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Leases | 12 Months Ended
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Dec. 31, 2021
Leases [Abstract] |
Leases | Leases The Company has operating and finance leases for various real estate and equipment. Certain of the Company’s lease agreements include rental payments based on a percentage of sales over specified contractual amounts, rental payments adjusted periodically for inflation and rental payments based on usage. The Company’s leases include options to extend the lease term one month to 75 years. The Company’s lease agreements do not contain any material restrictive covenants, other than those described below. Lessee Arrangements Operating Leases We lease real estate and equipment used in our operations from third parties. As of December 31, 2021, the remaining term of our operating leases ranged from 1 to 75 years with various extension options available, if we elect to exercise them. However, our remaining terms only include extension options that we have determined are reasonably certain as of December 31, 2021. In addition to minimum rental commitments, certain of our operating leases provide for contingent rentals based on a percentage of revenues in excess of specified amounts. We do not include costs associated with our non-lease components in our lease costs disclosed in the table below. During the years ended December 31, 2021 and December 31, 2020, we obtained $13 million and $38 million, respectively, of right-of-use (“ROU”) assets in exchange for new lease liabilities. Leases recorded on the balance sheet consist of the following:
(In millions) |  | Classification on the Balance Sheet |  | December 31, 2021 |  | December 31, 2020
Assets: |  |  |  |  |  |
Operating lease ROU assets (a) |  | Other assets, net |  | $ | 662 |  |  | $ | 457 |
Liabilities: |  |  |  |  |  |
Current operating lease liabilities (a) |  | Accrued other liabilities |  | 49 |  |  | 53 |
Non-current operating lease liabilities (a) |  | Other long-term liabilities |  | 726 |  |  | 516 |
___________________ (a)As noted above, we have elected the short-term lease measurement and recognition exemption and do not establish ROU assets or liabilities for operating leases with terms of 12 months or less.
Lease Terms and Discount Rate | December 31,
| 2021 |  | 2020
Weighted Average Remaining Lease Term (in years) | 28.8 |  | 25.6
Weighted Average Discount Rate | 8.1 | % |  | 8.4 | %
Components of Lease Expense |  |  |  |
|  | Years Ended December 31,
(In millions) |  | 2021 |  | 2020
Operating lease expense |  | $ | 128 |  |  | $ | 53 |
Short-term and variable lease expense |  | 104 |  |  | 50 |
Total operating lease costs |  | $ | 232 |  |  | $ | 103 |
Supplemental cash flow information related to leases is as follows:
Cash payments included in the measurement of lease liabilities |  |  |
| Years Ended December 31,
(In millions) | 2021 |  | 2020
Operating cash flows for operating leases | $ | 96 |  |  | $ | 49 |
Maturities of Lease Liabilities |
(In millions) | Operating Leases
2022 | $ | 108 |
2023 | 104 |
2024 | 69 |
2025 | 65 |
2026 | 64 |
Thereafter | 2,011 |
Total future minimum lease payments | 2,421 |
Less: present value factor | (1,646) |
Total lease liability | $ | 775 |
Finance Leases We have finance leases for certain equipment and real estate. As of December 31, 2021, our finance leases had remaining lease terms of up to approximately 37 years, some of which include options to extend the lease terms in one month increments. Our finance lease ROU assets and liabilities were $40 million and $43 million as of December 31, 2021, respectively, and $64 million for both finance lease ROU assets and liabilities as of December 31, 2020. Financing Obligations VICI Leases & Golf Course Use Agreement The fair value of the real estate assets and the related failed sale-leaseback financing obligations were estimated based on the present value of the estimated future lease payments over the lease term of 15 years, plus renewal options, using an imputed discount rate of approximately 11.01%. CEI leases certain real property assets from VICI under the following agreements: (i) for a portfolio of properties located throughout the United States (the “Regional Lease”), (ii) for Caesars Palace Las Vegas and Harrah’s Las Vegas (the “Las Vegas Lease”), and (iii) for Harrah’s Joliet Hotel & Casino (the “Joliet Lease”), (collectively, “VICI Leases”). The lease agreements, inclusive of all amendments, include (i) a 15-year initial term with four five-year renewal options, (ii) annual fixed rent payments of $1.1 billion, subject to annual escalation provisions based on the Consumer Price Index (“CPI”) and a 2% floor commencing in lease year two of the initial term and (iii) a variable element based on net revenues of the underlying leased properties, commencing in lease year eight of the initial term. The Regional Lease includes a put-call option whereby the Company may require VICI to purchase and lease back (as lessor) or whereby VICI may require the Company to sell to VICI and lease back (as lessee) the real estate components of the gaming and racetrack facilities of Harrah’s Hoosier Park Racing & Casino and Indiana Grand (“Centaur properties”). Election to exercise the option by either party must be made during the election period beginning January 1, 2022 and ending