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Ameristar Casinos reports record results

2 August 2007

LAS VEGAS, Nevada -- (PRESS RELEASE) -- Ameristar Casinos, Inc. (Nasdaq:ASCA) today announced second quarter results that set records for net revenues, operating income and EBITDA(1).

    -- Continued growth in the second quarter as net revenues increased
       2.7 percent to $253.2 million over prior-year second quarter
    -- EBITDA increased 5.4 percent -- twice the rate of growth in net
       revenues -- to $67.0 million, as compared to the same period last year
    -- Progress continues during second quarter on key growth milestones
       -- Resorts East Chicago transaction expected to close as early as
       -- Ameristar St. Charles destination resort hotel scheduled to open in
       -- Vicksburg casino and parking expansion on target for March 2008
       -- Ameristar earned 75 first-place awards from Annual Casino Player
          survey; all Ameristar-branded hotels won "Best Overall Hotel Casino"

"Ameristar finished another strong quarter with record second quarter results," said John Boushy, Ameristar's CEO and President. "The Company continues to deliver solid financial performance. In the second quarter, net revenues at each of our properties other than Kansas City outpaced the year-over-year change in its respective market. We enhanced or maintained profitability in all of our markets, and our EBITDA performance improvement this quarter was particularly notable at Black Hawk, Council Bluffs and Kansas City. This underscores the continued strength of our business strategy to build a higher quality revenue stream. I would like to take this opportunity to thank all our Ameristar team members for their continued hard work and dedication to delivering outstanding service to our guests and for helping the Company achieve solid results."

    (1) The table at the end of this release reconciles EBITDA, a non-GAAP
        financial measure, to operating income, a GAAP financial measure.

                     Consolidated Selected Financial Data
                 (Dollars in Millions, Except Per Share Data)

                               Three Months Ended     Six Months Ended
                                    June 30,      %       June 30,       %
                                  2007    2006  Change  2007    2006   Change
    Gross revenues               $298.0  $295.8  0.7%  $603.2  $605.9   (0.4%)
    Promotional allowances        (44.8)  (49.2)(9.0%)  (90.8) (103.2) (12.0%)
    Net revenues                 $253.2  $246.6  2.7%  $512.4  $502.7    1.9%

    Operating income              $43.3   $39.6  9.5%   $93.3   $83.2   12.0%
    Operating income margin       17.1%   16.1%  6.2%   18.2%   16.6%    9.6%

    Net income (1) (2)            $17.3   $18.0 (4.2%)  $41.2   $20.6  100.0%

    Diluted earnings per
     share (1) (2)                $0.30   $0.32 (6.3%)  $0.71   $0.36   97.2%

    EBITDA                        $67.0   $63.5  5.4%  $140.8  $129.8    8.5%
    EBITDA margin                 26.5%   25.8%  2.7%   27.5%   25.8%    6.6%

    Cash dividends declared per
     share                        $0.10   $0.09  9.3%   $0.21   $0.19    9.3%

    (1) For the three months ended June 30, 2007, the Company recorded a
        one-time charge related to a state income tax matter that adversely
        impacted net income and diluted earnings per share by $2.3 million
        and $0.04, respectively.

    (2) For the six months ended June 30, 2006, loss on early retirement of
        debt adversely impacted net income and diluted earnings per share by
        $17.1 million and $0.30, respectively.

    Our quarterly financial results were impacted by the following factors:

    -- Ameristar Black Hawk achieved strong financial results and contributed
       significantly to the Company's growth in EBITDA. The property's
       operating income margin and EBITDA margin are up 11.5 percentage points
       and 8.6 percentage points, respectively, from the second quarter of
       2006, which was the first full quarter following the re-branding of the
       property. Ameristar's initial investment to upgrade the property's
       casino and restaurants along with its focus on superior guest service
       and high quality food and gaming experiences are key drivers of our
       continued success at Black Hawk.  The addition of the planned hotel and
       spa will further position it as an Ameristar-class property, which we
       expect to drive even greater growth in the future.
    -- Ameristar Council Bluffs continues to compete effectively, relative to
       its current share of gaming positions in the market, despite the
       primary competitor's larger land-based facility.  Even with the
       increased competition, we continue to see significant improvement in
       operating income and EBITDA and look forward to additional growth
       opportunities after the completion of our recently announced expansion.
    -- Ameristar Vicksburg modestly improved its operating income and EBITDA
       year-over-year, despite a decline in revenue compared to the second
       quarter of 2006 when several Gulf Coast casinos were closed in the
       aftermath of Hurricane Katrina.
    -- Our net revenue growth rates at every property other than Kansas City
       exceeded market growth; however, all of our markets except Black Hawk
       achieved slightly less than expected growth.
    -- Corporate expense increased over the prior year mostly as a result of
       higher stock-based compensation expense and costs associated with our
       deferred compensation plan.
    -- Included in the reported second quarter net income and diluted earnings
       per share results of $17.3 million and $0.30, respectively, is a
       one-time cumulative adjustment to our state income tax expense that
       adversely impacted net income and diluted earnings per share by
       $2.3 million and $0.04, respectively. We do not expect the historical
       basis for this adjustment to impact our effective tax rate for future

