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Argosy Gaming Results Down

Net revenues were $236.3 million for the first quarter of 2003, compared to $241.7 million in net revenues reported the first quarter of 2002. Net revenues at the Company's Lawrenceburg property benefited from the implementation of dockside operations, and were up 3% versus the same quarter in 2002. In the Chicagoland market, net revenues for the Empress Casino Joliet were 10% lower than the same quarter in 2002, due primarily to customer preference for barge-based facilities, such as those operated by the Company's two nearest competitors. The Company will open its own barge-based facility in May 2003. Also negatively affecting the Joliet property was the implementation of dockside gaming in Northern Indiana in August 2002.

In addition, the increase in Illinois gaming and admission tax rates last year permits the Company's competitors in states adjacent to Illinois to spend more on marketing without impacting their overall operating margins. Net revenues at the Argosy Alton Belle were down 6% for the quarter compared to the first quarter in 2002, due to increased capacity in the St. Louis market from substantial capital investments by a competitor in the market last August. In Riverside, quarter over quarter net revenues were approximately 6% lower primarily due to construction disruption, as work on the new casino facility continues. The Company's Sioux City project saw an immediate benefit from the recently completed remodeling of the property, and net revenues were up 5% from the same quarter last year.

The Company reported EBITDA (earnings before interest, taxes, depreciation and amortization) of $58.2 million for the first quarter 2003, as compared to $74.6 million for the first quarter 2002. The decrease is primarily related to year-over-year increases in gaming and admission tax rates. The operating margin (EBITDA as a percent of net revenues) for the quarter was 25%, down from 31% the same quarter last year. The Company estimates that the operating margins would have been 30%, or down less than 1%, had last year's first quarter tax rates been applied to first quarter 2003 casino revenues.

At the Company's Alton property, operating margins were down for the quarter due primarily to the tax increases and competitive pressures discussed above. Operating margins at the Company's Joliet property for the first quarter 2003 were 24.0%, or 7.6 percentage points lower than in the first quarter of 2002, essentially all of which was due to the impact of last year's tax increases. The property's operating margins were also negatively impacted by increased marketing costs in the quarter in anticipation of the opening of its new barge next month. Lawrenceburg's operating margins would have been approximately 7.5 percentage points higher from the reported 29.8% for first quarter 2003 had the first quarter 2002 tax rates been applied to this quarter's revenues.

In addition, net income decreased approximately $0.03 per share due to an increase in the effective income tax rate from 41.5% in first quarter 2002 to 45% in first quarter 2003.

Capital Structure

Capital spending during the quarter ending March 31, 2003 was approximately $33 million. Argosy expects to spend approximately $115 million to $130 million incrementally by year-end.

The Company's $6 million support facility renovation at its Sioux City property was completed in early March. The project consisted of a 22,000 square-foot barge addition, which includes a new Outfitters Grill restaurant, an Argosy Preferred Welcome Center, a grand atrium entrance and a spacious new party room. The new landing facility also houses all of the casino's administrative offices, which were previously located at a satellite facility.

Construction at the Company's two remaining capital projects is well underway. The Company currently expects its new barge facility at Joliet to be completed in mid-May, at a cost of approximately $40 million. The Joliet casino will operate at or near the maximum number of allowable gaming positions throughout the transition from the two existing boats to the new barge.

"We couldn't be more excited about our upcoming grand opening," said Glasier. "Guests have clearly indicated their preference for barge-based casinos, and our property will soon offer a terrific gaming experience on the newest barge in the area. We expect to see the full financial benefit of this project beginning in the third quarter."

Construction of the new $105 million casino expansion at the Company's Riverside property is proceeding on schedule and on budget. The project includes a new barge facility with a 50% increase in gaming positions. The Company expects to have the project completed near the end of the year.

The Company is also transitioning to Ticket-In, Ticket-Out ("TITO") slot machines as part of its maintenance capital plan based on the anticipated efficiencies afforded by the technology, as well as consumer preference for the product. Approximately 245, or 50%, of the slot machines in the Argosy Casino-Sioux City are TITO. The Company's Lawrenceburg property is now operating close to 900 TITO machines, which represent 40% of the total available.

Approximately 200 TITO machines are operating at the Company's Riverside property, with the full transition to coincide with the completion of the new casino barge. The Company's Baton Rouge property is scheduled to begin its field trial on May 19, 2003, with 59 machines. Illinois has not approved TITO machines for use to date. However, the Company is purchasing TITO-capable machines for its Illinois properties during the normal replacement cycle.

As a result of these capital improvement projects, the Company reported that debt was up slightly from $890.8 million as of December 31, 2002 to $893.1 million as of March 31, 2003. Of the $893.1 million, $61.7 million was outstanding under the revolving portion of its senior secured credit facility, as compared to $58.3 million at December 31, 2002.

Legislative Update

The Governor of Illinois recently put forward a proposal to substantially increase gaming and admission taxes in the state. If the Governor's proposal is approved, the Company will likely take steps at its Alton and Joliet casinos to mitigate the impact of the tax increase. Potential actions could include reducing the amount spent on marketing, implementing admission fees at the properties and reducing the hours of operation to benefit from a corresponding decline in operational costs. The Company continues to favor the "Better Deal for Illinois", an industry led-initiative that would generate additional revenues for the state and encourage investment and growth at the Illinois properties, as an alternative.

Argosy Gaming Company is a leading owner and operator of riverboat 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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