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Goodwill and Other Intangible Assets
 12 Months Ended
Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets Goodwill and Other Intangible Assets
The purchase price of an acquisition is allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition. We determine the estimated fair values after review and consideration of relevant information including discounted cash flows, quoted market prices, and estimates made by management. To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets acquired and liabilities assumed, such excess is recorded as goodwill.
We perform our annual goodwill impairment assessment as of October 1. We perform this assessment more frequently if impairment indicators exist. We performed our annual goodwill impairment test by comparing the fair value of each reporting unit with its carrying amount. We determine the estimated fair value of each reporting unit based on a combination of EBITDA, valuation multiples, and estimated future cash flows discounted at rates commensurate with the capital structure and cost of capital of comparable market participants, giving appropriate consideration to the prevailing borrowing rates within the casino industry in general. We also evaluate the aggregate fair value of all of our reporting units and other non-operating assets in comparison to our aggregate debt and equity market capitalization at the test date. EBITDA multiples and discounted cash flows are common measures used to value businesses in our industry.
We perform our annual impairment assessment of other non-amortizing intangible assets as of October 1. We perform this assessment more frequently if impairment indicators exist. We determine the estimated fair value of our non-amortizing intangible assets by primarily using the Relief from Royalty Method and Excess Earnings Method under the income approach.
The evaluation of goodwill and other non-amortizing intangible assets requires the use of estimates about future operating results, valuation multiples, and discount rates to determine their estimated fair value. Changes in these assumptions can materially affect these estimates. Thus, to the extent gaming volumes deteriorate in the near future, discount rates increase significantly, or we do not meet our projected performance, we could have impairments to record in the future and such impairments could be material.
Changes in Carrying Value of Goodwill by Segment
(In millions)
Las Vegas
 
Other U.S.
 
All Other
 
CEC Total
Gross Goodwill
 
 
 
 
 
 
 
Balance as of January 1, 2018
$
6,204

 
$
1,002

 
$
61

 
$
7,267

Centaur acquisition (1)
—

 
275

 
—

 
275

Other
—

 
—

 
(3
)
 
(3
)
Balance as of December 31, 2018
6,204

 
1,277

 
58

 
7,539

Accumulated Impairment
 
 
 
 
 
 
 
Balance as of January 1, 2018
(3,115
)
 
(337
)
 
—

 
(3,452
)
Impairment
—

 
(17
)
 
(26
)
 
(43
)
Balance as of December 31, 2018
(3,115
)
 
(354
)
 
(26
)
 
(3,495
)
Net carrying value, as of December 31, 2018 (2)
$
3,089

 
$
923

 
$
32

 
$
4,044

 
 
 
 
 
 
 
 
Gross Goodwill
 
 
 
 
 
 
 
Balance as of January 1, 2019
$
6,204

 
$
1,277

 
$
58

 
$
7,539

Transferred to assets held for sale
—

 
—

 
(5
)
 
(5
)
Balance as of December 31, 2019
6,204

 
1,277

 
53

 
7,534

Accumulated Impairment
 
 
 
 
 
 
 
Balance as of January 1, 2019
(3,115
)
 
(354
)
 
(26
)
 
(3,495
)
Impairment
—

 
(27
)
 
—

 
(27
)
     Balance as of December 31, 2019
(3,115
)
 
(381
)
 
(26
)
 
(3,522
)
Net carrying value, as of December 31, 2019 (2)
$
3,089

 
$
896

 
$
27

 
$
4,012

____________________
(1) 
See Note 4 for further details relating to the acquisition of Centaur.
(2) 
$405 million and $81 million of goodwill within our Las Vegas and Other U.S. segments, respectively, is associated with reporting units with zero or negative carrying value. Except for Horseshoe Hammond, the fair value of our reporting units exceed their respective carrying values.
Changes in Carrying Value of Intangible Assets Other than Goodwill
 
Amortizing
 
Non-Amortizing
 
Total
(In millions)
2019
 
2018
 
2019
 
2018
 
2019
 
2018
Balance as of January 1
$
342

 
$
355

 
$
2,635

 
$
1,254

 
$
2,977

 
$
1,609

Impairments
—

 
—

 
(61
)
 
(21
)
 
(61
)
 
(21
)
Amortization expense
(71
)
 
(68
)
 
—

 
—

 
(71
)
 
(68
)
Transferred to assets held for sale
(1
)
 
—

 
(10
)
 
—

 
(11
)
 
—

Centaur acquisition (1)
—

 
55

 
—

 
1,390

 
—

 
1,445

Other additions (2)
—

 
—

 
—

 
20

 
—

 
20

Other
—

 
—

 
(10
)
 
(8
)
 
(10
)
 
(8
)
Balance as of December 31
$
270

 
$
342

 
$
2,554

 
$
2,635

 
$
2,824

 
$
2,977


____________________
(1) 
See Note 4 for further details relating to the acquisition of Centaur.
(2) 
Other additions of $20 million are related to gaming rights.
During 2019, as a result of declines in recent performance and downgraded expectations for future cash flows at the properties of our subsidiary Caesars Entertainment UK (“CEUK”), we recognized an impairment charge related to gaming rights of $50 million. This impairment was recognized within our All Other segment. In addition, we recognized impairment charges related to goodwill of $27 million and gaming rights of $11 million at Horseshoe Hammond, LLC within our Other U.S. segment as a result of downgraded expectations for future cash flows from increased competition in the region.
During 2018, as a result of declines in our stock price and increases in market yields within our industry, which are both factors used to determine the discount rate, along with downward adjustments to expectations of future performance at certain of our properties outside of Las Vegas, we recognized impairment charges related to goodwill of $43 million and gaming rights of $21 million for certain of our properties, of which $12 million was recognized in our Other U.S. segment and $9 million was recognized in our All Other segment.
We used the Excess Earnings Method and a Cost Approach for estimating fair value for these gaming rights. We utilized an income approach using a discounted cash flow method to determine the fair value of our goodwill.
Gross Carrying Value and Accumulated Amortization of Intangible Assets Other than Goodwill
 
December 31, 2019
 
December 31, 2018
(Dollars in millions)
Weighted
Average
Remaining
Useful Life
(in years)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Amortizing intangible assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade names and trademarks
1.0
 
$
14

 
$
(8
)
 
$
6

 
$
14

 
$
(3
)
 
$
11

Customer relationships
3.6
 
1,070

 
(819
)
 
251

 
1,071

 
(756
)
 
315

Contract rights
5.0
 
3

 
(2
)
 
1

 
3

 
(2
)
 
1

Gaming rights and other
4.5
 
43

 
(31
)
 
12

 
43

 
(28
)
 
15

 
 
 
$
1,130

 
$
(860
)
 
270

 
$
1,131

 
$
(789
)
 
342

Non-amortizing intangible assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Trademarks
 
776

 
 
 
 
 
790

Gaming rights
 
1,525

 


 
 
 
1,592

Caesars Rewards
 
253

 
 
 
 
 
253

 
 
2,554

 
 
 


 
2,635

Total intangible assets other than goodwill
 
$
2,824

 
 
 
 
 
$
2,977


The aggregate amortization expense for intangible assets that continue to be amortized was $71 million, $68 million, and $67 million, respectively, for the years ended December 31, 2019, 2018, and 2017.
Estimated Five-Year Amortization
 
Years Ended December 31,
(In millions)
2020
 
2021
 
2022
 
2023
 
2024
Estimated annual amortization expense
$
71

 
$
60

 
$
17

 
$
15

 
$
13