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Acres Gaming Reports Improved Fourth Quarter

23 August 2001

LAS VEGAS, Nevada -- (Press Release) -- Acres Gaming Inc. (Nasdaq: AGAM), the leader in Bonusing technology for the gaming industry, today announced financial results for the quarter and the year-ended June 30, 2001.

Highlights:

Fourth quarter revenue was $13.6 million, over four times greater than the prior year period.

Fourth quarter net income was $1.7 million, an increase of $5.5 million over the prior year loss of $3.8 million.

Fiscal Year 2001 revenue was $44.1 million, a 159% increase over the prior year $17.0 million.

Fiscal Year 2001 net income was $4.2 million, an increase of $8.3 million from the prior year loss of $4.1 million.

Cash at June 30, 2001 was $12.0 million, an $11.2 million increase over cash at June 30, 2000.

Backlog at June 30, 2001 was $21.1 million, over three times greater than the June 30, 2000 backlog of $6.7 million.

Net revenue for the fourth quarter of fiscal 2001 grew to $13.6 million from $3.2 million for the same quarter last year. Net income for the quarter totaled $1.7 million, or $0.16 per diluted share, compared to a loss of $3.8 million, or $0.43 per diluted share for the fourth quarter of fiscal 2000, which included a $2.0 million charge for settlement of shareholder litigation.

Net revenue for the fiscal year-end June 30, 2001 was $44.1 million compared to $17.0 million for the same time period last year, an increase of 159 percent. Net income for the year totaled $4.2 million, or $0.41 per diluted share, compared to a loss of $4.2 million or $0.47 per diluted share in 2000, which included a $2.0 million charge for settlement of shareholder litigation.

Bud Glisson, CEO of Acres Gaming, stated, ``The turnaround in the company from where we were a year ago has been dramatic by almost any standard. Fiscal year sales more than doubled, net income went from a $4 million loss to $4 million profit, cash went from less than $1 million to almost $12 million, and our year-end sales backlog went from $7 million to $21 million.''

``We continue to make good progress on current contracts for each of our main customer groups, but we are now incurring some delays on Bonusing implementations,'' Glisson continued. ``At Station Casinos, our player-tracking component deliveries have met our goals, but Bonusing implementations will not achieve the performance bonus deadlines in the contract due to development time for customized features and the regulatory approval process.

"Full completion may stretch out over the next year. At MGM Mirage, we have met our player-tracking component delivery goals, but Bonusing implementations have incurred delays of up to several months due mainly to casino readiness. Our relationship with both Station Casinos and MGM Mirage remains quite strong, and our main objective is to make sure that when implemented, Bonusing will be successful throughout their casino properties.''

Customer retention is one of the company's most important goals. On August 15th, the company announced another order from MGM Mirage, this one amounting to $3.3 million for a patron management system for eleven casinos. On May 17th, Acres announced another order from Tsogo Sun amounting to $1.0 million for its next South African casino.

Pursuit and protection of intellectual property continues to be an integral part of the company's strategy. As announced on March 28th, a U.S. District Court jury verdict awarded Acres damages of $1.5 million for patent infringement by Mikohn Gaming. Subsequent to the fiscal year end, the court denied Mikohn's post-verdict motions and ordered an accounting of additional damages due Acres for infringement after the June 1999 trial discovery cut-off.

On June 12th, another US Patent was added to the company's portfolio of intellectual property covering the company's Bonusing technology, this latest one describing a ``method for providing incentive to play gaming devices connected by a network to a host computer.''

Regarding the outlook for fiscal 2002, Glisson said, ``We provided guidance for the fourth quarter of fiscal 2001 during the last conference call, and although net income landed within the range we provided, the revenue mix was very different from our forecast due to a wide variety of factors, including delayed gaming approvals, development delays, customer priorities and changes in customer installation schedules.

"At this time we can't reasonably predict quarterly results for fiscal 2002, mainly because of the uncertain timing of Bonusing implementations, and we don't have adequate visibility to make a full year projection. However, its important to note that we are beginning fiscal year 2002 with a backlog that is almost half of our sales for the entire previous fiscal year.''

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