits and the deferral of certain tax deductions until earnings outside of the United States are repatriated to the United States, as well as changes to US tax laws that may be enacted in the future, could impact the tax treatment of CIE’s foreign earnings. The Obama administration has made public statements indicating that it has made international tax reform a priority, and key members of the US Congress have conducted hearings and proposed legislation in the past that addresses several international tax issues. Due to the large and expanding scale of CIE's international business activities, any changes in the US taxation of such activities may increase CIE's worldwide effective tax rate and harm CIE's, and therefore CGP LLC's, financial position and

results of operations. Additionally, any increase or changes in taxes in other countries where CIE has significant operations, such as Israel, could harm CIE's, and therefore CGP LLC's, financial position and results of operations.

Moreover, CIE's corporate structure and intercompany arrangements, including the manner in which CIE develops and uses its intellectual property and the transfer pricing of its intercompany transactions, are intended to provide CIE worldwide tax efficiencies. The application of the tax laws of various jurisdictions, including the United States, to CIE’s international business activities is subject to interpretation and depends on CIE’s ability to operate its business in a manner consistent with its corporate structure and intercompany arrangements. The taxing authorities of the jurisdictions in which CIE operates may challenge CIE’s methodologies for valuing developed technology or intercompany arrangements, including CIE’s transfer pricing, or determine that the manner in which CIE operates its business is not consistent with the manner in which CIE reports its income to the jurisdictions, which could increase CIE’s worldwide effective tax rate and harm its, and therefore CGP LLC's, financial position and results of operations.

CIE is no longer a member of Caesars Entertainment's consolidated group for US federal income tax purposes, which will trigger intercompany gains between CIE and Caesars Entertainment or other members of Caesars Entertainment's consolidated group. CIE could be liable for taxes owed by Caesars Entertainment for periods prior to the date CIE became deconsolidated including with respect to the intercompany gains.

Following the closing of the Rights Offering as defined in Item 1 - Business of our Annual Report on Form 10-K for the year ended December 31, 2013, Caesars Entertainment no longer owns 80% or more of the common stock of CIE, and therefore, under US federal income tax laws, CIE ceased to be a member of Caesars Entertainment’s consolidated group for US federal income tax purposes. The triggering of deferred intercompany gains between CIE and Caesars Entertainment or other members of Caesars Entertainment’s consolidated group resulted in the realization of a gain for Caesars Entertainment with respect to the WSOP assets that CIE acquired from CEOC and its subsidiaries.

After its deconsolidation from Caesars Entertainment’s consolidated group, CIE is the parent of a new consolidated group for US federal income tax purposes. Pursuant to the terms of the tax matters agreement between CIE and Caesars Entertainment (the "Tax Matters Agreement"), however, CIE may be required to make payments to Caesars Entertainment in respect of taxes owed by Caesars Entertainment for periods prior to the date CIE became deconsolidated. In addition, under US federal income tax laws, each member of a consolidated group is liable for the consolidated group’s entire tax obligation. Therefore, to the extent that Caesars Entertainment, or other members of Caesars Entertainment’s consolidated group, fail to make any US federal income tax payments required by law attributable to periods during which CIE was a member of Caesars Entertainment’s consolidated group, CIE could be liable for the shortfall. Similar principles may apply for foreign, state or local income tax purposes where CIE filed combined, consolidated or unitary returns with Caesars Entertainment or its subsidiaries for foreign, state or local income tax purposes.

Risks Related to CGP LLC's Casino Properties and Developments Business

CGP LLC's Casino Properties and Developments business is particularly sensitive to reductions in discretionary consumer spending resulting from downturns in the economy, the volatility and disruption of the capital and credit markets, adverse changes in the global economy and other factors which could negatively impact our financial performance and our ability to access financing.

Changes in discretionary consumer spending or consumer preferences are driven by factors beyond CGP LLC's control, such as perceived or actual general economic conditions; high energy, fuel and other commodity costs; the cost of travel; the potential for bank failures; a soft job market; an actual or perceived decrease in disposable consumer income and wealth; fears of recession and changes in consumer confidence in the economy; and terrorist attacks or other global events. CGP LLC's Casino Properties and Developments business is particularly susceptible to any such changes because CGP LLC’s properties offer a highly discretionary set of entertainment and leisure activities and amenities. If discretionary consumer spending declines, then CGP LLC's results of operations will be adversely impacted.

The continuing economic downturn and adverse conditions in the local, regional, national and global markets have negatively affected CGP LLC and may continue to negatively affect CGP LLC in the future. During periods of economic contraction, CGP LLC's revenues may decrease while some of its costs remain fixed or even increase, resulting in decreased earnings. In addition, CGP LLC may also be unable to find additional cost savings to offset any decrease in revenues. Even an uncertain economic outlook may adversely affect consumer spending in CGP LLC's gaming operations and related facilities, as consumers spend less in anticipation of a potential economic downturn.

Theoretical win rates for CGP LLC's casino operations depend on a variety of factors, some of which are beyond its control.

The gaming industry is characterized by an element of chance. Accordingly, theoretical win rates are employed to estimate what a certain type of game, on average, will win or lose in the long run. In addition to the element of chance, theoretical win rates are also affected by the spread of table limits and factors that are beyond CGP LLC's control, such as a player’s skill and experience and behavior, the mix of games played, the financial resources of players, the volume of bets placed

and the amount of time players spend gambling. As a result of the variability in these factors, the actual win rates at the casino may differ from the theoretical win rates and could result in the winnings of CGP LLC's gaming customers exceeding those anticipated. The variability of these factors, alone or in combination, has the potential to negatively impact our actual win rates, which may adversely affect CGP LLC's business, financial condition, results of operations and cash flows.

