Harrah's Entertainment, Inc.

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Exhibit 1 Consolidated Statements of Income (in thousands, except per share amounts)

Year Ended December 31

1999 1998 1997

Revenues
Casino* $2,424,237 $1,660,313 $1,338,003
Food and beverage 425,808 231,568 196,765
Rooms 253,629 153,538 128,354
Management fees 75,890 64,753 24,566
Other 131,403 78,320 78,954
Less: Casino promotional allowances (286,539) (184,477) (147,432)
Total revenues $3,024,428 $2,004,015 $1,619,210

Operating expenses
Direct
Casino $1,254,557 $868,622 $685,942
Food and beverage 218,580 116,641 103,604
Rooms 66,818 41,871 39,719
Depreciation of buildings, riverboats and equipment 188,199 130,128 103,670
Development costs 6,538 8,989 10,524
Write-downs, reserves and recoveries 2,235 7,474 13,806
Project opening costs 2,276 8,103 17,631
Other 690,404 467,999 383,791
Total operating expenses $2,429,607 $1,649,827 $1,358,687
Operating profit 594,821 354,188 260,523
Net income $208,470 $102,024 $99,388

Source: Harrah's Entertainment Inc.

*A breakdown of Casino revenues by regions is as follows:

Western region— $730.1 million, Central region—$970.9 million and Eastern region—$723.3 million.
 $24.09 46.01084 $81
17.68759688 83.88033 116.4043
19.620736401 65.18973 97.60117
163.5878857 17.1992 208.9229
-0.8029992147 67.77707 66.42982
25.126838136 55.32505 94.35333
23.764984159 335.3822 86.78417

26.631989294 44.43072 82.89549

12.583490985 87.39551 110.9764
5.4180618847 59.58062 68.22679
25.521365872 44.62606 81.53661
-14.585708856 -27.26666 -37.87533
-45.864117051 -70.09633 -83.81139
-54.041177471 -71.91164 -87.09092
21.941108572 47.52254 79.89062
21.428040454 47.26435 78.82021
35.952679802 67.93934 128.318
2.6522316577 104.3343 109.7537
Exhibit 2b New Business Program Analysis

New Customers 1 Month After Signup 2 Months After Signup 3 Months After Signup
Sign-up Month Customers Theoretical Customers Theoretical Customers Theoretical Customers Theoretical

1-Apr-99 1022 $31,992 125 $10,857 103 $10,478 85 $10,093

1-May-99 837 44,673 133 10,772 134 15,799 102 10,950
1-Jun-99 825 46,291 135 13,231 128 10,941 91 12,823
1-Jul-99 808 45,725 162 24,712 137 23,229 109 26,629
1-Aug-99 742 43,423 164 17,494 103 11,122 97 11,817
1-Sep-99 760 42,257 141 20,102 118 15,744 104 18,995
1-Oct-99 990 54,935 178 26,086 151 24,168 148 16,080
1-Nov-99 1064 63,687 225 28,657 182 23,824 142 21,988
1-Dec-99 772 41,494 143 15,906 149 16,517 94 13,229
1-Jan-00 986 $46,502 206 $20,041 193 $22,123 92 $12,476
8806 $460,979 1612 $187,858 1398 $173,945 1064 $155,080

Customers Revenues
1st Month 2nd Month 3rd Month 1st-3rd 1st Month 2nd Month 3rd Month 1st-3rd

1-Apr-99 12% 10% 8% 31% 1-Apr-99 34% 33% 32% 98%

1-May-99 16 16 12 44 1-May-99 24 35 25 84
1-Jun-99 16 16 11 43 1-Jun-99 29 24 28 80
1-Jul-99 20 17 13 50 1-Jul-99 54 51 58 163
1-Aug-99 22 14 13 49 1-Aug-99 40 26 27 93
1-Sep-99 19 16 14 48 1-Sep-99 48 37 45 130
1-Oct-99 18 15 15 48 1-Oct-99 47 44 29 121
1-Nov-99 21 17 13 52 1-Nov-99 45 37 35 117
1-Dec-99 19 19 12 50 1-Dec-99 38 40 32 110
1-Jan-00 21% 20% 9% 50% 1-Dec-99 43% 48% 27% 118%

Source: Harrah's Entertainment Inc.

