NEW YORK ( TheStreet) -- Caesar's Entertainment ( CZR) has failed on its bet in China. The Harrah's casino operator agreed to sell its Macau property to Chinese real estate developer Pearl Dynasty Investment for $438 million after failing to get a gambling license in the Chinese region. The transaction, revealed in a Friday, Aug. 9 regulatory filing, comes as the Las Vegas casino operator struggles under the weight of $23.7 billion in debt in a deeply competitive U.S. casino industry. Caesars paid $578 million for the golf course property in 2007, with plans to eventually develop it into a hotel and casino resort. However, Caesars abandoned those plans after the Chinese government made it clear that it would not be issuing new gambling licenses anytime soon. "There's two things that there's a lack of in Macau; land and gaming licenses," said one industry watcher. "
Caesars had one and didn't think they could get the other, so why not sell?" After hopes of getting a gambling in license in Macau dwindled, Caesars put the property on the auction block last year. Caesars expects to use the $420 million in sale proceeds to pay down some of its $23.7 billion in debt. It expects to complete the transaction by year's end. Pearly Dynasty paid about $66 million upfront as of Aug. 8, according to filings, and will pay the remainder at closing. Caesars will receive an additional $8 million if the buyer needs to extend the closing date by one month. Caesars is entitled to keep about $43 million of the purchase price if the deal falls apart, according to filings. Failing to get a gambling license in Macau is a big blow for Caesars since the Macau gaming market is growing faster than some U.S. regions. Macau gaming officials report that gambling revenues came in at around $3.5 billion in July, a 20% increase from July 2012. Worse still, Caesars main rivals Las Vegas Sands ( LVS), Wynn Resorts ( WYNN) and MGM International ( MGM) all own casinos in Macau. Those three operators got their Macau gambling licenses in 2001. Caesars did not apply for a Macau gambling license at the time when Chinese officials were accepting them.