Our business is particularly sensitive to energy prices and a rise in energy prices could harm our operating results.

We are a large consumer of electricity and other energy and, therefore, higher energy prices may have an adverse effect on our results of operations. Accordingly, increases in energy costs may have a negative impact on our operating results. Additionally, higher electricity and gasoline prices which affect our customers may result in reduced visitation to our resorts and a reduction in our revenues. We may be indirectly impacted by regulatory requirements aimed at reducing the impacts of climate change directed at up-stream utility providers, as we could experience potentially higher utility, fuel, and transportation costs.

Work stoppages and other labor problems could negatively impact our future profits.

Some of the employees at CGP LLC's properties are represented by labor unions. A lengthy strike or other work stoppage at one of CGP LLC's properties could have an adverse effect on our business and results of operations. From time to time, we have also experienced attempts to unionize certain of our non-union employees, and we cannot provide any assurance that we will not experience additional union activity in the future. There has been significant union activity in a number of jurisdictions in which we operate, including Las Vegas and Louisiana. For example, segments of the workforce at The LINQ Hotel & Casino and Harrah’s New Orleans recently opted to be represented by the Culinary Union. If this activity further affects our workforce, it could negatively impact our profits.

CGP LLC's casino operations extend credit to its customers and may not be able to collect gaming receivables from its credit players.

CGP LLC’s properties conduct its gaming activities on a credit basis as well as a cash basis, which credit is unsecured. Table games players typically are extended more credit than slot players, and high stakes players are typically extended more credit than patrons who tend to wager lower amounts. High-end gaming is more volatile than other forms of gaming, and variances in win-loss results attributable to high-end gaming may have a significant positive or negative impact on cash flow and earnings in a particular quarter.

CGP LLC’s properties extend credit to those customers whose level of play and financial resources warrant, in the opinion of property management, an extension of credit. These receivables could have a significant impact on our results of operations if deemed uncollectible.

We cannot assure you that we will be able to retain our performers and other entertainment offerings on acceptable terms or at all.

CGP LLC's properties’ entertainment offerings are only under contract for a limited time. For example, our contract with Britney Spears is set to expire, subject to certain termination rights, in December 2015. We cannot assure you that we will be able to retain our performers or other shows on acceptable terms or at all. In addition, the third parties which we depend on for CGP LLC's properties’ entertainment offerings may become incapable or unwilling to provide their services at the level agreed upon or at all. These and other of our entertainment offerings draw customers to CGP LLC's properties and are a significant source of our revenue.

Furthermore, CGP LLC's properties are managed by subsidiaries of CEOC, which also manage other properties owned by Caesars Entertainment and its other subsidiaries, and our entertainment offerings will be determined by these management companies and not by us. If we are unable to retain our resident performers or engage replacement performers of comparable popularity on acceptable terms, or if the third parties on which we depend to determine and negotiate contracts for CGP LLC's properties’ entertainment offerings were to become incapable or unwilling to provide their services at the level agreed upon or at all, we may suffer a decline in visitors to CGP LLC's properties and a loss of profits. We also rely on other third parties to manage other entertainment offerings at CGP LLC's properties, including certain of the nightclubs, bars and restaurants. For example, the nightclub/dayclub at Cromwell, which we anticipate will be a significant attraction to that complex, will be managed by a third party. If the manager of the club becomes incapable or unwilling to manage it at the agreed upon levels, the number of guests visiting Cromwell may decrease, which would have a negative impact on our results of operations at that property.

We face the risk of fraud and cheating.

Casino gaming customers may attempt or commit fraud or cheat in order to increase winnings. Acts of fraud or cheating could involve the use of counterfeit chips or other tactics, possibly in collusion with the employees of CGP LLC's casinos. Internal acts of cheating could also be conducted by employees through collusion with dealers, surveillance staff, floor managers or other casino or gaming area staff. Failure to discover such acts or schemes in a timely manner could result in losses in gaming

operations. In addition, negative publicity related to such schemes could have an adverse effect on CGP LLC's reputation, potentially causing a material adverse effect on CGP LLC's business, financial condition, results of operations and cash flows.

If we are unable to effectively compete against our competitors, our profits will decline.

The gaming industry is highly competitive and CGP LLC's competitors vary considerably in size, quality of facilities, number of operations, brand identities, marketing and growth strategies, financial strength and capabilities, and geographic diversity. CGP LLC also competes with other non-gaming resorts and vacation areas, and with various other entertainment businesses. Competitors in each market that we participate may have greater financial, marketing, or other resources than CGP LLC do, and there can be no assurance that they will not engage in aggressive pricing action to compete with CGP LLC. Although we believe CGP LLC is currently able to compete effectively in each of the various markets in which we participate, we cannot ensure that CGP LLC will be able to continue to do so or that they will be capable of maintaining or further increasing their current market share. CGP LLC's failure to compete successfully in their various markets could adversely affect their business, financial condition, results of operations, and cash flow.

