As of now, the WSOP or the World Series of Poker is owned and managed by Caesars Entertainment. However, since Caesars Entertainment has had a bad report of fiscal profit from the company, it is quite possible that Caesars will decide to sell some of its problematic sectors. And, according to analysts from Fitch, the WSOP might just be one of these.
They claim that it is a “possibility” that Caesars Entertainment will sell the World Series of Poker and reorganize its debts to maintain its financial strength. The report from Fitch pulled Caesars Entertainment stocks rating from stable to negative. This is not a good sign for the company or its stock holders. The report based its decisions on the $241.7 million loss incurred in the second quarter of 2012.
According to Michael Paladino, an analyst for the company, “The outlook revision reflects Fitch’s heightened concern regarding (Caesars) near-to-medium term cash burn rate and potential covenant compliance pressure. These factors, combined with previously expressed concerns about weakening relative asset quality due to constrained capital reinvestment, more than offset the positive credit impact from recent transactions executed to push out its debt maturities meaningfully.”
The report also predicted that there would be a hike in debt for Caesars, making things very difficult for their investors in the future.
“Fitch believes that most of Caesars’ current equity value is attributable to this unit (Caesars Interactive), which would benefit materially if online gaming is legalized on the federal level in the U. S…Besides (possibly) entering into Chapter 11 (bankruptcy proceedings), Caesars may elect to execute debt exchanges, possibly for equity since the company is now public,” stated the report.
However, the report suggested that a change in the US poker laws could help the struggling company. The Fitch Report does not seem to have high expectations of an online gambling bill that regulates online poker being passed in the year 2012. “The Republican Party included ‘prohibition of gambling over the Internet’ as part of its 2012 platform, making passage of online gaming bill through the Congress unlikely in the near term,” stated Paladino.
He also remarked specifically in regards to the future of online poker in the US, citing the UIGEA unclear conditions could keep poker exempt since it was no longer regarded as a game of chance as per the recent DiChristina Ruling. ‘Because the 2006 federal ban (the Unlawful Internet Gambling Enforcement Act) applies only to ‘game[s] subject to chance,’ the ruling, while not binding, suggests that the ban does not apply to poker.”