LogFAQs > #942485153

I'm looking at ways to bet against ERI/CZR. It's hard to imagine this newly merged company not going bankrupt. A small casino operator takes on mountains of debt to buy a much bigger casino operator with even bigger mountains of debt on its books. This happens during the middle of a pandemic but includes some cash payouts that were negotiated last year when CZR was a more valuable business. Now we find that despite reopening, there is almost no demand in Vegas. People focus on gambling of course but the convention and club businesses are probably faring even worse.

And, even worse, they no longer own many of the properties - those were spun off into VICI Properties during CZR's last bankruptcy. So now ERI/CZR is paying rent to VICI Properties so they can operate Caesars Palace, for instance. Mountains of debt, not much in assets, very little revenue coming in as long as coronavirus is here. Even when it's over, I think a lot of the business might not return - people have figured out ways to do business remotely without conventions and conferences, and people can gamble on stocks/options or sports online.

I don't want to short the stock as that has a finite gain and an infinite potential loss, but the option premiums for puts look pretty expensive. Guess I'm not the only one who feels this way about this company. Maybe I'll buy long term ITM puts to try to replicate shorting the stock without the unlimited risk.

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September 1, 2003; November 4, 2007; September 2, 2013
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