Our business may be adversely impacted by the additional gaming and room capacity in Nevada, Louisiana and Maryland and by the initiation and growth of online gaming in Nevada, New Jersey, Louisiana, Maryland and other states. In addition, our operations located in Louisiana may be adversely impacted by the expansion of gaming in Mississippi and the Gulf Coast, and our operations located in Nevada may be adversely impacted by the expansion of gaming in California. In recent years, many casino operators have been reinvesting in existing markets to attract new customers or to gain market share, thereby increasing competition in those markets. As companies have completed new expansion projects, supply has typically grown at a faster pace than demand in some markets, including Las Vegas, CGP LLC's largest market, and competition has increased significantly. For example, CityCenter, a large development of resorts and residences, opened in December 2009, Cosmopolitan Las Vegas, a 3,000 room hotel and casino, opened in December 2010, SLS Las Vegas, a 1,600 room hotel and casino on the northern end of the Strip near Circus Circus, opened in August 2014, and the Genting Group has announced plans to develop a 3,500 room hotel and 175,000 square foot casino called Resorts World Las Vegas, on the northern end of the Strip near Circus Circus. Also, in response to changing trends, Las Vegas operators have been focused on expanding their non-gaming offerings, including upgrades to hotel rooms, new food and beverage offerings, and new entertainment offerings. MGM Resorts International has announced plans for The Park, which includes a new retail and dining development on the land between New York-New York and Monte Carlo, a renovation of the Strip-front facades of both resorts and a new 20,000 seat indoor arena for sporting events and concerts operated by AEG. Construction of The Park and arena are expected to be complete in 2016. Additionally, SkyVue, a proposed 500-foot observation wheel, has been in construction since 2012. There have also been proposals for other large scale non-gaming development projects in Las Vegas by various other developers, including other arenas, observation wheels and a roller coaster, however, there are no details as to when or if these projects will be complete. The expansion of existing casino entertainment properties, the increase in the number of properties and the aggressive marketing strategies of many of CGP LLC's competitors have increased competition in many markets in which they operate, and this intense competition is expected to continue. These competitive pressures have and are expected to continue to adversely affect CGP LLC's financial performance.

In addition, in the mid-Atlantic region, existing casino resorts provide a number of gaming options for customers, thereby creating significant competition for Horseshoe Baltimore. The casino resorts in the mid-Atlantic region compete with each other on the basis of overall atmosphere, range of amenities, level of service, price, location, entertainment offered and size. Further, the MGM Resorts International's development in Prince George's County may draw additional customers away from Horseshoe Baltimore. If Horseshoe Baltimore is unable to effectively compete with other regional casino resorts or keep customers, this inability may negatively affect Horseshoe Baltimore’s, and therefore CGP LLC's, business and operations.

Reduction in discretionary consumer spending resulting from the downturn in the national economy over the past few years, the volatility and disruption of the capital and credit markets, adverse changes in the global economy and other factors could negatively impact our financial performance and our ability to access financing.

Changes in discretionary consumer spending or consumer preferences are driven by factors beyond our control, such as perceived or actual general economic conditions; high energy, fuel and other commodity costs; the cost of travel; the potential for bank failures; a soft job market; an actual or perceived decrease in disposable consumer income and wealth; the recent increase in payroll taxes; increases in gaming taxes or fees; fears of recession and changes in consumer confidence in the economy; and terrorist attacks or other global events. Our business is particularly susceptible to any such changes because our casino properties offer a highly discretionary set of entertainment and leisure activities and amenities. Gaming and other leisure activities we offer represent discretionary expenditures and participation in such activities may decline if discretionary consumer spending declines, including during economic downturns, during which consumers generally earn less disposable income. The economic downturn that began in 2008 and adverse conditions in the local, regional, national and global markets have negatively affected our business and results of operations and may continue to negatively affect our operations in the future. During periods of economic contraction, our revenues may decrease while most of our costs remain fixed and some costs even increase, resulting in decreased earnings. While economic conditions have improved, our revenues may continue to decrease. For

example, while the gaming industry has partially recovered from 2008, there are no assurances that the gaming industry will continue to grow as a result of economic downturn or other factors. Any decrease in the gaming industry could adversely affect consumer spending and adversely affect our operations.

Additionally, key determinants of our revenues and operating performance include hotel average daily rate ("ADR"), number of gaming trips and average spend per trip by our customers. Given that 2007 was the peak year for our financial performance and the gaming industry in the United States in general, we may not attain those financial levels in the near term, or at all. If we fail to increase ADR or any other similar metric in the near term, our revenues may not increase and, as a result, we may not be able to pay down our existing debt, fund our operations, fund planned capital expenditures or achieve expected growth rates, all of which could have a material adverse effect on our business, financial condition, results of operations and cash flow. Even an uncertain economic outlook may adversely affect consumer spending in our gaming operations and related facilities, as consumers spend less in anticipation of a potential economic downturn. Furthermore, other uncertainties, including national and global economic conditions, terrorist attacks or other global events, could adversely affect consumer spending and adversely affect our operations

CGP LLC's Casino Properties and Developments business may be subject to material environmental liability, including as a result of unknown environmental contamination.

The Casino Properties and Developments business is subject to certain federal, state and local environmental laws, regulations and ordinances which govern activities or operations that may have adverse environmental effects, such as emissions to air, discharges to streams and rivers and releases of hazardous substances and pollutants into the environment, as well as handling and disposal from municipal/non-hazardous waste, and which also apply to current and previous owners or operators of real estate generally. Federal examples of these laws include the Clean Air Act, the Clean Water Act, the Resource Conservation Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act and the Oil Pollution Act of 1990. Certain of these environmental laws may impose cleanup responsibility and liability without regard to whether the owner or operator knew of or caused particular contamination or release of hazardous substances. Should unknown contamination be discovered on CGP LLC's property, or should a release of hazardous substances occur on CGP LLC's property, CGP LLC could be required to investigate and clean up the contamination and could also be held responsible to a governmental entity or third parties for property damage, personal injury or investigation and cleanup costs incurred in connection with the contamination or release, which may be substantial. Moreover, such contamination may also impair CGP LLC's ability to use the affected property. Such liability could be joint and several in nature, regardless of fault, and could affect CGP LLC even if such property is vacated. The potential for substantial costs and an inability to use the property could adversely affect our business.

