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Affinity Gaming to divest three non-core casino properties in Northern Nevada

7 September 2012

LAS VEGAS, Nevada -- (PRESS RELEASE) -- Affinity Gaming, LLC (“Affinity Gaming”) today announced that it has entered into a definitive agreement to sell its casino properties in Reno, Verdi and Dayton, Nevada to Truckee Gaming, LLC, a limited liability company owned by a group of private investors (“Truckee Gaming”). Under the terms of the purchase agreement, Truckee Gaming will pay a purchase price of $19.2 million in cash, subject to certain customary adjustments, and a $1.7 million credit for deferred maintenance capital. The agreement allows for further adjustments to the purchase price if the collective trailing 12-months of EBITDA of the properties at the time of closing is greater than $4.1 million or less than $3.8 million.

“This transaction represents the substantial completion of our divestiture of non-core assets, which we identified nearly two years ago and which we carved out of our recently-completed refinancing,” said David D. Ross, Chief Executive Officer. “With this sale, we are able to focus management’s time on executing our long-term growth and expansion strategy and delivering the greatest value to our shareholders.”

Affinity Gaming’s current Chief Operating Officer, Ferenc Szony, will be leaving the Company to become a managing principal at Truckee Gaming, initially owning 100% of the equity interests in Truckee Gaming, which interests are subject to warrant dilution by other private investors. Management began planning for Mr. Szony’s departure earlier in the sale process and is ready to execute its transition plan at the appropriate time. Financing for the transaction is in part being provided by funds managed by affiliates of Global Leveraged Capital, LLC (“GLC”), a private investment and advisory firm, of which Thomas M. Benninger, a director of Affinity Gaming, is a managing general partner. In connection with the transaction, funds managed by affiliates of GLC will provide $7.1 million of mezzanine financing and will acquire warrants that can be exercised under certain conditions to obtain an equity interest of up to 21% of Truckee Gaming.

Truckee Gaming has agreed to allow Affinity Gaming to solicit competitive bids for the three casino properties through September 30, 2012. Third-party proposals for the three casino properties must be in writing and offer a more favorable overall transaction taking into account all facts and circumstances, including the payment of a $750,000 breakup fee to cover Truckee Gaming’s expenses. Affinity Gaming has retained Jefferies & Company, Inc. to run the solicitation process.

“We believe the agreement with Truckee Gaming offers fair value for these assets,” said Mr. Ross. “But we are taking the additional step of running a formal process to ensure that the Company receives the highest consideration possible.”

The transaction is subject to customary closing conditions, including the receipt of regulatory approvals and licenses from the Nevada Gaming Commission. In the absence of a “superior proposal” (as defined in the agreement) by a third party, the Company expects the transaction to close in the first half of 2013.

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