News Column

CAESARS ACQUISITION CO - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations

May 12, 2014

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 months ended March 31, 2014 and 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 for the year ended December 31, 2013 (referred to as "Predecessor Growth Partners") for the three months ended March 31, 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 through the execution of the series of transactions described in Item 1 - Business in our Annual Report on Form 10-K for the year ended December 31, 2013. 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 combined historical financial statements of Predecessor Growth Partners have been prepared on a stand-alone basis and, as the formation transactions are considered to be a reorganization of entities under common control, have been derived from the historical accounting records and consolidated financial statements of Caesars Entertainment. The combined condensed financial statements reflect the results of operations and cash flows of the businesses and assets contributed to or acquired by CGP LLC 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 Income from Equity Method Investment For the three months ended March 31, 2014, CAC recognized $9.3 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. Other Expenses In addition to its income from equity method investment, CAC incurred direct expenses of $5.9 million primarily related to professional services fees, predominantly in preparation for the Asset Purchase Transaction as described in Other Items within this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, as well as general liability insurance and licenses and fees. Provision for income taxes The provision for income taxes for the period presented of $1.2 million is approximately the same as the expected federal tax rate of 35% applied to CAC's pre-tax income, as there are no material items impacting the federal tax provision for the period presented. 31 -------------------------------------------------------------------------------- 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. Capital Resources CAC's sole 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, most significantly 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 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 March 31, 2014 or December 31, 2013. CAESARS GROWTH PARTNERS, LLC AND PREDECESSOR GROWTH PARTNERS Overview For financial reporting purposes, CGP LLC has two reportable segments: (1) Interactive Entertainment and (2) Casino Properties and Developments. CGP LLC'sInteractive 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 the Planet Hollywood Resort & Casino in Las Vegas ("Planet Hollywood") and of Caesars Baltimore Investment Company, LLC ("CBIC" or the "Maryland Joint Venture,") which is the entity that indirectly holds interests in Horseshoe Baltimore casino in Maryland ("Horseshoe Baltimore"). The Horseshoe Baltimore is under construction and is expected to open in the third quarter of 2014. Therefore, the results of operations for Horseshoe Baltimore are primarily comprised of pre-opening and financing-related activities. Operating Results of CGP LLC and Predecessor Growth Partners CGP LLC Predecessor Growth Partners Quarter Ended March 31, (In millions) 2014 2013 Change Change Revenues $ 226.3 $ 151.1 $ 75.2 49.8 % Loss from operations (61.8 ) (24.2 ) (37.6 ) (155.4 )% Adjusted EBITDA(1) 55.6 42.2 13.4 31.8 %



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

32 -------------------------------------------------------------------------------- Net revenues for first quarter 2014 increased by $75.2 million or 49.8% compared with 2013, driven by organic growth in both operating segments, and by CIE's first quarter 2014 acquisition of Pacific Interactive. Loss from operations for first quarter 2014 was $61.8 million as compared to loss from operations of $24.2 million for the same period in 2013. Loss from operations for the first quarter 2014 includes $76.1 million of expense resulting from the change in fair value of contingently issuable non-voting membership units associated with the CIE earn-out calculation related to the formation transaction. Loss from operations for the first quarter 2013 includes $52.4 million of expense associated with contingent consideration related to CIE's late 2012 acquisition of Buffalo Studios LLC ("Buffalo"). Before the consideration of these two items, income from operations would have been $14.3 million for first quarter 2014, compared with $28.2 million for first quarter 2013. This decrease in income from operations is primarily attributable to increased stock compensation expense and significant marketing expenses associated with online gaming. These adverse impacts on income from operations were partially offset by the income impact of increased revenues. Adjusted EBITDA increased $13.4 million or 31.8% in first quarter 2014 as compared with first quarter 2013, driven by the income impact of increased revenues, partially offset by the increase in marketing expenses. Reportable Segments Operating Results Interactive Entertainment Predecessor Growth CGP LLC Partners Quarter Ended March 31, (In millions) 2014 2013 Change Change Revenues $ 124.2 $ 68.1 $ 56.1 82.4 % Income/(loss) from operations 4.5 (37.9 ) 42.4 (111.9 )% Adjusted Segment EBITDA(1) 30.3 21.2 9.1 42.9 %



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(1) See "Reconciliations of Adjusted Segment EBITDA to Net (Loss)/Income" for a reconciliation of Adjusted Segment EBITDA to net (loss)/income.