CGP LLC's insurance coverage may not be adequate to cover all possible losses it could suffer, and, in the future, its insurance costs may increase significantly or it may be unable to obtain the same level of insurance coverage.

CGP LLC’s properties may suffer damage caused by a casualty loss (such as fire, natural disasters and acts of war or terrorism) that could severely disrupt its business or subject it to claims by third parties who are injured or harmed. Although CGP LLC maintains insurance (including property, casualty, terrorism and business interruption insurance), that insurance may be inadequate or unavailable to cover all of the risks to which its business and assets may be exposed. Should an uninsured loss or loss in excess of insured limits occur, it could have a significant adverse impact on CGP LLC’s operations and revenues

CGP LLC renews its insurance policies on an annual basis. If the cost of coverage becomes too high, CGP LLC may need to reduce its policy limits or agree to certain exclusions from its coverage in order to reduce the premiums to an acceptable amount. Among other factors, homeland security concerns, other catastrophic events or any change in the current US statutory requirement that insurance carriers offer coverage for certain acts of terrorism could adversely affect available insurance coverage and result in increased premiums on available coverage (which may cause CGP LLC to elect to reduce its policy limits) and additional exclusions from coverage. Among other potential future adverse changes, in the future CGP LLC may elect to not, or may be unable to, obtain any coverage for losses due to acts of terrorism.

Planet Hollywood licenses the Planet Hollywood brand from affiliates of Robert Earl and there can be no assurances that the Planet Hollywood brand would not be negatively impacted by its use outside of our control.

Affiliates of Robert Earl license certain intellectual property relating to the operation of the Planet Hollywood Resort and Casino to Planet Hollywood. The license includes certain names and trademarks and the right to display certain memorabilia on the Planet Hollywood premises. Planet Hollywood has invested significant time and financing to establish its brand as a Hollywood-themed entertainment and non-gaming destination. The expiration or termination, or modification of the terms, of this license may have a materially adverse effect on Planet Hollywood’s, and therefore CGP LLC's, business, financial conditions and operations results.

In addition, the Planet Hollywood brand is used by affiliates of Robert Earl in Hollywood-themed restaurants and shops around the United States and internationally. Any negative events associated with the use of the Planet Hollywood brand with

these restaurants and shops may be out of CGP LLC's control, and may negatively impact the brand’s image for the Planet Hollywood casino, which could harm Planet Hollywood’s, therefore CGP LLC's, business and results of operations.

The success of third parties adjacent to Planet Hollywood is important to our ability to generate revenue and operate our business and any deterioration to their success could materially adversely affect our revenue and operations.

Planet Hollywood does not own the businesses and amenities adjacent to its property such as the Miracle Mile Shops and the hotel tower and timeshare facility operated by Hilton Grand Vacations. However, these adjacent third-party businesses and amenities stimulate additional traffic through the Planet Hollywood complex, including the casino, which is Planet Hollywood’s largest generator of revenue. Any decrease in the popularity of, or the number of customers visiting, these adjacent businesses and amenities may lead to a corresponding decrease in the traffic through Planet Hollywood complex, which would negatively affect Planet Hollywood’s, and therefore CGP LLC's, business and operating results.

Certain of CGP LLC's properties are dependent on the success of third parties.

Certain of CGP LLC's properties are dependent on the success of third parties adjacent to CGP LLC's properties. These adjacent third-party businesses and amenities stimulate additional traffic through CGP LLC's properties, including the casinos. For example, we do not own the Grand Bazaar, which is currently being constructed directly in front of Bally’s, but we expect we will rely on that complex to increase the number of visitors to Bally’s. We also rely on the efforts of third parties in selling condominiums in the Westgate Resorts, located adjacent to Planet Hollywood. We also expect that the success of The LINQ, an open-air dining, entertainment and retail development owned by CEOC that is located adjacent to The LINQ Hotel & Casino, will have a significant impact to the hotel. The popularity and success of these adjacent businesses and amenities may impact the traffic through CGP LLC's properties. Accordingly, we will be dependent on third parties for increasing visitors to certain of CGP LLC's properties.

Additionally, certain of CGP LLC's properties are dependent on space leased from third parties. To the extent such leases were to terminate or such properties were otherwise no longer available to us, our business and results of operations could be negatively affected.

CGP LLC's properties also depend on the success of third parties that manage businesses within certain of CGP LLC's properties, both for the revenues derived from these businesses and for the increases in visitors to these properties as a result of the businesses. For example, we expect that the success of Cromwell will depend largely on the success of the nightclub and pool club featured at the complex, which will be managed by a third party. If this third party is not successful and does not drive visitors to the casino or hotel at Cromwell, our business and results of operations could be negatively affected.

Adverse outcomes in legal proceedings could adversely affect Horseshoe Baltimore Casino.

