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Harrah's Pays $73 Million to Bluffs Run Casino

LAS VEGAS – (PRESS RELEASE) -- Harrah's Entertainment, Inc. (NYSE: HET) said it recently paid about $73 million to an Iowa West Racing Association affiliate as an additional purchase price consideration for the Bluffs Run Casino.

Harrah's acquired Bluffs Run, a greyhound racing facility in Council Bluffs, Iowa, as part of the 2001 Harveys Casino Resorts acquisition. Harveys had bought Bluffs Run from Iowa West in 1999.

In acquiring Harveys, Harrah's assumed terms of the earlier Harveys-Iowa West transaction. Included in those terms was a provision for an increase in the purchase price for Bluffs Run if the State of Iowa reduced racetrack casino gaming taxes before 2007.

In April 2004, the Iowa Legislature enacted legislation that reduces the racetrack casino tax rate to 22 percent from 36 percent effective July 1, 2004. If racetrack casinos operate table games, the new tax rate would be 24 percent.

Bluffs Run is owned by Harrah's, leased to Iowa West (which holds the pari-mutuel and gaming license for the facility) and managed by Harrah's. The $73 million price adjustment payment assumes a 24 percent tax rate and the future operation of table games at Bluffs Run. However, Iowa West has taken the position that the purchase price adjustment should be based on a tax rate of 22 percent, which would result in an additional $12 million payment to Iowa West. Harrah's anticipates that the issue will be resolved by arbitration.

The $73 million payment and any additional payment that may be required as a result of the arbitration will increase goodwill attributable to the Bluffs Run facility.

Founded 66 years ago, Harrah's Entertainment, Inc. owns or manages through various subsidiaries 25 casinos in the United States, primarily under the Harrah's brand name. Harrah's Entertainment is focused on building loyalty and value with its target customers through a unique combination of great service, excellent products, unsurpassed distribution, operational excellence and technology leadership.

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