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Argosy Gaming Results Up

9 February 2005

ALTON, Illinois – (PRESS RELEASE) – Argosy Company (NYSE: AGY) today announced its fourth quarter and year-end operating results for the periods ended December 31, 2004. Diluted earnings per share ("Diluted EPS") for the fourth quarter of 2004 was $0.60 on net income of $17.9 million, as compared to Diluted EPS of $0.46 on net income of $13.6 million for the fourth quarter of 2003. Included in the fourth quarter 2004 results are $2.8 million in costs related to the proposed merger between Argosy and Penn National Gaming, which negatively impacted Diluted EPS by $0.06 and an accrual reversal related to a settlement with the State of Indiana regarding the deductibility of state gaming tax payments that positively impacted EPS by $0.03. The Company attributes the increase in net income to a $4.1 million decrease in net interest expense as a result of a reduction in debt levels and a lower cost of borrowing, and strong operational performance, particularly in the month of December.

The Company's full year 2004 diluted EPS was $2.07 on net income of $61.5 million, as compared to $1.76 per share on net income of $51.7 million for 2003. Included in net income for 2003 was a $6.5 million pre-tax charge for the write-down of barge platforms originally intended for use at the Company's Joliet property and a $5.9 million pre-tax charge due to new legislation regarding the calculation of the 2003 increase in Indiana gaming tax rates, for a combined impact to 2003 Diluted EPS of $0.26. For the 12-month period ended December 31, 2004, results were positively impacted by a $3.2 million pre-tax gain on the sale of a former gaming vessel in Joliet and the $1.0 million Indiana income tax accrual reversal mentioned above, but were negatively impacted by $26.0 million in pre-tax expenses related to the refinancing of the Company's 10 3/4% notes in February and $3.8 million in pre-tax merger-related costs. These four items together resulted in a net reduction of 2004 Diluted EPS by $0.50.

2004 Highlights

-- Net revenues for the year increased $81.4 million from 2003, to $1.0 billion, including a $50.6 million increase in net revenues at the Company's Riverside property and a $26.1 million increase in net revenues at the Company's Lawrenceburg property.

-- The Company's new casino at its Riverside property has positively impacted the Kansas City market, where gaming revenues grew over 10% in 2004. In addition to growing the market, Argosy Riverside's share of the market increased from 15.7% in 2003 to 21.7% in 2004. A $75 million expansion project to add a hotel and replace the existing parking garage at the property is currently underway.

-- The boat formerly used at Argosy's Riverside property was renovated and transferred to Sioux City. The resulting 29.8% increase in gaming capacity translated into a 34.7% increase in casino revenues and a 56.1% increase in operating income at the property for the period September through December 2004.

-- Argosy refinanced $350 million of Senior Subordinated Notes as well as its $675 million Revolving Credit Facility and Term Loan B at lower rates and with more flexible covenants. Coupled with a lower average outstanding debt balance, the result was a $10.8 million decrease in interest expense for 2004 as compared to 2003.

Fourth Quarter 2004 Results

Net revenues for the fourth quarter of 2004 were $255.7 million, up $23.8 million from fourth quarter 2003 net revenues of $231.9 million. Net revenues for the quarter increased versus fourth quarter 2003 at every property except Lawrenceburg, where they were essentially unchanged. Argosy Casino-Riverside benefited from the success of its new casino, as net revenues increased $10.8 million, or 44.8%, versus the same quarter in 2003, to $34.8 million. Argosy Sioux City also had a strong performance in the quarter with net revenues of $13.5 million, for a year-over-year increase of 29.9% due primarily to its renovated boat and expanded gaming capacity.

"While I'm very pleased with the increase in net revenues for the quarter, I think it's even more important to note the excellent flow-through to EBITDA that the properties achieved," said Richard J. Glasier, President and Chief Executive Officer. "Our property management has been very good at controlling costs, particularly in the payroll area. Benefit and insurance expenses have remained relatively constant, while at the same time we've seen positive results from technological efficiencies like the implementation of Ticket-in/Ticket-out ("TITO") slot machines."

The Company reported EBITDA (earnings before interest, taxes, depreciation and amortization) of $62.5 million for the fourth quarter 2004, as compared to $57.7 million for the fourth quarter 2003. The Company's EBITDA margin for the quarter was 24.5%, down from 24.9% for the same quarter last year. Gaming and admission taxes for the Company for the quarter were 35.3% of net revenues, up from 33.5% in the fourth quarter of 2003. At the property level (excluding corporate expenses) the EBITDA margin improved from 27.8% in the fourth quarter of 2003 to 28.8% in the same quarter of 2004.

Financial Position

Argosy reported that debt decreased from $870.2 million as of December 31, 2003 to $814.1 million as of December 31, 2004. Full-year 2004 capital spending was $75.3 million, which was primarily for the completion of the new casino in Riverside, the beginning of work on the new $75 million hotel and garage project in Riverside and the renovation and relocation of the boat from Riverside to Sioux City. In addition, the Company essentially completed its stated objective of becoming 100% TITO-operational by year-end 2004.

"Our consistent strong operational performance was certainly a key component in Penn National Gaming's decision to acquire Argosy," said Glasier. "Our employees should be proud of the part they have played in helping develop what is expected to become one of the largest gaming companies in the country."

Pursuant to the merger agreement between Argosy and Penn National Gaming, Argosy has agreed not to provide any guidance concerning its expected earnings or other performance.

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