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Argosy Reports Earnings Up

29 July 2004

ILLINOIS – (PRESS RELEASE) -- Argosy Gaming Company (NYSE: AGY) today announced results for the three months ended June 30, 2004. Diluted earnings per share ("EPS") were $0.63 on net income of $18.6 million, as compared to EPS of $0.24 on net income of $6.9 million for the second quarter of 2003. Improved performance at the Company's Lawrenceburg and Riverside properties contributed to the year-over-year increase in earnings. Earnings in the second quarter of 2003 were impacted by a $5.9 million charge due to new legislation regarding the calculation of the 2002 increase in Indiana gaming tax rates and a $6.5 million write-down of barge platforms originally intended for use at the Company's Joliet property. The combination of these two items reduced second quarter 2003 EPS by $0.26 per share. Included in the results of the second quarter of 2004 are after-tax expenses of approximately $0.02 per share, associated with the refinancing of the Company's 10 3/4% notes due 2009. Results for the second quarter of 2004 were also positively impacted by approximately $0.05 per share by the recent agreement reached with the City of Lawrenceburg, Indiana to reduce the annual payments to the city in return for additional capital investment at the Company's Lawrenceburg property.

Net revenues for the second quarter of 2004 were $254.6 million, up 2.5% from second quarter 2003 net revenues of $248.3 million. Net revenues at the Company's Riverside property continue to benefit from the opening of the new casino, and were 58.2% higher in the quarter than in the second quarter of 2003. In Illinois, operational actions taken to mitigate the impact of increased gaming and admission taxes caused year-over-year revenues to fall. Net revenues at the Company's Alton property and Joliet property were down 11.9% and 14.0%, respectively in the second quarter of 2004.

The Company reported EBITDA (earnings before interest, taxes, depreciation and amortization) of $66.2 million for the second quarter 2004, as compared to $45.5 million for the second quarter 2003. At Argosy Casino Riverside, EBITDA increased from $4.8 million in the second quarter of 2003 to $10.7 million in the second quarter of 2004, or 124%. The EBITDA margin (EBITDA as a percent of Net Revenues) for the Company in the second quarter of 2003 was 18.3%, but was negatively impacted by approximately 5 percentage points due to the Indiana tax charge and write down in Joliet mentioned earlier. Even after giving effect to these items, the EBITDA margin for the second quarter of 2004 improved by approximately 3 percentage points, at 26.0%. The EBITDA margin at every one of the Company's properties was higher in the second quarter of 2004 than in the same quarter of 2003.

Net income for the six months ended June 30, 2004, was $22.5 million ($0.76 EPS) on net revenues of $518.7 million, compared to net income of $21.6 million ($0.74 EPS) on net revenues of $484.7 million for the same period in 2003. For the six-month period ended June 30, 2003, the Indiana tax rate increase and the asset write-down reduced the EPS by $0.26 per share. For the six-month period ended June 30, 2004, results were positively impacted by the Lawrenceburg agreement by $0.05 per share, but were negatively impacted by $0.52 per share in expenses related to the refinancing of the Company's 10 3/4% notes.

"The year started out with exceptional results. The second quarter results were on track with our expectations of improved year-over-year results," said Richard J. Glasier, President and Chief Executive Officer. "Operationally, Argosy is well situated to grow from a strong base. We're particularly pleased to see the strong return on investment on our project in Riverside, which gives us additional confidence in our announced expansion projects."

Capital spending during the quarter ending June 30, 2004, was approximately $15.2 million, and was primarily maintenance capital, including conversion of the Company's slot machines to Ticket-in, Ticket-out ("TITO") technology. As of the end of the quarter, approximately 90% of the Company's slot machines were TITO-operational. The Company continues to expect to be essentially 100% TITO-operational by the end of the year.

The Company is spending approximately $8 million in project capital to renovate and move the boat formerly used at its Riverside property to Sioux City. The boat is expected to arrive in Sioux City this week, and should be operational at its new location by the end of August. The project includes an increase in the number of slot machines from 482 to 625 and an increase in the number of gaming tables from 14 to 18. The boat will also enhance customer comfort by increasing the square footage of the property's gaming space by approximately 60%.

Construction at the Company's Riverside expansion project, which includes construction of a new state-of-the-art parking garage and the addition of a premier hotel, is expected to commence in early August. When completed, the $75 million project will provide for over a 20% increase in the number of guest parking spaces, with enclosed parking for 1,400, and 250 rooms at a property that currently does not have a hotel.

Argosy is in the process of evaluating several different options for expansion at its Lawrenceburg property, and expects to finalize details on a project during the third quarter. The expansion is expected to include a combination of increased gaming positions, incremental parking and additional hotel rooms. The Company is preliminarily estimating a project cost in the area of $150 million. Argosy expects to recover approximately $50 million of the project cost through credits against future annual development fee payments to the City of Lawrenceburg.

Based on these projects and anticipated maintenance capital expenditures, Argosy believes it will spend approximately $50 million to $60 million on capital in the second half of the year, for a full year total of $95 million to $100 million.

Due to the cash flow from its properties' operating performance, the Company reported that debt was down from $894.6 million as of March 31, 2004, to $847.1 million as of June 30, 2004. Of that amount, $27.6 million was outstanding under the revolving portion of its senior secured credit facility, as compared to $53.1 million at March 31, 2004. The Company recently initiated negotiations to refinance its existing senior secured credit facility, and anticipates closing the transaction before the end of the third quarter. From the initial terms and conditions discussed, Argosy expects to be able to reduce its interest expense on the outstanding balances of the existing facility. In conjunction with the refinancing, the Company expects to write off deferred financing costs associated with the existing facility of approximately $5.4 million, reducing third quarter 2004 EPS by $0.11.

"The strength of the bond and commercial bank markets has given us the chance to both lower our interest costs and gain flexibility for our development plans," said Glasier. "We think there may be some attractive new investment opportunities in the market in the coming quarters, and we look forward to using our strong balance sheet to take advantage of them."

Based on the year-to-date performance and the Company's forecast for the rest of the year, Argosy expects reported full-year 2004 EPS to be in the range of $1.73 - $1.83. Included in this estimate is a $0.09 impact to EPS from the $5 million credit from the City of Lawrenceburg for full-year 2004 and $0.63 in costs associated with refinancing the Company's senior subordinated notes in February and the senior secured credit facility now being negotiated.

Argosy will host a conference call for interested parties on July 29, 2004, at 11:00 a.m. EDT to review its second quarter financial results. The call will be broadcast live via the Internet and may be accessed through our web site at http://www.argosycasinos.com . For those interested in participating in the call, please dial (706) 634-1306 and reference conference ID #8816637 five to ten minutes prior to the call start time. A replay of the call will be made available through August 5, 2004 and can be accessed through our web site at http://www.argosycasinos.com .

Argosy Gaming Company is a leading owner and operator of casinos and related entertainment and hotel facilities in the midwestern and southern United States. Argosy owns and operates the Alton Belle Casino in Alton, Illinois, serving the St. Louis metropolitan market; the Argosy Casino-Riverside in Missouri, serving the greater Kansas City metropolitan market; the Argosy Casino-Baton Rouge in Louisiana; the Argosy Casino-Sioux City in Iowa; the Argosy Casino-Lawrenceburg in Indiana, serving the Cincinnati and Dayton metropolitan markets; and the Empress Casino Joliet in Illinois serving the greater Chicagoland market.

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