We are involved in legal proceedings concerning environmental approvals for Horseshoe Baltimore Casino. An action was filed in the Circuit Court for Baltimore City, Maryland on February 20, 2013 challenging the Maryland Department of the Environment's ("MDE") approval of an amendment to a cleanup plan, known as a response action plan ("RAP"), to address contamination at the Casino property (the "RAP litigation"). The RAP litigation seeks to vacate the existing RAP for the site which is required as part of our participation in MDE’s voluntary cleanup program ("VCP"). This case was dismissed by the Circuit Court for Baltimore City on November 6, 2013 and a notice of appeal was filed on December 6, 2013 and oral arguments were heard on October 3, 2014 without issuance of a decision. The same plaintiffs filed a citizen suit on September 19, 2013 in US District Court for the Northern Division of Maryland under the Resource Conservation and Recovery Act ("RCRA"), alleging violations of RCRA and the existence of conditions which create an imminent and substantial endangerment to human health and the environment. This case was dismissed by the court on July 16, 2014 and a notice of appeal of the dismissal was filed August 13, 2014, but no briefing or hearing schedule has been set. Multiple other complaints and administrative challenges to elements of Horseshoe Baltimore Casino were asserted during its construction but ultimately were unsuccessful.

None of the approvals or permits we obtained in connection with the construction of Horseshoe Baltimore Casino have been rescinded as of the date of this Form 10-Q.

Continued growth in consumer demand for non-gaming offerings would negatively impact our gaming revenue.

Recent trends have indicated a growing shift in customer demand for non-gaming offerings, as opposed to solely gambling, when visiting Las Vegas. According to the Las Vegas Convention and Visitors Authority ("LVCVA"), approximately 41% of Las Vegas visitors in 2013 indicated that their primary reason to visit was for vacation or pleasure as opposed to solely for gambling as the main attraction, up from 39% of visitors in 2008. For the nine months ended September 30, 2014, approximately 57% of our gross revenues from our casino properties were from gaming sources. To the extent the demand for non-gaming offerings replaces demand for gambling, our gaming revenues will decrease, which could have an adverse impact on our business and results of operations.

Costs and complexities in the renovation of The LINO Hotel and Csino could delay its renovation and could be greater than the indemnification provided for by CEOC.

The costs and complexities of the $223 million renovation of The LINQ Hotel and Casino may be greater than we anticipate. It is common with significant renovation projects to experience unexpected costs, problems and delays during construction, development and operational start-up. To the extent such expenses are greater than the indemnification provided by CEOC under the Acquired Properties Transaction agreement, we would be liable for such excess. There is no guarantee that CEOC will be able to pay the indemnities required under the Acquired Properties Transaction agreement. Any failure to make such payments and any delays in opening the project could have an adverse impact on our business and results of operations.

Risks Related to Our Class A Common Stock

Caesars Entertainment's call right on our Class A common stock may result in you being forced to sell our Class A common stock at a disadvantageous time and will cause you to own stock of Caesars Entertainment. This call right may not occur at all due to the discretion of Caesars Entertainment or the inability of Caesars Entertainment to meet the conditions required to exercise such right.

After October 21, 2016, Caesars Entertainment will have the right, which it may assign to any of its affiliates or to any transferee of all non-voting units of CGP LLC held by Caesars Entertainment, to acquire all or a portion of the voting units of CGP LLC (or, at our option, shares of CAC’s Class A common stock) not otherwise owned by Caesars Entertainment at such time. As a result, you may be forced to sell your shares of CAC’s Class A common stock on little notice and at a value that may cause you to realize a loss. The exercise of this right by Caesars Entertainment will result in you receiving consideration entirely or partly in the form of stock of Caesars Entertainment, which may be a tax-free reorganization for US federal income tax purposes in certain circumstances. If the exchange is not a tax-free reorganization, you may recognize gain or loss for US federal income tax purposes on such exchange depending on the amount of cash and the value of the stock of Caesars Entertainment you receive in such exchange and the adjusted tax basis of your shares of CAC’s Class A common stock. There can be no assurances that the stock of Caesars Entertainment will maintain its value from the time of Caesars Entertainment’s exercise of the call right or be part of an active trading market. As a consequence, you may be forced to dispose of the stock of Caesars Entertainment at a great loss.

In addition, Caesars Entertainment may exercise the call right in its sole discretion, subject to meeting certain conditions, so Caesars Entertainment may decide to not exercise the call right for any reason whatsoever. Moreover, if Caesars Entertainment does not meet certain liquidity requirements, debt leverage ratio and other requirements, it will be unable to exercise the call right. The uncertainty as to the timing of the exercise of the call right, if at all, by Caesars Entertainment may adversely affect the trading value of our stock.

CGP LLC is required to be liquidated on April 21, 2022, which may result in you receiving less than the full value of your Class A common stock.

Following October 21, 2018 and until April 21, 2022, our Board will have the right to cause a liquidation of CGP LLC, including the sale or winding up of CGP LLC or other monetization of all of its assets. On April 21, 2022 (unless otherwise agreed by Caesars Entertainment and CAC), if our Board has not previously exercised its liquidation rights, CGP LLC shall, and our Board shall cause CGP LLC to, effect a liquidation. Because the liquidation will occur on a set schedule, it is possible that regulations or market factors at the time of liquidation may impede the ability to liquidate the assets of CGP LLC. If CGP LLC is unable to liquidate portions of its assets, proceeds from the liquidation will be negatively impacted. Moreover, the forced liquidation does not preserve the flexibility to maximize the value of CGP LLC’s assets in a sale by waiting for an advantageous time. In addition, CAC’s allocable portion of the gain (if any) on the liquidation of the assets of CGP LLC will generally be subject to US federal income tax at the regular corporate rate. As a result, you may receive less than the full value of your Class A common stock should liquidation occur on April 21, 2022.

An active trading market for our Class A common stock may not develop.

