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Argosy Gaming Profit Down

ALTON, Illinois – (PRESS RELEASE) -- Argosy Gaming Company (NYSE: AGY) today announced first quarter results for the period ended March 31, 2004. Earnings per diluted share ("EPS") were $0.13 on net income of $4.0 million, as compared to $0.50 per diluted share on net income of $14.7 million for the first quarter of 2003. Included in the results of the first quarter of 2004 are after-tax expenses of $14.8 million, or $0.50 per share, associated with the February 2004 refinancing of the Company's outstanding 10-3/4% notes due 2009.

Net revenues were $264.1 million for the first quarter of 2004, up $27.8 million, or 12% from $236.3 million in the first quarter of 2003. Of note, net revenues at Argosy's Riverside property increased 62%, or $14.6 million, from the first quarter of the prior year. At Argosy's Lawrenceburg property, net revenues also grew by $14.6 million, or 15% over the first quarter of 2003. Net revenues at the Company's Illinois properties declined 5%, or $4.2 million, primarily as a result of actions taken by the Company following the increase in the gaming and admission tax rates there.

Argosy's EBITDA (earnings before interest, taxes, depreciation and amortization) for the quarter was up 16% year over year, at $67.3 million for the first quarter 2004 compared to $58.2 million for the first quarter 2003. The increase is primarily related to improved results at the Company's Lawrenceburg and Riverside properties, partially offset by increased gaming and admission tax rates. EBITDA improved at each of the Company's properties compared to the same quarter in 2003, with the exception of the Company's two Illinois properties, where increased gaming and admission tax rates more than offset operational efficiencies.

"We're thrilled by the response to our investment in Riverside. To have EBITDA more than double from the same quarter last year is outstanding," said Richard J. Glasier, President and CEO of Argosy. "We're especially pleased that the new facility has been successful not only in bringing back guests who decided to forego playing at Argosy while the construction was underway, but in growing the entire Kansas City market, as new visitors are attracted to the property."

The Company's EBITDA margin (EBITDA as a percent of net revenues) for the quarter was 26%, up from 25% the same quarter last year. This improvement was achieved despite the increase in gaming and admission taxes as a percent of net revenues from 34% in the first quarter of 2003 to 35% in 2004. At Argosy's Riverside property, EBITDA margin increased almost eight percentage points for the first quarter of 2004, from 23.3% to 31.2%, and matched the 31.2% EBITDA margin achieved at the Company's Sioux City property. The highest EBITDA margin performance for the Company was achieved in Lawrenceburg, where it was 32.3% for the first quarter of 2004, up from 29.8% during the same quarter in 2003. The Empress Casino Joliet was also able to improve its EBITDA margin, from 24.0% in 2003 to 24.6% for the first quarter of this year, despite a decrease in revenues and increase in gaming and admission taxes at the property.

"Our management teams did an excellent job of translating revenue growth into EBITDA growth this quarter," said Glasier. "In several cases, the percentage increase in EBITDA was more than twice the percentage increase in casino revenues."

Capital Structure

Capital spending during the quarter ended March 31, 2004 was $30.7 million and consisted of maintenance capital and residual payments for construction of the new casino at the Company's Riverside property, which opened in December 2003.

The Company has decided to move the riverboat formerly used in Riverside to Sioux City to replace the boat currently in use there. Argosy expects to spend approximately $8 million to $10 million for relocation and renovation of the vessel. Completion is anticipated at the end of the third quarter of 2004, and will include a 150-unit increase in the number of slot machines. The Company is also considering additional capital investment at its Riverside and Lawrenceburg properties.

Argosy continues to transition to Ticket-In, Ticket-Out ("TITO") slot machines as part of its maintenance capital plan based on the anticipated operating efficiencies afforded by the technology, as well as consumer preference for the product. Approximately 55% of the Company's slot machines are currently operating with TITO technology, and an additional 30% are TITO- ready and available for use, pending regulatory approval. The Company began utilizing TITO machines in Alton and Joliet earlier this month. Subject to receiving final approval from the state of Illinois, the Company expects to be essentially 100% TITO-operational by the end of the year.

In February of 2004, the Company refinanced $329 million out of a total of $350 million of the Company's 10-3/4% Notes due 2009 with a new issue of $350 million in notes at a rate of 7%. The new notes mature in 2014. Because capital spending and the costs associated with the refinancing exceeded the free cash flow generated by operations during the quarter, Company debt increased from $870.2 million as of December 31, 2003 to $894.6 million as of March 31, 2004.

Guidance

Argosy announced the following updates to its previously issued earnings guidance:

-- The Company is redeeming the remaining outstanding $21 million in 10-3/4% Notes due 2009 on June 1, 2004. The Company expects to incur an after-tax charge of approximately $0.02 per share in the second quarter related to this transaction.

-- The Company expects capital spending for the balance of 2004 to be between $40 million and $45 million, including final payments for the new casino at Riverside and the renovation and transfer of the Riverside boat to Sioux City. Capital spending for the full year of 2004 is expected to between $70 million and $75 million.

-- On an annualized basis, the positive impact of additional capacity in Sioux City and the efficiencies of dockside operations are expected to offset the recently passed gaming tax increase in Iowa. However, the tax increase is expected to have a small negative impact on the 2004 results.

Based on these factors and the Company's stronger than expected first quarter performance, Argosy now estimates EPS for 2004, after deduction of $0.52 in charges to EPS in connection with the refinancing of the Company's $350 million of 10 3/4% notes, to be in the range of $1.73 to $1.83.

Argosy will host a conference call for interested parties on April 27, 2004, at 11:00 a.m. EDT to review its first quarter 2004 results. Call participants should dial (706) 634-1306 ten to fifteen minutes before the call and reference ID #6681757. The call will be broadcast live via the Internet and may be accessed through our web site at www.argosycasinos.com . A replay of the call will be available at our web site through May 2, 2003.

Argosy Gaming Company is a leading owner and operator of casinos and related entertainment and hotel facilities in the midwestern and southern United States. Argosy owns and operates the Alton Belle Casino in Alton, Illinois, serving the St. Louis metropolitan market; the Argosy Casino- Riverside in Missouri, serving the greater Kansas City metropolitan market; the Argosy Casino-Baton Rouge in Louisiana; the Argosy Casino-Sioux City in Iowa; the Argosy Casino-Lawrenceburg in Indiana, serving the Cincinnati and Dayton metropolitan markets; and the Empress Casino Joliet in Illinois serving the greater Chicagoland market.

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