Casino earnings season unofficially kicked off this week, and at least by Wall Street standards, the results so far haven't been good.

Industry giant Harrah's Entertainment (NYSE:HET) -- which received a $25 billion (and reportedly rising) buyout bid earlier this month -- reported earnings Wednesday that fell short of expectations. Both Penn National (NYSE:PENN) and Boyd Gaming (NYSE:BYD) missed expectations, and both guided short of analyst expectations for the fourth quarter as well. Of the four big names to report earnings this week, only Motley Fool Hidden Gems selection Ameristar Casinos (NASDAQ:ASCA) managed to beat the street; however, the riverboat casino operator also guided lower than expected (but likely conservatively so) for the fourth quarter.

My colleague Nathan Slaughter has the scoop on Boyd's Q3, and we covered Ameristar yesterday. Today, we'll do a quick overview of Harrah's and Penn National's Q3 earnings.

Harrah's saw revenues in the third quarter rise 10.6%, while property EBITDA climbed 4.5%. However, adjusted EPS from continuing operations fell 6% to $0.94, short of the $0.99 per share analyst estimate.

As in the second quarter, development costs weighed in on results. Meanwhile, the three-day government-imposed shutdown in the Atlantic City market in July also hurt in more ways than one. CEO Gary Loveman commented that, amid the "promotional environment" that followed the shutdown, "the truth is that we simply did not do as good a job managing our businesses in Atlantic City as we have done in the past." Revenues in Atlantic City were flat, while EBITDA dropped 7%.

But outside of Atlantic City, the company's performance was fairly exceptional, particularly on the Las Vegas Strip. With the addition of Caesars' legacy properties to the Total Rewards program, RevPAR at the six Las Vegas properties rose 14%. Here's how the rest of Harrah's numbers break down by region.


Revenue increase

Property EBITDA increase

Las Vegas












And despite weakness in Atlantic City, same-store sales companywide were up 8%. Loveman also noted that the World Series of Poker grew revenues 273%, while doubling EBITDA.

Performance aside, the real story at the moment is the $25 billion buyout bid by private equity firms Apollo Management and Texas Pacific Group. The bid, which originally amounted to $81 per share and has reportedly been raised since, will likely drive any stock-price movement until a potential deal is consummated.

Penn National
Penn National reported revenues of $586.1 million and EBITDA of $162.8 million, both more than double last year's figures, thanks largely to the October 2005 acquisition of Argosy Gaming. The company also posted a $114.7 million gain on the sale of a racetrack to The Mohegan Tribal Gaming Authority. However, income from continuing operations, which more than doubled to $40.4 million or $0.47 per share, fell short of the $0.50 per-share analyst estimate.

The cost of securing new property insurance was responsible for $0.02 of the shortfall. Otherwise, earnings were in line with the company's original guidance for diluted earnings from continuing operations of $0.49 per share.

The Q4 guidance also fell considerably short of analysts' estimates. The company expects to post Q4 EBITDA of $142.3 million and earnings from continuing operations of $0.34 per share, compared to the $0.40 per-share analyst estimate. But like Ameristar's guidance, Penn National's may be somewhat conservative. It includes higher insurance costs, but excludes potential Katrina-related proceeds.

In addition, the guidance also includes a $0.02 per-share charge related to the random 3% tax in Illinois on four Chicagoland casinos -- and only the Chicagoland casinos -- of which Penn National owns two. The company currently has an injunction blocking the distribution of the proceeds of the tax, but it will continue to pay the tax "until the matter is resolved."

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Fool contributor Jeff Hwang owns shares of Ameristar Casinos and currently has a CAPS rating of 93. The Fool has a disclosure policy.