UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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Harrah’s Entertainment, Inc.

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A Really Big Deal Gary Loveman, Chairman, CEO and President

Private Equity Firms Flush with CashBanks in Aggressive Lending ModeThe Stars are Aligned for Major Private-Equity Deals (also known as “leveraged buyouts,” or LBOs)

Private Equity: Where the Money Comes From Charitable/philanthropic foundations: Public-employee pension systems: Private pension systems: Large institutional investors fund Private Equity firms based on a track record of superior returns.Countries:

Growth in Number and Value of LBOs Up 50% from 2005 Source: Dealogic July 2006: KPMG estimates Private Equity firms have $750 billion, enough to fund acquisition of every company on London Stock Exchange and NASDAQ LBOs in Q1 - Q3 2006 = $124.6 billion

Private Equity’s $750 Billion: What Could it Buy? Holland GDP: $650 B Sweden GDP: $270 B Australia GDP: $600 B Source: U.S. Department of State

What Makes a Company Attractive to Private Equity Firms? HEALTHY CASH FLOWS FROM OPERATIONS GREAT BRANDS TALENTED EMPLOYEES STRONG GROWTH PROSPECTS

A Leveraged Buyout Involves Significant Debt Initially HET Capital Structure Comparison Est. Debt / EBITDA 4.7 x 8.0 x Billions $0$7$14$21$28Pre-LBOPost-LBOEquityDebt

By Reducing Debt, LBO Equity Sponsors Enhance Their ReturnsBillions Example Here Assumes 8% Annual Growth In EBITDA And Constant TEV / EBITDA Multiple 23% CAGR on equity Illustrative $0$5$10$15$20$25$30$35$40Year 1Year 2Year 3Year 4Year 5EquityDebt

Seven of Ten Largest-Ever Private Equity Deals Done in 2006 $11.3 SunGuard Data Systems Inc. 3/28/2005 $13.7 Univision Communications Inc. 6/27/2006 $17.4 Albertson’s Inc. 1/23/2006 $18.8 Freescale Semiconductor Inc. 9/15/2006 $22.0 Kinder Morgan Inc. 8/28/2006 $26.7 Clear Channel Communications Inc. 11/16/2006 $27.8 Harrah’s Entertainment Inc. Tentative $31.3 RJR Nabisco Inc. 10/24/1988 $33.0 HCA Inc. 7/24/2006 $36.0 Equity Office Properties Trust PLC 11/20/2006 Total Value ($bil) TargetDate Announced Source: TheDeal.com

Privatization Trend in the Gaming and Leisure Space Acquired by Columbia Sussex Acquired by Fortress Investment GroupIsadore Sharp / Kingdom Hotels Cascade Investments have offered to purchase companyFertitta family / Colony Capital have offered to purchase the company

TPG / Apollo Offer Represents a Significant Premium HET Stock Price Prior to Buyout News (1/1/2006 - 9/29/2006)$50$55$60$65$70$75$80$85$90$951/3/20062/2/20063/4/20064/3/20065/3/20066/2/20067/2/20068/1/20068/31/20069/29/06:News of buyout offer becomes publicTPG / Apollo offer = $90, a 36% premium

Equity Ownership Comparison Texas Pacific Group – 50%* Apollo Management – 50%* Under New Ownership Capital Research & Management – 8.8% Janus Capital – 8.0% Goldman Sachs Group – 8.0% Private Capital Management – 6.1% Hotchkis & Wiley – 4.7% State Street – 4.3% Barclays Global Investors – 3.1% Amvescap – 2.8% Vanguard – 2.5% ~100,000 Others – 51.7% HET Ownership (at 9/30/06) Note: Table excludes holdings by employees to simplify comparison *Relative ownership percentages to be determined

Apollo & TPG Partner with Some of America’s Most Recognized Brands

Public vs. Private Ownership Comparison Stock listed / traded on exchange (e.g. NYSE) Regular public reporting required (e.g. quarterly earnings releases) Oversight by Board of Directors Long-Term Compensation For Employees HET operating strategy based on marketing and customer service excellence Owners involved in day to day operations? No No Yes – Board composition will change TBD Yes No Private Ownership Yes Yes Yes Options / SARS / Restricted Stock Yes No Public Ownership

What It Means – Compensation Stock Options – Restricted Stock (RS) & Stock Appreciation Rights (SAR): Treated just like common stock. Upon close of deal, the equity vehicle is cashed out at the purchase price for both vested and unvested shares. 401(k) Plan: Plan calls for full vesting of any unvested amounts in the Company Match portion, upon close of deal. Participants who invested their 401(k) funds in HET stock fund will receive cash for the equivalent purchase price value of the fund shares at the close of the deal.

With High Initial Debt Levels, Capital Allocation Priorities Will Likely Change Re-Invest For Growth Mergers & Acquisitions Share Repurchases / Dividends Reduce Debt Potential Uses Of Cash üü X üüUnder New Structure üüüüüüHET Historically

Current Development Projects & International Expansion El Reino - Spain Baha Mar

Competitors Casino LCI Casino Locations The Sportsman Rendezvous Golden Nugget Fifty St James Leicester Square (1) Note: (1) Currently under development, will open March 2007. Location of LCI Casinos (London)

Leeds (January 2008) Nottingham (July 2007) Brighton Manchester (October 2006) Glasgow (July 2007) Southend London x 5 (including Leicester Square) Location of LCI Casinos (U.K.)

Timeline/Process Going Forward Anticipate the transaction will require approximately one year to complete Contingent upon: Stockholder approval Sometime in 2007 Requires approval of “not less than a majority” of Harrah’s outstanding common stock 2. Regulatory approval in nearly every jurisdiction

The Bottom Line: Ownership changes. Overall company direction does not.