Political support against Caesars Entertainment’s efforts to create a real estate investment trust (REIT) to split its assets.
US Congress members have now signed a letter asking Treasury Secretary Jacob Lew to reject what would be a beneficial tax regime.
Caesars has transferred 10 of its properties, including seven on the Las Vegas Strip, into a real estate investment trust that will be 70 per cent owned by MGM, but will allow for ‘strategic and financial benefits.’
In an attempt to cut its debt, Mandalay Bay, The Mirage, Monte Carlo, New York-New York, Luxor, Excalibur, and the non-gaming Park development have been transferred into the REIT, along with the MGM Grand Detroit, Beau Rivage in Biloxi and the Gold Strike Tunica.
Caesars put the unit into bankruptcy early last year, meaning creditors are owed $18bn.
However 15 lawmakers have said Caesars’ plan contravenes the unit’s original intention of providing small investors opportunity to diversify into real estate.
The letter said: “The REIT would effectively shelter a considerable portion of the casinos’ profits, thus functioning as a taxpayer-funded subsidy to one of the largest casino companies in the US and its private equity owners.”
Caesars wants a private letter ruling from the Internal Revenue Service to treat the REIT as a tax-free separation.
The letter was signed by 14 Democrats and one Republican.