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Ameristar Casinos Reports Record Results

4 August 2005

LAS VEGAS, -- Ameristar Casinos, Inc. (Nasdaq: ASCA) today announced 2005 second quarter financial results, which set all-time second quarter records for consolidated net revenues, operating income, EBITDA, net income and earnings per share.

Second Quarter Highlights

* Consolidated net revenues of $238.9 million, representing an increase of $28.9 million, or 13.7%, over the second quarter of 2004.

* Consolidated operating income of $42.2 million, an increase of $3.1 million, or 8.0%, from the prior-year second quarter.

* Consolidated EBITDA (a non-GAAP financial measure that is defined and reconciled with operating income below) of $63.1 million, representing an increase of $6.2 million, or 10.9%, over the second quarter of 2004.

* Consolidated net income of $16.7 million, up $1.6 million, or 10.9%, from the second quarter of 2004.

* Diluted earnings per share of $0.29, compared to $0.27 for the second quarter of 2004. Analysts' latest consensus estimate for the second quarter, as reported by Thomson First Call, was $0.30. Our previously issued earnings guidance for the second quarter of 2005 indicated a range of $0.275 to $0.295 per share.

* A 2-for-1 split of our common stock resulted in a June 20, 2005 distribution of one additional share of common stock for each share held of record as of the close of business on June 6, 2005. All share and per-share information in this press release gives effect to the stock split.

* On May 2, 2005, our Board of Directors declared a quarterly cash dividend of $0.078125 per share, which was paid to stockholders of record as of June 6, 2005.

* During the second quarter of 2005, we prepaid $30.0 million of long-term debt, further improving our total debt leverage ratio (as defined in our senior credit agreement) from 3.29:1 at December 31, 2004 to 2.98:1 at June 30, 2005.

* We were the leader in market share (based on gross gaming revenues) in our St. Charles, Kansas City, Council Bluffs, Vicksburg and Jackpot markets during the second quarter of 2005, while reducing our consolidated promotional allowances as a percentage of casino revenues by 1.1 percentage points from the second quarter of 2004 to the same period in 2005.

Craig H. Neilsen, Chairman and CEO, stated: "Our record second quarter financial results are a testament to the strength of Ameristar's brand and our core operating strategies. We continued to improve upon the financial successes of prior years by setting new second quarter records for net revenues, operating income, EBITDA, net income and earnings per share. Our strong financial performance positions the Company to grow further through both internal and external development opportunities. In addition, we believe our recent stock split increases the liquidity of our shares and makes them attractive to a broader range of investors."

Financial Results

Net Revenues

Consolidated net revenues for the second quarter of 2005 were $238.9 million, an increase of 13.7% compared to the second quarter of 2004. All of our properties improved in net revenues, with increases of 11.3% at Ameristar Council Bluffs, 10.9% at Ameristar Vicksburg, 7.0% at Ameristar Kansas City, 5.6% at the Jackpot Properties and 3.6% at Ameristar St. Charles. Mountain High, which we acquired on December 21, 2004, contributed $13.9 million in net revenues during the second quarter of 2005.

For the quarter, Ameristar Council Bluffs, Ameristar Kansas City and Ameristar Vicksburg improved their market leadership positions to 43.4%, 36.9% and 46.6%, respectively, with increases of 2.6, 2.1 and 0.9 percentage points, respectively, over the prior-year second quarter. Ameristar Council Bluffs benefited from construction disruption and a reduced number of available slot machines at the competing racetrack casino. Ameristar St. Charles maintained its market share leadership position with 31.6% of the market, despite a 1.1 percentage point decrease from the second quarter of 2004 mostly resulting from a major facility expansion at the property's primary competitor that was completed in the third quarter of 2004. Ameristar St. Charles has led the St. Louis market for nine of the last 11 quarters.

Led by a $29.2 million (15.7%) increase in slot revenues, consolidated casino revenues for the second quarter of 2005 increased $29.8 million, or 14.1%, from the second quarter of 2004. Mountain High contributed $14.3 million to casino revenues during the second quarter of 2005. We believe that the growth in slot revenues at our other properties has been driven by our complete implementation of coinless slot technology at our Ameristar-branded properties and our successful slot mix strategy, which includes the continued upgrade of popular new-generation, low-denomination slot machines. We further believe casino revenues increased in part as a result of our continued successful implementation of our targeted marketing programs, as evidenced by a 7.4% increase in rated play at our Ameristar-branded properties from the second quarter of 2004.

Food and beverage revenues increased $2.3 million (8.2%) over the prior-year second quarter. The increase was mostly attributable to the acquisition of Mountain High, which contributed $1.9 million in additional food and beverage revenues during the second quarter of 2005.

Room revenues decreased 7.7%, from $6.7 million in the second quarter of 2004 to $6.2 million in 2005. The $0.5 million decrease was primarily due to reduced room capacity as a result of the ongoing renovation of the hotel rooms at Ameristar Kansas City, which is expected to be completed in the third quarter of 2005, and the hotel room renovation project at Ameristar Council Bluffs, which was completed in May 2005.

Operating Income and EBITDA

In the second quarter of 2005, consolidated operating income increased $3.1 million, or 8.0%, to $42.2 million. Consolidated operating income margin decreased 0.9 percentage point from the prior-year second quarter, to 17.7%. Consolidated EBITDA increased 10.9% to $63.1 million compared to the second quarter of 2004. However, consolidated EBITDA margin in the second quarter of 2005 decreased from 27.1% to 26.4%.

