In early October, Harrah's received an $81 per share bid from private equity firms Apollo Management and Texas Pacific Group that is still on the table. The overall deal is valued at $15.05 billion, which is a 22% premium over the stock's closing price the day before the offer was made public.

The competing bid reportedly may come from Penn National and hedge fund D.E. Shaw, with financial backing from Lehman Bros. and Wachovia. Earlier this month, D.E. Shaw partnered with Ian Bruce Eichner to make a buyout offer for Riviera Holdings Corp., owner of the Riviera Hotel & Casino on the Las Vegas Strip and another in Colorado. Curtis says the Penn National reports are merely the results of insiders fulfilling their fiduciary responsibility and that a higher offer doesn't appear to be a sound one for Penn.

"The bottom line is that an offer by [Penn] to acquire [Harrah's] at 10x-10.5x 2008 EBITDA just does not make sense, in our view, particularly when numerous dilutive asset sales at multiples less than 10x would be required," Curtis wrote. "Additionally, an acquisition of HET would be a wide departure from the philosophy that has made PENN successful in the first place, which is to pursue strategic and accretive acquisitions at a disciplined and measured pace."