December 31, 2024. Upon either party exercising their option, the Centaur properties would be sold at a price in accordance with the agreement and leased back to CEI in accordance to the pre-existing terms of the Regional Lease. The sale of Caesars Southern Indiana to EBCI for $250 million was finalized on September 3, 2021 and as a result of the sale, Caesars’ annual payments to VICI Properties under the Regional Lease decreased by $33 million and variable rent under the lease shall exclude net revenue attributable to Caesars Southern Indiana. The Golf Course Use Agreement between the Company and VICI, encompassing four golf courses in three states, has a 35-year term (inclusive of all renewal periods), whereby the Company agrees to pay (i) an annual membership fee of $11 million, subject to annual escalation provisions based on the CPI and a 2% floor (ii) annual use fees of $3 million, including escalation provisions based on the CPI and a 2% floor commencing on the second lease year through and including the final lease year and (iii) certain per-round fees, as set forth in the agreement. Furthermore, the term of the Golf Course Use Agreement was extended such that there will be 15 years remaining until the expiration of the initial term. GLPI Leases The fair value of the real estate assets and the related failed sale-leaseback financing obligations were estimated based on the present value of the estimated future lease payments over the lease term of 35 years, including renewal options, using an imputed discount rate of approximately 9.75%. The value of the failed sale-leaseback financing obligations is dependent upon assumptions regarding the amount of the lease payments and the estimated discount rate of the lease payments required by a market participant. CEI leases certain real property assets from GLPI under the Master Lease (as amended, the “GLPI Master Lease”). The GLPI Master Lease, encompassing a portfolio of properties within the United States, provides for the lease of land, buildings, structures and other improvements on the land (including barges and riverboats), easements and similar appurtenances to the land and improvements relating to the operation of the leased properties. The GLPI Master Lease, inclusive of all amendments, provides for (i) an initial term of 20 years (through September 2038), with four five-year renewals at the Company’s option, (ii) annual land and building base rent of $24 million and $63 million, (iii) escalating provisions of building base rent equal to 101.25% of the rent for the preceding year for lease years five and six, 101.75% for lease years seven and eight and 102% for each lease year thereafter and (iv) relief from the operating, capital expenditure and financial covenants in the event of involuntary closures. The GLPI Master Lease does not provide the Company with an option to purchase the leased property or the ability to terminate its obligations under the GLPI Master Lease prior to its expiration without GLPI’s consent. The Lumière Lease was entered into by the Company and GLPI, whereby the Company sold the real estate underlying Lumière to GLPI and leased back the property under a long-term financing obligation. The Lumière Lease, inclusive of all amendments, provides for (i) an initial term commencing on September 29, 2020 and ending on October 31, 2033, (ii) four five-year renewal options, (iii) annual rent payments of $23 million, (iv) escalation provisions commencing in lease year two equal to 101.25% of the rent for the preceding year for lease years two through five, 101.75% for lease years six and seven and 102% for each lease year thereafter, (v) maintaining a minimum of 1.20:1 adjusted revenue to rent ratio and (vi) certain relief under the financial covenant in the event of involuntary closures. The Company continues to reflect the real estate assets related to the failed sale-lease back transactions on the Balance Sheets in Property and equipment, net as if the Company was the legal owner, and continues to recognize depreciation expense over their estimated useful lives. The future minimum payments related to the GLPI Leases, including the Lumière Lease, and VICI Leases financing obligation, as amended, at December 31, 2021 were as follows:
(In millions) | GLPI Leases |  | VICI Leases
2022 | $ | 110 |  |  | $ | 1,066 |
2023 | 111 |  |  | 1,087 |
2024 | 112 |  |  | 1,107 |
2025 | 113 |  |  | 1,120 |
2026 | 115 |  |  | 1,136 |
Thereafter | 4,604 |  |  | 42,808 |
Total future payments | 5,165 |  |  | 48,324 |
Less: Amounts representing interest | (4,172) |  |  | (38,079) |
Plus: Residual values | 240 |  |  | 893 |
Financing obligation | $ | 1,233 |  |  | $ | 11,138 |
Cash payments made relating to our long-term financing obligations during the years ended December 31, 2021 and 2020 were as follows:
| GLPI Leases (a) |  | VICI Leases (a)
| December 31, |  | December 31,
(In millions) | 2021 |  | 2020 |  | 2021 |  | 2020
Cash paid for principal | $ | — |  |  | $ | — |  |  | $ | 1 |  |  | $ | 49 |
Cash paid for interest | 109 |  |  | 93 |  |  | 983 |  |  | 472 |
