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Alliance Reports Profits Down

15 April 2003

LAS VEGAS – (Press Release) -- Alliance Gaming Corporation (NYSE: AGI) today announced earnings for its third fiscal quarter ending March 31, 2003. Net income (after tax) for the third quarter totaled $12.8 million, or $0.25 per diluted share, on revenues of $175.5 million. For the comparable quarter ended March 31, 2002, the Company reported net income of $15.9 million, or $0.32 per diluted share, on revenues of $155.0 million, which period included no Federal income tax expense due to the utilization of net operating loss carry forwards and other tax credits. Assuming Federal income taxes had been recognized for the quarter ended March 31, 2002, net income and EPS would have been $11.1 million or $0.22 per diluted share, respectively.

Results for the March 2003 quarter include:

* Record consolidated revenues of $175.5 million, an increase of 13% from the $155.0 million in the prior year quarter, led by a 43% increase in revenues at the Bally Gaming and Systems business unit.

* Record consolidated EBITDA, of $35.7 million, an increase of 9% from the $32.8 million in the prior year quarter, led by a 42% increase at Bally Gaming and Systems.

* Consolidated operating income of $25.3 million, an increase of 2% from the $24.7 million in the prior year quarter.

* Net income (after tax) of $0.25 per diluted share, an increase of 14% compared to the prior year quarter after-tax earnings of $0.22 per diluted share.

Fiscal Year 2003 Guidance Update:

* For the fiscal year ending June 30, 2003, the Company is raising its guidance for net income per diluted share to at least $0.88.

Fiscal Year 2004 Guidance:

* For fiscal 2004, the Company expects net income per diluted share of at least $1.08 on 50.5 million shares outstanding on a fully taxed basis.

Cash and Capital Expenditures:

* As of March 31, 2003, the Company's cash and cash equivalents totaled $65.8 million, which included approximately $21.2 million held for operational purposes in vaults, cages and change banks and $9.5 million held in jackpot reserve accounts.

* For the quarter ended March 31, 2003, consolidated capital expenditures, including costs to produce proprietary games, totaled $9.5 million as compared to $10.6 million for the prior year quarter. The current period capital expenditures were driven by the continued deployment of wide-area progressive and daily-fee games, and the remodeling costs incurred at the Rainbow Casino.

Other financial highlights:

* Consolidated net interest expense for the current quarter totaled $6.0 million compared to $6.5 million in the prior year period, resulting from lower interest rates on the Company's term loan facility.

* As was previously disclosed, beginning July 1, 2002, the Company began recognizing Federal income tax expense based on 35% of pre-tax domestic income. Consistent with the prior year, the Company recorded state income taxes at a rate of approximately 2% of domestic income, and there was no tax effect from the results of Bally Wulff in Germany.

The Company will hold its conference call on Tuesday, April 15th at 10 a.m. PDT (1 p.m. EDT). Participants may access the call by dialing (719) 457-2667. The Company will also broadcast the conference call over the Internet. Interested parties are asked to log on to the call at www.alliancegaming.com using the Investor Relations tab 10 minutes prior to the start of the call.

Supplemental Business Unit Detail

Bally Gaming and Systems Revenues Increase 43%, Operating Income Increases 40%

Bally Gaming and Systems business unit reported a 43% increase in revenues over the prior year's quarter. Revenues from sales of gaming devices increased 91% over the prior year's quarter primarily as a result of a 50% increase in the number of units sold to 4,550 games and a 16% increase in the average selling price to $8,670. The increase in the average selling price includes the positive impact from the sale of 160 Monte Carlo premium-priced units. Bally Systems revenues increased 13% over the prior year quarter representing a 26% decrease in game monitoring units shipped, offset by a 39% increase in the average selling price per unit driven by the larger proportion of player tracking and promotion software revenues.

Bally Systems recurring hardware and software revenues increased 146% to $4.5 million compared to the prior year quarter resulting from the larger base of installed systems. Gaming Operations revenues decreased 1% over the prior year's quarter as a result of a decrease in the average revenue per unit offset by a 8% increase in the average installed base of wide-area progressive (WAP) and daily-fee games deployed, which now total 1,720 and 2,330, respectively. During the quarter we deployed an additional 790 WAP and daily-fee games, and had returns totaling 670 games, resulting in a net increase in the installed base of 120 games on a sequential basis as of March 31, 2003 compared to December 31, 2002. The current quarter placements included the initial roll out of the Company's latest WAP offering, "Cash for Life," which went live in Nevada on March 24, 2003, with 130 units installed by quarter end.

The Bally Gaming and Systems EBITDA improved 42% to $23.4 million, compared to $16.4 million in the prior year quarter. Operating income improved 40% to $19.1 million. The combined gross margin percentage remained unchanged at 58%.

On April 9, 2003, the Company completed the acquisition of Micro Clever Consulting (MCC), a leading international casino management systems company based in France. MCC has a presence in 75 European casinos and adds approximately 8,000 units to the roughly 225,000 unit count for Bally Systems.

Route Operations Revenues Decrease 5%, Operating Income Decreases 66%

For the Nevada route operations, revenue decreased 5% and EBITDA decreased 30% compared to prior year quarter. The average number of games deployed decreased 3% over the prior year quarter and the average net win per day per gaming machine decreased to $69.00 from $70.50. During the quarter an additional 8 former Raley's locations that had closed in the December 2002 quarter, were re-opened as Food-4-Less locations. However, play at those locations is currently lower than the historical norms as the Food-4-Less stores build their customer base. We have completed the acquisition of the remaining economic interest in the route contract for the Longs Drug Stores as well as an extension in that contract for an additional five years through 2012. Longs will be opening an additional two locations in Southern Nevada in the coming months. At March 31, 2003, the Gamblers Bonus product was available at 415 locations and was installed in over 4,160 gaming machines or 52% of the Nevada route's total installed base of gaming machines.

The decrease in revenues at VSI is due to a 1% decrease in the number of units deployed and a decrease in net win per day per gaming machine to $60.50 from $63.40 in the prior year quarter.

Casino Operations Revenues Increase 2%, Operating Income Decreases 4%

For the quarter, the combined casino operations business unit reported a 2% increase in revenues and a 1% increase in EBITDA. Rail City reported an 8% increase in revenues driven by a 6% increase in the average number of games and a slight increase in slot win. EBITDA at Rail City increased 17% to $1.7 million.

Revenues at the Rainbow Casino were flat compared with the same quarter in fiscal 2002, which reverses several consecutive quarters of declines and is a direct result of the recently completed interior remodeling projects and increases in promotional programs. The Vicksburg gaming market declined approximately 2% in the March 2003 quarter compared to the prior year quarter. Rainbow's EBITDA decreased 3% to $5.4 million compared to the prior year quarter. Having completed the interior remodeling project late in the December 2002 quarter, we began the external remodeling project in January which is expected to be completed later this month.

Wall Machines & Amusement Games Revenues Decrease 8%, Operating Income Decreases 38%

Wall Machines and Amusement Games business unit revenues decreased 8% as a result of a 7% decrease in revenues from leased games offset by a 2% increase in new units sold and a 5% increase in average selling price. The prior year's quarterly results included higher new units sales and the sale of conversion kits related to the transition to the euro currency, which was completed during that quarter. The wall machine market continues to be adversely impacted by the overall slowness in the German economy.

Alliance Gaming Corporation is a diversified gaming company headquartered in Las Vegas, Nevada. The Company is engaged in the design, manufacture, operation and distribution of advanced gaming devices and systems worldwide and is the nation's largest gaming machine route operator and operates two casinos.

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