We've seen cards like Theater of Horrors before:
When a card is exiled, it's exiled face up unless otherwise stated. This is different from, say, Thief of Sanity, Bomat Courier, or Gonti, Lord of Luxury. For Theater of Horrors, both players will see what's coming. A small downside for the player with the enchantment, but in flavor of Rakdos' flashy and reckless nature.