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Analyst Upgrades Argosy Stock

2 July 2002

NEW YORK --CIBC World Markets analyst William Schmitt has upgraded the stock of riverboat casino operator Argosy Gaming Co. from "buy" to "strong buy" following a recent decision raising casino taxes in Indiana.

The Indiana Legislature last week approved a plan to raise taxes and allow dockside gambling. Operators may choose between a flat 22.5 percent tax, up from 20 percent, or may pay a higher, graduated rate if they dock their boats.

"We believe the resolution of this issue removes the uncertainty and mitigates much of the risk to the story," Schmitt said.

Schmitt also has reduced his stock price target on Illinois-based Argosy, as well as dropping earnings per share estimates on the company for 2002 and 2003.

"We now believe the worst is behind AGY ... We expect AGY will choose to continue to cruise, as it appears the tax impact will be less than if it remained dockside."

Schmitt reduced a 12 month price target from $39 to $38. Earnings per share estimates fell from $2.99 to $2.93 in 2002 and from $2.93 to $2.75 in 2003.

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