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Acres Gaming Announces Q3 2001 Results

30 April 2001

LAS VEGAS, Nevada --(Press Release)--April 30, 2001--Acres Gaming Incorporated (Nasdaq SM:AGAM), the leader in Bonusing technology for the gaming industry, today announced financial results for the quarter ended March 31, 2001.

Net revenue for the third quarter of fiscal 2001 grew to $17.5 million from $2.2 million for the same quarter last year due to growth in Acres Advantage sales. Net income for the quarter totaled $2.6 million, or $0.25 per diluted share, compared to a loss of $1.1 million, or $0.13 per diluted share for the third quarter of fiscal 2000.

Third Quarter Highlights:

Revenue and earnings for the quarter exceeded those for any previous quarter in the Company's history.

Quarter-end backlog grew 61 percent to $31.3 million compared to $19.5 million at December 31, 2000.

MGM MIRAGE ordered $5.7 million of Acres Advantage and Acres Bonusing products for two additional MGM MIRAGE properties. To date, orders for six MGM MIRAGE properties have been received, totaling $13.5 million.

Station Casinos agreed to purchase $21.8 million of Acres Advantage and Acres Bonusing products for five additional casinos.

Siena Hotel Spa Casino agreed to purchase $1.8 million of Acres Advantage and Acres Bonusing products for a new resort being built in Reno, Nevada.

A Federal District Court jury verdict validated four Acres Bonusing patents.

The March 31, 2001 ending cash balance was $8.2 million and the Company remains debt-free.

Net revenue for the nine months ended March 31, 2001 increased to $30.4 million from $13.8 million for the same period last year. Net income for the nine-month period totaled $2.5 million, or $0.24 per diluted share, compared to a loss of $327,000 or $0.04 per diluted share for the same period in 2000.

Bud Glisson, CEO of Acres Gaming, stated, ``We have proven our ability to scale up to meet rising demand for our products. Our highest priority has been to execute the orders we have received to demonstrate how Acres Advantage and Acres Bonusing can create casino success stories.''

Reed Alewel, Senior Vice President and CFO of Acres Gaming, added, ``We had strong revenue growth from our basic system products and finished the quarter with a very healthy order backlog, especially on Bonusing products. Most of our sales this quarter were from basic system products, resulting in margins at the low end of our historical range. Higher margin Bonusing products are scheduled for delivery at the later stages of most of our contracts.''

Year-to-date net operating expenses were $8.6 million versus $7.8 million in the prior year period, an increase of 10 percent. For the current quarter, net operating expenses increased to $3.8 million from $2.6 million in the prior year quarter.

Approximately one-half of the increase was a result of increased legal and professional fees, largely in connection with the recently completed patent infringement trial. The balance of the increase came from reductions in amounts capitalized as software development costs and accrued bonuses.

Commenting on the future, Glisson explained, ``We expect most of the $31 million backlog to be realized in the fourth quarter of fiscal 2001 and the first half of fiscal 2002. Timing of our installations, especially for new Bonusing products, is subject to the schedules of our customers and gaming regulators. We continue to expect fourth quarter revenues in the $10 to $12 million range and earnings in the $1 to $2 million range.''

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