Interactive Entertainment revenues increased by $56.1 million for the three months ended March 31, 2014 compared to the same period in 2013, as a result of organic growth and the Pacific Interactive acquisition further discussed below. Income from operations for the three months ended March 31, 2014 was $4.5 million and loss from operations for the three months ended March 31, 2013 was $37.9 million. Loss from operations for the first quarter 2013 includes $52.4 million of expense associated with contingent consideration related to CIE's late 2012 acquisition of Buffalo. Before consideration of this item, income from operations would have been $14.5 million for first quarter 2013. The decrease in income from operations is primarily attributable to increased stock compensation expense and significant marketing expenses associated with online gaming. These adverse impacts on income from operations were partially offset by the income impact of increased revenues. Adjusted Segment EBITDA increased in first quarter 2014 as compared with first quarter 2013, driven by the income impact of increased revenues, partially offset by the increase in marketing expenses. For the three months ended March 31, 2014, the CIE business generated approximately 93% of its revenues from its social and mobile games business. CIE measures the performance of its social and mobile games business by using financial metrics, including revenue, and operating metrics, including Daily Active Users, Monthly Active Users, Monthly Unique Users, Average Revenue per User and Monthly Unique Payers. These operating metrics help CIE to understand and measure the engagement levels of its players, the size of its audience and its reach. In December 2012, CIE consummated the acquisition of substantially all of the assets of Buffalo, a social and mobile games developer based in Santa Monica, California. Aggregate cash consideration paid at the time of the acquisition was $45.2 million and contingent consideration of $58.5 million was paid in April 2014. In May 2013, CIE acquired the World Series of Poker social and mobile game assets and intellectual property from Electronic Arts, Inc. In August 2013, CIE acquired an online game development business based in the Ukraine and in October 2013, CIE acquired the workforce, assets and intellectual property of an online gaming development group. Assets acquired and liabilities assumed in these transactions were not material to the financial statements of Predecessor Growth Partners or CGP LLC. On February 13, 2014, CIE announced the acquisition of Pacific Interactive UK Limited, a company based in the United Kingdom, and the assets of various affiliates of Pacific Interactive, creator of House of Fun, which is among the leading social and mobile casino-themed games on Facebook, iOS, Android and the Amazon marketplace. House of Fun was launched in 2011, is free to play, boasts industry-leading Key Performance Indicators ("KPIs") and, as of March 31, 2014 has a loyal user base of approximately 770 thousand daily active users and almost 3.0 million monthly active users. 33 -------------------------------------------------------------------------------- The table below shows the results of CIE's social and mobile games business, using the financial and operating metrics referred to above, for the periods indicated. Revenues are presented in millions of dollars, user statistics are presented in thousands of users, and average revenues per user is presented in dollars. For the Three Months Ended March 31, December 31, September 30, June 30, March 31, 2014(1) 2013(2) 2013 2013 2013 Total Revenues $ 115.7 $ 90.7 $ 74.7 $ 70.7$ 66.6 Average Daily Active Users (3) 5,704 4,639 4,803 4,952 5,259 Average Monthly Active Users (3) 19,597 15,914 16,354 16,962 17,695 Average Monthly Unique Users (3) 17,370 13,908 14,615 14,941 16,052 Average Monthly Unique Payers (3) 511 322 293 279 292



Average Revenue per User $ 0.24 $ 0.21 $ 0.17

$ 0.16$ 0.14

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(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 on 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 March 31, 2014, CIE's social and mobile games business had approximately 511 thousand average Monthly Unique Payers, or 2.9% of the total number of average Monthly Unique Users on the social and mobile platforms during this period, purchase virtual goods. 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. 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 distribution platforms. Overall, CIE expects average revenue per user to be slightly higher on the mobile platforms based upon the relative ease of the tablet payment process and the overall user demographics of tablet users, when compared to the purchase process and user demographics of web platforms. The table below shows the revenue generated from CIE's social and mobile games business by geographic region for the periods presented and assumes that deferred revenues are spread proportionately across all geographies. For the Three Months Ended March 31, December 31, September 30, June 30, March 31, (In millions) 2014 2013(1) 2013 2013 2013 North America $ 80.2 $ 60.9 $ 50.1 $ 47.8$ 43.2 South America 0.7 0.6 0.6 0.6 0.4 Europe 10.0 8.9 8.1 7.8 8.7 Asia/Pacific 24.3 20.0 15.7 14.3 14.0 Africa and Rest of the World 0.5 0.3 0.2 0.2 0.3 $ 115.7 $ 90.7 $ 74.7 $ 70.7$ 66.6