Prior to the closing of the Rights Offering as defined in Item 1 - Business of our Annual Report on Form 10-K for the year ended December 31, 2013, and our listing on the NASDAQ Global Select market ("NASDAQ") on November 19, 2013, there had not been a public market for our Class A common stock. We cannot predict the extent to which investor interest in us will lead to the development of an active trading market or how liquid that market might become. The Sponsors own approximately 66.3% of our common stock as of September 30, 2014 and while the shares are eligible for resale, currently such shares are not available for the public market. As a result, our shares may be less liquid than the shares of other newly public companies or other public companies generally and there may be imbalances between supply and demand for our shares. As a result our share price may experience significant volatility and may not necessarily reflect the value of our expected performance. If an active trading market does not develop, you may have difficulty selling any of our common stock that you buy. Consequently, you may not be able to sell our Class A common stock at prices equal to or greater than the price you paid.

Future sales or the possibility of future sales of a substantial amount of our Class A common stock may depress the price of shares of our Class A common stock.

Future sales or the availability for sale of substantial amounts of our Class A common stock in the public market could adversely affect the prevailing market price of our Class A common stock and could impair our ability to raise capital through future sales of equity securities.

All of the outstanding shares of our Class A common stock are eligible for resale under Rule 144 or Rule 701 of the Securities Act, subject to volume limitations, applicable holding period requirements and the lock-up agreements or other contractual restrictions related to certain of our stockholders.

We cannot predict the size of future issuances of our Class A common stock or other securities or the effect, if any, that future issuances and sales of our Class A common stock or other securities, including future sales by Caesars Entertainment, will have on the market price of our Class A common stock. Sales of substantial amounts of Class A common stock (including shares of Class A common stock issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices for our Class A common stock.

The price and trading volume of our Class A common stock may fluctuate significantly, and you could lose all or part of your investment.

The market price of our Class A common stock may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume of our Class A common stock may fluctuate and cause significant price variations to occur. Volatility in the market price of our Class A common stock may prevent you from being able to sell your shares at or above the price you paid for your shares of Class A common stock. The market price for our Class A common stock could fluctuate significantly for various reasons, including:


•	our operating and financial performance and prospects;


•	our quarterly or annual earnings or those of other companies in our industry;


•	conditions that impact demand for the products and services of CGP LLC's businesses;


•	the public's reaction to our press releases, other public announcements and filings with the SEC;


•	changes in earnings estimates or recommendations by securities analysts who track our Class A common stock;


•	market and industry perception of our success, or lack thereof, in pursuing our growth strategy;


•	strategic actions by us or our competitors, such as acquisitions or restructurings;


•	changes in government and environmental regulation, including gaming taxes;


•	changes in accounting standards, policies, guidance, interpretations or principles;


•	arrival and departure of key personnel;


•	the small percentage of our shares that are publicly traded;


•	changes in our capital structure;


•	increases in market interests rates that would decrease the value of CGP LLC's fixed-rate securities;


•	changes in the stock price of, or a restructuring of, Caesars Entertainment;


•	sales of Class A common stock by us or affiliates of the Sponsors;


•	the expiration of contractual lock-up agreements; and


•	changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events.

In addition, in recent years, the stock market has experienced significant price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies, including companies in the gaming, lodging, hospitality and entertainment industries. The changes frequently appear to occur without regard to the operating performance of the affected companies. Hence, the price of our Class A common stock could fluctuate based upon factors that have little or nothing to do with us, and these fluctuations could materially reduce our share price.

Hamlet Holdings controls us and their interests may conflict with or differ from your interests as a stockholder.

Hamlet Holdings beneficially owns approximately 66.3% of our Class A common stock. Hamlet Holdings has the power to control our Board. Moreover, Hamlet Holdings has the ability to vote on any transaction that requires the approval of

our Board or our stockholders, including the approval of significant corporate transactions such as mergers and the sale of substantially all of our assets. In addition, Hamlet Holdings, the members of which are comprised of three individuals affiliated with Apollo and two individuals affiliated with TPG, as of September 30, 2014 beneficially own approximately 60.7% of Caesars Entertainment’s common stock and controls Caesars Entertainment. As a result, even though an independent committee of the Board of Caesars Entertainment may make decisions with regard to development opportunities for CGP LLC, Hamlet Holdings is in a position to exert a significant influence over both of CAC and Caesars Entertainment and the direction of their business and operations.

The interests of Hamlet Holdings and the Sponsors could conflict with or differ from the interests of holders of our Class A common stock. Affiliates of the Sponsors are in the business of making or advising on investments in companies they hold, and may from time to time in the future acquire interests in or provide advice to businesses that directly or indirectly compete with certain portions of our business or are suppliers or customers of ours or may pursue acquisitions that may be complementary to our business, in which case and, as a result, those acquisition opportunities may not be available to us.

The concentration of ownership held by Hamlet Holdings could delay, defer or prevent a change of control of us or impede a merger, takeover or other business combination which another stockholder may otherwise view favorably. In addition, a sale of a substantial number of shares of stock in the future by Hamlet Holdings could cause our stock price to decline. So long as Hamlet Holdings continues to beneficially own a significant amount of the outstanding shares of our Class A common stock, Hamlet Holdings will continue to be able to strongly influence or effectively control our decisions.

Our stockholders are subject to extensive governmental regulation and if a stockholder is found unsuitable by the gaming authority, that stockholder would not be able to beneficially own our Class A common stock directly or indirectly and we will have the right to redeem the Class A common stock of such disqualified holder.

