The following discussion should be read in conjunction with, and is qualified in its entirety by, the audited consolidated financial statements and the notes thereto and other financial information included elsewhere in this Form 10-K. Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" are forward-looking statements. See "Item 1A. Risk Factors- PRIVATE SECURITIES LITIGATION REFORM ACT" of this report. Overview
We are the world's most diversified casino-entertainment provider and the most geographically diverse U.S. casino-entertainment company. As of December 31, 2012, we owned, operated, or managed, through various subsidiaries, 52 casinos in 13 U.S. states and seven countries. The majority of these casinos operate in the United States, primarily under the Caesars, Harrah's, and Horseshoe brand names and in England. Our casino entertainment facilities include 33 land-based casinos, 11 riverboat or dockside casinos, three managed casinos on Indian lands in the United States, one managed casino in Cleveland, Ohio, one managed casino in Canada, one casino combined with a greyhound racetrack, one casino combined with a thoroughbred racetrack, and one casino combined with a harness racetrack. Our land-based casinos include nine in England, two in Egypt, one in Scotland, one in South Africa and one in Uruguay. As of December 31, 2012, our facilities had an aggregate of approximately three million square feet of gaming space and approximately 43,000 hotel rooms. Our industry-leading customer loyalty program, Total Rewards, has over 45 million members. We use the Total Rewards system to market promotions and to generate customer play across our network of properties. In addition, we own an online gaming business, providing for real money casino, bingo, and poker games in the United Kingdom, alliances with online gaming providers in Italy and France, "play for fun" offerings in other jurisdictions, social games on Facebook and other social media websites, and mobile application platforms. We also own and manage the World Series of Poker tournament and brand.
Regional Aggregation
The executive officers of our company review operating results, assess performance, and make decisions related to the allocation of resources on a property-by-property basis. We believe, therefore, that each property is an operating segment and that it is appropriate to aggregate and present the operations of our company as one reportable segment. To provide more meaningful information than would be possible on a consolidated basis, our casino properties (as of December 31, 2012, or otherwise noted below) have been grouped into seven regions as shown in the table below to facilitate discussion of our operating results:

Las Vegas              Atlantic City              Louisiana/Mississippi      Iowa/Missouri
Caesars Palace                                                               Harrah's North
                       Harrah's Atlantic City     Harrah's New Orleans       Kansas City
Bally's Las Vegas                                                            Harrah's Council
                       Showboat Atlantic City     Harrah's Louisiana Downs   Bluffs
Flamingo Las                                                                 Horseshoe Council
Vegas(a)               Bally's Atlantic City      Horseshoe Bossier City     Bluffs/
Harrah's Las Vegas     Caesars Atlantic City      Grand Biloxi               Bluffs Run
Paris Las Vegas        Harrah's Philadelphia(c)   Harrah's Tunica
Rio                                               Horseshoe Tunica
The Quad Resort &                                 Tunica Roadhouse Hotel &
Casino(b)
Bill's Gamblin'
Hall &                                            Casino
Saloon
Planet Hollywood
Resort &
Casino


Illinois/Indiana              Other Nevada          Managed and International
Horseshoe Southern Indiana    Harrah's Reno         Harrah's Ak-Chin(e)
Harrah's Joliet(d)            Harrah's Lake Tahoe   Harrah's Cherokee(e)
Harrah's Metropolis           Harveys Lake Tahoe    Harrah's Rincon(e)
Horseshoe Hammond             Harrah's Laughlin     Horseshoe Cleveland(f)
                                                    Conrad Punta del Este(g)
                                                    Caesars Windsor(h)
                                                    London Clubs International(i)

(b) Prior to December 2012, this property operated under the name Imperial Palace Hotel and Casino.

(c) Prior to May 2012, this property operated under the Harrah's Chester name. We have a 99.5% ownership interest in and manage this property.

(d) We have an 80% ownership interest in and manage this property.

(e) Managed.

(f) We manage this property and have a 20% interest in Rock Ohio Caesars, LLC, which owns this property.

