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Tax Court Decision Costs Caesars $8 Million

LAS VEGAS -- (PRESS RELEASE) -- Caesars Entertainment, Inc. (NYSE: CZR) today reported that the cumulative charge on its net income of a recent Indiana Tax Court decision regarding the deductibility of gaming taxes is $8 million (net of federal tax benefit). The Indiana Tax Court ruled on April 19 in the case of Aztar Indiana Gaming Corporation v. Indiana Department of State Revenue that gaming taxes paid to the state of Indiana based on casino revenues are not deductible for Indiana corporate income tax purposes.

The company is updating its previously reported financial results for the first quarter of 2004. Including the additional charge, Caesars Entertainment's first quarter net income is $71 million, or $0.23 per fully diluted share which will be reported in the company's Quarterly Report on Form 10-Q. The company previously reported first quarter net income of $79 million, or $0.25 per diluted share. First quarter adjusted earnings, which exclude non-recurring items, were $70 million, or $0.23 per diluted share. The company previously reported adjusted earnings of $71 million, or $0.23 per diluted share. In a press release announcing first quarter earnings issued on April 22, the company estimated that the cumulative impact of the Indiana tax ruling could have been as much as $9 million.

As a result of the decision, Caesars Entertainment in the first quarter of 2004 will take one-time charges of $7 million for the pre-2004 years and $1 million for the first quarter. The company expects that the recurring tax liability resulting from this decision will be approximately $1 million a quarter.

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