You say you received FREE airfare and hotel offer from Harrahs. You did not say for how many nights and from where you would be coming. If the airfare is round trip to Reno, there seems no sense in driving to Vegas and back to get your "free" airfare. You would also miss out on your free room.
A lot depends on what you consider to be "acceptable" for a freebie. If I got that offer I would take it. But I'm not that picky. I have been to Reno many times since it is within a 2 hour driving distance for me. Here's my total opinion:
What used to be the "gambling central" of Reno is a desperate, delapidated dump. That includes Harrahs. About a block away is the only decent part of "old Reno" - Silver Legacy, El Dorado and Circus Circus. They are all next to each other and have acceptable rooms, restaurants, and gambling. About 1 - 2 miles away are Atlantis and Peppermill. They are pleasant and have good gambling. About 5 miles from Reno is the town of Sparks where John Asquagas Nugget is an excellent casino with lots of promos, entertainment, and good gambling choices. You can also ask someone to direct you to Boomtown. It is a "locals" place which reminds me of Sams Town in Vegas - if you like that sort of thing (I do). Oh, yes, there is also the Sands, a block off the main strip, behind the El Dorado. It is owned by Terribles and has the same club card and promos.
I stayed at Harrahs about a year ago (free, of course, I would not choose to stay there if I had to pay). The rooms are acceptable and so is the restaurant food. Only the slot mahine choices are bad and so are the surroundings.
As to Lake Tahoe, it is about an hour drive and well worth the trip if you want to experience the beautiful scenery. I would not recommend driving there just for the South Shore casinos (Harrahs and Harveys). They are good, but not good enough to warrant a special trip. It depends whether you want to make this a "gambling trip" or a nice vacation. There are many recreational activities around the lake.
All in all, it's a free trip. I think you can find enough good gambling and other things to do in the Reno area as long as you're not expecting anything resembling the wonders of Las Vegas.