____________________ (a)For the initial periods of the GLPI and VICI Leases, cash payments are less than the interest expense recognized, which causes the failed-sale leaseback obligation to increase during the initial years of the lease term. Lease Covenants The GLPI Leases and VICI Leases contain certain covenants requiring minimum capital expenditures based on a percentage of net revenues along with maintaining certain financial ratios. The Company was in compliance with all applicable covenants as of December 31, 2021. Lessor Arrangements Lodging Arrangements Lodging arrangements are considered short-term and generally consist of lease and nonlease components. The lease component is the predominant component of the arrangement and consists of the fees charged for lodging. The nonlease components primarily consist of resort fees and other miscellaneous items. As the timing and pattern of transfer of both the lease and nonlease components are over the course of the lease term, we have elected to combine the revenue generated from lease and nonlease components into a single lease component based on the predominant component in the arrangement. During the years ended December 31, 2021 and 2020, we recognized $1.6 billion and $450 million, respectively, in lease revenue related to lodging arrangements, which is included in Hotel revenues in the Statements of Operations. Conventions Convention arrangements are considered short-term and generally consist of lease and nonlease components. The lease component is the predominant component of the arrangement and consists of fees charged for the use of meeting space. The nonlease components primarily consist of food and beverage and audio/visual services. Revenue from conventions is included in Other revenue in the Statement of Operations, and during the years ended December 31, 2021 and 2020, we recognized $7 million and $3 million, respectively, in lease revenue related to conventions. Real Estate Operating Leases We enter into long-term real estate leasing arrangements with third-party lessees at our properties. As of December 31, 2021, the remaining terms of these operating leases ranged from 1 to 84 years, some of which include options to extend the lease term for up to five years. In addition to minimum rental commitments, certain of our operating leases provide for contingent payments including contingent rentals based on a percentage of revenues in excess of specified amounts and reimbursements for common area maintenance and utilities charges. As the timing and pattern of transfer of both the lease and nonlease components are over the course of the lease term, we have elected to combine the revenue generated from lease and nonlease components into a single lease component based on the predominant component in the arrangement. In addition, to maintain the value of our leased assets, certain leases include specific maintenance requirements of the lessees or maintenance is performed by the Company on behalf of the lessees. During the years ended December 31, 2021 and 2020, we recognized $149 million and $41 million, respectively, of real estate lease revenue, which is included in Other revenue in the Statement of Operations. Real estate lease revenue includes $45 million and $13 million, respectively, of variable rental income for the years ended December 31, 2021 and 2020.
Maturities of Lease Receivables |
(In millions) | Operating Leases
2022 | $ | 62 |
2023 | 58 |
2024 | 52 |
2025 | 46 |
2026 | 45 |
Thereafter | 704 |
Total | $ | 967 |
Leases | Leases The Company has operating and finance leases for various real estate and equipment. Certain of the Company’s lease agreements include rental payments based on a percentage of sales over specified contractual amounts, rental payments adjusted periodically for inflation and rental payments based on usage. The Company’s leases include options to extend the lease term one month to 75 years. The Company’s lease agreements do not contain any material restrictive covenants, other than those described below. Lessee Arrangements Operating Leases We lease real estate and equipment used in our operations from third parties. As of December 31, 2021, the remaining term of our operating leases ranged from 1 to 75 years with various extension options available, if we elect to exercise them. However, our remaining terms only include extension options that we have determined are reasonably certain as of December 31, 2021. In addition to minimum rental commitments, certain of our operating leases provide for contingent rentals based on a percentage of revenues in excess of specified amounts. We do not include costs associated with our non-lease components in our lease costs disclosed in the table below. During the years ended December 31, 2021 and December 31, 2020, we obtained $13 million and $38 million, respectively, of right-of-use (“ROU”) assets in exchange for new lease liabilities. Leases recorded on the balance sheet consist of the following:
(In millions) |  | Classification on the Balance Sheet |  | December 31, 2021 |  | December 31, 2020
Assets: |  |  |  |  |  |
Operating lease ROU assets (a) |  | Other assets, net |  | $ | 662 |  |  | $ | 457 |
Liabilities: |  |  |  |  |  |
Current operating lease liabilities (a) |  | Accrued other liabilities |  | 49 |  |  | 53 |
Non-current operating lease liabilities (a) |  | Other long-term liabilities |  | 726 |  |  | 516 |
___________________ (a)As noted above, we have elected the short-term lease measurement and recognition exemption and do not establish ROU assets or liabilities for operating leases with terms of 12 months or less.
