This just in: Working with “key senior creditors,” Caesars Entertainment Operating Co. is reported to be arranging a prepackaged bankruptcy, with a target date of Jan. 14.
How does Gary Loveman keep his job? If he were a cat, he’d be onto his 10th or 11th life by now. I mean, it can’t be easy losing $908 million in 3Q14 in the casino business 
or everybody else would be doing it. Loveman managed to turn a 6% increase in revenue into a 19% growth in losses, even though writedowns were $499 million not 3Q13’s $819 million. Interest expenses soared 26% and cash-flow problems are the elephant in the room. Little of the growth came from gambling or hotel rooms, each just up a tick or two, but food and beverage managed an impressive 7% increase. Caesars Entertainment also chose this moment to sneak out resort fee increases at six of its eight Strip hotels. That means an extra hidden impost of $25, regardless of which Las Vegas Strip Caesars property you patronize.
Loveman must not have received the memo that Caesars had just been clocked in Ohio, for he chose to whistle past the graveyard, saying, “Moving forward, we see several dynamics that bode well for our future, including signs of improvement in regional markets, given limited supply growth and greater traction from our investments in hospitality and entertainment offerings across our network.”
One of the other revelations was that, with one fewer casino in Atlantic City, paradoxically, it’s costing more to market the remaining three. Closing the Showboat 
wasn’t supposed to have this effect. And Caesars got clobbered on the home front, recording poor international traction, a clean-out by the high rollers ($35 million in losses) and $20 million in delinquent casino debt at Caesars Palace. The unending crisis management that is Caesars must take a toll and CFO Donald Colvin (left) retired, to be replaced by Eric Hession. We wish him luck and have a feeling he’ll need it.
Aside from the revenue increase, silver linings included the disclosure that company debt was down to $23 billion, from $24 billion. It may not seem like much but you’ve got to start somewhere. According to Bloomberg News, Caesars is trying to restructure $18 billion of that debt burden. “Further, we are intensely focused on ensuring operating costs are aligned with the current environment to enhance profitability,” added Loveman. Profitability? Is he on drugs? No, subsidiary Caesars Growth Partners actually recorded a modest profit, burnishing the unit’s prospects — and possibly stoking the fears of those who feel the best assets have been stashed away in the spinoff. Loveman added that he continued to look upon the Strip “with optimism” — and why not? Loveman’s reinvestment in most of his Strip properties has been one of his better calls as CEO.
* Speaking of Caesars Palace … filings and counterfilings continue to fly in the case between the FBI and eight mostly Chinese players accused of running a renegade online casino out of several high-roller villas. According to the defense, Assistant U.S. Attorney Kimberly Frayn counseled the Bureau not to sent agents in disguised as tech geeks. Tacitly conceding the argument, the government replied, “Law enforcement has long been permitted to obtain consent by posing as a confederate, business associate, or service provider. In fact, the government uses ruses every day in its undercover operations.” High-profile purchases of computer equipment and tech support put the Caesars operation on the government’s radar and a civic-minded employee made the connection between the setup and sports wagering.
The G-Men worked with the Nevada Gaming Control Board to try and penetrate the sub rosa operation. Eventually they had to interdict Internet service, send in the phony technicians and warrantlessly record secret video that provided the evidence for the bust. Already, 30 minutes of this footage has been shared with The Associated Press. The eight Chinese are under indictment for “wagering information, operating an illegal gambling business and aiding and abetting.” If you’re wondering what alleged ringleader Paul Phua was doing here after being arrested in Macao, bribery may have played a role in helping him slip China‘s net, perhaps to the tune of $644,00. “Hopefully, they want only money,” reads one of the relevant text messages.
It wasn’t a sneaky exit, either. Phua flew the coop in style, aboard his $48 million private plane. He’s also alleged to be a member of the 14K Triad which, if true, brings to Las Vegas a criminal element that’s been dreaded ever since Macao became a land of gaming opportunity. There’s no need for Phua and son Darren to bribe anybody in Vegas. They’re at liberty, courtesy of bond provided by former World Series of Poker champion Phil Ivey, who’s had his own troubles with the law of late.
