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Argosy Reports Results Up

27 October 2004

ALTON, Illinois – (PRESS RELEASE) -- Argosy Gaming Company (NYSE: AGY) today announced third quarter results for the period ended September 30, 2004. Diluted earnings per share ("Diluted EPS") were $0.71 on net income of $21.1 million, as compared to Diluted EPS of $0.56 on net income of $16.5 million for the third quarter of 2003. Included in the quarterly results for the third quarter of 2004 is a gain of $3.2 million pre-tax, or approximately $0.06 per diluted share, from the sale of one of the boats that operated at the Company's Joliet property prior to the addition of the current barge-based facility. In previously issued guidance, the Company anticipated incurring a $0.11 charge in the third quarter related to the recent refinancing of its senior credit facility. However, the charge was not incurred, as the ultimate structure of the refinancing requires that the associated fees be amortized over the life of the amended facility instead of being expensed currently.

Net income for the nine months ended September 30, 2004, was $43.7 million ($1.47 EPS) on net revenues of $785.1 million, compared to net income of $38.1 million ($1.30 EPS) on net revenues of $727.6 million for the same period in 2003. For the nine-month period ended September 30, 2003, 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 reduced EPS by $0.26 per share. For the nine-month period ended September 30, 2004, results were positively impacted by the $0.06 per share gain on the sale of the Joliet boat, but were negatively impacted by $0.52 per share in expenses related to the refinancing of the Company's 10 3/4% notes in February.

Third Quarter Results

Net revenues for the third quarter of 2004 were $266.5 million, up 9.7% from third quarter 2003 net revenues of $242.9 million. Each of the Company's properties reported higher net revenues in the third quarter of 2004 than in the same quarter of 2003. Argosy Casino-Riverside achieved a 53.3% increase in net revenues versus the same quarter in 2003, improving from $22.7 million to $34.8 million, and in line with its capacity increase due to the opening of its new casino in December 2003. In Sioux City, net revenues increased 22.6%, from $10.2 million in 2003 to $12.5 million in 2004. In September, the first full month of operations from the larger riverboat previously used in Riverside, casino revenues in Sioux City increased 48% on a 28% increase in capacity. At the Company's Lawrenceburg property net revenues increased $7.7 million, or 7.1%, to $115.5 million from $107.8 million in the third quarter of 2003.

The Company reported EBITDA (earnings before interest, taxes, depreciation and amortization) of $71.6 million for the third quarter 2004, as compared to $63.1 million for the third quarter 2003. The $8.5 million increase is primarily related to the successful expansion of the Company's Riverside casino and improved operational performance at most of the Company's properties. EBITDA margin (EBITDA as a percent of net revenues) improved from the same quarter last year at every property except for the Company's two Illinois casinos, excluding Joliet's boat sale. Company-wide, EBITDA margin for the quarter was 26.9%, up from 26.0% for the same quarter last year. The Company's effective gaming and admission tax rate (gaming and admission taxes as a percent of net revenues) increased 2.0 percentage points, from 33.8% in the third quarter of 2003 to 35.8% this quarter. The gain from the sale of the boat in Joliet had a positive impact on the consolidated EBITDA margin of 1.2 percentage points.

"Higher revenues and improved margins are a strong testament to the great job done by our management teams," said Richard J. Glasier, President and CEO of Argosy Gaming Company. "I'm very pleased with our results this quarter, particularly in light of the tough tax environment in Illinois and the highly competitive nature of some of the markets we operate in."

The Company reported a reduction in debt from $847.1 million as of June 30, 2004 to $805.3 million as of September 30, 2004. As a result of the reduction in debt and a lower effective interest rate, net interest expense dropped from $19.0 million in the third quarter of 2003 to $15.6 million in the current quarter.

On September 30, 2004 Argosy completed a refinancing of its Revolving Credit and Term Loan B facilities. The existing Credit Agreement, which consisted of a $400 million revolver and $275 million term loan B, was amended and restated to permit a $500 million revolver and $175 million term loan B. The new facility reduces the interest rate on the term loan B from LIBOR plus 225 basis points to LIBOR plus 175 basis points. The interest rate for LIBOR-based loans under the new facility for the revolver dropped by approximately 88 basis points.

Argosy spent $14.0 million in capital during the quarter ended September 30, 2004 of which approximately half was for maintenance capital and half for project capital at the Sioux City and Riverside properties. The Argosy IV riverboat, which was previously used in Riverside, went into service in Sioux City on September 1, 2004, with 125 more slot machines and six additional gaming tables. The Sioux City expansion project, which also included enhanced parking and a new live entertainment venue, was completed on budget at a cost of approximately $8 million. At Riverside, work has begun on the construction of a 1,400-space garage to replace the existing 800-space facility. Completion is expected at the end of August of 2005. The $75 million project also includes the construction of a hotel with approximately 250 rooms that is expected to be completed near the end of 2006. Argosy continues to evaluate alternative expansion projects at Lawrenceburg and expects to finalize its decision by year-end 2004. The Company expects capital expenditures for the fourth quarter of 2004 to be in the range of $15 million to $20 million, of which $10 million to $12 million will be for project capital, and the remainder for maintenance capital.

"Argosy's new casino at Riverside is still growing the Kansas City market, and the transfer of the Riverside boat to Sioux City has created a lot of excitement in the market," said Glasier. "Our investments at these properties have given us very solid returns. We're looking forward to continued growth with our expansion projects in Riverside and Lawrenceburg." In October 2004, the Company entered into a contract to purchase Raceway Park in Toledo, Ohio for approximately $20 million, subject to various conditions including regulatory approval. The purchase also includes an off-track wagering facility in Sandusky, Ohio.

Guidance

Argosy expects reported full-year 2004 EPS in the range of $1.95 - $2.00. Included in the estimate are $0.52 in costs associated with refinancing the Company's senior subordinated notes in February and the $0.06 gain from the sale of the Joliet boat.

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