Lease Terms and Discount Rate | December 31,
| 2021 |  | 2020
Weighted Average Remaining Lease Term (in years) | 28.8 |  | 25.6
Weighted Average Discount Rate | 8.1 | % |  | 8.4 | %
Components of Lease Expense |  |  |  |
|  | Years Ended December 31,
(In millions) |  | 2021 |  | 2020
Operating lease expense |  | $ | 128 |  |  | $ | 53 |
Short-term and variable lease expense |  | 104 |  |  | 50 |
Total operating lease costs |  | $ | 232 |  |  | $ | 103 |
Supplemental cash flow information related to leases is as follows:
Cash payments included in the measurement of lease liabilities |  |  |
| Years Ended December 31,
(In millions) | 2021 |  | 2020
Operating cash flows for operating leases | $ | 96 |  |  | $ | 49 |
Maturities of Lease Liabilities |
(In millions) | Operating Leases
2022 | $ | 108 |
2023 | 104 |
2024 | 69 |
2025 | 65 |
2026 | 64 |
Thereafter | 2,011 |
Total future minimum lease payments | 2,421 |
Less: present value factor | (1,646) |
Total lease liability | $ | 775 |
Finance Leases We have finance leases for certain equipment and real estate. As of December 31, 2021, our finance leases had remaining lease terms of up to approximately 37 years, some of which include options to extend the lease terms in one month increments. Our finance lease ROU assets and liabilities were $40 million and $43 million as of December 31, 2021, respectively, and $64 million for both finance lease ROU assets and liabilities as of December 31, 2020. Financing Obligations VICI Leases & Golf Course Use Agreement The fair value of the real estate assets and the related failed sale-leaseback financing obligations were estimated based on the present value of the estimated future lease payments over the lease term of 15 years, plus renewal options, using an imputed discount rate of approximately 11.01%. CEI leases certain real property assets from VICI under the following agreements: (i) for a portfolio of properties located throughout the United States (the “Regional Lease”), (ii) for Caesars Palace Las Vegas and Harrah’s Las Vegas (the “Las Vegas Lease”), and (iii) for Harrah’s Joliet Hotel & Casino (the “Joliet Lease”), (collectively, “VICI Leases”). The lease agreements, inclusive of all amendments, include (i) a 15-year initial term with four five-year renewal options, (ii) annual fixed rent payments of $1.1 billion, subject to annual escalation provisions based on the Consumer Price Index (“CPI”) and a 2% floor commencing in lease year two of the initial term and (iii) a variable element based on net revenues of the underlying leased properties, commencing in lease year eight of the initial term. The Regional Lease includes a put-call option whereby the Company may require VICI to purchase and lease back (as lessor) or whereby VICI may require the Company to sell to VICI and lease back (as lessee) the real estate components of the gaming and racetrack facilities of Harrah’s Hoosier Park Racing & Casino and Indiana Grand (“Centaur properties”). Election to exercise the option by either party must be made during the election period beginning January 1, 2022 and ending December 31, 2024. Upon either party exercising their option, the Centaur properties would be sold at a price in accordance with the agreement and leased back to CEI in accordance to the pre-existing terms of the Regional Lease. The sale of Caesars Southern Indiana to EBCI for $250 million was finalized on September 3, 2021 and as a result of the sale, Caesars’ annual payments to VICI Properties under the Regional Lease decreased by $33 million and variable rent under the lease shall exclude net revenue attributable to Caesars Southern Indiana. The Golf Course Use Agreement between the Company and VICI, encompassing four golf courses in three states, has a 35-year term (inclusive of all renewal periods), whereby the Company agrees to pay (i) an annual membership fee of $11 million, subject to annual escalation provisions based on the CPI and a 2% floor (ii) annual use fees of $3 million, including escalation provisions based on the CPI and a 2% floor commencing on the second lease year through and including the final lease year and (iii) certain per-round fees, as set forth in the agreement. Furthermore, the term of the Golf Course Use Agreement was extended such that there will be 15 years remaining until the expiration of the initial term. GLPI Leases The fair value of the real estate assets and the related failed sale-leaseback financing obligations were estimated based on the present value of the estimated future lease payments over the lease term of 35 years, including renewal options, using an imputed discount rate of approximately 9.75%. The value of the failed sale-leaseback financing obligations is dependent upon assumptions regarding the amount of the lease payments and the estimated discount rate of the lease payments required by a market participant. CEI leases certain real property assets from GLPI under the Master Lease (as amended, the “GLPI Master Lease”). The GLPI Master Lease, encompassing a portfolio of properties within the United States, provides for the lease of land, buildings, structures and other improvements on the land (including barges and riverboats), easements and similar appurtenances to the land and improvements relating to the operation of the leased properties. The GLPI Master Lease, inclusive of all amendments, provides for (i) an initial term of 20 years (through September 2038), with four five-year renewals at the Company’s option, (ii) annual land and building base rent of $24 million and $63 million, (iii) escalating provisions of building base rent equal to 101.25% of the rent for the preceding year for lease years five and six, 101.75% for lease years seven and eight and 102% for each lease year thereafter