In many jurisdictions, gaming laws can require any of our stockholders to file an application, be investigated and qualify or have his, her or its suitability determined by gaming authorities. Gaming authorities have very broad discretion in determining whether an applicant should be deemed suitable. Subject to certain administrative proceeding requirements, the gaming regulators have the authority to deny any application or limit, condition, restrict, revoke or suspend any license, registration, finding of suitability or approval, or fine any person licensed, registered or found suitable or approved, for any cause deemed reasonable by the gaming authorities.

For example, under Nevada gaming laws, each person who acquires, directly or indirectly, beneficial ownership of any voting security, or beneficial or record ownership of any non-voting security or any debt security, in a public corporation which is registered with the Nevada Gaming Commission, or the Gaming Commission, may be required to be found suitable if the Gaming Commission has reason to believe that his or her acquisition of that ownership, or his or her continued ownership in general, would be inconsistent with the declared public policy of Nevada, in the sole discretion of the Gaming Commission. Any person required by the Gaming Commission to be found suitable shall apply for a finding of suitability within 30 days after the Gaming Commission's request that he or she should do so and, together with his or her application for suitability, deposit with the Nevada Gaming Control Board (the "Control Board") a sum of money which, in the sole discretion of the Control Board, will be adequate to pay the anticipated costs and charges incurred in the investigation and processing of that application for suitability, and deposit such additional sums as are required by the Control Board to pay final costs and charges. Additionally, under Ohio law, an institutional investor, which is broadly defined and includes any corporation that holds any amount of our stock, will be required to apply for and obtain a waiver of suitability determination.

Furthermore, any person required by a gaming authority to be found suitable, who is found unsuitable by the gaming authority, may not hold directly or indirectly the beneficial ownership of any voting security or the beneficial or record ownership of any non-voting security or any debt security of any public corporation which is registered with the gaming authority beyond the time prescribed by the gaming authority. Such a finding could result in an owner of our securities being required to dispose of their securities at prices less than the price paid for such securities. A violation of the foregoing may constitute a criminal offense. A finding of unsuitability by a particular gaming authority impacts that person’s ability to associate or affiliate with gaming licensees in that particular jurisdiction and could impact the person’s ability to associate or affiliate with gaming licensees in other jurisdictions. The Certificate of Incorporation contains provisions establishing the right to redeem our Class A common stock held by disqualified holders if such holder is determined by any gaming regulatory agency to be unsuitable.

Many jurisdictions also require any person who acquires beneficial ownership of more than a certain percentage of voting securities of a gaming company and, in some jurisdictions, non-voting securities, typically 5%, to report the acquisition to gaming authorities, and gaming authorities may require such holders to apply for qualification or a finding of suitability, subject to limited exceptions for "institutional investors" that hold a company’s voting securities for investment purposes only. Under Maryland gaming laws, we may not sell or otherwise transfer more than 5% of the legal or beneficial interest in Horseshoe Baltimore without the approval of the Maryland Lottery and Gaming Control Commission, or the Maryland Commission, after the Maryland Commission determines that the transferee is qualified or grants the transferee an institutional investor waiver.

Some jurisdictions may also limit the number of gaming licenses in which a person may hold an ownership or a controlling interest and in Maryland an individual or business entity may not own an interest in more than one video lottery facility. It is unclear whether and to what extent such prohibitions will apply to online real money gaming operations when and if such operations become legal in US jurisdictions other than Nevada, New Jersey, and Delaware.

Your percentage ownership in us may be diluted in the future.

Your percentage ownership in CAC may be diluted in the future because of equity awards that may be granted to our directors, officers, employees and service providers in the future. We may decide to establish equity incentive plans that will provide for the grant of common stock-based equity awards to our directors, officers, employees and service providers. In addition, we may issue equity in order to raise capital or in connection with future acquisitions and strategic investments, which would dilute your percentage ownership.

Because we do not anticipate paying dividends on our Class A common stock in the foreseeable future, you should not expect to receive dividends on shares of our Class A common stock.

We have no present plans to pay cash dividends to our stockholders and, for the foreseeable future, intend to retain all of our earnings for use in our business. The declaration of any future dividends by us is within the discretion of our Board and will be dependent on our earnings, financial condition and capital requirements, as well as any other factors deemed relevant by our Board.

We are a "controlled company" within the meaning of the NASDAQ rules and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements.

Hamlet Holdings controls a majority of our voting Class A common stock. As a result, we are a "controlled company" within the meaning of the NASDAQ corporate governance standards. Under the NASDAQ rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a "controlled company" and may elect not to comply with certain corporate governance requirements, including:


•	the requirement that a majority of the Board consists of independent directors;


•	the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors;


•	the requirement that we have a compensation committee that is composed entirely of independent directors; and


•	the requirement for an annual performance evaluation of the nominating and corporate governance and compensation committees.

We intend to utilize these exemptions. As a result, we will not have a majority of independent directors nor will our nominating and corporate governance and compensation committees consist entirely of independent directors and we are not required to have an annual performance evaluation of the nominating and corporate governance and compensation committees. Accordingly, you do not have the same protections afforded to stockholders of companies that are subject to all of the NASDAQ corporate governance requirements.

We are an "emerging growth company" and our possible election to delay adoption of new or revised accounting standards applicable to public companies may result in our financial statements not being comparable to those of other public companies. As a result of this and other reduced disclosure requirements applicable to emerging growth companies, our Class A common stock may be less attractive to investors.

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies," including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition, Section 107 of the JOBS Act provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards such that an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

We have elected to delay such adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to the financial statements of other public companies.

