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Ameristar Casinos' Results Show Continued Growth

28 July 2004

LAS VEGAS – (PRESS RELEASE) -- Ameristar Casinos, Inc. (Nasdaq: ASCA) today announced financial results for the second quarter of 2004, reflecting the continued growth of the company.

Second Quarter 2004 Financial Highlights

* Record second quarter consolidated net revenues of $210.0 million, representing an increase of $15.2 million, or 7.8%, over the second quarter of 2003.

* Record second quarter consolidated EBITDA (a non-GAAP financial measure which is defined and reconciled with operating income below) of $56.9 million, representing an increase of $1.8 million, or 3.2%, over the second quarter of 2003.

* Consolidated operating income of $39.1 million for the second quarter of 2004, a decrease of $0.2 million from the prior-year second quarter.

* Record second quarter net income of $15.0 million, up $0.6 million, or 3.8%, from the second quarter of 2003.

* Diluted earnings per share of $0.54 for the second quarter of 2004, compared to $0.54 for the second quarter of 2003. Our previously issued earnings guidance for the second quarter of 2004 indicated a range of $0.55 to $0.57 per share. Analysts' latest consensus estimate for the second quarter of 2004, as reported by Thomson First Call, was $0.59.

* On June 1, 2004, our Board of Directors declared a quarterly cash dividend of $0.125 per share, which was paid on June 30, 2004 to shareholders of record on June 15, 2004.

* During the second quarter of 2004, we prepaid $15.0 million of long-term debt under our senior credit facilities, further improving our total debt leverage ratio (as defined in our senior credit agreement) from 3.49:1 at December 31, 2003 to 3.17:1 at June 30, 2004.

Second Quarter 2004 Operational Highlights

* We extended and improved our leadership position in market share (based on gross gaming receipts) in each of our markets with Ameristar-branded properties during the second quarter of 2004 compared to the same period in 2003.

* As of June 30, 2004, nearly 100% of the slot machines at our Ameristar-branded properties have been equipped with coinless technology.

Other Second Quarter 2004 Highlights

* On May 28, 2004, we signed an agreement with Windsor Woodmont Black Hawk Resort Corp. to acquire Mountain High Casino in Black Hawk, Colorado for approximately $115.0 million, plus the assumption of approximately $2.4 million of outstanding debt and certain other contingent consideration. Closing of this acquisition is expected to occur in December 2004. Mountain High Casino is an upscale, integrated gaming and entertainment facility and is currently the largest casino in Colorado. Following the closing of the transaction, we intend to invest approximately $75 million in capital expenditures to improve the competitiveness of the property, as well as make other operational enhancements. The planned capital improvements include construction of a hotel and additional covered parking, reconfiguration and expansion of the gaming area, the introduction of cashless slot technology and other gaming equipment upgrades, the addition and replacement of food and beverage outlets and enhancement of the entertainment showroom.

* On July 15, 2004, we received approval from the Iowa Racing and Gaming Commission for a $26 million expansion and enhancement of Ameristar Council Bluffs. Our expansion plans call for adding another 9,800 square feet of gaming space to accommodate 398 additional gaming positions, including slot machines, table games and a poker room, as well as an overlook bar and deli. In addition to satisfying demand during peak times, the changes will result in a more spacious casino floor with improved circulation and traffic flow.

Enhancements to the landside facilities include an extensive renovation to the buffet, which will be re-branded as the Heritage Buffet. The changes will bring an upscale Craftsman-era ambiance to the room and an upgrade to the entire buffet line, including the creation of several display cooking stations. The buffet will also be expanded by 53 seats to bring it to a total of 340 seats. In the hotel -- currently the only AAA Four Diamond-rated hotel in the Omaha area -- all of the 162 guest rooms will undergo a complete renovation. The new rooms will feature a classically modern interior accented by hardwood furniture, and upscale bathroom finishings. The rooms will provide luxury conveniences, including a 32" LCD TV, pillow-top bed and fully functioning work desks with high-speed internet access.

"Our continued market share leadership in all of the jurisdictions in which we operate further evidences the strength of the Ameristar brand," said Craig H. Neilsen, Chairman and CEO. "We are most pleased that since the introduction of our all-new Ameristar Kansas City property in the third quarter of 2003, we have seen steady improvement in our market share leadership despite a significant increase in the number of gaming positions in the Kansas City market. Our solid financial performance has allowed us to continue to return a portion of our earnings to our shareholders with the declaration of our second quarterly cash dividend, while at the same time we have further reduced our financial leverage. Indeed, we believe we are well-positioned to further grow the Company."

Financial Results

Net Revenues

Net revenues for the second quarter of 2004 increased to $210.0 million, an increase of 7.8% compared to the second quarter of 2003. All of our Ameristar-branded properties improved in net revenues, with increases of 11.2% at Ameristar Vicksburg, 9.3% at Ameristar Council Bluffs, 8.6% at Ameristar Kansas City and 7.5% at Ameristar St. Charles. For the quarter, each of our Ameristar-branded properties improved its market share. Ameristar Vicksburg and Ameristar Council Bluffs further improved their long-time market leadership positions to 45.7% and 40.9%, respectively, with increases of 6.5 and 2.1 percentage points, respectively, over the prior-year second quarter. Ameristar St. Charles and Ameristar Kansas City increased reported market shares to 32.7% and 34.8%, respectively, up 1.7 and 0.9 percentage points, respectively, over the prior-year second quarter.