and (iv) relief from the operating, capital expenditure and financial covenants in the event of involuntary closures. The GLPI Master Lease does not provide the Company with an option to purchase the leased property or the ability to terminate its obligations under the GLPI Master Lease prior to its expiration without GLPI’s consent. The Lumière Lease was entered into by the Company and GLPI, whereby the Company sold the real estate underlying Lumière to GLPI and leased back the property under a long-term financing obligation. The Lumière Lease, inclusive of all amendments, provides for (i) an initial term commencing on September 29, 2020 and ending on October 31, 2033, (ii) four five-year renewal options, (iii) annual rent payments of $23 million, (iv) escalation provisions commencing in lease year two equal to 101.25% of the rent for the preceding year for lease years two through five, 101.75% for lease years six and seven and 102% for each lease year thereafter, (v) maintaining a minimum of 1.20:1 adjusted revenue to rent ratio and (vi) certain relief under the financial covenant in the event of involuntary closures. The Company continues to reflect the real estate assets related to the failed sale-lease back transactions on the Balance Sheets in Property and equipment, net as if the Company was the legal owner, and continues to recognize depreciation expense over their estimated useful lives. The future minimum payments related to the GLPI Leases, including the Lumière Lease, and VICI Leases financing obligation, as amended, at December 31, 2021 were as follows:
(In millions) | GLPI Leases |  | VICI Leases
2022 | $ | 110 |  |  | $ | 1,066 |
2023 | 111 |  |  | 1,087 |
2024 | 112 |  |  | 1,107 |
2025 | 113 |  |  | 1,120 |
2026 | 115 |  |  | 1,136 |
Thereafter | 4,604 |  |  | 42,808 |
Total future payments | 5,165 |  |  | 48,324 |
Less: Amounts representing interest | (4,172) |  |  | (38,079) |
Plus: Residual values | 240 |  |  | 893 |
Financing obligation | $ | 1,233 |  |  | $ | 11,138 |
Cash payments made relating to our long-term financing obligations during the years ended December 31, 2021 and 2020 were as follows:
| GLPI Leases (a) |  | VICI Leases (a)
| December 31, |  | December 31,
(In millions) | 2021 |  | 2020 |  | 2021 |  | 2020
Cash paid for principal | $ | — |  |  | $ | — |  |  | $ | 1 |  |  | $ | 49 |
Cash paid for interest | 109 |  |  | 93 |  |  | 983 |  |  | 472 |
____________________ (a)For the initial periods of the GLPI and VICI Leases, cash payments are less than the interest expense recognized, which causes the failed-sale leaseback obligation to increase during the initial years of the lease term. Lease Covenants The GLPI Leases and VICI Leases contain certain covenants requiring minimum capital expenditures based on a percentage of net revenues along with maintaining certain financial ratios. The Company was in compliance with all applicable covenants as of December 31, 2021. Lessor Arrangements Lodging Arrangements Lodging arrangements are considered short-term and generally consist of lease and nonlease components. The lease component is the predominant component of the arrangement and consists of the fees charged for lodging. The nonlease components primarily consist of resort fees and other miscellaneous items. As the timing and pattern of transfer of both the lease and nonlease components are over the course of the lease term, we have elected to combine the revenue generated from lease and nonlease components into a single lease component based on the predominant component in the arrangement. During the years ended December 31, 2021 and 2020, we recognized $1.6 billion and $450 million, respectively, in lease revenue related to lodging arrangements, which is included in Hotel revenues in the Statements of Operations. Conventions Convention arrangements are considered short-term and generally consist of lease and nonlease components. The lease component is the predominant component of the arrangement and consists of fees charged for the use of meeting space. The nonlease components primarily consist of food and beverage and audio/visual services. Revenue from conventions is included in Other revenue in the Statement of Operations, and during the years ended December 31, 2021 and 2020, we recognized $7 million and $3 million, respectively, in lease revenue related to conventions. Real Estate Operating Leases We enter into long-term real estate leasing arrangements with third-party lessees at our properties. As of December 31, 2021, the remaining terms of these operating leases ranged from 1 to 84 years, some of which include options to extend the lease term for up to five years. In addition to minimum rental commitments, certain of our operating leases provide for contingent payments including contingent rentals based on a percentage of revenues in excess of specified amounts and reimbursements for common area maintenance and utilities charges. As the timing and pattern of transfer of both the lease and nonlease components are over the course of the lease term, we have elected to combine the revenue generated from lease and nonlease components into a single lease component based on the predominant component in the arrangement. In addition, to maintain the value of our leased assets, certain leases include specific maintenance requirements of the lessees or maintenance is performed by the Company on behalf of the lessees. During the years ended December 31, 2021 and 2020, we recognized $149 million and $41 million, respectively, of real estate lease revenue, which is included in Other revenue in the Statement of Operations. Real estate lease revenue includes $45 million and $13 million, respectively, of variable rental income for the years ended December 31, 2021 and 2020.