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(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. 34

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Casino Properties and Developments

CGP LLC Predecessor Growth Partners Quarter Ended March 31, (In millions) 2014 2013 Change Change Revenues $ 102.1 $ 83.0 $ 19.1 23.0 % Income from operations 10.8 13.7 (2.9 ) (21.2 )% Adjusted Segment EBITDA(1) 26.1 21.0



5.1 24.3 %

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(1) See "Reconciliations of Adjusted Segment EBITDA to Net (Loss)/Income" for a reconciliation of Adjusted Segment EBITDA to net (loss)/income. 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 our property: (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. Casino Properties and Developments net revenues for the three months ended March 31, 2014 increased by $19.1 million when compared with the same period in 2013. The majority of the increase was driven by Other revenue related to the enhanced entertainment options at the new Axis Theater in 2014. Additionally, there were increases in both trips and spend per trip at Planet Hollywood. During the first quarter of 2014, total trips increased by approximately 2.5% from the first quarter of 2013, driven by a 5.2% increase in trips by non-lodgers, partially offset by a decrease in trips by lodgers. Total spend per trip increased by 5.2% in first quarter of 2014 versus the first quarter of 2013, driven by increases in spend per trip from both lodgers and non-lodgers. Gross casino hold decreased slightly from 11.8% in the first quarter of 2013 to 11.4% in first quarter of 2014. Cash average daily room rates for the three months ended March 31, 2014 increased to $132, or approximately 23.4%, when compared to $107 for the same period in 2013, primarily resulting from the introduction of resort fees. Average daily occupancy was 95.7% in the first quarter of 2014 and 94.6% in the first quarter of 2013. Revenue per available room ("RevPar") for the three months ended March 31, 2014 and 2013 was $124 and $103, respectively. Food and beverage revenues for the three months ended March 31, 2014 and 2013 were $24.9 million and $21.4 million, respectively. This increase in revenues was driven largely by the ramp up of the Gordon Ramsay BurGR restaurant that opened in 2012, combined with increased banquet business, as well as revenues from the Axis Bar inside the new Axis theater, the new Pinup Pizza takeout restaurant, and Shiver frozen daiquiri bar which all opened after the first quarter of 2013. Income from operations decreased in 2014 when compared with 2013 as the income impact of increased revenues was more than offset by the combination of increased expenses at Planet Hollywood and increased pre-opening expenses associated with the Baltimore Development, as defined and described in the Capital Resources section below. Certain pre-opening expenses for Baltimore are not a component of Adjusted Segment EBITDA, therefore Adjusted Segment EBITDA increased for 2014 when compared with 2013. 35 --------------------------------------------------------------------------------



Other Factors Affecting Net Income

Predecessor Growth CGP LLC Partners Quarter Ended March 31, (In millions) 2014 2013



Interest expense, net of interest capitalized $ (11.9 ) $

(10.1 ) Interest income 1.0 - Interest income - related party 48.8



40.6

Loss on early extinguishment of debt (0.6 ) - Other income/(expense), net -



0.2

Provision for income taxes (1) (1.7 ) (2.0 ) Net loss/(income) attributed to non-controlling interests (2) 6.5 1.8 _________________________