Note: The first two columns report the number of new customers signed up in a particular month and the predicted worth of these customers. Offers, of varying type and value, were sent to each new
customer that played at Harrah’s, and were redeemable one month, two months and three months after their first visit. The following columns report the number of customers who came back to Harrah’s
in the subsequent months and predicted worth of these customers. For example, in April 1999, 1,022 new customers came to Harrah’s. In May, 125 customers of these 1022 customers returned to
Harrah’s and their predicted worth was $10,857 compared to $31,992, the predicted worth of the 1022 customers who signed up in April. Similarly, 103 of the customers who signed up in April returned
in June, and 85 returned in July, with no demonstrable change in predicted worth for the pool. Each month brought a new vintage of customers signing up.
Exhibit 2c Loyalty Program (Frequency Upside)—Offer Behavior Change by Offer and Month

Trips Days Hours Avg. Avg. Avg.

Report # of Hotel Red # of per # of per per Theo Observed Comp Comp Theo win Theo win Theo win
Offer Period Guests % % Trips Guest Days Trip Hours Day Win Win Amt. % per Trip per Day per Hour

Jan-99 21* 24% 5% 20 1.0 34 1.7 109 3.2 $7,770 $12,745 $1,361 18% $389 $229 $71 173.6
Feb-99 28 18 11 28 1.0 50 1.8 166 3.3 11,957 15,436 2,434 20 427 239 72
PRE Mar-99 30 17 10 28 0.9 41 1.5 148 3.6 6,596 (1,432) 799 12 236 161 45
Apr-99 40 23 18 40 1.0 61 1.5 173 2.8 5,051 6,100 845 17 126 83 29
May-99 36 14 8 36 1.0 64 1.8 218 3.4 9,000 5,838 1,585 18 250 141 41
Jun-99 953 29 22 978 1.0 1,709 1.7 6,496 3.8 267,907 270,836 42,514 16 274 157 41
Jul-99 133* 25 31 153 1.2 252 1.6 987 3.9 74,275 95,263 12,558 17 485 295 75
Aug-99 146 26 44 172 1.2 286 1.7 870 3.0 43,240 51,900 8,987 21 251 151 50
POST Sep-99 166 40 58 188 1.1 362 1.9 1,270 3.5 70,824 94,739 16,110 23 377 196 56
Oct-99 152 42 53 178 1.2 319 1.8 1,286 4.0 58,354 87,082 12,300 21 328 183 45
Nov-99 102 52 55 111 1.1 198 1.8 761 3.8 29,095 50,920 7,151 25 262 147 38
Dec-99 83 42 41 98 1.2 167 1.7 554 3.3 23,187 38,983 4,304 19 237 139 42
Total 1,890 31% 32% 2,030 1.1 3,543 1.7 13,037 3.7 $607,256 $728,410 $110,948 18% $299 $171 $47

*To be read as, of the 953 customers who received an offer in June, 21 customers had patronized the casino in January and 133 customers patronized the casino in July.

Note: Harrah’s identified a list of potentially loyal customers who could increase the number of trips that they made to Harrah’s. An offer was sent to a total of 953 customers in June, redeemable in July, August, and September. Each offer consisted of three individual
offers—one for each month, at an average incremental cost to Harrah’s of $40 per each redeemed offer. The type and level of offer was similar in value and type to what the customer had historically received. The offer was different for customers of different perceived
worth to Harrah’s but was predominately cash and food based. Exhibit 2c tracks the behavior of this pool of 953 customers before and after the offer was sent in June. While, on average, only 30 of these 953 customers were visiting Harrah’s between January and
May, the number jumped to an average of 150 per month during the subsequent months. The theoretical win from these customers also increased accompanied with the increase in offer redemptions. Harrah’s calculated the profitability of these programs by comparing
the incremental theoretical wins to the incremental cost of the program.

