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Slide 1: Harrah’s Entertainment, Inc. September 2008
Slide 2: Strictly Confidential and Proprietary – Do Not Reproduce Forward Looking Statements Certain information in this presentation may be considered forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995. This information is based on the Company's current expectations and actual results could vary materially depending on risks and uncertainties that may affect the Company's operations, markets, services, prices and other factors as discussed in filings with the Securities and Exchange Commission. These risks and uncertainties include, but are not limited to, industry and economic conditions, competitive, legal, governmental and technological factors. There is no assurance that the Company's expectations will be realized. The Company assumes no obligation to update any forward-looking information contained in this presentation should circumstances change, except as otherwise required by securities and other applicable laws. Market data and other statistical information used throughout this presentation are based on independent industry publications, government publications, reports by market research firms or other published independent sources. Some data are also based on our good faith estimates which are derived from our review of internal surveys, as well as the independent sources listed above. Although we believe these sources are reliable, we have not independently verified the information and cannot guarantee its accuracy and completeness. 2
Slide 3: Strictly Confidential and Proprietary – Do Not Reproduce Corporate Structure Harrah’s Entertainment, Inc. LTM Revenue: $10.7 bn LTM Adjusted EBITDA: $2.7 bn Guarantor of new and existing HOC Debt Guarantor of leases for PropCo debt PropCo Borrowing Structure HOC Borrowing Structure Other (1) $6.5 bn CMBS Debt CMBS Borrowers LTM Revenue: $2.7 bn LTM Adjusted EBITDA: $0.8 bn Harrah’s Operating Company, Inc. (“HOC”) LTM Revenue: $8.0 bn LTM Adjusted EBITDA: $1.9 bn $2.0 bn Revolver (Undrawn) $7.3 bn Term Loan B Facility $6.8 bn New Senior Notes/Bridge $4.6 bn Existing Senior Unsecured Notes All Material Operating Subsidiaries Underlying Properties Harrah's Las Vegas Rio Flamingo Las Vegas Paris Las Vegas Harrah's Atlantic City Harrah's Laughlin Imperial Palace Bill’s Gamblin’ Hall & Saloon Bally's Las Vegas Caesars Palace Harrah's Lake Tahoe Bill's Lake Tahoe Harveys Lake Tahoe Bally's Atlantic City Subsidiary Pledgors under New Credit Facility and Guarantors under Senior Unsecured Bridge Facility / Notes Underlying Properties Caesars Atlantic City Showboat Atlantic City Harrah’s Chester (PA) Harrah's New Orleans (LA) Harrah's Louisiana Downs (LA) Horseshoe Bossier City (LA) Horseshoe Tunica (MS) Grand Tunica (MS) Grand Biloxi (MS) Sheraton Tunica (MS) Harrah's Council Bluffs (IA) Horseshoe Council Bluffs / Bluffs Run (IA) Harrah's North Kansas City (MO) Harrah's St. Louis (MO) Harrah's Joliet (IL) Harrah's Metropolis (IL) Horseshoe Hammond (IN) Caesars Indiana Harrah's Reno Harrah’s Ak-Chin Harrah’s Rincon Harrah’s Cherokee Casino Windsor Conrad Punta Del Este London Clubs (2) 125 acres of developable land in Las Vegas 175 acres of land in Macau • • LTM through of 6/30/08 Includes captive insurance subsidiaries. Includes 10 casino clubs in the UK, 2 in Egypt and 1 in South Africa. 3
Slide 4: Business & Market Overviews