The growth in consolidated operating income and consolidated EBITDA was principally driven by the increase in revenues noted above and the continued concentration on cost-containment initiatives related to marketing and food and beverage operations. The factors described below should also be considered in evaluating the performance of the specified properties.

Despite the major facility expansion by our St. Charles property's primary competitor that has created a more competitive environment and resulted in increased promotional expenses, Ameristar St. Charles experienced only a 0.7 percentage point decrease in operating income margin compared to the prior-year second quarter.

Ameristar Council Bluffs increased second quarter operating income by $1.7 million, or 13.0%, and second quarter EBITDA by $1.8 million, or 11.7%, compared to the prior-year period. The substantial increase in revenues at our Council Bluffs property from the prior-year period enabled the property to maintain a relatively flat EBITDA margin notwithstanding a 2.0 percentage point increase in the Iowa tax rate on gaming revenues of riverboat casinos, which became effective July 1, 2004.

Mountain High provided $0.7 million of operating income and $2.2 million of EBITDA in the second quarter of 2005. However, significant construction disruption related to the casino expansion project currently underway negatively affected Mountain High's operating results during the second quarter, and we expect the disruption to increase for the remainder of this year.

Consolidated operating income, EBITDA and the related margins were negatively impacted by a $4.3 million increase in health benefit costs at our operating properties attributable primarily to greater large claim payments. Consolidated operating income was also affected by an increase in depreciation expense. Depreciation and amortization expense increased $3.1 million (17.3%) over the second quarter of 2004, primarily due to the increase in our depreciable assets resulting from the purchase of new-generation, low-denomination slot product and $1.4 million in depreciation expense relating to Mountain High.

Corporate expense increased $2.4 million compared to the prior-year second quarter. The increase in corporate expense was primarily the result of expanded development activities and the addition of corporate staff to position us for future growth. The increase in development-related costs was mostly attributable to our ongoing pursuit of a gaming license in Pennsylvania.

Net Income and Diluted Earnings Per Share

For the second quarter of 2005, net income increased 10.9% to $16.7 million, from $15.0 million for the second quarter of 2004. Diluted earnings per share were $0.29 in the quarter ended June 30, 2005, compared to $0.27 in the corresponding prior-year quarter. Average diluted shares outstanding increased over the prior-year quarter, in large part due to the substantial increase in our stock price that resulted in increased dilution from in-the-money stock options. The increase in average diluted shares adversely impacted diluted earnings per share by $0.01 in the second quarter of 2005. Net interest expense increased $1.4 million, or 10.3%, over the 2004 second quarter, due primarily to a 0.6 percentage point rise in our average interest rate and an increase in our long-term debt level resulting from the $115.0 million borrowed in December 2004 to acquire Mountain High. For the quarter ended June 30, 2005, other non-operating expenses included a $0.6 million loss on disposal of assets related to our Kansas City hotel renovation project.

Our effective income tax rate for the quarter ended June 30, 2005 decreased to 37.4% from 40.0% for the quarter ended June 30, 2004, due primarily to a decrease in our effective state income tax rate.

Liquidity and Capital Resources

Our financial position remains strong, with approximately $83.1 million of cash and cash equivalents and $69.3 million of available borrowing capacity under our senior credit facilities as of June 30, 2005. During the second quarter of 2005, we reduced our long-term debt by approximately $30.9 million, due primarily to $26.0 million of prepayments under our senior credit facilities and a $4.0 million prepayment of debt related to Ameristar

Vicksburg. At June 30, 2005, our total debt was $733.5 million, representing a decrease of $32.8 million from December 31, 2004.

Capital expenditures for the 2005 second quarter totaled $48.6 million, which included the continued acquisition of new-generation, low-denomination slot machines, the hotel room renovations at our Council Bluffs and Kansas City properties, the capital improvement projects underway at Mountain High and the implementation of information technology solutions to enhance our operating capabilities.

In order to fully seize the opportunities we are presented with in the Black Hawk market, we are currently considering expanding the scope of our planned capital improvements to the Mountain High property. As a result, we have not yet completed a definitive project budget or schedule for the hotel; however, we expect to begin construction of the hotel in the fourth quarter of 2005. Planned improvements to the gaming and non-gaming areas of the property are now expected to be completed in the second quarter of 2006. At that time, we plan to rebrand the property under the "Ameristar" name.

Outlook

Based on our preliminary results of operations for July 2005 and our outlook for the remainder of the quarter, we currently estimate operating income of $42 million to $44 million, EBITDA of $64 million to $66 million (given anticipated depreciation expense of $22 million), interest expense of $15 million and diluted earnings per share of $0.30 to $0.32 for the third quarter of 2005.

Gaming regulatory authorities in Colorado, Iowa, Mississippi and Missouri currently publish, on a monthly basis, gross gaming revenue, market share and other financial information with respect to the gaming facilities, including Ameristar's, that operate within their respective jurisdictions. Because various factors in addition to our gross gaming revenue (including changes in operating costs, promotional allowances and other expenses) influence our operating income, EBITDA and diluted earnings per share, such reported information, as it relates to Ameristar, may not be indicative of the results of our operations for such periods or for future periods.

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