(g) We have an approximate 95% ownership interest in and manage this property. In November 2012, we entered into a definitive agreement with Enjoy to sell 45% of Baluma S.A., our subsidiary that owns and operates Conrad. Under the terms of the agreement, we will have an approximate 52% ownership in this property. Please refer to Note 3, "Acquisitions, Investments, Dispositions and Divestitures," to our consolidated financial statements appearing in Item 8 of this report for more details on this agreement.

(h) We operate this property and the province of Ontario owns the complex through the Ontario Lottery and Gaming Corporation.

(i) As of December 31, 2012, we owned, operated, or managed 10 casino clubs in the provinces of the United Kingdom and two in Egypt. On March 4, 2013, we closed one of the casino clubs in the United Kingdom. We also have a 70% ownership interest in and manage one casino in South Africa.

Consolidated Operating Results
                                                                                         Percent
                                                                                 Favorable/(Unfavorable)
(Dollars in millions)                2012          2011          2010         2012 vs 2011      2011 vs 2010
Casino revenues                  $ 6,246.9      $ 6,394.5     $ 6,671.8            (2.3 )%            (4.2 )%
Net revenues                       8,586.7        8,573.3       8,553.2             0.2  %             0.2  %
(Loss)/income from operations       (313.4 )        816.3         483.1              **               69.0  %
Loss from continuing operations,
net of income taxes               (1,382.7 )       (698.1 )      (849.4 )         (98.1 )%            17.8  %
(Loss)/income from discontinued
operations, net of income taxes     (109.5 )         31.4          26.1              **               20.3  %
Net loss attributable to Caesars  (1,497.5 )       (687.6 )      (831.1 )        (117.8 )%            17.3  %
Operating margin *                    (3.6 )%         9.5 %         5.6 %    (13.1) pts            3.9 pts

Net revenues, (loss)/income from operations, and loss from continuing operations, net of income taxes for all periods presented in the table above exclude the results of the Harrah's St. Louis casino and the results of the subsidiaries that hold our land concession in Macau, both of which are presented as discontinued operations.

* Operating margin is calculated as (loss)/income from operations divided by net revenues. ** Not meaningful. Year ended December 31, 2012 compared to year ended December 31, 2011 Net revenues for 2012 increased $13.4 million or 0.2% from 2011 due mainly to higher revenues from our online businesses and from Caesars' management companies due in part to the opening of Horseshoe Cleveland in May 2012. These higher revenues were mostly offset by revenue declines in the Atlantic City Region resulting from hurricane-related property closures as well as continued competitive pressures in that region. All five properties in the Atlantic City Region had closures during the fourth quarter 2012 due to Hurricane Sandy, which made landfall on October 29, 2012. Harrah's Philadelphia reopened two days later and the Atlantic City properties reopened five days later. However, the region's economy has been slow to recover due to the devastation caused by the hurricane. We estimate that the negative impact of Hurricane Sandy on net revenues was approximately $40 million to $45 million.