Maturities of Lease Receivables |
(In millions) | Operating Leases
2022 | $ | 62 |
2023 | 58 |
2024 | 52 |
2025 | 46 |
2026 | 45 |
Thereafter | 704 |
Total | $ | 967 |
Leases | Leases The Company has operating and finance leases for various real estate and equipment. Certain of the Company’s lease agreements include rental payments based on a percentage of sales over specified contractual amounts, rental payments adjusted periodically for inflation and rental payments based on usage. The Company’s leases include options to extend the lease term one month to 75 years. The Company’s lease agreements do not contain any material restrictive covenants, other than those described below. Lessee Arrangements Operating Leases We lease real estate and equipment used in our operations from third parties. As of December 31, 2021, the remaining term of our operating leases ranged from 1 to 75 years with various extension options available, if we elect to exercise them. However, our remaining terms only include extension options that we have determined are reasonably certain as of December 31, 2021. In addition to minimum rental commitments, certain of our operating leases provide for contingent rentals based on a percentage of revenues in excess of specified amounts. We do not include costs associated with our non-lease components in our lease costs disclosed in the table below. During the years ended December 31, 2021 and December 31, 2020, we obtained $13 million and $38 million, respectively, of right-of-use (“ROU”) assets in exchange for new lease liabilities. Leases recorded on the balance sheet consist of the following:
(In millions) |  | Classification on the Balance Sheet |  | December 31, 2021 |  | December 31, 2020
Assets: |  |  |  |  |  |
Operating lease ROU assets (a) |  | Other assets, net |  | $ | 662 |  |  | $ | 457 |
Liabilities: |  |  |  |  |  |
Current operating lease liabilities (a) |  | Accrued other liabilities |  | 49 |  |  | 53 |
Non-current operating lease liabilities (a) |  | Other long-term liabilities |  | 726 |  |  | 516 |
___________________ (a)As noted above, we have elected the short-term lease measurement and recognition exemption and do not establish ROU assets or liabilities for operating leases with terms of 12 months or less.