(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 purposes. CGP LLC does not record a tax provision

for its Casino Properties and Developments segment as all entities within

this segment are pass-through entities for income tax purposes. Predecessor

Growth Partners' income taxes represent the allocated income taxes from the

consolidated Caesars Entertainment provision for income taxes as if

Predecessor Growth Partners filed separate U.S. 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 Baltimore 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 associated with the Planet Hollywood secured loan increased from $9.5 million in first quarter of 2013, to $9.6 million in the first quarter of 2014. Increases to the expense resulted from increased amortization of debt discount, partially offset by a decrease in interest expense resulting from pre-payments of principle. In July 2013, CBAC Borrower LLC ("CBAC Borrower") entered into a credit agreement (the "Baltimore Credit Facility"). Interest expense associated with this facility was $1.6 million in the first quarter of 2014 which consisted of $5.9 million in interest expense offset by $4.3 million in capitalized interest for related construction of the facility. Other interest expense, net of interest capitalized, was $0.7 million and $0.6 million for the three months ended March 31, 2014 and 2013, respectively, primarily due to a 2014 change in the fair value of the earn-out associated with an acquisition partially offset by a decrease in the interest expense associated with CIE's unsecured credit facility with Caesars Entertainment as defined in the Capital Resources section below, resulting from the lower average balance owed to Caesars Entertainment. Interest expense associated with contingent consideration and capital lease obligations was not material to any period presented. Interest income-related party CGP LLC receives interest income on its portfolio of approximately $1.1 billion face value of aggregate principal amount of notes received from CEOC in the transactions described in Item 1 - Business of our Annual Report on Form 10-K for the year ended December 31, 2013 ("CEOC Notes"). The CEOC Notes have fixed interest rates ranging from 5.625% to 6.50% and maturities ranging from 2015 to 2017. The increase in interest income in the first quarter of 2014 when compared with the first quarter of 2013 is primarily the result of increased accretion of discount originally recorded as a result of purchasing the senior notes at market prices significantly below face value. Loss on early extinguishment of debt The Planet Hollywood secured loan contains excess cash flow provisions which require mandatory prepayment of debt when certain conditions are met. The mandatory prepayments made in the first quarter of 2014 resulted in the recognition of a loss on early extinguishment of debt of $0.6 million. Other income/(expense), net Other income/(expense), net for the three months ended March 31, 2014 and 2013 was not material to the respective periods. 36 -------------------------------------------------------------------------------- Provision for income taxes CGP LLC The provision for income taxes for CGP LLC represents the income taxes from its corporate subsidiary, CIE, which was taxed as a corporation for federal, state and foreign income tax purposes. 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. No provision for income taxes is reported for the Casino Properties and Developments segment of CGP LLC as this segment is taxed as a partnership for federal and state income tax purposes whereby any income or losses were allocated to the CGP LLC Members and taxed by each Member. Predecessor Growth Partners The 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 U.S. 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 nondeductible stock-based compensation and other nondeductible expenses. Net loss/(income) attributed to non-controlling interests CGP LLCCaesars Interactive EntertainmentCGP LLC's non-controlling interest reflects the non-controlling interest associated with consolidating Caesars Interactive 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. For the quarter ended March 31, 2014, net income of $0.2 million was attributable to non-controlling interests in CIE. Baltimore Joint Venture For the quarter ended March 31, 2014, net loss of $6.7 million was attributable to non-controlling interests in the Baltimore joint venture. In February 2014, our joint venture CR Baltimore Holdings ("CRBH") sold a portion of its interest in CBAC Gaming LLC ("CBAC"), the entity which owns a majority of the interests in the Maryland Joint Venture to an existing joint venture partner, Caves Valley Partners ("CVP"). CGP LLC received $12.8 million of the proceeds from the sale. After consideration of this transaction, CRBH owns approximately 70% of CBAC. Predecessor Growth Partners As a result of the acquisition of a 51% controlling equity interest in Playtika Ltd. ("Playtika") in May 2011, CIE began consolidating the results of Playtika subsequent to the acquisition date, recording net income attributed to non-controlling interest of $8.0 million for the 49% equity interest not owned during that period. CIE acquired the remaining 49% equity interest in Playtika in December 2011. For the period ended March 31, 2013, net loss attributed to non-controlling interests was $1.8 million. Reconciliations of Adjusted Segment EBITDA to Net (Loss)/Income Our 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. 37 --------------------------------------------------------------------------------