Source: Harrah’s Entertainment Inc.

Exhibit 2d Loyalty Program (Budget Upside)—Offer Behavior Change by Offer and Month

Trips Days Hours

Report # of Hotel Red # of per per per Observed Comp. Comp Avg. Avg. Avg.
Period Guests % % Trips Guest Days Trip Hours Day Theo Win W/(L) Amt. % Trip Day Hour

Jun-99 235 0% 37% 368 1.6 401 1.1 767 1.9 $13,544 $18,011 $88 1% $37 $34 $18
Jul-99 241 0 33 374 1.6 405 1.1 878 2.2 16,931 15,699 182 1 45 42 19
Aug-99 284 0 26 427 1.5 474 1.1 1,015 2.1 18,710 22,042 233 1 44 39 18
Sep-99 302 0 26 528 1.7 611 1.2 1,247 2.0 23,520 20,004 603 3 45 38 19
Oct-99 578 0 40 1,028 1.8 1,135 1.1 2,109 1.9 28,905 31,918 534 2 28 25 14
Nov-99 267 0 50 577 2.2 649 1.1 1,193 1.8 23,646 39,205 318 1 41 36 20
Dec-99 291 0 75 721 2.5 830 1.2 1,528 1.8 32,105 63,248 668 2 45 39 21
Jan-00 250 0 62 583 2.3 686 1.2 1,228 1.8 27,370 30,952 617 2 60 40 22
Feb-00 247 0 63 581 2.4 679 1.2 1,237 1.8 36,885 39,060 1,550 4 63 54 30
Mar-00 288 0 67 717 2.5 852 1.2 1,529 1.8 43,318 59,028 1,927 4 60 51 28

Note: Exhibit 2d tracks a group of customers with an upside budget potential. In October, 578 customers were selected and mailed offers that were redeemable in November, December, and January. In January, these customers were evaluated
again as high budget upside and sent additional offers intended to capture a larger share of budget in February and March. Each offer consisted of one coupon per month.

The offers provided an unconditional cash incentive for visiting and a larger play-based incentive to increase play. For example, a customer would receive $5 for visiting and $20 for playing to a $200 level of theoretical wins, $30 for playing to a $300
level, and so forth. The value of the unconditional offer was typically less than they had previously received via direct mail; however, the conditional part was significantly greater— resulting in a direct mail piece that was only slightly more costly to
Harrah's, about $15 compared to $10 in the past.

Source: Harrah's Entertainment Inc.

Exhibit 2e Retention Program—Offer Behavior Change by Offer and Month

Avg.
Trips Days Hours Theo Avg. Avg.
Report # of Hotel Red # of per per per Theo Observed Comp win per win per win per
Offer Period Guests % % Trips Guest # of Days Trip Hours Day Win W/(L) Comp Amt. % Trip Day Hour

