This could be Caesars new casino in South Korea, if the company passes this debt test. Photo: Review Journal

Debt becomes a problem when it means that a company cannot take advantage of growth opportunities that could be very profitable. Such was the issue with Caesars Entertainment (NASDAQ:CZR) during 2013 when the company lost its bid to develop a casino in South Korea due to its unstable debt load.

Companies like Las Vegas Sands (NYSE:LVS) and Boyd Gaming Corp. (NYSE:BYD) which do not have these debt issues, have new properties and attractions coming in the next year that will prove to be great investments in their futures--something that Caesars lacks. Caesars has been working hard over the last year to pay down its ridiculously high debt, and the South Korean government will soon test its financial strength again. But can it pass this time?

First, a failed attempt in South Korea
Caesars made its first attempt to enter the South Korean market with an initial bid in 2012. Into the first half of 2013, the bid seemed sure to go through, which would have been great for Caesars, since the company's one Asian property in Macau was not operating any gambling services.

CEO Gary Loveman has said that not having a casino in Macau was the worst mistake the company has ever made. Photo: Review Journal

Things did not work out as planned. Unfortunately for Caesars, the South Korean government declined the bid in June 2013. Analysts close to the matter agreed that the likely reason was the company's huge debt load.

Then, a focus on strengthening its financial position
Despite poor first-quarter earnings in terms of profit, which was down 50% from the same quarter last year, it is obvious that the company is currently very focused on getting its balance sheet back to a more healthy state. Through debt restructuring, asset sales, and a new stock listing for its largest subsidiary, the company is hoping to reduce its huge debt burden.

A few months after the denial of its bid in South Korea last year, the company announced that it would sell its one Macau property to pay down long-term debt. Throughout this year, the company has completed the sales of other properties, such as its Golden Nugget casino in the U.K.

And now, another chance in South Korea
South Korea is a promising market with its proximity to China and Japan. South Koreans would not be part of that market, because as of now, the government would restrict casinos from local residents (as 16 of South Korea's casinos are, with only one local casino open to local residents). Caesars was recently granted "preliminary approval" from the South Korean government to build this proposed $794.7 million casino and hotel just 25 miles from the capital city, Seoul.

Caesar's casino could be open by 2018, in time for the winter Olympics there. Photo: KoreaTimes

But be aware: preliminary approval certainly does not guarantee that the casino will make it to the building stage. The company still needs to meet a series of other criteria laid forth by the South Korean government, just as the company failed to do last time. Until this preliminary approval becomes an actual building permit, its not a win yet.

With no debt, these two companies already have growth to show
Las Vegas Sands, which posted incredible record revenue in the first quarter of 2014, is not wasting time in trying to sort out its financials before it seeks growth opportunities. The company has been aggressively expanding in Asia, and its most profitable area, Macau, is no exception.

The Parisian promises to be an impressive resort with a 50% scaled Eiffle Tower. Photo: Las Vegas Sands

Las Vegas Sands is currently developing its third attraction in the area,The Parisian, which will open in late 2015. This $2.7 billion integrated resort will include over 3,000 hotel rooms and suites, around 450 table games, 2,500 slots, a retail mall, and a replica of the Eiffel Tower at 50% scale. While Caesars is seeking its first Asian presence, Las Vegas Sands already gets 88% of its massive revenue from Asia, and since then has far surpassed Caesars in earnings over the last five years.

Like Caesars, Boyd Gaming Corp. also posted pretty poor earnings, which owed to its lack of international revenue. However, without much debt holding the company back, at least it can take financial risks on new investments. The company has spent the first quarter of this year pushing its new online gambling platform.

While the online gambling business is not enough to give the company a huge revenue windfall yet, the company can take a quarter to try it out in the hope that it will catch on and become a revenue generator in the future. Along with its partnership with PartyPoker, Boyd Gaming Corp. is already the market leader in online gambling in New Jersey, where it has used in-house and online championships to grow the brand. If Boyd can replicate this Borgata success in other parts of the country, this investment could yield great future results. 

Photo: The Borgata

Will Caesars make it this time in South Korea, or is it still too far underwater?
Regardless of its poor earnings in the last few years, Caesars remains optimistic about its future. With debt restructuring and property sales, the company is still striving to improve its debt-heavy balance sheet. Hopefully, the South Korean government will not balk this time around and the casino will get built.

For investors who are looking for that "come back" story, this might be a good play. However, consider that Las Vegas Sands and Boyd Gaming Corp., each with lighter balance sheets, have already been making the kinds of investments in future growth which will pay off in 2015 and beyond. Therefore, wait to see if Caesars can pass this test and actually get a casino under way before you get too excited about this comeback.