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Ameristar Reports Record Results

29 July 2003

LAS VEGAS – (Press Release)-- Ameristar Casinos, Inc. (Nasdaq: ASCA) today announced operating results for the second quarter of 2003.

Second quarter 2003 highlights:

-- Record net revenues of $194.8 million, an increase of $28.5 million, or 17.2%, over the second quarter of 2002.

-- Record operating income of $39.4 million, representing an increase of $10.1 million, or 34.4%, as compared to the same quarter last year.

-- Record EBITDA (as defined and reconciled below) of $55.1 million, a 39.2% increase from $39.6 million in the second quarter of 2002. Impairment charges and preopening expenses totaling $5.5 million reduced EBITDA in the second quarter of 2002. After adjusting for these charges, the EBITDA growth rate was 22.2%, or 129.0% of the growth rate in net revenues.

-- A 14.5% increase in net income to $14.5 million for the second quarter of 2003, from $12.6 million for the same quarter in the prior year.

-- Diluted earnings per share of $0.54 for the second quarter of 2003, compared to $0.47 for the second quarter of 2002. Analysts' latest consensus estimate for the second quarter of 2003, as reported by Thomson First Call, was $0.47.

-- Each of our properties ranked number one in market share(1) for the second quarter. This further exemplifies the "Number One" theme of our 2002 annual report to stockholders, which won the Annual Report 100 "Best of Show" award in the country's most prestigious annual report competition.

-- We continue to be the leader in the implementation of "coin-less" slot technology and remain on target to implement "coin-less" technology in 75% of our slot machines by the end of 2003 and 100% of our slot machines by the end of 2004.

-- Winner of 114 "Best of Gaming" awards in annual readers' surveys conducted by Casino Player Magazine, sweeping the state of Missouri for Best Casino and Best Overall Hotel/Casino with Ameristar St. Charles and Ameristar Kansas City, respectively.

-- The significant renovation and improvement projects at Ameristar Kansas City are on target to be completed in the third quarter of 2003. On September 12-13, 2003, festivities celebrating the "All New Ameristar" will include a concert by Martina McBride, the Country Music Associations' Female Vocalist of the year for 2002 and 2003.

The grand re-opening celebration will culminate with a spectacular world-class fireworks display, synchronized to music. This grand reopening will be preceded by the opening of the 330-seat Amerisports Brew Pub on August 14, 2003 which will feature appearances by nationally acclaimed sports celebrities. The Amerisports Brew Pub will have a high-tech video system with seven rear projection screens, each capable of displaying multiple events, along with three large plasma screens and 17 televisions. This system will have the capability to broadcast more sporting events simultaneously than any other venue in the United States.

The increase in net revenues in the second quarter of 2003 was primarily due to a 65.3% increase at Ameristar St. Charles. The new Ameristar St. Charles facility, which opened in August 2002, continues to generate a strong return on investment.

Operating income for the second quarter of 2003 improved at all but one of our properties. The improvements were the result of our continued success in implementing effective and efficient marketing and direct mail promotions, new slot product and related technology enhancements and cost containment strategies. Although one of our principal competitors implemented a new players' club program in the second quarter of 2003, to date we have not experienced a loss in market share as a result of this change in the competitive environment.

EBITDA increased to $55.1 million for the quarter ended June 30, 2003 from $39.6 million for the comparable period in 2002. EBITDA includes impairment charges on assets held for sale of $0.1 million and $4.1 million, respectively, and preopening expenses of $0 and $1.3 million, respectively, for the quarters ended June 30, 2003 and 2002. Excluding these items, EBITDA would have been $55.2 million and $45.1 million, respectively, for the three months ended June 30, 2003 and 2002.

Net income and diluted earnings per share for the second quarter of 2003 improved despite a substantial increase in net interest expense resulting from a significant reduction in capitalized interest following the opening of the new St. Charles facility. For the three months ended June 30, 2003, consolidated net interest expense was $16.6 million, compared to $9.4 million in the prior year period. Additionally, depreciation and amortization expense increased from $10.3 million in the 2002 second quarter to $15.8 million in the 2003 second quarter, primarily due to the opening of the new St. Charles facility.

"In the second quarter of 2003, we achieved record net revenues and were number one in gaming revenues in each of our markets. Our St. Charles property continues to lead the way with excellent performance. Indeed, our marketing and operating strategies have proven to be highly successful, as evidenced by our strong financial results for the second quarter," said Craig H. Neilsen, Chairman and CEO.