Jul-98 5,980 0% 14% 8,695 1.5 11,079 1.3 27,882 2.5 $1,603,196 $1,691,024 $312,370 19% $184 $145 $57
Aug-98 5,041 0 13 7,284 1.4 9,330 1.3 22,962 2.5 1,325,049 1,366,126 209,748 16 182 142 58
Sep-98 3,098 0 17 4,369 1.4 5,416 1.2 12,791 2.4 705,836 1,008,256 106,832 15 162 130 55
Oct-98 1,444 1 21 2,272 1.6 2,661 1.2 6,303 2.4 354,198 483,471 55,006 16 156 133 56
Nov-98 326 2 16 478 1.5 553 1.2 1,213 2.2 63,140 94,869 9,242 15 132 114 52
Dec-98 10 10 0 14 1.4 16 1.1 25 1.6 1,293 1,729 54 4 92 81 51
Jan-99 362 4 14 366 1.0 441 1.2 1,086 2.5 60,999 68,786 9,089 15 167 138 58
Feb-99 3,578 0 22 4,140 1.2 5,325 1.3 12,676 2.4 661,868 803,336 105,703 16 160 124 53
Mar-99 4,592 0 24 5,659 1.2 7,114 1.3 16,967 2.4 900,992 1,048,778 130,620 14 159 127 53
Apr-99 4,052 0 22 5,166 1.3 6,597 1.3 16,488 2.5 911,712 1,040,968 123,737 14 176 138 55
May-99 3,576 0 22 4,637 1.3 5,850 1.3 15,134 2.6 810,873 967,491 114,451 14 175 139 54
Jun-99 3,325 0 23 4,492 1.4 5,710 1.3 14,113 2.5 806,390 863,057 108,807 13 180 141 57
Jul-99 3,934 0 21 5,606 1.4 7,074 1.3 18,357 2.6 1,160,901 1,099,528 179,247 15 207 164 63
Aug-99 3,769 0 20 5,277 1.4 6,827 1.3 17,713 2.6 1,047,831 1,293,718 169,202 16 199 153 59
Sep-99 3,197 1 20 4,476 1.4 5,737 1.3 15,139 2.6 922,912 1,031,069 124,268 13 206 161 61
Oct-99 2,882 1 22 3,982 1.4 5,057 1.3 13,743 2.7 760,428 918,241 105,493 14 191 150 65
Nov-99 2,589 1 21 3,455 1.3 4,397 1.3 11,750 2.7 635,578 815,021 91,749 14 184 145 54
Dec-99 2,151 1 21 2,834 1.3 3,597 1.3 10,144 2.8 595,359 562,899 71,643 12 210 168 59
Total 53,906 0% 20% 73,202 1.4 92,781 1.3 234,484 2.5 $13,328,555 $15,163,367 $2,027,261 15% $182 $144 $57

Source: Harrah's Entertainment Inc.

Note: The report shown in Exhibit 2e summarizes the visitation patterns for a group of customers whose patronage was declining in the second half of 1998. These customers had significantly reduced their aggregate frequency to Harrah’s casinos. Based on their historical
pattern of behavior, Harrah’s had expected to see them in December but hadn’t.

In order to reinvigorate relationships with these customers, Harrah’s sent a direct mail offer to approximately 8,000 customers in January of 1999 that was redeemable in February, March and April. One cash coupon was sent per month, with the amount varying by customer
worth. If these customers returned to Harrah’s, they were put into the loyalty-marketing program and managed according to their upside potential. The program seemed to be working even though the cost of the offer had gone up from $30 to $40.
Exhibit 2f Consolidation of Play (Theoretical win) by Customer

