CAESAR'S BONUS POLICY 2004/2005
 
 
 
 
                          CAESARS ENTERTAINMENT, INC.
                                  BONUS POLICY
 
 
         This document sets forth the bonus policy as approved by the
compensation committee (the "Committee") of the board of directors (the
"Board") of Caesars Entertainment, Inc. (the "Company") on September 23 and 24,
2004.
 
I.       Bonus in Respect of Fiscal Year 2004
 
         Bonuses paid in respect of the 2004 fiscal year will be paid according
to each individual's achievement of performance targets as previously
established by the Committee. Timing of payment of such bonuses will be
consistent with the Company's past practice.
 
II.      Bonus in Respect of Fiscal Year 2005
 
         The Committee has determined that bonuses paid in respect of fiscal
year 2005 should reflect the contemplated merger (the "Merger") of the Company
with and into Harrah's Operating Company pursuant to that certain merger
agreement dated July 14, 2004 by and among the Company, Harrah's Entertainment,
Inc. ("Harrah's") and Harrah's Operating Company.
 
     o   Only Active Employees and Transferred Employees are eligible to
         receive bonuses in respect of fiscal year 2005.
 
         o     An "Active Employee" is an individual employed by the Company or
               one of its subsidiaries at the time the Merger closes (the
               "Closing") or, if applicable, on the date the Committee
               determines that the Merger has been terminated (the "Termination
               Date").
 
         o     A "Transferred Employee" is an individual who is employed by the
               Company or one of its subsidiaries on the date, during fiscal
               year 2005 and prior to the Closing or the Termination Date, as
               the case may be, on which the Company sells the property at
               which such individual is principally employed (the "Sale Date").
 
     o   If the Closing occurs:
 
         o     on or before June 30, 2005, bonuses will be paid out to Active
               Employees at 50% of target annual bonus levels.
 
         o     on or after July 1, 2005, bonuses will be paid out to Active
               Employees at 100% of target annual bonus levels.
 
     o   If the Termination Date occurs, bonuses in respect of fiscal year 2005
         will be paid to Active Employees at 100% of target annual bonus
         levels.
 
     o   With respect to each Transferred Employee, if the Sale Date occurs:
 
         o     on or before June 30, 2005, a bonus will be paid out to such
               Transferred Employee at 50% of the individual's target annual
               bonus level.
 
         o     on or after July 1, 2005, a bonus will be paid out to such
               Transferred Employee at 100% of the individual's target annual
               bonus level.
 
     o   Bonuses will be paid:
 
         o     to Transferred Employees as soon as reasonably practicable
               following the applicable Sale Date.
 
         o     to Active Employees, if the Closing occurs, as soon as
               reasonably practicable following the Closing.
 
         o     to Active Employees, if the Termination Date occurs, consistent
               with past practice.
 
     o   The Committee may determine, in its sole discretion, that certain
         individuals may receive 100% of target annual bonus regardless of the
         date on which the Closing occurs.
 
III.     Completion Stay Bonus
 
         The Committee, recognizing that it is necessary to retain certain
individuals critical to the continued management and operation of the Company
through the Closing or the Termination Date, as the case may be, has determined
that bonuses will be paid to such employees to incentivize them to remain
employed by the Company through the Closing or the Termination Date, as the
case may be.
 
     o   The Committee may award up to $19 million in completion stay bonuses
         to individuals it selects prior to the Closing.
 
     o   Eligible Employees will be paid a bonus ranging from 25% to 100% of
         the employee's base salary.
 
         o     Prior to the Closing, the Committee, in its sole discretion,
               will determine those employees to whom it intends to grant
               completion stay bonuses (the "Eligible Employees") and the
               amounts of such bonuses and the Committee may amend the awards
               and make new awards as may be necessary or prudent.
 
         o     Individuals must be employed by the Company or one of its
               subsidiaries at the time of the Closing or the Termination Date,
               as the case may be, to receive a completion stay bonus.
 
         o     An Eligible Employee's base salary will be measured as of the
               time of the Closing or the Termination Date, as the case may be.
 
     o   Completion stay bonuses will be paid out as soon as practicable
         following the earlier of the Closing or the Termination Date.