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Argosy Replaces Leased Slot Machines in Illinois

12 June 2002

LOS ANGELES, California – As reported by Reuters: "Casino operator Argosy Gaming Co. (NYSE:AGY) said on Tuesday it will get rid of most or all of the leased slot machines at its two Illinois casinos, in a cost-cutting move that follows a major, pending tax hike.

"The announcement sparked a sell-off for shares of International Game Technology (NYSE:IGT), the nation's top slot machine maker, as investors worried that other casinos may follow suit if Illinois hikes its maximum gaming tax rate to 50 percent from the current 35 percent, as expected.

"…In a bid to cut costs in the face of higher possible Illinois taxes, Argosy plans to get rid of some or all of the 90 participation games at its two Illinois casinos, most of those leased from IGT, said Argosy Treasurer Dan Marshall.

"He said the machines make up a relatively small 4 percent of the total at the two casinos, but replacement of most or all is expected to save the company about $2 million each year.

"…It is likely that other companies in Illinois will follow suit," wrote Lehman Bros. analyst Joyce Minor in a research note.

"…`Argosy's comments today and the lateral implications (other operators doing the same) are not positive for IGT,' Minor wrote…"

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