Lease Terms and Discount Rate | December 31,
| 2021 |  | 2020
Weighted Average Remaining Lease Term (in years) | 28.8 |  | 25.6
Weighted Average Discount Rate | 8.1 | % |  | 8.4 | %
Components of Lease Expense |  |  |  |
|  | Years Ended December 31,
(In millions) |  | 2021 |  | 2020
Operating lease expense |  | $ | 128 |  |  | $ | 53 |
Short-term and variable lease expense |  | 104 |  |  | 50 |
Total operating lease costs |  | $ | 232 |  |  | $ | 103 |
Supplemental cash flow information related to leases is as follows:
Cash payments included in the measurement of lease liabilities |  |  |
| Years Ended December 31,
(In millions) | 2021 |  | 2020
Operating cash flows for operating leases | $ | 96 |  |  | $ | 49 |
Maturities of Lease Liabilities |
(In millions) | Operating Leases
2022 | $ | 108 |
2023 | 104 |
2024 | 69 |
2025 | 65 |
2026 | 64 |
Thereafter | 2,011 |
Total future minimum lease payments | 2,421 |
Less: present value factor | (1,646) |
Total lease liability | $ | 775 |
Finance Leases We have finance leases for certain equipment and real estate. As of December 31, 2021, our finance leases had remaining lease terms of up to approximately 37 years, some of which include options to extend the lease terms in one month increments. Our finance lease ROU assets and liabilities were $40 million and $43 million as of December 31, 2021, respectively, and $64 million for both finance lease ROU assets and liabilities as of December 31, 2020. Financing Obligations VICI Leases & Golf Course Use Agreement The fair value of the real estate assets and the related failed sale-leaseback financing obligations were estimated based on the present value of the estimated future lease payments over the lease term of 15 years, plus renewal options, using an imputed discount rate of approximately 11.01%. CEI leases certain real property assets from VICI under the following agreements: (i) for a portfolio of properties located throughout the United States (the “Regional Lease”), (ii) for Caesars Palace Las Vegas and Harrah’s Las Vegas (the “Las Vegas Lease”), and (iii) for Harrah’s Joliet Hotel & Casino (the “Joliet Lease”), (collectively, “VICI Leases”). The lease agreements, inclusive of all amendments, include (i) a 15-year initial term with four five-year renewal options, (ii) annual fixed rent payments of $1.1 billion, subject to annual escalation provisions based on the Consumer Price Index (“CPI”) and a 2% floor commencing in lease year two of the initial term and (iii) a variable element based on net revenues of the underlying leased properties, commencing in lease year eight of the initial term. The Regional Lease includes a put-call option whereby the Company may require VICI to purchase and lease back (as lessor) or whereby VICI may require the Company to sell to VICI and lease back (as lessee) the real estate components of the gaming and racetrack facilities of Harrah’s Hoosier Park Racing & Casino and Indiana Grand (“Centaur properties”). Election to exercise the option by either party must be made during the election period beginning January 1, 2022 and ending December 31, 2024. Upon either party exercising their option, the Centaur properties would be sold at a price in accordance with the agreement and leased back to CEI in accordance to the pre-existing terms of the Regional Lease. The sale of Caesars Southern Indiana to EBCI for $250 million was finalized on September 3, 2021 and as a result of the sale, Caesars’ annual payments to VICI Properties under the Regional Lease decreased by $33 million and variable rent under the lease shall exclude net revenue attributable to Caesars Southern Indiana. The Golf Course Use Agreement between the Company and VICI, encompassing four golf courses in three states, has a 35-year term (inclusive of all renewal periods), whereby the Company agrees to pay (i) an annual membership fee of $11 million, subject to annual escalation provisions based on the CPI and a 2% floor (ii) annual use fees of $3 million, including escalation provisions based on the CPI and a 2% floor commencing on the second lease year through and including the final lease year and (iii) certain per-round fees, as set forth in the agreement. Furthermore, the term of the Golf Course Use Agreement was extended such that there will be 15 years remaining until the expiration of the initial term. GLPI Leases The fair value of the real estate assets and the related failed sale-leaseback financing obligations were estimated based on the present value of the estimated future lease payments over the lease term of 35 years, including renewal options, using an imputed discount rate of approximately 9.75%. The value of the failed sale-leaseback financing obligations is dependent upon assumptions regarding the amount of the lease payments and the estimated discount rate of the lease payments required by a market participant. CEI leases certain real property assets from GLPI under the Master Lease (as amended, the “GLPI Master Lease”). The GLPI Master Lease, encompassing a portfolio of properties within the United States, provides for the lease of land, buildings, structures and other improvements on the land (including barges and riverboats), easements and similar appurtenances to the land and improvements relating to the operation of the leased properties. The GLPI Master Lease, inclusive of all amendments, provides for (i) an initial term of 20 years (through September 2038), with four five-year renewals at the Company’s option, (ii) annual land and building base rent of $24 million and $63 million, (iii) escalating provisions of building base rent equal to 101.25% of the rent for the preceding year for lease years five and six, 101.75% for lease years seven and eight and 102% for each lease year thereafter and (iv) relief from the operating, capital expenditure and financial covenants in the event of involuntary