Predecessor Growth CGP LLC Partners Quarter Ended March 31, (In millions) 2014 2013 Adjusted Segment EBITDA Interactive Entertainment $ 30.3 $ 21.2 Casino Properties and Developments 26.1 21.0 Other (0.8 ) - 55.6 42.2 Reconciliation Stock-based compensation(a) (18.3 ) (2.5 ) Write-downs, reserves, recoveries, and project opening costs(b) (7.8 ) (0.8 ) Change in fair value of contingently issuable non-voting membership units(c) (76.1 ) - Change in fair value of contingent consideration(d) (0.7 ) (52.4 ) Loss on early extinguishment of debt(e) (0.6 ) - Transaction costs (0.2 ) - Other (expense)/income, net - 0.2 Other(f) (0.7 ) (0.3 ) EBITDA (48.8 ) (13.6 ) Depreciation and amortization (13.6 ) (10.4 ) Interest expense, net of interest capitalized (11.9 ) (10.1 ) Interest income 1.0 - Interest income - related party 48.8 40.6 Provision for income taxes (1.7 ) (2.0 ) Net (loss)/income $ (26.2 ) $ 4.5 ___________________



(a) Amounts represent non-cash stock-based compensation expense related to stock

options and restricted stock.

(b) Amounts primarily represent development costs related to the construction

and planned casino operations of Horseshoe Baltimore. (c) Amount represents the change in fair value of contingently issuable



non-voting membership units associated with the CIE earn-out calculation

related to the transactions establishing CGP LLC. The non-voting membership

units ultimately will 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 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. (f) Amounts represent other add-backs and deductions to arrive at EBITDA and



Adjusted EBITDA but not separately identified, such as lobbying expenses.

The following Segment EBITDA information is presented based on the reporting segments: Quarter Ended March 31, 2014 Casino Interactive Properties and (In millions) Entertainment Developments Other Total Income/(loss) from operations $ 4.5 $ 10.8 $ (77.1 )$ (61.8 ) Depreciation and amortization 6.1 7.5 - 13.6 Loss on extinguishment of debt - (0.6 ) - (0.6 ) Segment EBITDA 10.6 17.7 (77.1 ) (48.8 ) Depreciation and amortization (6.1 ) (7.5 ) - (13.6 ) Interest expense, net of interest (0.7 ) (11.2 ) - (11.9 ) capitalized Interest income - - 1.0 1.0 Interest income-related party - - 48.8 48.8 Provision for income taxes (1.7 ) - - (1.7 ) Net income/(loss) $ 2.1 $ (1.0 ) $ (27.3 )$ (26.2 ) 38

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Quarter Ended March 31, 2013 Interactive Casino Properties and (In millions) Entertainment Developments Other Total (Loss)/income from operations $ (37.9 ) $ 13.7 $ - $ (24.2 ) Depreciation and amortization 3.9 6.5 - 10.4 Other income/(expense), net 0.1 0.1 - 0.2 Segment EBITDA (33.9 ) 20.3 - (13.6 ) Depreciation and amortization (3.9 ) (6.5 ) - (10.4 ) Interest expense, net of interest (0.6 ) (9.5 ) - (10.1 )