We may take advantage of these reporting exemptions until we are no longer an "emerging growth company." We will remain an "emerging growth company" until the earliest to occur of (i) the last day of the fiscal year during which our total annual gross revenues equal or exceed $1.0 billion, (ii) the last day of the fiscal year following the fifth anniversary of our initial public offering, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt or (iv) the date on which we are deemed a "large accelerated filer" under Rule 12b-2 of the Exchange Act.

We cannot predict if investors will find our Class A common stock less attractive because we will rely on certain of these exemptions. If some investors find our Class A common stock less attractive as a result, there may be a less active trading market for our Class A common stock and our stock price may be more volatile.

As a result of our becoming a company with publicly traded common stock, our expenses and administrative burden increased and will likely further increase particularly after we are no longer an "emerging growth company" as defined in the JOBS Act.

As a company with publicly traded common stock, we incur legal, accounting and other expenses that we did not incur as a company without a publicly traded equity security. In addition, our administrative staff is required to perform additional tasks. For example, we need to create or revise the roles and duties of our Board committees and retain a transfer agent. We are also required to hold an annual meeting for our stockholders, which will require us to expend resources to prepare, print and mail a proxy statement relating to the annual meeting.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act and related regulations implemented by the SEC and the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"), which amended the Sarbanes-Oxley Act, among other federal laws, are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. Dodd-Frank, signed into law on July 21, 2010, effects comprehensive changes to the regulation of financial services in the United States and will subject us to additional federal regulation. We cannot predict with any certainty the requirements of the regulations ultimately adopted or how Dodd-Frank and such regulations will impact the cost of compliance for a company with publicly traded common stock. We are currently evaluating and monitoring developments with respect to Dodd-Frank and other new and proposed rules and cannot predict or estimate the amount of the additional costs we may incur or the timing of such costs. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed. We also expect that being a company with publicly traded common stock and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our Board, particularly to serve on our audit committee, and qualified executive officers.

As an "emerging growth company" as defined in the JOBS Act, we may take advantage of certain temporary exemptions from various reporting requirements, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. When these exemptions cease to apply, we expect to incur additional expenses and devote increased management effort toward ensuring compliance with them. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of such costs.

We may incur impairments to goodwill, indefinite-lived intangible assets, or long-lived assets which could negatively affect our future profits.

We have historically performed our annual impairment assessment of goodwill as of September 30, and finalized the assessment in the following quarter in some years. In 2013, we performed this September 30 assessment and subsequently changed our testing date to October 1. We did not change our methodology with the change in our testing date. We perform this assessment more frequently if impairment indicators exist. We determine the estimated fair value of each reporting unit as a function, or multiple, of EBITDA, combined with estimated future cash flows discounted at rates commensurate with the capital structure and cost of capital of comparable market participants, giving appropriate consideration to the prevailing borrowing rates within the casino industry in general. Both EBITDA multiples and discounted cash flows are common measures used to

value and buy or sell businesses in the casino industry. We determine the estimated fair value of our nonamortizing intangible assets by primarily using the Relief From Royalty Method and Excess Earnings Method under the income approach.

We review the carrying value of our long-lived assets whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. When performing this assessment, we consider current operating results, trends and prospects, as well as the effect of obsolescence, demand, competition, and other economic, legal, and regulatory factors.

We are dependent upon CGP LLC's properties for future cash flows and our continued success depends on our ability to draw customers to CGP LLC's properties. Significant negative industry or economic trends, reduced estimates of future cash flows, disruptions to our business, slower growth rates or lack of growth in our business have resulted in significant write-downs and impairment charges during prior years, and, if one or more of such events occurs in the future, additional impairment charges may be required in future periods. If we are required to record additional impairment charges, this could have a material adverse impact on our consolidated financial statements.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

Federal Investigation

In recent years, governmental authorities have been increasingly focused on AML policies and procedures, with a particular focus on the gaming industry. As an example, a major gaming company recently settled a US Attorney investigation into its AML practices. On October 11, 2013, a subsidiary of Caesars Entertainment, Desert Palace, Inc. (the owner of Caesars Palace), received a letter from the FinCEN, stating that FinCEN is investigating Caesars Palace for alleged violations of the Bank Secrecy Act to determine whether it is appropriate to assess a civil penalty and/or take additional enforcement action against Caesars Palace. Additionally, Caesars Entertainment has been informed that a federal grand jury investigation related to the Company's anti-money laundering practices and procedures is ongoing. Caesars Entertainment is fully cooperating with both the FinCEN and grand jury investigations. Based on proceedings to date, Caesars Entertainment is currently unable to determine the probability of the outcome of these matters or the range of reasonably possible loss, if any.

Item 6. Exhibits

Incorporated by Reference

Exhibit

Number

Exhibit Description

Filed Herewith

Form

Period Ending

Exhibit

Filing Date

31.1

Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated November 14, 2014.

31.2

Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated November 14, 2014

32.1

Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated November 14, 2014.

32.2

Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated November 14, 2014.

99.1

Combined and Consolidated Condensed financial information of Caesars Growth Partners, LLC as of September 30, 2014 and December 31, 2013 and for the period from January 1, 2014 through September 30, 2014.

*101

The following financial statements from the Company’s Form 10-Q for the three and nine months ended September 30, 2014, formatted in XBRL: (i) Condensed Balance Sheets, (ii) Condensed Statements of Comprehensive Loss, (iii) Condensed Statement of Stockholders’ Equity, (iv) Condensed Statement of Cash Flows, (v) Notes to Condensed Financial Statements.

—



*	Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




	CAESARS ACQUISITION COMPANY

November 14, 2014	By:	/S/ TROY J. VANKE
		Troy J. Vanke
		Chief Accounting Officer

Attached files

Caesars Acquisition Co Reports

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