Customer
IDs Q1 Q2 Q3 Q4 1998 Q1 Q2 Q3 Q4 1999 Attrition New Change

1 $800 $700 $300 $-- $1,800 $800 $900 $900 $200 $2,800 0 0 $1,000
2 -- -- -- -- -- 120 -- 80 -- 200 0 1 --
3 -- 60 -- 60 120 80 60 -- 50 190 0 0 70
4 -- -- -- -- -- -- -- 80 -- 80 0 1 --
5 -- 60 40 60 160 -- -- -- -- -- 1 0 --
6 -- 60 120 220 400 150 70 80 -- 300 0 0 (100)
7 -- 40 -- -- 40 40 -- 50 70 160 0 0 120
8 80 80 -- -- 160 60 60 80 80 280 0 0 120
9 -- 1,200 2,000 500 3,700 -- 2,500 1,500 4,000 8,000 0 0 4,300
10 -- 60 -- -- 60 20 50 20 50 140 0 0 80
11 80 -- 40 80 200 120 80 220 -- 420 0 0 220
12 -- 40 40 40 120 50 50 50 50 200 0 0 80
13 -- -- -- -- -- -- -- -- 150 150 0 1 --
14 800 1,500 1,200 800 4,300 1,100 1,500 1,200 1,400 5,200 0 0 900
15 7,000 2,500 -- -- 9,500 5,000 6,000 -- 480 11,480 0 0 1,980
16 -- -- -- -- -- -- 60 70 70 200 0 1 --
17 -- -- -- -- -- -- 40 40 -- 80 0 1 --
18 300 400 500 500 1,700 900 900 700 400 2,900 0 0 1,200
19 40 40 -- -- 80 50 50 -- -- 100 0 0 20
20 50 -- -- 50 100 40 40 40 -- 120 0 0 20
21 -- 30 30 -- 60 40 30 30 100 0 0 40
22 400 600 -- -- 1,000 -- -- 280 -- 280 0 0 (720)
23 -- 1,000 -- -- 1,000 -- 600 280 -- 880 0 0 (120)
24 50 -- -- -- 50 100 -- -- 150 250 0 0 200
25 2,000 2,000 2,200 1,500 7,700 2,100 2,200 3,000 1,500 8,800 0 0 1,100
26 -- -- -- -- -- 60 -- -- -- 60 0 1 --
27 30 -- 30 50 110 -- -- -- -- -- 1 0 --
28 40 40 50 -- 130 -- -- -- -- -- 1 0 --
29 40 40 -- -- 80 20 40 -- 40 100 0 0 20
30 -- -- 60 60 120 -- -- -- -- -- 1 0 --
31 100 -- 80 -- 180 -- 40 80 90 210 0 0 30
32 -- 60 30 -- 90 40 -- 50 40 130 0 0 40
33 30 -- -- 100 130 60 50 50 -- 160 0 0 30
34 -- -- 4,000 2,000 6,000 3,500 -- 1,000 -- 4,500 0 0 (1,500)
35 50 70 -- 200 320 -- -- -- -- -- 1 0 --
36 -- -- 200 -- 200 -- -- 600 -- 600 0 0 400
37 60 -- 40 -- 100 40 40 60 80 220 0 0 120
38 -- -- 200 -- 200 -- 240 100 90 430 0 0 230
39 50 -- 60 -- 110 -- 260 -- -- 260 0 0 150
40 -- -- -- 40 40 60 60 40 -- 160 0 0 120
41 120 -- -- -- 120 -- -- -- -- -- 1 0 --
42 -- -- 200 -- 200 150 100 80 -- 330 0 0 130
43 40 40 60 -- 140 -- -- 70 60 130 0 0 (10)
44 -- -- -- -- -- 70 60 80 60 270 0 1 --
45 400 400 400 500 1,700 800 800 700 500 2,800 0 0 1,100
46 -- 40 -- 40 80 -- 60 70 -- 130 0 0 50
47 -- 50 -- -- 50 40 -- 40 260 340 0 0 290
48 -- -- -- -- -- -- -- -- 120 120 0 1 --
49 -- -- 70 -- 70 -- 140 70 60 270 0 0 200
50 -- -- -- -- -- -- 3,000 1,500 70 4,570 0 1 --
51 40 40 -- -- 80 70 70 50 -- 190 0 0 110
52 60 120 -- -- 180 -- 150 -- 80 230 0 0 50
53 120 60 -- 60 240 -- -- -- -- -- 1 0 --
54 40 -- 30 -- 70 40 50 50 40 180 0 0 110
55 40 60 -- -- 100 50 60 90 50 250 0 0 150
56 -- -- 60 -- 60 -- 50 -- 70 120 0 0 60
57 50 -- -- 100 150 40 60 70 70 240 0 0 90
58 60 40 -- -- 100 80 -- -- 50 130 0 0 30
59 -- -- -- 70 70 60 -- -- -- 60 0 0 (10)
60 70 -- -- -- 70 60 50 -- 70 180 0 0 110
61 40 40 30 110 50 30 50 50 180 0 0 70
