Realized gain on equity securities

CAESARS ENTERTAINMENT, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)determined on an individual asset basis based upon quoted prices of identical assets available in active markets (Level 1), quoted prices of identical assets in inactive markets, or quoted prices for similar assets in active and inactive markets (Level 2), and represent the amounts the Company would expect to receive if the Company sold these marketable securities.The Company held common shares of Flutter Entertainment PLC (“Flutter”), which is a publicly traded company with a readily determinable share price. The Flutter shares contained certain restrictions which expired in December 2020. As such, the shares were transferred from a Level 3 investment to a Level 1 investment. There were no other transfers between Level 1, Level 2 and Level 3 investments. During the year ended December 31, 2020, the Company sold a portion of these shares for $24 million and recorded a gain of $14 million. As of December 31, 2020, the fair value of shares held was $10 million, and was included in Prepayments and other current assets on the Balance Sheets. On July 7, 2021, the Company sold these shares for $9 million and recorded a loss of $1 million during the year ended December 31, 2021. Gains and losses have been included in Other income (loss) on the Statements of Operations.Derivative InstrumentsThe Company does not purchase or hold any derivative financial instruments for trading purposes.5% Convertible Notes - Derivative LiabilityOn October 6, 2017, Former Caesars issued $1.1 billion aggregate principal amount of 5% convertible senior notes maturing in 2024 (“5% Convertible Notes”) which contained a derivative liability. On June 29, 2021, all outstanding 5% Convertible Notes were converted as a result of our mandatory conversion. See Note 12 for further discussion. The derivative liability associated with the conversion feature no longer exists following the mandatory conversion.Forward contractsThe Company has entered into several foreign exchange forward contracts with third parties to hedge the risk of fluctuations in the foreign exchange rates between USD and GBP and to fix the exchange rate for a portion of the funds used in the William Hill Acquisition, repayment of related debt, and expected proceeds of the sale of the international operations. Three of these forward contracts to purchase £724 million at a contracted exchange rate were settled on June 11, 2021 and December 31, 2021, resulting in total gains of $38 million, which were recorded in the Other income (loss) on the Statements of Operations. As of December 31, 2021, the Company is contracted to sell a total of £790 million at fixed exchange rates. These contracts are to hedge the risk of fluctuations in the foreign exchange rate related to a portion of the expected proceeds from the sale of William Hill International. The forward term of these contracts ends in March 2022. The Company recorded a loss of $15 million during the year ended December 31, 2021, related to these forward contracts, which was recorded in the Other income (loss) on the Statements of Operations. Interest Rate Swap DerivativesWe assumed Former Caesars’ interest rate swaps to manage the mix of assumed debt between fixed and variable rate instruments. As of December 31, 2021, we have four interest rate swap agreements to fix the interest rate on $1.3 billion of variable rate debt related to the CRC Credit Agreement. The interest rate swaps are designated as cash flow hedging instruments. The difference to be paid or received under the terms of the interest rate swap agreements is accrued as interest rates change and recognized as an adjustment to interest expense at settlement. Changes in the variable interest rates to be received pursuant to the terms of the interest rate swap agreements will have a corresponding effect on future cash flows.The major terms of the interest rate swap agreements as of December 31, 2021 were as follows:

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| Effective Date |  | Notional Amount(In millions) |  | Fixed Rate Paid |  | Variable Rate Received as of December 31, 2021 |  |  |  | Maturity Date |
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| 1/1/2019 |  | 250 |  | 2.274% |  | 0.09038% |  |  |  | 12/31/2022 |
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| 1/1/2019 |  | 200 |  | 2.828% |  | 0.09038% |  |  |  | 12/31/2022 |
| 1/1/2019 |  | 200 |  | 2.828% |  | 0.09038% |  |  |  | 12/31/2022 |
| 1/1/2019 |  | 600 |  | 2.739% |  | 0.09038% |  |  |  | 12/31/2022 |
|  |  |  |  |  |  |  |  |  |  |  |

Valuation MethodologyThe estimated fair values of our interest rate swap derivative instruments are derived from market prices obtained from dealer quotes for similar, but not identical, assets or liabilities. Such quotes represent the estimated amounts we would receive or pay [Table of Contents](#i37dfc5eabc12461dbfc5ef573d80947e_7)89