Capital expenditures for the second quarter of 2007 totaled $67.6 million. Capital expenditures during the second quarter were primarily related to the hotel project at Ameristar St. Charles ($37.8 million), the Ameristar Black Hawk hotel project ($6.8 million) and our casino expansion at Ameristar Vicksburg ($6.4 million).

Ameristar's commitment to quality casino, restaurants, hotels and entertainment venues has earned it 75 first-place "Best Of" honors in 2007 from Casino Player magazine's "Best of Gaming" annual issue. Each of Kansas City, Council Bluffs, Vicksburg and St. Charles consistently won top honors in eight casino, service and dining awards in its market, including Best Dealers, Best Reel Slots, Best Video Poker, Best Coffee Shop and Best Valet Parking. All Ameristar-branded hotel properties earned the "Best Overall Hotel Casino" honor.

In addition to focusing on current financial performance, we are also implementing plans for future growth at Ameristar. Through our 50/50 growth strategy, we expect to see half of our growth coming from disciplined expansions at selected properties and the other half from strategic acquisitions and new developments. With this strategy, we remain committed to our goal of doubling EBITDA over the next three to five years.

Resorts East Chicago

"We are making progress with our integration planning for Resorts East Chicago as we prepare to complete the acquisition later this year," said Ray Neilsen, Ameristar Co-Chairman and Senior Vice President. "In April we announced our agreement to acquire this property for $675 million in cash. Resorts East Chicago, which is located in East Chicago, Indiana and serves the Chicagoland market, allows the Company to enter an extremely attractive market, diversifies our cash flow, enhances our distribution channels, and provides a platform from which we can substantially grow an already well-positioned property."

Currently, we are working with the Indiana Gaming Commission to complete the licensing process and expect that the completion of the acquisition will occur by the end of the year and could occur as early as September.

After Ameristar completes this acquisition, we intend to make a number of improvements, including enhancing and upgrading the slot product and refreshing selected public areas. The Company expects to re-brand Resorts East Chicago to an Ameristar property within the 12-month period after the acquisition is complete.

In addition, we currently intend to make a number of major capital improvements to the property in order to capture the untapped demand within the dynamic Chicagoland market and maximize the property's profit opportunity. We are developing plans for an expansion of the facility to significantly improve the gaming experience, enhance access to the casino, build additional structured parking and upgrade the non-gaming amenities, all with the objective of creating best-in-class offerings and experiences consistent with the Ameristar brand. We expect to provide more details regarding this expansion after we close the transaction.

Internal Expansion Projects

St. Charles. The Company officially "topped off" the 25-story, 400-room, all-suite hotel at Ameristar St. Charles in June by placing the last beam atop the hotel structure. When completed in December, the hotel will have an indoor/outdoor swimming pool and a 7,000 square-foot full-service spa. This project also includes 19,200 square feet of meeting and conference facilities that were completed in the third quarter of 2006 and an additional 2,000-space parking garage, half of which was opened in February 2007. The remaining spaces are scheduled to be completed along with the hotel in December. This project is expected to cost $265 million and remains on schedule.

Additionally, we are extremely pleased to report that the improvement of the roadway providing primary access to Ameristar St. Charles has been accelerated from 2008 into the current year, with completion coinciding with the opening of the hotel. Through enhanced access and the capacity to accommodate more traffic at peak periods, the road improvements will greatly reduce long-standing access constraints at the property. And lighting, landscaping and other aesthetic improvements will greatly enhance the guest arrival experience and complement the high quality facility Ameristar St. Charles offers. While construction disruption will impact business volumes in the short-term, we believe this project will provide an important advantage for the property to gain steady momentum after opening the hotel, particularly in light of a new competitor opening in downtown St. Louis. In connection with this community improvement project, the road will be renamed Ameristar Boulevard.

A transportation development district and a community improvement district were organized by Ameristar to plan, develop and acquire land for this project. The approximate cost is $20 million and is being funded by proceeds of tax-exempt bonds issued by the districts and advances to the districts by Ameristar, which will be repaid through an additional 2 percent sales tax on non-gaming revenues at the Ameristar property. The acceleration of the road project was accomplished through the intensive efforts and collaboration of the corporate and property teams.

