Alliance Gaming Reports Results

9 November 2005

LAS VEGAS – (PRESS RELEASE) -- Alliance Gaming Corporation (NYSE: AGI) today announced its unaudited results for the fourth quarter and fiscal year ended June 30, 2005, as well as unaudited restated results for the comparative prior year periods. The Company reported a fourth quarter loss from continuing operations of $(1.0) million, or $(0.02) per share on revenues of $120.7 million, including an inventory write-down of $4.4 million, or $0.07 per share net of tax. For fiscal year 2005, the Company reported a loss from continuing operations of $(20.3) million, or $(0.40) per share on revenues of $484.0 million, including certain inventory and asset write-downs, restructuring costs and refinancing charges that totaled $34.2 million, or $0.51 per share net of tax. These fourth quarter and fiscal year 2005 losses were computed using an effective tax rate of 24%

For the comparable prior year quarter ended June 30, 2004, as restated, the Company reported income from continuing operations of $11.7 million or $0.23 per diluted share on revenues of $151.9 million. For the fiscal year ended June 30, 2004, as restated, the Company reported income from continuing operations of $39.7 million or $0.78 per diluted share on revenues of $480.4 million, including a refinancing charge of $12.3 million, or $0.15 per diluted share net of tax. The fiscal year 2004 results were computed using a tax rate of 35%.

"The past 12 months have been both challenging and productive," said Chief Executive Officer Richard Haddrill. "We revamped our product lines, integrated acquisitions, reorganized management and we believe that we positioned ourselves well for future growth. We have much left to do but we appear to be on the right track as exemplified by our successful showing at the G2E gaming expo in September. We are in the process of finalizing orders with customers for more than 5,000 games related to our 2005 Expo promotions, which is well in excess of our normal level of show-related orders. We expect these orders to be delivered over the next twelve months. Further, despite overall slow market conditions, sales pipelines for both games and systems appear to be strong compared to recent quarters."

"We continue to be on plan with our Alpha game development. We currently have approvals for 31 titles in various gaming jurisdictions. Approximately 50 additional games are under development and have expected release dates scheduled for the next 12 months."

Liquidity and Capital Expenditures

* As of June 30, 2005, cash and cash equivalents totaled $46.6 million, which included approximately $2.7 million held for operational purposes in vaults, cages and change banks and $13.4 million held in jackpot reserve accounts.

* Capital expenditures, including costs to produce proprietary games, totaled $14.0 million for the quarter, equal to that of the prior year quarter. Capital expenditures for fiscal year 2005 totaled $53.2 million, compared to $50.0 million in the prior year.

* During the quarter, the Company exchanged approximately $14.3 million of subordinated debt held by employees, and accrued interest thereon, for approximately 1.0 million shares of common stock, which are treated as shares outstanding for purposes of computing EPS. The remaining $ $14.0 million of subordinated debt may be converted to common stock at the election of the Company.

Bank covenants

As of June 30, 2005, the Company was in compliance with the financial covenants contained in its bank credit agreement. However, the Company is and will be in technical default until the Company delivers to its lenders the audited financial statements for the fiscal year ended June 30, 2005, which it expects to complete in early December 2005.

Restatement of prior period financial statements

On Nov. 2, 2005 the Board of Directors of the Company concluded that the previously issued audited financial statements of the Company for the fiscal years ended June 30, 2003 and 2004 and the related auditors' report thereon, and the unaudited quarterly financial information previously reported for the year ended June 30, 2004 and for the quarters in the nine-month period ended March 31, 2005, should no longer be relied upon and will require restatement. The restatement required the Company to correct certain revenue recognition policies, which generally had the effect of deferring revenue and earnings to later periods than previously reported. The Company also restated its effective tax rate for 2005 to 24%, to reflect tax reserves applied to certain tax credits and to reflect a deferred tax liability related to the Company's consolidation of its European operations.