For 2012, loss from operations was $313.4 million compared with income from operations of $816.3 million in 2011. This change was due largely to non-cash impairment charges that totaled $1,067.7 million, comprised of intangible asset impairment charges of $195.2 million related to goodwill, $209.0 million related to trademarks and $33.0 million related to gaming rights, as well as tangible asset impairment charges of $450.0 million related to the tangible assets of one of the properties in the Atlantic City Region and $180.5 million related to a previously halted development project in Biloxi, Mississippi. By comparison, non-cash intangible and tangible asset impairment charges were $32.8 million in 2011. Also contributing to the loss from operations in 2012 was an increase in depreciation expense associated with the opening of the Octavius Tower at Caesars Palace Las Vegas in January 2012, and increased corporate expenses and write-downs, reserves, and project opening costs, net of recoveries. Net loss attributable to Caesars for 2012 increased $809.9 million or 117.8% from 2011, due mainly to the increase in loss from operations and a net loss from our discontinued operations of $109.5 million, partially offset by increases in gains on early extinguishments of debt and the tax rate benefit as further described in "Other Factors Affecting Net Income" that follows herein. Year ended December 31, 2011 compared to year ended December 31, 2010 Despite a decline in casino revenues, net revenues for 2011 increased $20.1 million, or 0.2%, from 2010, as favorable results in Las Vegas and from our international and online businesses, including revenues related to Playtika, which we acquired during the year, were somewhat offset by revenue declines at properties in the Midwest and Atlantic City.
For 2011, income from operations increased $333.2 million, or 69.0%, from 2010. This increase was due mainly to a $151.2 million decrease from 2010 of intangible and tangible non-cash impairment charges, the effects of cost-reduction efforts under cost savings programs, including Project Renewal, and a $75.9 million reduction in write-downs, reserves, recoveries, and project opening costs.
Net loss attributable to Caesars for 2011 decreased $143.5 million or 17.3%, compared with 2010, due primarily to higher income from operations and an increase in the benefit for income taxes, partially offset by higher interest expense in 2011, due mainly to certain interest rate swaps no longer qualifying for hedge accounting.
Performance Metrics
We measure performance in part through the tracking of trips by rated customers, which means a customer whose gaming activity is tracked through the Total Rewards customer-loyalty system ("trips"), and by spend per rated customer trip ("spend per trip"). A trip is created by a Total Rewards card holder engaging in one or more of the following activities while at one of our properties: (1) hotel stay, (2) gaming activity, or (3) a comp redemption, which means the receipt of a complimentary item given out by our casinos. In markets where we have multiple properties, customers often engage in trip generating activities at more than one property in a day. In these instances, we consider the market as a whole and do not count multiple trips. Customer spend means the cumulative rated theoretical spend (which is the amount of money expected to be retained by the casino based upon the mathematics underlying the particular game as a fraction of the amount of money wagered by the customer) across all game types for a specific customer. For the Atlantic City region, we refer to customers that stay at a hotel in one of its properties as lodgers and customers that may play at a casino located in one of its properties but do not stay at a hotel at such property as non-lodgers.
The following table reflects the percentage increase/(decrease) in trips and spend per trip for the U.S. regions for 2012 compared with 2011:

                         Trips      Spend per Trip
Consolidated Caesars     (4.1 )%          0.9  %
Las Vegas region          1.0  %          3.2  %
Atlantic City region:
  Lodgers               (10.2 )%         (0.8 )%
  Non-lodgers            (8.3 )%         (1.1 )%
All other regions        (2.5 )%         (0.5 )%

For 2012, trips decreased on a consolidated basis compared with 2011, due mainly to hurricane-related property closures and competitive pressures in the Atlantic City Region, as well as modest declines in the rest of our domestic regions, except for Las Vegas where trips rose slightly. For 2012, spend per trip increased from 2011, due mainly to an increase in the Las Vegas region largely as a result of strength in the international high-end segment, which was partially offset by declines in Atlantic City and our other domestic regions. On a consolidated basis, cash average daily room rates for 2012 were relatively unchanged from 2011 as declines in the Atlantic City Region as a result of lost convention business in the fourth quarter 2012 due to the hurricane were offset by increases in our Iowa/Missouri and Louisiana/Mississippi regions. Total occupancy percentage decreased 0.6 percentage points in 2012 compared with 2011 due mainly to declines in the Atlantic City Region, partially offset by increases in several of our other domestic regions.
The following table reflects the percentage increase/(decrease) in trips and spend per trip for our U.S. regions for 2011 compared with 2010:

                         Trips     Spend per Trip
Consolidated Caesars    (6.7 )%          3.4  %
Las Vegas region         2.5  %          2.7  %
Atlantic City region:
  Lodgers               (0.2 )%         (2.2 )%
  Non-lodgers           (5.6 )%         (0.7 )%
All other regions       (9.8 )%          2.7  %

For 2011, trips on a consolidated basis declined from 2010 due to (i) new competition in the Atlantic City, Iowa/Missouri, and Illinois/Indiana regions,
(ii) reduced access to one of our properties due to a bridge closure in the Illinois/Indiana region beginning in the first week of September 2011 that reopened in February 2012, (iii) temporary closures in the Atlantic City region during the third quarter of 2011 due to Hurricane Irene, (iv) temporary closures of seven properties in the Illinois/Indiana and Louisiana/Mississippi regions during the first half of 2011 due to flooding and severe weather conditions, and
(v) the impact of marketing programs on trip frequency of certain customer segments in all U.S. regions. These decreases in trips were partially offset by an increase in trips for the Las Vegas region during 2011. On a consolidated basis, cash average daily room rates for 2011 increased to $91 from $86, or 6.4%, when compared to 2010 largely driven by the Las Vegas region. Total occupancy percentages in 2011 increased 1.4 percentage points when compared to 2010.