Slide 5: Strictly Confidential and Proprietary – Do Not Reproduce Company Snapshot One of the world’s largest and most diversified gaming companies – #1 or #2 market share in almost every major market in the U.S. – 51 casinos in six countries (1) – Approximately 40,000 hotel rooms and suites, 3 million square feet of casino gaming space, and 2 million square feet of convention center space (1) Industry leading loyalty program (Total Rewards) with over 40 million members A Portfolio of Winning Brands LTM 6/30/08 Net Revenue ($10.7 Billion)(2) Managed / Intl / Other, 5% LTM 6/30/08 Property EBITDA ($2.7 Billion)(2) Managed / Intl / Other, 3% Other Nevada, 5% Other Nevada, 6% Iowa / Missouri, 7% Iowa / Missouri, 8% Las Vegas, 33% Illinois / Indiana, 9% Las Vegas, 41% Illinois / Indiana, 12% Mississippi / Louisiana, 12% Mississippi / Louisiana, 14% Atlantic City, 23% Atlantic City, 22% (1) As of June 30, 2008, HOC and its subsidiaries own or manage 45 of the Harrah’s Entertainment casinos. (2) Property EBITDA excludes corporate overhead, normalizations and pro forma cost savings. HOC LTM Net Revenue of $8.0 billion and Property EBITDA of $1.8 billion. 5
Slide 6: Strictly Confidential and Proprietary – Do Not Reproduce Differentiated Business Strategy • Leverage scale and Total Rewards program to generate same store gaming revenue growth and cross-market play - Hub and spoke network of properties - Highly scalable existing infrastructure - Application of centralized marketing to new properties/operations • Pursue targeted investments in proven markets • Focuses on organizational restructuring, teleservices reorganization and procurement savings Drive Profitable Sales Growth Increase Profitability • Substantial progress against $164M savings goal • Ongoing rationalization of property labor and marketing costs • • • • Stable, predictable revenue High operating margins Low maintenance capex Growth capex channeled to highest return uses Maximize Cash Flow 6
Slide 7: Strictly Confidential and Proprietary – Do Not Reproduce Highly Strategic Las Vegas Market Position… Harrah’s has the #2 Market Share in Las Vegas, With 8 Properties 28% of the Strip’s revenue and 25% of the Strip’s positions 160 contiguous acres on the east side of the Strip combined with 170 acres on the west side – 125 acres of developable land Harrah’s controls three of the “4 Corners” at the intersection of Flamingo and Las Vegas Blvd Las Vegas Property Map To Downtown Stratosphere Fontainebleau* Circus Circus Sahara St r ip The Riviera LV Hilton Convention Center Echelon* W. Desert Inn Rd Spring Mountain Rd Encore* Fashion Show Mall New Frontier Montreux* Plaza* Treasure Island Venetian Mirage The Wynn Golf Club E. Desert Inn Rd Wynn Palazzo* Royale Sands Expo Harrah’s Imperial Palace Flamingo Barbary Coast Bill’s Gamblin’ Hall Bally’s Paris University of Nevada – Las Vegas Rio Caesar’s Caesars Flamingo Rd Palms Bellagio Cosmopolitan* 15 Harmon Blvd City Center* Monte Carlo Hard Rock * Tropicana Ave New York New York New York New York Excaliber Luxor Mandalay Bay 604 Tropicana Ave Aladdin/Planet Hollywood Planet Hollywood Hooters ** McCarran Int’l Airport MGM Grand Tropicana HOC * Denotes property either under development or planned for development. PropCo Harrah’s Undeveloped Land 7
Slide 8: Strictly Confidential and Proprietary – Do Not Reproduce … Drives Market Outperformance ($ in millions) Property Caesars Palace Rio Hotel & Casino Harrah’s Las Vegas Paris Las Vegas Flamingo Las Vegas Imperial Palace Bally’s Las Vegas Bill’s Gamblin’ Hall & Saloon TOTAL Casino Space (sq. ft.) Rooms & Suites 3,350 2,520 2,530 Harrah’s Las Vegas 129,900 107,000 90,300 85,000 2,920 Bally’s Las Vegas 76,800 3,500 75,000 66,400 42,500 672,900 2,640 2,810 210 20,480 Caesars Palace Paris Las Vegas HET Las Vegas LTM Net Revenues HET Las Vegas LTM EBITDA $3,542 $1,123 Rio Hotel & Casino 8
Slide 9: Strictly Confidential and Proprietary – Do Not Reproduce Atlantic City Snapshot ($ in millions) Property Casino Space (sq. ft.) Rooms & Suites Bally’s Atlantic City 225,800 1,740 Caesars Atlantic City 145,000 1,140 Harrah’s Atlantic City Harrah’s Atlantic City 160,800 1,630 Showboat Atlantic City 124,200 1,330 Showboat Atlantic City Harrah’s Chester (PA) TOTAL 92,000 747,800 -5,840 Bally’s Atlantic City HET Atlantic City LTM Net Revenues HET Atlantic City LTM EBITDA $2,402 $595 Note: LTM as of 6/30/08. Caesars Atlantic City 9
