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Alliance Gaming Reports Loss

21 October 2004

LAS VEGAS – (PRESS RELEASE) -- Alliance Gaming Corporation (NYSE: AGI) today announced its results for its first fiscal quarter ending September 30, 2004. First quarter loss from continuing operations totaled $(6.4) million, or $(0.13) per diluted share, on revenues of $116.9 million. For the comparable prior year quarter ended September 30, 2003, the Company reported income from continuing operations of $1.8 million or $0.04 per diluted share (or $0.19 excluding the refinancing charge), on revenues of $101.2 million.

Consolidated results for the September 30, 2004 quarter include:

* Revenues from continuing operations of $116.9 million, an increase of 16% from the $101.2 million in the prior year quarter.

* Operating loss from continuing operations of $(6.4) million, compared to operating income of $21.9 million in the prior year quarter.

* EBITDA from continuing operations of $4.4 million, compared to Adjusted EBITDA of $28.0 million in the prior year quarter.

* A restructuring charge of $1.4 million (or $0.02 per share, net of tax) reflecting the reduction in work-force which occurred during the current quarter.

* An inventory write down of $3.0 million (or $0.04 per share, net of tax) for recently discontinued legacy video products and used games, and $1.0 million (or $0.01 per share, net of tax) for increased bad debt reserves for one significant customer account.

Adjusted earnings before interest, taxes, depreciation, amortization and before refinancing charge (Adjusted EBITDA), and Adjusted EPS excluding refinancing charge, are not Generally Accepted Accounting Principles (GAAP) measurements. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. A reconciliation of Adjusted EBITDA to income from continuing operations and a reconciliation of Adjusted EPS excluding the refinancing charge to GAAP EPS are attached to this press release.

Cash and Capital Expenditures:

* As of September 30, 2004, cash and cash equivalents totaled $43.2 million, which included approximately $1.9 million held for operational purposes in vaults, cages and change banks and $14.4 million held in jackpot reserve accounts.

* During the September 2004 quarter the Company utilized the proceeds from the sale of United Coin and Rail City to reduce its term loan by $31.6 million, and repaid the revolving credit finance by $70 million to zero.

* For the quarter ended September 30, 2004, consolidated capital expenditures for our continuing operations, including costs to produce proprietary games, totaled $11.4 million compared to $6.7 million for the prior year quarter. The current period capital expenditures were driven by the continued deployment of wide-area progressive and daily-fee games.

* Net interest expense for continuing operations for the current quarter totaled $3.5 million compared to $5.7 million in the prior year period

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