Harrah’s, Caesars Sign Agreement
To Sell Four Casinos To Colony Capital

LAS VEGAS, September 27, 2004 – Harrah’s Entertainment, Inc. (NYSE:HET) and Caesars Entertainment, Inc. (NYSE:CZR) today signed a definitive agreement to sell Harrah’s East Chicago, Harrah’s Tunica, Atlantic City Hilton and Bally’s Tunica to an affiliate of Colony Capital, LLC. 

The agreement calls for the Colony unit to pay a combined total of about $1.24 billion for the four properties. The sale price represents approximately 8.5 times the trailing 12-month Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of the four properties.

Under terms of the agreement and subject to customary approvals, Colony will purchase the assets of the four properties and assume certain related current liabilities. One of the few private investment firms licensed in gaming, Colony owns Resorts International in Atlantic City and the Las Vegas Hilton. Colony also is a partner in Accor Casinos in Europe.

Harrah’s and Caesars agreed to sell the four properties in connection with the $9.4 billion merger agreement they announced July 15, 2004, although the sale is not conditioned on closing of the merger.

State regulatory agencies and the Federal Trade Commission are reviewing the Harrah’s-Caesars merger, which the companies expect to be consummated by mid-2005.

“We are very proud of the successful businesses built by the employees of Harrah’s East Chicago and Harrah’s Tunica, and know their dedication and professionalism will serve Colony well,” said Gary Loveman, Harrah’s Entertainment president and chief executive officer.  “Customers will continue to be able to earn credits with their Total Rewards loyalty cards at these two Harrah’s properties until Colony assumes control of them,” Loveman said.”

Harrah’s expects to report no material after-tax gain or loss from the sale.  Harrah’s plans to use the approximately $476 million in after-tax proceeds it expects to receive from the sale to reduce debt. The Tunica and East Chicago properties will be reported as assets held for sale until closing.

“This transaction will enable Caesars to accelerate our goal of reducing our indebtedness below $4 billion and our debt ratio to less than 3.75 times EBITDA,” said Wallace R. Barr, Caesars Entertainment president and chief executive officer.

After applying to debt reduction the anticipated $480 million in after-tax proceeds of the sale of its two properties, Caesars’ indebtedness will total approximately $3.7 billion, or approximately 3.6 times the company’s trailing 12-month EBITDA as of June 30, 2004, excluding the result of the two properties.

Caesars Entertainment expects to report a gain on sale in the quarter in which the transaction closes. Until the sale is completed, the Atlantic City Hilton and Bally’s Tunica will be accounted for as assets held for sale.

“We are honored to be able to acquire these assets from two of the most prestigious gaming companies in the world,” said Thomas J. Barrack, chairman and CEO of Colony Capital. “Both Harrah’s and Caesars have positioned and nurtured these properties for continued growth and profitability. We look forward to meeting and working with the dedicated employees at all four casinos.”

Various subsidiaries of Harrah’s Entertainment, Inc. own or manage 28 casinos in the United States, primarily under the Harrah’s brand name. Founded 66 years ago, Harrah’s Entertainment is focused on building loyalty and value with its valued customers through a unique combination of great service, excellent products, unsurpassed distribution, operational excellence and technology leadership.

More information about Harrah’s is available at www.harrahs.com.
Caesars Entertainment, Inc. is one of the world's leading gaming companies. With $4.5 billion in annual net revenue, 28 properties on four continents, 26,000 hotel rooms, two million square feet of casino space and 53,000 employees, the Caesars portfolio is among the strongest in the industry. Caesars casino resorts operate under the Caesars, Bally's, Flamingo, Grand Casinos, Hilton and Paris brand names. The company has its corporate headquarters in Las Vegas.

More information about Caesars is available at www.caesars.com.
For the past 13 years, Colony Capital has invested more than $10.5 billion in over 7,500 assets through various corporate, portfolio and complex property transactions. Colony has a staff of more than 100 and is headquartered in Los Angeles, with offices in New York, Paris, London, Madrid, Rome, Beirut, Hawaii, Hong Kong, Tokyo, Taipei, Shanghai and Seoul.