Watching Caesars Entertainment (NASDAQ:CZR) over the last few years has been like watching a really bad movie, one you hope will have a redeeming ending, but never does. With three years of solid disappointing earnings and operating decisions, the company just can't seem to stop the bleeding.
While the company now scrambles to restructure its debt with a plan that includes agreeing to merge with affiliate Caesars Acquisition Company (NASDAQ:CACQ) and proposing to restructure subsidiary Caesars Entertainment Operating Co. (CEOC), we have to ask how the company could get so far down the wrong track, especially as competing gaming companies like Las Vegas Sands (NYSE:LVS) and MGM Resorts International (NYSE:MGM) have thrived in both Asia and Las Vegas.
With missed opportunities around the world, poor operations in the U.S., and now what could be a potential bankruptcy filing, here's how Caesars might be in the running for the worst bet in the gaming industry.
Failing in the U.S.
Despite all of that, Caesars should have at least been able to focus on its domestic properties to generate growth. Yet the company has actually posted substantial losses for the last three years on its U.S. operations.
Loveman and his managers have been busy shuffling debt and assets between Caesars Entertainment (the parent company) and subsidiary Caesars Entertainment Operating Co. As early as March of 2014, the company announced reorganization of its debt between these entities to make the companies operate more efficiently.
After billions of dollars in debt was passed down to CEOC, the company held talks with creditors over the last several months that culminated in a plan to allow CEOC to enter Chapter 11 bankruptcy protection, taking with it their debt obligations.
So while Caesars failed to create an international presence in the hot gaming spots, other companies like Las Vegas Sands were reaping huge rewards in Asia. And while Caesars has been failing in the U.S., other companies such as MGM have been winning on the resurgence of revenue in Las Vegas. Going forward, even if the company is capable of restructuring, decreasing its debt burden, and continuing operations, this track record and little evidence of turning things around for the better in the future continues to support the case that Caesars is the worst bet investors can make in the gaming industry.
Bradley Seth McNew owns shares of Las Vegas Sands. The Motley Fool is short Caesars Entertainment. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.