The Company has also decided to add several enhanced amenities to the St. Charles property. A new entertainment venue, expected to cost $15 million, will be constructed in time for the hotel's December 2007 opening. Other enhancements will include a new casino circle bar and improved casino flow and layout. We believe this master plan build out -- the hotel, spa, pool, road improvements, the new entertainment venue and additional upgrades -- will further strengthen Ameristar St. Charles' position as the premier casino resort destination in the area.

Vicksburg. The $98 million casino and parking expansion project at Ameristar Vicksburg continues to progress as planned. Dry-docking the vessel was completed in June, and construction work on the gaming expansion project as well as the 1,000-space parking garage has already started. As a result of this expansion, we are adding 440 gaming positions, which is a reduction from our original estimate of 800. We believe the expansion allows for a more spacious casino layout and, in addition, accommodates a high-limit table games area, while still allowing for more gaming positions as demand grows in the future. Even with the decreased number of gaming positions, we expect to generate the same level of return. The expansion will also add two new restaurants, a VIP club and retail space to the Vicksburg property. The project is expected to be completed in March 2008 and remains on schedule and on budget. When complete, we expect this expansion to further strengthen Vicksburg's long-standing dominant position in the market, as reflected by its 47 percent gaming revenue market share during the second quarter.

Council Bluffs. Ameristar announced an approximately $100 million expansion project at the Company's Council Bluffs property on June 1, which was subsequently approved by the Iowa Racing and Gaming Commission. The expansion will double the current casino floor square footage and add approximately 600 new slot machines and 20 additional table games, including a poker room. By reducing capacity constraints during peak periods and providing an enhanced, more spacious casino experience, we expect this project will increase revenues for our property and grow the market overall. Subject to the receipt of necessary additional regulatory approvals, the Company expects the Council Bluffs expansion to be completed in mid-2009.

Black Hawk. Construction is also proceeding on the site for Ameristar Black Hawk's 536-room, four-diamond-quality hotel. As previously reported, the project has suffered delays due to difficult site conditions. An unexpected relocation of utilities is now complete, and crews are again removing rock in preparation for the construction of the hotel tower. The project's estimated cost is $220 million, and it is scheduled for completion in the second half of 2009. As previously reported, the project may experience additional delays and/or cost increases due to site conditions.

"While we pursue our strategy to double Ameristar's EBITDA over the next three to five years, we have been and remain disciplined in our growth plans," said Gordon Kanofsky, Ameristar Co-Chairman and Executive Vice President. "We continue to be primarily focused on acquiring existing income-generating assets where the integration of the Ameristar brand and management model can significantly improve cash flow -- as we believe is the case with Resorts East Chicago. We also intend to retain financial flexibility to pursue these acquisitions and development projects to achieve our growth objectives."


Based upon results of operations to date, we are providing guidance for the third quarter and revising full-year guidance. Due to the uncertainty of timing, impacts from the acquisition of Resorts East Chicago are not included in our third quarter or full-year estimates.

For the third quarter 2007, we currently estimate operating income of $43 million to $45 million, EBITDA of $67 million to $69 million (based upon anticipated depreciation expense of $24 million), interest expense of $12 million and diluted earnings per share of $0.33 to $0.35. Our third quarter 2007 operating income and EBITDA guidance includes a one-time impact associated with the anticipated construction disruption from the accelerated St. Charles road project of $1.1 million and pre-opening costs for the new St. Charles amenities of $0.7 million.

For the full year 2007, we currently estimate operating income of $169 million to $173 million (decreased from initial guidance of $176 million to $184 million) and EBITDA of $264 million to $268 million (decreased from initial guidance of $272 million to $280 million). Our revised guidance gives effect to $95 million of anticipated depreciation expense and $46 million of anticipated interest expense. We estimate diluted earnings per share of $1.25 to $1.29 (decreased from initial guidance of $1.41 to $1.49).

    Our revised guidance for the full-year 2007 includes the following items:

    -- A one-time anticipated construction disruption impact to operating
       income and EBITDA of $4.4 million due to the acceleration of the road
       improvement project at St. Charles, which is expected to be completed
       to coincide with the hotel opening in December;
    -- A continuation of slightly lower than anticipated revenue growth in all
       our markets except Black Hawk;
    -- $3.7 million of pre-opening costs related to the St. Charles hotel and
       the additional entertainment venue, including $1.1 million of such
       costs not reflected in our initial guidance; and
    -- A $2.3 million one-time cumulative adjustment to our state income tax
       expense that negatively impacted diluted EPS by $0.04 in the second

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