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Alliance Gaming Reports Record Results

15 January 2002

LAS VEGAS –(Press Release) --Jan. 15, 2002-- Alliance Gaming Corporation (Nasdaq: ALLY) today announced earnings for its second fiscal quarter ending December 31, 2001. Net income for the second quarter totaled a record $12.8 million, or $0.54 per diluted share, on record revenues of $150.5 million. For the comparable quarter ended December 31, 2000, the Company reported earnings of $5.5 million, or $0.26 per diluted share, on revenues of $130.1 million.

The Company's financial performance was led by its Bally Gaming and Systems business unit which reported a 34% increase in revenues to $51.6 million, and a 40% increase in EBITDA to $12.4 million, which is a new record for this business unit. Each of the Company's business units, except the Casino Operations, reported quarter over quarter increases in both revenues and EBITDA. During the quarter the Company also completed the acquisition of Casino Market Place Development Corporation (CMP), a provider of casino management software, which is included in the reported results for Bally Gaming and Systems.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the Company's business units are as follows (Dollars in millions):

     EBITDA Summary
                              Three Months Ended          Six Months Ended
                                 December 31,               December 31,
                              2001          2000          2001         2000
     Bally Gaming and
      Systems               $ 12.4         $ 8.9         24.3          16.6
     Route Operations          6.6           6.0         13.2          11.9
     Casino Operations         5.7           6.0         12.1          12.8
     Bally Wulff               5.8           3.4          5.7           5.3
     Corporate office expense (2.8)         (2.5)        (5.0)         (5.1)

     Alliance total EBITDA  $ 27.7        $ 21.8       $ 50.3        $ 41.5


Consolidated net interest expense for the current quarter totaled $6.7 million compared to $8.6 million in the prior year period, resulting from substantially lower interest rates on the Company's term loan facility.

The Company recorded an income tax provision of $0.1 million in the current quarter compared to $0.3 million in the prior year quarter. The current quarter tax provision represents primarily estimated state income and franchise taxes.

As of December 31, 2001, the Company had $55.3 million of cash and cash equivalents, approximately $21.7 million of which was held for operational purposes in vaults, cages and change banks.

For the current quarter, consolidated capital expenditures, including costs for proprietary games, totaled $8.1 million and compared to $4.0 million for the prior year period. The increase was primarily driven by the continued deployment of wide-area progressive games. Additionally, the Company paid $12.0 million for the acquisition of CMP, $8.0 million of which was paid in cash.

Effective July 1, 2001, the Company elected to adopt the provisions of Financial Accounting Standard No. 142, ``Goodwill and Other Intangible Assets'', whereby amortization of goodwill ceased. Ceasing amortization increased earnings per share for the quarter by $0.01. The Company has received independent third party valuations for each of its business units with associated goodwill, and has determined that there is no impairment of goodwill at the adoption date. This assessment will be updated annually in accordance with FASB 142.

The Company also updated its guidance for fiscal year 2002. The Company believes its diluted earnings per share will be in the range of $1.95 to $2.00.

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