PLAYBOY ENTERPRISES TO OPEN ENTERTAINMENT DESTINATION AT PALMS RESORT IN EARLY 2006

Boutique Casino, Club, Retail Operations and
One-of-a-Kind Sky Villa Included in New Tower

CHICAGO, Wednesday, October 6, 2004 – Playboy Enterprises, Inc. (PEI) (NYSE: PLA, PLAA) today announced that it has partnered with the Palms Casino Resort and the Nine Group to develop and operate an entertainment destination to be located in the expansion currently under construction at the Palms Casino Resort in Las Vegas. The development will feature a nightclub, boutique casino and lounge, retail store, sky villa and the famous Playboy Rabbit Head, which will be making its Las Vegas debut in early 2006.
The Palms Casino Resort together with the Nine Group, which manages four existing venues at the Palms, will own and operate the Playboy-themed operations. Although specific financial terms were not disclosed, PEI said that it expects to report a seven-figure revenue increase, starting in 2006, as a result of signing this long-term licensing deal.

Hugh M. Hefner, founder of PEI, said: “The Playboy lifestyle is a natural fit for Las Vegas, but the key for us has always been finding the right partners to fulfill the promise of our brand. We are particularly pleased to team with George Maloof and the Palms Casino Resort and the Nine Group, who have clearly demonstrated their abilities to create energetic and appealing entertainment venues.”

George Maloof, president of the Palms Casino Resort, said: “This project builds on the series of successful collaborations we’ve had with Playboy, including last year’s 50th anniversary kickoff. Together, we will create provocative experiences that will be unique not just in Las Vegas but in the gaming industry.”

“Playboy has proven its exceptional ability to merchandise its brand, so we are excited to be part of this opportunity to take their efforts to the next level in Las Vegas,” said Michael Morton, co-owner of the Nine Group.

Christie Hefner, chairman and chief executive officer of PEI, said: “The Palms deal continues our strategy of striking attractive licensing deals with outstanding well-capitalized partners who can leverage our brand in exciting new ways. This project creates a premier showcase for the brand and will reinforce Playboy’s global position as the standard-bearer for fun, sexy entertainment.”