MEMORANDUM From: The Bill Walczak Campaign Re: Research Findings on Caesars Entertainment Date: September 17, 2013

Below are the findings from a research conducted on Caesars Entertainment. Caesars, the operating partner in the Suffolk Downs proposal, is loaded with debt: Caesars Entertainment, investor and operating partner in the Suffolk Downs proposal, is struggling under a heavy debt load of $24 billion brought about by a leveraged buyout on the eve of the financial crisis.1

The Wall Street Journal characterized Caesars' capital structure as "unsustainable" and reported earlier this year that "S&P lowered Caesars' rating to triple-C plus, seven notches into junk territory.2 Caesars debt occurred through a private equity-backed LBO in 2008: On January 28, 2008, Caesars Entertainment was acquired by affiliates of private equity funds Apollo Global Management, LLC and TPG Capital, LP in an all-cash transaction, valued at $30.7 billion, including the assumption of $12.4 billion of debt, and the incurrence of $1.0 billion of acquisition costs.3 Caesars private equity investors took the company public in 2012 and remain the largest shareholders.

With $23.7 billion of debt, Caesars must restructure and may still face bankruptcy: Analysts predict Caesars will have to restructure its debt by 2015, which is before a proposed casino in Boston would open. Caesars has refinanced debt in the short-term, but RBC Capital Markets concluded in May that "we continue to believe these short-term solutions only buy them time until 2015. It is our view

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1!! Caesars!Entertainment!Corporation.!101K.!March!15,!2013! 2!! Nathalie!Tadena.!"S&P!cuts!Caesars'!rating!on!weak!i"!quarter!results,!unsustainable!capital!structure."!Wall$$ 3!! Caesars!Entertainment!Corporation.!101K.!March!15,!2013!

Street$Journal.$May!3,!2013!

that at that time, or sometime before then, a contentious debt-for-equity or distressed debt exchange will need to be consummated." "Caesars Entertainment Corp. is working to improve its capital structure, but despite moves to cut costs, buy back debt and pursue a spinoff transaction during the second quarter, Caesars' $23.7 billion debt load is still the elephant in the room and could push them into Chapter 11," reports The Deal Pipeline.

Caesars' private equity owners are planning to split the company to separate its most valuable assets from debt-encumbered assets: Caesars Entertainment is proposing to create a new and separate company, Caesars Growth Partners LLC ("Growth Partners").4 The new company will be jointly owned by Caesars and its current shareholders, including TPG and Apollo.5 Growth Partners will own valuable assets spun off from Caesars, including the Planet Hollywood casino in Las Vegas, the company's stake in the new Horseshoe Casino in Baltimore, and its online division (which includes online games, real-money online gaming, and the successful World Series of Poker franchise).

Caesars Acquisition Company, the holding company of Growth Partners, filed an initial registration with the SEC on July 10 and Caesars expects final SEC approval6 and listing of the new company's shares on NASDAQ in the corning months. Questions raised by Caesars' planned split: Would a casino at Suffolk Downs be part of Growth Partners or the old Caesars? Is the Massachusetts Gaming Commission investigating the suitability of Growth Partners? Mitch Garber, CEO of Caesars' online business (not Caesars CEO Gary Loveman), will be the CEO of Growth Partners. Mitch Graber is not on the Mass Gaming Commissions current list of qualifiers who are under investigation for suitability. Is the Massachusetts Gaming Commission investigating the suitability of all of the proposed executives? What happens if the spin-off plan does not succeed? Even if it does, can Growth Partners truly escape the legacy liabilities of old Caesars? What if interactive gaming turns out to not be the growth engine the company is hoping for? If the plan moves forward, how will it affect Caesars long-time host communities like Atlantic City and Las Vegas? If the private equity owners are willing to leave longtime host communities high and dry, will they also forsake Boston down the road?

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 4!Jeffrey!Goldfarb.!"Caesars!blinds!market!with!science."!Dealbook$April!24,!2013.!! 5!! Technically,!Caesars!shareholders!will!own!their!stake!in!Growth!Partners!through!a!holding!company!called!!

6!7/10/2013,!Nevada!Gaming!Control!Board!hearing!

"Caesars!Acquisition!Company"!

How will a casino at Suffolk Downs deliver on the promise of 4,000 jobs? The Suffolk Downs proposal promises 150,000-250,000 square feet of gaming space and 10 or more restaurants, and 450 hotel rooms. Only one commercial casino owned and operated by Caesars devotes this much space to gaming: Harrah's Resort in Atlantic City has 158,500 square feet of gaming. But Harrahs has 12 restaurants and 2,590 hotel rooms, much larger than what is planned for Suffolk Downs. Even though Harrah's Resort in Atlantic City is larger than the proposed casino at Suffolk Downs, Harrahs employs fewer than 4,000 workers. As reported to the New Jersey Casino Control Commission, Harrah's has 3,818 employees, of which 354 are part-time."7 Cocktail servers at Caesars' casinos in Atlantic City have raised concerns with a cost-cutting and job-eliminating "beverage on demand" program. "Patrons can order a drink directly from a slot machine they're playing rather than an actual person, but those who serve the drinks say not having that personal interaction is a problem waiting to happen. 'I'm sharing a football field area with 3, 4 other cocktail servers that are serving the same gentleman,' said Davis, 'I don't know if they've served him once, twice, three times.8 At Harrah's casino in New Orleans, the company cut full-time jobs to part-time to meet the state mandated requirement of 2,400 employees. Harrah's New Orleans is comparable in size to the proposed casino at Suffolk Downs (125,100 square feet of gaming, 2,730 gaming positions, 10 restaurants, and a 450 room hotel). The New Orleans casino is required to maintain a minimum number of employees, because of a tax break it received after bankruptcy. To maintain the 2,400 minimum, Harrah's New Orleans cut the number of full-time workers from 84% to 78%.9

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7!! http:///www.state.nj.us/casinos/licens/licenrep/2012%20docs/cht_2013_08.pdf!

8!Phaidra!Laird.!"Union!members!ask!DGE!to!investigate!drink!ordering,!serving!in!some!AC!casinos."!NBC!40!

September!12,!2013!

9!Associated!Press.!Harrahs!replaced!full1time!workers!with!part1time.!January!23,!2011!