Regional Operating Results

Las Vegas Region
                                                                                  Percent Favorable/(Unfavorable)
(Dollars in millions)                    2012          2011          2010          2012 vs 2011        2011 vs 2010
Casino revenues                       $ 1,641.5     $ 1,582.5     $ 1,544.4                3.7  %              2.5 %
Net revenues                            3,029.9       3,013.1       2,834.8                0.6  %              6.3 %
Income from operations                    428.7         495.5         349.9              (13.5 )%             41.6 %
Operating margin*                          14.1 %        16.4 %        12.3 %        (2.3) pts             4.1 pts


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Net revenues for 2012 increased $16.8 million or 0.6% from 2011 due primarily to strength in the international, high-end gaming segment contributing to higher casino revenues and the January 2012 opening of 662 additional rooms in the Octavius Tower at Caesars Palace Las Vegas contributing to higher rooms revenue. Trips increased 1.0% in 2012 from 2011 and spend per trip increased 3.2%. In 2012, hotel revenues increased 1.9%, cash average daily room rates were relatively unchanged and occupancy rates decreased 1.5 percentage points from 2011. Revenues were negatively impacted by Project Linq construction activities in 2012, which included the closure of O'Shea's casino and several retail outlets at Harrah's Las Vegas earlier in 2012, and the ongoing renovation of The Quad Resort & Casino (formerly, the Imperial Palace Hotel and Casino). We estimate that Project Linq construction activities reduced 2012 net revenues by approximately $30 million to $40 million. Income from operations decreased $66.8 million, or 13.5%, from 2011, due primarily to an increase in property operating expenses and depreciation expense associated with the Octavius Tower at Caesars Palace Las Vegas, in addition to an increase of $19.7 million in write-downs, reserves, and project opening costs, net of recoveries related primarily to increased remediation costs in the region. We estimate that Project Linq construction activities reduced 2012 income from operations by approximately $15 million to $25 million.
Strengthening fundamentals in the overall Las Vegas market and the international, high-end gaming segment positively impacted our 2011 results in the region compared with 2010. Increases in trips, spend per trip, cash average daily room rates, and total occupancy contributed to a $178.3 million, or 6.3% increase in our Las Vegas region net revenues for 2011 from 2010. Hotel revenues in the region increased 11.4%, cash average daily room rates increased 8.0% to $92 from $85 and total occupancy percentages rose 3.2 percentage points for 2011, marking our highest occupancy percentage in the Las Vegas region in six years. For 2011, income from operations increased $145.6 million, or 41.6%, from 2010 due to the impact of increased revenues and a decrease in remediation costs related to the properties in the region.
During 2012, we secured $185.0 million in financing to fund the complete renovation of Bill's Gamblin' Hall & Saloon into a boutique lifestyle hotel that includes a dayclub/nightclub. The renovation will include a complete remodeling of the guest rooms, casino floor, and common areas, the addition of a second floor restaurant, and the construction of an approximately 65,000 square foot rooftop pool and dayclub/nightclub. We will own the property and manage the casino, hotel, and food and beverage operations, and the dayclub/nightclub will be leased to a third party. Bill's Gamblin' Hall & Saloon temporarily closed in early February 2013 to accommodate these renovations. The renovated hotel, casino, and restaurant are expected to open in December 2013 and the dayclub/nightclub is expected to open in April 2014. Through December 31, 2012, $3.0 million had been spent on this project. See Note 8, "Debt-Bill's Credit Facility," to the consolidated financial statements included in Item 8 of this report, for discussion of the financing related to this project.
During 2011, we commenced construction on Project Linq, a dining, entertainment, and retail development between the Flamingo casino and The Quad Resort & Casino, on the east side of the Las Vegas Strip, which is scheduled to open in phases beginning in late 2013. Project Linq also includes the construction of a 550-foot observation wheel, the High Roller, which is expected to open in early 2014. Through December 31, 2012, $240.6 million had been spent on this project, of which $187.9 million was spent in 2012. See Note 8, "Debt-Octavius and Linq Projects," to the consolidated financial statements included in Item 8 of this report, for discussion of the financing related to Project Linq.