Driven by a $23.2 million (14.3%) increase in slot revenues, casino revenues for the second quarter of 2004 increased $23.8 million, or 12.6%, from the second quarter of 2003. We believe casino revenues increased in part as a result of our continued successful implementation of our targeted marketing programs, which is evidenced by a 21.7% increase in rated play at our Ameristar-branded properties when compared to the second quarter of 2003. We also believe that the growth in slot revenues has been driven by our aggressive implementation of coinless slot technology at our Ameristar-branded properties, which are now nearly 100% coinless. In addition, we believe our continued leadership in the introduction of new-generation nickel and penny slot machines at our Ameristar-branded properties is a contributor to the improvement in slot revenues, due to the popularity of this segment of the slot market.

We believe the quality of our food and beverage operations also contributed to our market share leadership. Food and beverage revenues increased by $3.5 million, or 14.0%, in the second quarter of 2004 compared to the prior-year second quarter. The increase was principally attributable to our new food and beverage venues that opened at Ameristar Kansas City in the third quarter of 2003 and Ameristar Vicksburg's newly renovated Heritage Buffet, which was completed in the fourth quarter of 2003. The renovation and expansion of the buffet at Ameristar Council Bluffs is expected to achieve results similar to those of our other recent food and beverage projects.

Net revenues at the Jackpot Properties decreased to $15.5 million, representing a $0.3 million decrease compared to the second quarter of 2003. Lower net revenues were the result of increased competition from a Native American gaming property in Southeastern Idaho and higher fuel prices.

Operating Income and EBITDA

In the second quarter of 2004, consolidated operating income decreased 0.6% to $39.1 million and consolidated operating income margin dropped 1.6 percentage points from the prior-year second quarter, to 18.6%. Operating income margin decreased at Ameristar St. Charles, Ameristar Kansas City and the Jackpot Properties by 1.5, 1.9 and 7.3 percentage points, respectively, when compared to the same period in 2003. Consolidated EBITDA increased 3.2% to $56.9 million compared to the second quarter of 2003. However, consolidated EBITDA margin in the second quarter of 2004 decreased from 28.3% to 27.1%, primarily due to Ameristar St. Charles, Ameristar Kansas City and the Jackpot Properties, where EBITDA margin dropped 2.3, 0.5 and 7.1 percentage points, respectively, from the prior-year second quarter. The declines in operating income and EBITDA margins at these properties were primarily attributable to increased costs for marketing and advertising to maintain competitiveness, as well as increased employee benefits costs. At the Jackpot Properties, the decreases in EBITDA and operating income and related margins were also the result of the aforementioned decline in net revenues and higher labor and entertainment costs.

Ameristar Kansas City's operating income margin was also negatively impacted by an increase in depreciation expense of $1.1 million from the prior-year quarter, as a result of the completion of the enhancement and renovation projects at the property in the third quarter of 2003. However, EBITDA at Ameristar Kansas City increased $0.9 million, or 6.6%, over the prior-year second quarter, due primarily to the aforementioned increases in gaming and food and beverage revenues.

Ameristar Vicksburg improved its EBITDA margin to 34.0% from 32.5% and its operating income margin to 23.1% from 22.5% in the second quarter of 2003. Ameristar Council Bluffs' EBITDA margin increased to 37.0% in the second quarter of 2004 from 35.9% in the second quarter of 2003, and its operating income margin improved 0.8 percentage points to 30.3% when compared to the same quarter in 2003. The growth in EBITDA and operating income margins at these properties was principally driven by the increase in revenues noted above.

Corporate expense increased $1.1 million in the second quarter of 2004 compared to the same quarter of 2003. The increase in corporate expense was primarily the result of our expanded development activities. We expect this trend to continue through the remainder of 2004 as we seek growth through development opportunities in the United Kingdom and Pennsylvania, and through acquisition opportunities.

Depreciation and amortization expense increased to $17.8 million in the second quarter of 2004 from $15.8 million in the second quarter of 2003, primarily due to the increase in our depreciable assets resulting from the enhancement and renovation projects at Ameristar Kansas City and Ameristar Vicksburg and the continued implementation of coinless slot technology.

Net Income and Diluted Earnings Per Share

For the second quarter of 2004, net income increased 3.8% to $15.0 million from $14.5 million for the second quarter of 2003. Diluted earnings per share were $0.54 in each of the quarters ended June 30, 2004 and 2003. Interest expense for the 2004 second quarter was $13.8 million, down $2.8 million from the second quarter of 2003. The decline in interest expense was due to a decrease in our long-term debt levels, the termination of our interest rate swap agreement on March 31, 2004, and lower interest rates on our senior credit facilities year-over-year. In the 2004 second quarter, we incurred a non-operating loss on early retirement of debt of $0.2 million. Our effective income tax rate for the quarter ended June 30, 2004 was 40.0%, compared to 37.0% for the quarter ended June 30, 2003, due primarily to an increase in the effective state income tax rate.

Liquidity and Capital Resources

Our financial position remains strong, with approximately $89.7 million of cash and cash equivalents and $68.9 million of available borrowing capacity under our senior credit facilities as of June 30, 2004. During the second quarter of 2004, we reduced our long-term debt by approximately $15.8 million, including the prepayment of $15.0 million of principal under our senior credit facilities. At June 30, 2004, our total debt was $685.4 million, representing a decrease of $31.6 million (4.4%) from December 31, 2003. We expect to increase the borrowing capacity under our senior credit facilities in order to fund the acquisition of Mountain High Casino.

Capital expenditures for the second quarter of 2004 totaled $28.8 million and included capital maintenance projects at all of our properties, the continued acquisition of coinless slot machines and the implementation of information technology solutions to enhance our operating capabilities.

Outlook

Based on our preliminary results of operations to date in July 2004 and our outlook for the remainder of the quarter, we currently estimate operating income of $37 million to $39 million, EBITDA of $55 million to $57 million (given anticipated depreciation expense of $18 million), interest expense of $14 million and diluted earnings per share of $0.50 to $0.53 for the third quarter of 2004.

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