Caesars Entertainment owns almost half of the Las Vegas Strip but that hasn't led to much financial success.

Let's be honest, if Caesars Entertainment (NASDAQ:CZR) weren't able to tap public markets by selling stock and hadn't spun off some of its most valuable assets to a subsidiary partly owned by Caesars Acquisition Company (NASDAQ: CACQ), the company would likely have been bankrupt by now. A debt load of $23.6 billion companywide is simply too much to handle when revenue is falling and your resorts are coming under siege from all sides. 

By shifting assets around and, in my opinion, playing games with both debt holders and shareholders, management has managed to stay afloat and shift valuable assets to subsidiaries, trying to secure private equity owners' money. 

Now, the company is coming to shareholders with pockets turned out again, just as some of its debt holders are challenging the legality of the moves it's already made. 

What's another few million shares among friends?
The latest move is a 7 million share stock offering, which will balloon to 8.05 million shares if the overallotment option is exercised. 

Proceeds from the offering will likely be around $157 million and Caesars needs that money just to pay its bills. Last year, the company's property EBITDA, a proxy for cash flow, fell 7.5% to $1.88 billion and wasn't even enough to cover interest expenses of $2.25 billion. 

The negative cash flow requires Caesars to either sell shares to pay for debt or sell assets and pay off debt. That puts shareholders in a tough position.

Caesars best assets are gone ... or are they?
What management has tried to do to retain some value for its private equity and stock owners is push assets down to subsidiaries, which would hypothetically be protected if Caesars Entertainment Operating Company goes bankrupt. But debt holders think the asset sales increase the likelihood of bankruptcy and give away assets that would be theirs in bankruptcy.

Unnamed bondholders have sued to undo the sale of Planet Hollywood, Caesars Palace's Octavius Tower, Project Linq, and other assets to Caesars Growth Partners and Caesars Entertainment Resort Properties. It'll be some time before we find out if the suit will gain any traction, but it's not good for shareholders that bondholders are questioning the moves. 

Foolish bottom line
Caesars Entertainment is losing money and will continue to dilute shareholders unless Las Vegas and regional gaming grow rapidly, which isn't happening. Also, on the downside is bondholders questioning recent transactions, which is understandable given that some of Caesars best assets are now in other subsidiaries.  

Both Caesars Entertainment and Caesars Acquisition Companies are high risk and not worth buying at the moment. There are simply safer options in gaming. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.