Slide 10: Strictly Confidential and Proprietary – Do Not Reproduce The Leader in Regional Markets ($ in millions) Market Properties Casino Space (sq. ft.) Rooms & Suites LTM Net Revenues LTM EBITDA 2007 Market Revenues Harrah’s Market Share(1) Louisiana / Mississippi(2) 7 427,500 3,550 $1,508 $332 $3,267 37% Illinois / Indiana(3) 4 188,900 960 $1,288 $234 $4,034 32% Iowa / Missouri(4) 4 286,900 1,140 $799 $223 $2,105 37% TOTAL 15 903,300 5,650 $3,535 $789 Note: LTM as of 6/30/08. All properties included in HOC. Source of market revenues and Harrah’s market share: State gaming commission and control boards. (1) Market Share based on year ending Dec.2007 (2) Louisiana / Mississippi market defined as Shreveport – Bossier City, LA, New Orleans, LA, Gulfcoast and Tunica, MS. (3) Illinois / Indiana market defined as Chicagoland and Southern Illinois and Indiana. (4) Iowa / Missouri market defined as Council Bluffs, IA, St. Louis, MO, and Kansas City, MO. Caesars Indiana Grand Casino Biloxi Grand Casino Tunica 10
Slide 11: Strictly Confidential and Proprietary – Do Not Reproduce Growing International Presence London Clubs International Properties in London, Egypt and South Africa Total Casino Space: 143,200 sq. ft. Total Hotel Rooms & Suites: 190 Macau Orient Golf Course 18-hole golf course on 175 acres in Cotai Acquired in September 2007 Casino Windsor, Ontario (1) Casino Space:100,000 sq. ft. Hotel Rooms & Suites: 340 Conrad Punta Del Este Resort & Casino, Uruguay Only Las Vegas style resort and casino in Uruguay Total Casino Space: 44,500 sq. ft. – 510 slot machines, 50 table games MACAU ORIENT GOLF (OWNED BY HARRAH’S) Nature preserve BORDER CROSSING VENETIAN GALAXY CITY OF DREAMS The Golden Nugget – London FOUR SEASONS SHERATON ST. REGIS FAR EAST MACAU STUDIO CITY HILTON CONRAD MACAU DOME FAIRMONT RAFFLES TBD Fifty – London RESERVOIR Total Hotel Rooms & Suites: 300 175 Acres on Cotai Strip in Macau (1) HOC owns a 50% interest in Windsor Casino Limited, which manages the property. Emerald Safari – South Africa 11
Slide 12: Investment For Growth
Slide 13: Strictly Confidential and Proprietary – Do Not Reproduce Harrah’s Atlantic City Expansion Project Overview New Waterfront hotel tower, connected to existing Bayview Tower Number of Hotel Rooms: 851 Number of Suites: 109 Amentities: – Elizabeth Arden Red Door Spa; – The Pool (80,000 gallon pool under 90ft. glass dome w/82 degree temp); – Daytime pool with cabanas and club atmosphere at night; – The Waterfront Shops (7 unique shops); – Taste of the Shore Food Court (4 eateries), Waterfront Buffet, new Reflections Cafe and McCormick & Schmick’s (located on existing property) Official opening ceremony March 6, 2008 13
Slide 14: Strictly Confidential and Proprietary – Do Not Reproduce Horseshoe Hammond Expansion Project Overview Riverboat casino on Indiana side of Lake Michigan Casino Space: 48,300 sq. ft. Slot Machines: 1,940 Table Games: 60 Expanded casino space of 108,000 sq. ft. will include +3,200 slots and 94 table games including 40 poker tables Officially opened July 29, 2008 14
Slide 15: Strictly Confidential and Proprietary – Do Not Reproduce Caesars Palace Las Vegas Expansion Project Overview New hotel tower and convention space on Flamingo Road next to existing Augustus Tower Number of hotel rooms: 662 Number of suites: 68 New convention space: 110,000 s.f. 3 Pool Villas; 3 new pools Renovate buffet, Race & Sports Book, miscellaneous restaurants, casino space Hotel and convention space scheduled to open Summer 2009 15
Slide 16: Strictly Confidential and Proprietary – Do Not Reproduce Harrah’s Kansas Project Overview Awarded sole gaming contract in southcentral Kansas – Subject to completion of background investigations and licensing requirements $485M resort casino – 2,000 slots, 50 tables, WSOP Poker Room – 175 hotel rooms, including 30 suites and 5 pool villas – 30,000 square feet of convention space – 5 restaurants, including celebrity concepts – 18 hole championship golf course JV with local real estate developers Attractive project due to proximity to Wichita and limited competition in area – Project located within 20 minute drive of Wichita city center – Also within driving distance of Oklahoma City Opening expected in August 2010 16