Atlantic City Region
                                                                                  Percent Favorable/(Unfavorable)
(Dollars in millions)                    2012          2011          2010         2012 vs 2011        2011 vs 2010
Casino revenues                      $ 1,429.6      $ 1,584.9     $ 1,696.8              (9.8 )%             (6.6 )%
Net revenues                           1,681.3        1,839.1       1,899.9              (8.6 )%             (3.2 )%
(Loss)/income from operations           (394.6 )         79.6          83.7                **                (4.9 )%
Operating margin*                        (23.5 )%         4.3 %         4.4 %      (27.8) pts           (0.1) pts


____________________

For 2012, net revenues decreased by $157.8 million, or 8.6% from 2011, due mainly to continued competitive pressures and the negative impact of Hurricane Sandy which forced the closure of our properties in Atlantic City for five days and our property in Philadelphia for two days in the fourth quarter 2012. The hurricane related property closures contributed to a decline in trips during 2012 compared with 2011, and spend per trip declined slightly. We estimate that the negative impact of Hurricane Sandy on net revenues was approximately $40 million to $45 million. Loss from operations was $394.6 million for 2012 compared with income from operations of $79.6 million in 2011. This change was due largely to a non-cash impairment charge of $450.0 million recorded in the fourth quarter 2012 related to tangible assets of one of the properties in the region, with no comparable charge in 2011, as well as the earnings impact of lower revenues. See Note 5, "Property and Equipment, net" to the consolidated financial statements included in Item 8 of this report, for discussion of the tangible asset impairments. We estimate that the negative impact of Hurricane Sandy on loss from operations was approximately $35 million to $40 million. We expect that the region will continue to be challenged as a result of the slow recovery from the hurricane and competitive pressures.
Atlantic City region net revenues declined $60.8 million, or 3.2%, for 2011 from 2010 due to declines in trips and spend per trip in both lodger and non-lodger segments. Trip declines resulted from temporary closures of the properties in the region during the third quarter of 2011 due to Hurricane Irene, the continued effect of competition from new casinos and the mid-2010 introduction of table games in the Pennsylvania market. Income from operations declined $4.1 million, or 4.9%, for 2011 from 2010 due to lower revenues, which was mostly offset by reduced property operating expenses as a result of our cost reduction activities.

Louisiana/Mississippi Region
                                                                                           Percent
                                                                                   Favorable/(Unfavorable)
(Dollars in millions)                    2012          2011          2010       2012 vs 2011    2011 vs 2010
Casino revenues                      $   999.7      $ 1,012.0     $ 1,096.4         (1.2 )%           (7.7 )%
Net revenues                           1,101.9        1,104.4       1,193.4         (0.2 )%           (7.5 )%
(Loss)/income from operations           (222.3 )        122.0          69.9           **              74.5  %
Operating margin*                                                                 (31.2)
                                         (20.2 )%        11.0 %         5.9 %        pts           5.1 pts


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Iowa/Missouri Region
The following results for all periods exclude the Harrah's St. Louis casino
which has been classified as a discontinued operation as a result of the sale of
this property in 2012.
                                                             Percent Favorable/(Unfavorable)
(Dollars in millions)    2012        2011        2010        2012 vs 2011        2011 vs 2010
Casino revenues        $ 428.0     $ 435.7     $ 442.3             (1.8 )%              (1.5 )%
Net revenues             459.8       466.7       473.0             (1.5 )%              (1.3 )%
Income from operations   123.1       105.6       105.4             16.6  %               0.2  %
Operating margin*         26.8 %      22.6 %      22.3 %        4.1 pts              0.3 pts


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