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Casino Data Systems Reports Record Quarterly Earnings

For the quarter, the company posted $20.2 million, its third-highest quarterly revenue total. In comparison with other second quarters, this total is second only to fiscal 1999 second-quarter revenues of $22.8 million, the highest revenue figure for any quarter in company history.

The company reported its highest quarterly operating income ever at $4.4 million compared to $2.4 million for the same quarter of the prior year. This $2.0 million or 86% increase was primarily driven by design and manufacturing efficiencies in the company's Games division.

These efficiencies, combined with the sales mix, increased the company's gross margin percentage to 57% as compared to 44% for the prior year's second quarter. Also contributing to the increase in operating income were lower selling, general and administrative expenses largely due to lower legal expenses.

Net income increased 61% quarter over quarter from $1.9 million or $0.11 per diluted share to $3.1 million, or $0.17 per diluted share.

The company posted its second-highest revenue for a six-month period ending June 30 at $37.0 million. Revenue for the prior year's comparable period of $38.5 million, remains the highest ever posted by the company for the first six months of a fiscal year.

Six-month operating income was $6.6 million, an increase of 160% over the $2.5 million reported for the first six months of the prior year. Gross margin for the first six months of 2000 increased to 58% as compared to 44% for the prior year period. Six-month net income of $4.7 million, or $0.26 per share basic, $0.25 diluted, increased 121% from $2.1 million, or $0.12 per basic and diluted share for the prior year period.

The company also reported the following highlights from its June 30, 2000 balance sheet:

-- No long-term debt

-- Unrestricted cash and investments of $20.4 million

-- Net working capital of $62.2 million

-- Total assets of $117.6 million

                         CASINO DATA SYSTEMS
                       Statements of Operations
           Three and Six Months Ended June 30, 2000 and 1999
                              (Unaudited)

                            Three Months Ended      Six Months Ended
                                June  30,               June 30,
                             2000       1999        2000       1999
                               (in thousands, except per share data)

Revenue
Oasis Systems             $ 8,235    $ 8,187     $16,270    $15,083
Gaming Devices              8,931     10,741      14,539     15,435
Recurring Revenue           1,029      1,952       2,406      4,152
Signs                       1,333      1,449       2,331      2,656
TurboPower                    678        439       1,456      1,179
                           20,206     22,768      37,002     38,505

Cost of goods sold          8,637     12,677      15,658     21,363
Gross margin               11,569     10,091      21,344     17,142

Costs and expenses
Selling, general and
  administrative            4,217      5,084       9,043     9,261
Research and
  development               1,988      1,583       3,745     3,223
Depreciation and
  amortization                942      1,049       1,900     2,100
                            7,147      7,716      14,688    14,584

Income from operations      4,422      2,375       6,656     2,558
Other income                  416        625         638       737
Income before income
  tax                       4,838      3,000       7,294     3,295
Income tax expense          1,693      1,050       2,553     1,153
Net income                $ 3,145    $ 1,950     $ 4,741   $ 2,142

Basic net income per
  common share             $ 0.17     $ 0.11      $ 0.26    $ 0.12
Diluted net income
  per common share         $ 0.17     $ 0.11      $ 0.25    $ 0.12

Basic weighted average
  shares outstanding       18,458      18,143     18,437    18,105
Diluted weighted
  average shares
  outstanding              18,796      18,498     18,763    18,345
-0-

                          CASINO DATA SYSTEMS
                            Balance Sheets
               As of June 30, 2000 and December 31, 1999
                              (Unaudited)


                                            6/30/00       12/31/99
                                                (in thousands)

ASSETS
Current assets
Cash - unrestricted                        $ 17,130       $  6,866
Cash - restricted                             1,830          2,389
Investments ($1,698 and $1,309,
  respectively are restricted)                5,002          2,581
Accounts and notes receivable, net           24,423         25,445
Inventory, net                               24,185         25,600
Other current assets                          2,085          2,143
                                             74,655         65,024

Property and equipment, net                  15,877         17,762
Investments - restricted                     14,344         14,517
Deferred tax asset, net                      10,172         10,172
Notes receivable                                348            539
Intangible assets, net                          104            122
Software development, net                     1,693          2,362
Other assets                                    398            389
                                             42,936         45,863

Total assets                              $ 117,591      $ 110,887

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
Current portion of long-term debt         $      --      $     214
Accounts payable                              3,538          1,427
Accrued expenses                              8,639          8,567
Accrued slot liability                          271            252
                                             12,448         10,460

Non current liabilities
Accrued slot liability                       17,730         17,901
                                             17,730         17,901

Shareholders' equity
Common stock                                 85,110         84,964
Accumulated earnings (deficit)                2,303         (2,438)
                                             87,413         82,526

Total liabilities and shareholders'
  equity                                  $ 117,591      $ 110,887

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