Ameristar St. Charles

Ameristar St. Charles posted record net revenues, operating income and EBITDA for the second quarter of 2003. Net revenues increased 65.3% to $64.2 million, from $38.8 million in the prior year quarter. Net revenues have been driven by substantial increases in gaming volume due to a 9.9% increase in market share to 31.0% for the second quarter of 2003 compared to the second quarter of 2002. The increase in market share exceeds the growth in the St. Louis gaming market, which increased only 5.8% for the same period.

Since the opening of the new facility in August 2002, Ameristar St. Charles has been the market share leader in the St. Louis market. Food and beverage revenues increased 194.6% to $7.8 million from $2.6 million in the same period in 2002, due to the addition of a wide variety of restaurant venues with increased seating capacity.

Operating income increased to $16.2 million from $5.7 million, and EBITDA increased to $22.2 million from $7.0 million in the second quarter of 2003 compared to the second quarter of 2002. Excluding impairment charges and preopening expenses, operating income increased 48.4% and EBITDA increased 80.8% in the second quarter of 2003 compared to the second quarter of 2002. In addition to revenue growth, the increases in operating income and EBITDA were generated through a combination of labor cost management, improvements in operational processes and systems and more effective and efficient marketing programs. Ameristar St. Charles' EBITDA margin (adjusted for impairment charges and preopening expenses) improved to 34.5% for the second quarter of 2003 from 31.6% in the second quarter of 2002. The margin improvement was achieved despite a significant growth in food and beverage revenues, which typically produce lower margins than gaming revenues.

Ameristar Kansas City

Net revenues at Ameristar Kansas City remained stable at $52.5 million in the second quarter of 2003 compared to the second quarter of 2002. The property maintained its market share of 33.8% for the three months ended June 30, 2003 compared to the same period in the prior year. Net revenues during the second quarter of 2003 continued to be negatively impacted by construction disruption related to the renovation and improvement projects designed to enhance the property's casino and non-gaming amenities. These projects, which began in the third quarter of 2002, have been substantially completed and have included a comprehensive renovation of the casino area, the widespread implementation of ticket-in, ticket-out slot machines and the addition of the Great Plains Cattle Co., Falcon Diner, Depot No. 9 Stage and Bar, Pearl's Oyster Bar and an open-seating food court with three popular national chain outlets.

Final completion of the renovation and improvement projects is expected in the third quarter of 2003 with the opening of the Amerisports Brew Pub and a casino cabaret featuring live, Las Vegas-style entertainment. We expect the investment in these projects to improve the property's financial results, as we experienced following the completion of renovation and improvement projects at Ameristar Council Bluffs and Ameristar Vicksburg and the opening of the new casino entertainment facility at Ameristar St. Charles.

Operating income improved slightly to $10.9 million for the three months ended June 30, 2003 from $10.6 million for the three months ended June 30, 2002, despite an increase in depreciation expense of $0.5 million from newly constructed assets being placed in service. Ameristar Kansas City's EBITDA and EBITDA margin improved to $14.4 million and 27.4%, respectively, for the second quarter of 2003 from $13.6 million and 25.9%, respectively, for the same period in 2002. The improvements were the result of increased efficiencies of targeted marketing programs and improved control over labor costs.

Ameristar Council Bluffs

Net revenues at Ameristar Council Bluffs increased 6.2% to $38.9 million in the 2003 second quarter compared to $36.6 million for the 2002 second quarter. The property continues to benefit from the success of effective and efficient marketing strategies and the installation of new slot machines, many of which have ticket-in, ticket-out capabilities. Ameristar Council Bluffs' market share increased to 38.7% for the quarter ended June 30, 2003 compared to 37.6% in the prior year period. The property has now been the market share leader for 22 consecutive months.

Operating income at Ameristar Council Bluffs increased by $1.5 million, or 15.2%, from $9.9 million in the second quarter of 2002 to $11.4 million in the second quarter of 2003. EBITDA margin also increased to 35.9% for the quarter ended June 30, 2003 from 33.5% for the same period in the prior year. The improvements in operating income and EBITDA margin were attributable to continued effective and efficient implementation of targeted marketing programs and cost containment strategies.

Ameristar Vicksburg

Ameristar Vicksburg reported an increase in net revenues of approximately 1.5% to $23.4 million for the second quarter of 2003, from $23.1 million for the second quarter of 2002. This improvement is primarily the result of an increase in table games volume, partially offset by a 10.9% decline in slot revenue due to lower volume and a slightly lower hold percentage. The property's market share decreased slightly, to 39.2% for the three months ended June 30, 2003 compared to 39.6% in the comparable period in 2002. Ameristar Vicksburg continued to maintain its long-time market leadership position.