capitalized

Interest income-related party - - 40.6 40.6 Benefit from/(provision for) income 14.0 (1.8 ) (14.2 ) (2.0 ) taxes Net (loss)/income $ (24.4 ) $ 2.5 $ 26.4$ 4.5 Liquidity and Capital Resources Capital Spending CGP LLC incurs capital expenditures in the normal course of business, performs ongoing refurbishment and maintenance at Planet Hollywood, and performs ongoing maintenance and enhancements to its social and mobile games to maintain their quality standards. Cash used for capital expenditures in the normal course of business is typically made available from cash flows generated by operating activities. CGP LLC may also pursue acquisition opportunities for additional businesses or social or mobile games that meet its strategic and return on investment criteria. CGP LLC's planned development projects, if they go forward, will require 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 months ended March 31, 2014 was $29.6 million. Predecessor Growth Partners' capital spending for the three months ended March 31, 2013 totaled $12.6 million. The majority of the 2014 and 2013 capital spending relates to Horseshoe Baltimore. CGP LLC's near term 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, interest income generated from its investments in the CEOC Notes, and borrowings under CIE's credit facility with Caesars Entertainment. CGP LLC's cash and cash equivalents totaled $972.6 million and $976.9 million at March 31, 2014 and December 31, 2013, respectively. Payments of short-term debt obligations and other commitments are expected to be made from operating cash flows. 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 operating cash inflows are used for operating expenses, debt service costs, working capital needs and capital expenditures in the normal course of business. CGP LLC's restricted cash totaled $226.4 million and $260.4 million at March 31, 2014 and December 31, 2013, respectively. Restricted cash and cash equivalents include amounts restricted under the terms of the Baltimore Credit Facility and Planet Hollywood debt agreement. The Planet Hollywood debt agreement requires that CGP LLC maintain certain reserves for payment of property taxes, insurance, interest and ongoing furniture, fixtures and equipment purchases, or property development. The classification between current and long-term is dependent upon the intended use of each particular reserve. At March 31, 2014 and December 31, 2013, Caesars Interactive had cash balances in its subsidiary located in Israel of $20.7 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 March 31, 2014. CIE may use the cash in the Playtika subsidiary to repay debt payable to related parties, fund operations at Playtika, pursue international acquisitions or repatriate the cash to CGP LLC. As of both March 31, 2014 and December 31, 2013, CIE had $39.8 million of book value of indebtedness outstanding and payable to Caesars Entertainment, and Planet Hollywood had $459.4 million and $462.5 million, respectively, of book value of indebtedness outstanding and payable to third-party lenders. In addition, at March 31, 2014 and December 31, 2013, the Maryland Joint Venture had $218.2 million and $217.7 million, respectively, of book value of indebtedness outstanding and 39 -------------------------------------------------------------------------------- payable to third-party lenders. Cash paid for interest for the first quarter of 2014 and 2013 was $14.3 million and $4.9 million, respectively. CGP LLC believes that its cash and cash equivalents balance 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. See "Other Items, Subsequent Events for CGP LLC" for information regarding subsequent transactions related to CGP LLC's liquidity. Capital Resources 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 London Inter-Bank Offered Rate ("LIBOR") plus 5%. This credit facility does not have any restrictive or affirmative covenants. In March 2012, Rock Gaming LLC ("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 June 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 Consolidated Condensed Balance Sheet at March 31, 2014 and December 31, 2013. 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 exercised its option to extend the Planet Hollywood senior secured loan to 2013. On December 5, 2013 the loan maturity was again extended to April 2015. No additional options exist to extend the maturity of the loan. The book values of outstanding debt under the Planet Hollywood Loan Agreement were $459.4 million and $462.5 million at March 31, 2014 and December 31, 2013, respectively, and bear interest on the unpaid principal balance at a rate per annum equal to LIBOR plus 2.859%. CBAC Borrower, a joint venture among 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 the Horseshoe Baltimore and a parking garage (collectively, the "Baltimore Development"). 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 and a $37.5 million delayed draw facility available until January 2015 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 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 the Baltimore Development, which guarantees completion of the construction of the Baltimore Development, availability of contemplated working capital and the discharge, bonding or insuring over of certain liens in connection with the Baltimore Development. The maximum liability of CBIC under its completion guarantee is approximately $9 million. Concurrently with the closing of the Baltimore Credit Facility, CBAC 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 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 the Baltimore Development. 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 40 -------------------------------------------------------------------------------- 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. 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. Contingently issuable non-voting membership units Pursuant to the terms of the CGP Operating Agreement, 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 March 31, 2014 and December 31, 2013 was $382.6 million and $306.5 million, respectively. The change in fair value of $76.1 million is reported within the CGP LLC Consolidated Condensed Statement of Operations. Other Obligations and Commitments As of March 31, 2014, there have been no material changes outside of the ordinary course of business to our contractual obligations, which are set forth in the table included in Item 7 in our annual report on Form 10-K for the year ended December 31, 2013. Off- Balance Sheet Arrangements CGP LLC did not have any off-balance sheet arrangements at March 31, 2014 or December 31, 2013. Other Items CIE share repurchase 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. The transaction 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-based awards reclassified to equity upon exercise. Net cash outflow for the share repurchase was $15.3 million. Subsequent Events for CGP LLC Asset Purchase Transaction Agreement On March 1, 2014, CAC entered into a Transaction Agreement (the "Agreement") by and among, Caesars Entertainment, CEOC, Caesars License Company, LLC ("CLC"), Harrah's New Orleans Management Company ("HNOMC"), Corner Investment Company, LLC ("CIC"), 3535 LV Corp. ("3535 LV"), Parball Corporation ("Parball"), JCC Holding Company II, LLC ("JCC Holding"), CAC and CGP LLC. The Agreement was fully negotiated by and between a Special Committee of CEC's Board of Directors (the "CEC Special Committee") and a Special Committee of CAC's Board of Directors (the "CAC Special Committee"), each comprised