closures. The GLPI Master Lease does not provide the Company with an option to purchase the leased property or the ability to terminate its obligations under the GLPI Master Lease prior to its expiration without GLPI’s consent. The Lumière Lease was entered into by the Company and GLPI, whereby the Company sold the real estate underlying Lumière to GLPI and leased back the property under a long-term financing obligation. The Lumière Lease, inclusive of all amendments, provides for (i) an initial term commencing on September 29, 2020 and ending on October 31, 2033, (ii) four five-year renewal options, (iii) annual rent payments of $23 million, (iv) escalation provisions commencing in lease year two equal to 101.25% of the rent for the preceding year for lease years two through five, 101.75% for lease years six and seven and 102% for each lease year thereafter, (v) maintaining a minimum of 1.20:1 adjusted revenue to rent ratio and (vi) certain relief under the financial covenant in the event of involuntary closures. The Company continues to reflect the real estate assets related to the failed sale-lease back transactions on the Balance Sheets in Property and equipment, net as if the Company was the legal owner, and continues to recognize depreciation expense over their estimated useful lives. The future minimum payments related to the GLPI Leases, including the Lumière Lease, and VICI Leases financing obligation, as amended, at December 31, 2021 were as follows:
(In millions) | GLPI Leases |  | VICI Leases
2022 | $ | 110 |  |  | $ | 1,066 |
2023 | 111 |  |  | 1,087 |
2024 | 112 |  |  | 1,107 |
2025 | 113 |  |  | 1,120 |
2026 | 115 |  |  | 1,136 |
Thereafter | 4,604 |  |  | 42,808 |
Total future payments | 5,165 |  |  | 48,324 |
Less: Amounts representing interest | (4,172) |  |  | (38,079) |
Plus: Residual values | 240 |  |  | 893 |
Financing obligation | $ | 1,233 |  |  | $ | 11,138 |
Cash payments made relating to our long-term financing obligations during the years ended December 31, 2021 and 2020 were as follows:
| GLPI Leases (a) |  | VICI Leases (a)
| December 31, |  | December 31,
(In millions) | 2021 |  | 2020 |  | 2021 |  | 2020
Cash paid for principal | $ | — |  |  | $ | — |  |  | $ | 1 |  |  | $ | 49 |
Cash paid for interest | 109 |  |  | 93 |  |  | 983 |  |  | 472 |
____________________ (a)For the initial periods of the GLPI and VICI Leases, cash payments are less than the interest expense recognized, which causes the failed-sale leaseback obligation to increase during the initial years of the lease term. Lease Covenants The GLPI Leases and VICI Leases contain certain covenants requiring minimum capital expenditures based on a percentage of net revenues along with maintaining certain financial ratios. The Company was in compliance with all applicable covenants as of December 31, 2021. Lessor Arrangements Lodging Arrangements Lodging arrangements are considered short-term and generally consist of lease and nonlease components. The lease component is the predominant component of the arrangement and consists of the fees charged for lodging. The nonlease components primarily consist of resort fees and other miscellaneous items. As the timing and pattern of transfer of both the lease and nonlease components are over the course of the lease term, we have elected to combine the revenue generated from lease and nonlease components into a single lease component based on the predominant component in the arrangement. During the years ended December 31, 2021 and 2020, we recognized $1.6 billion and $450 million, respectively, in lease revenue related to lodging arrangements, which is included in Hotel revenues in the Statements of Operations. Conventions Convention arrangements are considered short-term and generally consist of lease and nonlease components. The lease component is the predominant component of the arrangement and consists of fees charged for the use of meeting space. The nonlease components primarily consist of food and beverage and audio/visual services. Revenue from conventions is included in Other revenue in the Statement of Operations, and during the years ended December 31, 2021 and 2020, we recognized $7 million and $3 million, respectively, in lease revenue related to conventions. Real Estate Operating Leases We enter into long-term real estate leasing arrangements with third-party lessees at our properties. As of December 31, 2021, the remaining terms of these operating leases ranged from 1 to 84 years, some of which include options to extend the lease term for up to five years. In addition to minimum rental commitments, certain of our operating leases provide for contingent payments including contingent rentals based on a percentage of revenues in excess of specified amounts and reimbursements for common area maintenance and utilities charges. As the timing and pattern of transfer of both the lease and nonlease components are over the course of the lease term, we have elected to combine the revenue generated from lease and nonlease components into a single lease component based on the predominant component in the arrangement. In addition, to maintain the value of our leased assets, certain leases include specific maintenance requirements of the lessees or maintenance is performed by the Company on behalf of the lessees. During the years ended December 31, 2021 and 2020, we recognized $149 million and $41 million, respectively, of real estate lease revenue, which is included in Other revenue in the Statement of Operations. Real estate lease revenue includes $45 million and $13 million, respectively, of variable rental income for the years ended December 31, 2021 and 2020.
Maturities of Lease Receivables |
(In millions) | Operating Leases
2022 | $ | 62 |
2023 | 58 |
2024 | 52 |
2025 | 46 |
2026 | 45 |
Thereafter | 704 |
Total | $ | 967 |

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