Vegas Newsletter Warns Readers of Possible Caesars Bankruptcy
Posted on: September 7, 2013, 05:30h.
Last updated on: October 22, 2013, 01:20h.
It’s no secret that Caesars Entertainment has had some financial problems in recent years. Now, a newsletter publisher who writes for Las Vegas visitors is recommending that gamblers and tourists not stay at hotels or play in casinos owned by Caesars, saying that he believes a bankruptcy filing could be possible in the near future.
Watch Your Bankroll
The newsletter, called Openings and Closings in Las Vegas, is published by Bill Mandel. According to Mandel, the newsletter has more than 64,000 subscribers and has been published for 16 years. In his most recent issue, he cautioned readers about doing business at Caesars casinos.
“In an abundance of caution, this newsletter advises you not to deposit any funds (deposits for hotel reservations, deposits in the cashier’s cage, or not redeeming casino chips, etc.)…until the situation at Caesars becomes clearer,” Mandel wrote recently.
It’s certainly true that rumors about a possible Caesars bankruptcy have been circulating for months now. And while the company won’t comment on those rumors, plenty of analysts have at least raised the possibility, though Caesars hasn’t made any specific moves that would suggest they are headed in that direction.
In April, Moody’s Investors Services downgraded Caesars’ credit rating to one of the lowest levels possible, which helped fuel bankruptcy speculation. That move by Moody’s was cited by Mandel as one reason for his concern. Many analysts are also concerned about the company’s medium-term future, with January 2015 being a key date that many have looked at. At that time, $4.4 billion in mortgage-backed securities are scheduled to mature.
No Reason for Alarm
Overall, however, most investors seem to have at least cautious optimism about the company’s future. While Caesars’ stock price fell to as low as $12.25 after the Moody’s credit rating drop, it rose to nearly $22 just months later. With Caesars’ new World Series of Poker online poker product expected to launch soon in Nevada, their recent breakthroughs in new markets – Caesars recently broke ground on a new property in Maryland – and the launch of their Linq venues on the Las Vegas Strip next year, many believe the company is headed for a turnaround in the years to come.
Even if Caesars does opt for bankruptcy at some point, many experts say that Mandel’s warnings are unfounded. According to UNLV gaming expert David Schwartz, there’s really no precedent for a casino bankruptcy endangering money that has been deposited by players in a casino or hotel.
“I’m struggling to remember any time when a gaming company’s bankruptcy filing directly affected customers,” Schwartz said. “It would be a problem for shareholders, but not customers.”
For instance, Schwartz cited the 2009 bankruptcy filing by Station Casinos. That move allowed Station (and the Fertitta family, which owns the casino group) to reorganize the company’s finances, allowing them to reemerge as a stronger company in 2011.
Caesars Entertainment was founded in 1937, at which point it was known as Harrah’s Entertainment. The company now owns over 50 casinos, as well as hotels and golf courses around the world. Some of their most famous properties include Caesars Palace and Bally’s in Las Vegas, the Harrah’s chain of casinos, and the Horseshoe casinos.
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