solely of independent directors, and was recommended by both committees and approved by the Boards of Directors of CEC and CAC. The CEC Special Committee, the CAC Special Committee and the Boards of Directors of CEC and CAC each received fairness opinions from firms with experience in valuation matters, which stated that, based upon and subject to (and in reliance on) the assumptions made, matters considered and limits of such review, in each case as set forth in the opinions, the Purchase Price (as defined below) was fair from a financial point of view to CEC and CGP LLC, respectively. Pursuant to the terms of the Agreement, CGP LLC (or one or more of its designated direct or indirect subsidiaries) agreed to acquire from CEOC or one or more of its affiliates, (i) The Cromwell (f/k/a Bill's Gamblin' Hall & Saloon), The Quad, Bally's Las Vegas and Harrah's New Orleans (each a "Property" and collectively, the "Properties"), (ii) 50% of the ongoing management fees and any termination fees payable under the Property Management Agreements to be entered between a Property Manager (as defined below) and the owners of each of the Properties (the "Property Management Agreements"); and (iii) certain intellectual property that is specific to each of the Properties (together with the transactions described in (i) and (ii) above, the "Asset Purchase Transaction") for an aggregate purchase price of $2.0 billion (the "Purchase Price"), less 41 -------------------------------------------------------------------------------- outstanding debt to be assumed in the Asset Purchase Transaction, and also subject to various pre-closing and post-closing adjustments in accordance with the terms of the Agreement. On May 5, 2014, CAC and CGP LLC entered into that certain First Amendment to Transaction Agreement (the "Amendment") by and among Caesars Entertainment Corporation, CEOC, CLC, HNOMC, CIC, 3535 LV, Parball and JCC Holding pursuant to which the parties to such agreement amended the Agreement (the Agreement, as so amended by the Amendment, the "Amended Agreement"). On May 5, 2014, pursuant to the Amended Agreement, CGP LLC acquired the Las Vegas properties The Cromwell, The Quad, and Bally's Las Vegas (together, the "Acquired Properties") and CGP LLC will acquire the Louisiana property, Harrah's New Orleans, after the required regulatory approval. Pursuant to the terms of the Amended Agreement, the parties have agreed to use reasonable best efforts to establish a new services joint venture (the "Services JV") which will be jointly owned by CEOC, CERP, and Caesars Growth Properties Holdings, LLC ("CGPH"), a wholly-owned subsidiary of CGP LLC and certain of their respective subsidiaries. The purpose of the Services JV includes the common management of the enterprise-wide intellectual property, which will be licensed by the Services JV to, among other parties, each of the Property Owners, and shared services operations across the portfolio of CEOC, CERP and CGP LLC properties. The foregoing description of the Agreement and the Amendment is only a summary, does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement and the Amendment which were filed with the Securities and Exchange Commission ("SEC") on March 3, 2014 as an Exhibit to Form 8K and on May 6, 2014 as an Exhibit to Form 8-K, respectively. Caesars Growth Properties Term Facility The purchase price of CGP LLC's acquisition of The Cromwell, The Quad Resort & 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 CGP LLC with cash on hand and the proceeds of $700.0 million of term loans (the "First Closing Term Loan"). Caesars Growth Properties Holdings, LLC ("CGPH") closed on the First Closing Term Loan on May 5, 2014. The First Closing Term Loan matures on May 5, 2015; provided that CGPH has the option to extend, for a fee equal to 1.00% of the aggregate principal amount of the First Closing Term Loan outstanding on the initial maturity date, for one additional year. The First Closing Term Loan requires scheduled quarterly payments in amounts equal to 0.25% of the original aggregate principal amount of the First Closing Term Loan, with the balance due at maturity. In addition, the First Closing Term Loan is expected to be repaid in full upon the acquisition by CGP LLC of the Harrah's New Orleans Hotel and Casino, the contribution of the Planet Hollywood Resort and Casino and the release of certain indebtedness required to fund such acquisition from escrow. The Credit Agreement allows CGPH to request one or more incremental term loan and revolving credit facilities in an aggregate amount of up $150.0 million, subject to certain conditions and receipt of commitments by existing or additional financial institutions or institutional lenders. Caesars Growth Properties Indenture 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 U.S. 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 date that certain escrow conditions are satisfied (the "Escrow Release Date"). The Indenture provides that, among other things, prior to the Escrow Release Date, the Issuers will not own, hold or otherwise have any interest in any assets other than the escrow account and cash or cash equivalents (the "Pre-Escrow Release Covenant"). In connection with the First Closing, the Issuers are currently not in compliance with the Pre-Escrow Release Covenant. The Issuers intend to be in compliance with the Indenture prior to such default becoming an event of default under the Indenture by either consummating the Second Closing (acquisition of Harrah's New Orleans (the "Louisiana Property"), 50% of the ongoing management fees and any termination fees payable for the Louisiana Property, and certain intellectual property that is specific to the Louisiana Property) and releasing the gross proceeds of the notes from escrow or, following receipt of gaming and other required governmental approvals, transferring the assets related to the First Closing to another entity. There can be no assurances, however, that the Issuers will be successful in consummating the Second Closing or transferring such assets, and curing such default. Caesars Growth Properties Term Loan On May 8, 2014, Caesars Growth Properties Holdings, LLC (the "Borrower") closed on the $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 42 -------------------------------------------------------------------------------- "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"), which was undrawn at the closing of the Term Loan. The Borrower is a subsidiary of CGP LLC, which is a joint venture between Caesars Acquisition Company and Caesars Entertainment Corporation. Pursuant to an escrow agreement, dated as of May 8, 2014, among U.S. 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 Term Loan, if applicable, into a segregated escrow account until the date that certain escrow conditions are satisfied. Full details of this transaction, including additional information on the terms of the Term Loan and Revolving Credit Facility, and the conditions upon which the funds can be released from escrow, can be obtained from the Form 8-K filed with the SEC on May 9, 2014. 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 Form 10-Q. These forward-looking statements, including, without limitation, those relating to (i) the purchase of the Properties and (ii) 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 CAC's 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 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 therein): the ability to satisfy the conditions to the closing with respect to the Contemplated Transaction, including receipt of required