Slide 17: Investment Strengths
Slide 18: Strictly Confidential and Proprietary – Do Not Reproduce Market Leader with Unparalleled Scale Harrah’s is the world’s largest and most diversified gaming company – 51 casinos across 6 countries (1) – #1 or #2 share in almost every major domestic market #1 #1 #1 Reno / Lake Tahoe Black Hawk / Central City #2 Las Vegas Cripple Creek #2 Laughlin Tunica Shreveport / Bossier City #1 #2 Kansas City #1 Chicagoland Council Bluffs Detroit Atlantic City Chester #1 #1 St. Louis #1 Vicksburg Biloxi New Orleans HOC Property PropCo Property Native American Casino Managed by HOC #1 Major Gaming Market #1 Market Share #2 Market Share Lake Charles #1 #2 Unparalleled Scale and Diversification Drives Growth and Stability Note: Joint venture interest in Canadian property not directly owned. (1) HOC owns or manages 45 casinos. 18
Slide 19: Strictly Confidential and Proprietary – Do Not Reproduce Most Diversified Gaming Operator LTM 6/30/08 EBITDA by Geography Harrah’s (1) Managed / Intl / Other, 3% Other Nevada, 5% Iowa / Missouri, 8% MGM Mirage Other, 3% Mississippi, 4% AC (Borgota ) (2), 5% Detroit, 6% Wynn Illinois / Indiana, 9% Las Vegas, 41% Las Vegas , 42% Mississippi / Louisiana, 12% Macau, 58% Atlantic City, 22% Las Vegas Strip, 82% Station (3) Managed, 22% AC (Borgota ) (2), 19% Boyd Las Vegas Sands (4) Las Vegas , 37% Las Vegas Locals, 50% Macau, 63% Midwest / South, 31% Las Vegas Locals, 78% Source: Derived or extrapolated from public company filings and available third party analyst reports. (1) Represents HET consolidated. (2) Borgata is 50/50 owned by MGM/Boyd. (3) Based off 2007 operating income as reported. (4) Based off Adjusted EBITDAR. 19
Slide 20: Strictly Confidential and Proprietary – Do Not Reproduce Portfolio of Leading Brands Each brand has a strong identity and enjoys powerful customer recognition Diverse collection of brands appeals to wide range of customer preferences and encourages multiple visits 20
Slide 21: Strictly Confidential and Proprietary – Do Not Reproduce Superior Business Model: Generating Same Store Gaming Revenue Growth and Cross-Market Play Brand Hydrogen Loyalty Decision science capabilities 21
Slide 22: Strictly Confidential and Proprietary – Do Not Reproduce Strong and Predictable Free Cash Flow Generation Stable and predictable revenues – Favorable business mix with over 70% of gross revenue driven by casino operations – High operating margins – Profitability improvement program implemented in 2006 Reasonable capital expenditure requirements – Well-maintained asset base ($4.6 billion of total capex since 2004) – Capital expenditures channeled to highest return uses 22
Slide 23: Strictly Confidential and Proprietary – Do Not Reproduce Substantial Land Value 125 Undeveloped Las Vegas Acres 175 Acres on Cotai Strip in Macau VENETIAN CITY OF DREAM S FOUR SEASONS SHERAT ON ST. REGIS GALAXY 36.73 Acres 38.15 (1) Acres FAR EAST Flamingo Road 3.87 Acres Nature preserve MACAU STUDIO CITY HILTON CONRA D FAIRMON T RAFFLES MACAU DOME BORDER CROSSING 125 undeveloped Las Vegas acres surrounding the Strip Illustrative Value / Acre ($mm) $30 25 20 15 10 (a) Based on 125 acres Illustrative (a) Value ($mm) $3,750 3,125 2,500 1,875 1,250 (1) Total size of indicated plot is 38.15 acres, with 36.20 acres owned by Harrah’s. Note: Values shown for Las Vegas land are for illustrative purposes only and do not reflect any performed land value appraisals by the Company. Las Vegas Blvd. 48.21 Acres TBD MACAU ORIENT GOLF (OWNED BY HARRAH’S) RESERVOIR Purchased Macau Orient Golf in September 2007 Purchase price: $578 million 23
Slide 24: Harrah’s Entertainment, Inc. September 2008