Operating income decreased to $5.3 million for the second quarter of 2003 from $6.4 million for the second quarter of 2002. EBITDA also decreased, from $8.8 million for the quarter ended June 30, 2002 to $7.6 million for the quarter ended June 30, 2003. The decline in operating income and EBITDA was primarily due to a $0.5 million increase in health insurance expense resulting from an increase in large claims and a $0.3 million increase in marketing expenses due to the implementation of new marketing promotions. The decline in operating income and EBITDA was also attributable to impairment charges of $0.1 million related to slot machines held for sale and maintenance costs of $0.2 million.

Jackpot Properties

Net revenues at the Jackpot Properties increased $0.4 million, or 2.8%, in the second quarter of 2003 compared to the second quarter of 2002. The increase was primarily attributable to lower participation fees on gaming equipment, which are reported as a reduction of slot revenues. The Jackpot Properties' financial results continue to be impacted by the sluggish Southern Idaho economy.

The Jackpot Properties reported operating income of $3.4 million and EBITDA of $4.3 million for the second quarter of 2003, up 7.1%, or $0.2 million, and 7.2%, or $0.3 million, respectively, from the second quarter of 2002. The increases in operating income and EBITDA are primarily attributable to lower marketing and advertising expenses, which decreased 20.5% for the three months ended June 30, 2003 compared to the same period in 2002, and were a result of the implementation of cost-efficient marketing and direct mail promotions.

Income tax rates

Our effective income tax rate for the quarter ended June 30, 2003 was 37.0%, compared to 36.6% for the prior year quarter. The federal income tax statutory rate was 35.0% in both years. The differences from the statutory rate are due to the effects of state income tax expense and certain expenses we incurred which are not deductible for federal income tax purposes.

Liquidity and Capital Resources

At June 30, 2003, our total debt was $766.5 million, a decrease of $32.0 million since December 31, 2002. At June 30, 2003, we had $67.6 million of available revolving borrowing capacity under our senior credit facilities. Our cash and cash equivalents increased from $90.6 million at December 31, 2002 to $102.3 million at June 30, 2003.

Interest expense (net of capitalized interest associated with our ongoing construction projects) for the quarter ended June 30, 2003 was $16.6 million, up 77.8% from $9.4 million for the quarter ended June 30, 2002, due to the cessation of capitalization of interest on the new St. Charles facility when it opened in August 2002. Total interest cost before capitalizing interest was $17.1 million for the quarter ended June 30, 2003, down $0.1 million from the quarter ended June 30, 2002. A higher weighted-average debt level in the second quarter of 2003 compared to the second quarter of 2002 as a result of $115.0 million borrowed under our senior credit facilities between April 1 and December 31 of 2002 was offset by a lower weighted-average interest rate applicable to the senior debt. The reduction in the interest rate is largely attributable to the May 2002 amendment of the credit agreement and an increase in the credit rating on a portion of the senior credit facilities in September 2002.

During the second quarter of 2003, we repaid approximately $22.1 million of long-term debt, including a $12.1 million prepayment of equipment financing notes. During the third and fourth quarters of 2003, we will make approximately $15.0 million of mandatory principal payments under the senior credit facilities, and we intend to prepay up to $13 million in other long- term debt in the third quarter of 2003.

We anticipate that capital expenditures for 2003 will exceed the amount currently permitted under our senior credit facilities (approximately $73 million) due to the acceleration of our implementation of "coin-less" slots at our properties and the renovation and improvement projects nearing completion at Ameristar Kansas City. Accordingly, we expect to seek a waiver from the lenders under our senior credit facilities prior to the end of the year.

For the year ending December 31, 2003, we currently estimate free cash flow of $70 million to $80 million. Free cash flow is a non-GAAP financial measure, which we define as cash flows from operations, as defined in accordance with GAAP, less capital expenditures. The reconciliation of GAAP cash flows from operations to free cash flow is shown in a table below.

Earnings guidance for the third quarter of 2003 and year ending December 31, 2003

Based on our preliminary results of operations to date and our outlook for the remainder of the quarter, we currently estimate consolidated operating income of $36 million to $38 million, EBITDA of $52 million to $54 million (given anticipated depreciation expense of $16 million) and diluted earnings per share of $0.47 to $0.52 for the third quarter of 2003.

For the year ending December 31, 2003, we have increased our operating income and diluted earnings per share estimates. We now estimate operating income of $138 million to $146 million, EBITDA of $202 million to $210 million (given anticipated depreciation expense of $64 million) and diluted earnings per share of $1.59 to $1.77.

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