regulatory

approvals; the purchase of Harrah's New Orleans may not be consummated on the terms contemplated or at all; the ability to timely and cost-effectively integrate companies that CGP LLC acquires into its operations, including the Acquired Properties;



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 construction of The Cromwell and the renovation of The Quad; 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 effects of a default by Caesars Entertainment on certain debt obligations;

Caesars Entertainment's interests may conflict with CGP LLC's interests and may possibly keep all potential development opportunities for itself; the adverse effects if Caesars Entertainment or any of its subsidiaries were to file for bankruptcy; 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 CGP LLC, CIE and the Acquired Properties license for use in their respective businesses; 43

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CIE's reliance on subsidiaries of Caesars Entertainment to obtain online gaming licenses in certain jurisdictions, such as New Jersey; the adverse effects on CAC's ability to comply with certain obligations imposed by federal securities law and certain debt arrangements if it is determined that Deloitte & Touche LLP ("Deloitte") was not independent of Caesars Entertainment or CGP LLC; 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, including 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 ability to timely and cost-effectively integrate assets, including the properties



recently

acquired as well as those yet to be acquired in connection with



the

Contemplated Transaction, and companies that CGP LLC acquires



into its

operations; the additional capital that CGP LLC may require to complete the consummation of the Contemplated Transaction and support



business

growth may not be available on acceptable terms;



the adverse effects of extensive governmental regulation and taxation

policies, which are applicable to CGP LLC, are enforced; the effects of local and national economic, credit and capital market conditions on the economy in general, and on the gaming industry in particular;



the sensitivity of CAC'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

Planet Hollywood faces from other hotel casino resorts in Las Vegas and Horseshoe Baltimore will face 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; CAC's ability to expand into international markets in light of additional business, regulatory, operational, financial and



economic

risks associated with such expansion;



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; evolving U.S. and foreign laws could subject CIE to claims and prevent CIE from providing its current games to players or to modify its games; 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 or is legalized in an unfavorable manner;



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; and



political and economic uncertainty created by terrorist attacks and

other acts of war or hostility. 44

-------------------------------------------------------------------------------- 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. 45



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