62 50 50 -- -- 100 880 500 400 600 2,380 0 0 2,280
63 20 -- -- 60 80 40 50 50 70 210 0 0 130
64 30 -- 40 -- 70 -- -- -- -- -- 1 0 --
65 -- -- -- -- -- -- 200 200 200 600 0 1 --
66 60 120 200 -- 380 70 80 50 100 300 0 0 (80)
67 60 -- 120 -- 180 220 60 -- 220 500 0 0 320
68 150 -- -- 80 230 100 140 200 80 520 0 0 290
69 20 -- 60 -- 80 50 -- 80 -- 130 0 0 50
70 -- 120 -- 80 200 200 -- 220 -- 420 0 0 220
71 40 -- 40 40 120 80 50 -- 150 280 0 0 160
72 -- 40 60 -- 100 30 40 50 50 170 0 0 70
73 -- 70 -- 30 100 -- 80 -- -- 80 0 0 (20)
74 -- -- -- -- -- 150 -- 150 -- 300 0 1 --
75 60 40 -- 50 150 60 100 60 80 300 0 0 150
76 800 400 700 800 2,700 700 800 300 -- 1,800 0 0 (900)
77 40 50 100 -- 190 -- -- -- -- -- 1 0 --
78 -- -- -- -- -- 80 -- 70 -- 150 0 1 --
79 400 -- -- -- 400 -- 480 -- 180 660 0 0 260
80 400 400 -- 600 1,400 220 1,500 1,400 -- 3,120 0 0 1,720
81 400 -- -- -- 400 -- -- -- 300 300 0 0 (100)
82 -- -- -- -- -- 80 80 80 70 310 0 1 --
83 -- -- -- -- -- 80 -- 50 -- 130 0 1 --
84 -- -- 600 -- 600 -- 520 -- -- 520 0 0 (80)
85 -- 40 -- 40 80 -- -- 320 -- 320 0 0 240
86 -- -- 200 -- 200 -- -- -- -- -- 1 0 --
87 400 500 -- 600 1,500 500 700 600 600 2,400 0 0 900
88 70 200 400 -- 670 -- -- 500 -- 500 0 0 (170)
89 -- 3,300 2,200 -- 5,500 1,500 1,400 1,500 2,000 6,400 0 0 900
90 400 -- 400 -- 800 -- -- -- 780 780 0 0 (20)
91 60 -- -- 30 90 50 50 -- -- 100 0 0 10
92 -- -- -- 1,000 1,000 320 260 -- -- 580 0 0 (420)
93 1,000 -- 400 -- 1,400 -- -- 1,100 -- 1,100 0 0 (300)
94 -- 600 400 -- 1,000 -- -- -- -- -- 1 0 --
95 -- -- 200 -- 200 100 260 -- 80 440 0 0 240
96 -- -- 50 -- 50 40 50 -- 60 150 0 0 100
97 -- -- -- 1,000 1,000 -- -- -- -- -- 1 0 --
98 40 20 30 -- 90 40 -- -- 120 160 0 0 70
99 -- 200 600 -- 800 200 -- 1,100 -- 1,300 0 0 500
100 50 -- -- 60 110 -- 200 -- -- 200 0 0 90
Average 176 176 190 115 656 219 282 221 165 885
Actives 52 47 45 36 86 60 61 61 52 88
Max 7,000 3,300 4,000 2,000 9,500 5,000 6,000 3,000 4,000 11,480
Min -- -- -- -- -- -- -- -- -- --
Total 17,630 17,620 18,840 11,530 65,620 21,850 28,200 22,080 16,340 88,470

Source: Harrah's Entertainment Inc.

Exhibit 3 Total Gaming Revenue in the United States, 1995-1999 ($ in millions)

1995 1996 1997 1998 1999

Traditional
Total Nevada $7,366.4 $7,420.2 $7,802.7 $8,064.1 $9,020.5
Las Vegas Strip 3,607.4 3,579.6 3,809.4 3,812.4 4,488.5
Atlantic City 3,747.6 3,814.6 3,905.8 4,032.2 4,164.2
Total $11,113.9 $11,234.8 $11,708.5 $12,096.3 $13,184.7

Riverboats $4,732.0 $5,549.2 $6,437.9 $7,299.6 $8,332.2

Native American $4,175.9 $4,731.3 $5,779.3 $7,890.9 $8,426.3

Other $430.3 $639.0 $772.9 $873.9 $1,199.8

Total United States $20,452.1 $22,154.4 $24,698.6 $28,160.7 $31,143.0

Source: Gaming Commissions and Merrill Lynch estimates.

Note: Other includes Colorado, Delaware, Detroit, and South Dakota.