Dover Downs Gaming & Entertainment Results Up

27 January 2005

DOVER, Delaware – (PRESS RELEASE) -- Dover Downs Gaming & Entertainment, Inc. (NYSE: DDE) today reported results for the three months and year ended December 31, 2004.

Pro-forma earnings per share for the fourth quarter of 2004 were $.15 per diluted share compared with pro-forma earnings of $.12 per diluted share for the fourth quarter of 2003. Pro-forma net earnings improved 16.8% to $3,845,000 compared with pro-forma net earnings of $3,292,000 for the fourth quarter of 2003.

The disclosure of pro-forma results is necessary as there were two items affecting the comparability of the fourth quarter of 2004 financial statements with the fourth quarter of 2003 financial statements:

1) Previously, the Company recorded the expense for customer reward points when they were redeemed by the customer, and disclosed the total outstanding obligation in its footnotes in accordance with generally accepted accounting principles. As a result of a fourth quarter change in how its customers can use their reward points, the Company was required to change its accounting. The Company must now expense reward points as they are earned by the customer, and as a result, the fourth quarter statement of earnings includes a one-time, net non-recurring charge of $2,250,000 to record the total points earned during the last nine years that were outstanding at the date of the program change. The earnings per share effect of the change in policy is $.05 per diluted share in the fourth quarter of 2004.

2) As previously disclosed, the Company received $1,300,000 in the fourth quarter of 2003 from its insurance carrier to settle a business interruption claim related to the opening of the Dover Downs Hotel and Conference Center. The earnings per share effect of the insurance proceeds was $.03 per diluted share in the fourth quarter of 2003.

Without the pro-forma adjustments, net earnings for the fourth quarter of 2004 were $2,507,000, or $.10 per diluted share, compared with $4,063,000 or $.15 per diluted share for the fourth quarter of 2003.

The Company's gross revenues for the fourth quarter of 2004 were $56,532,000 compared with $51,310,000 for the fourth quarter of 2003. Slot win improved more than 15% compared with the fourth quarter of 2003, as the Company's share of the Delaware slot market reached its highest levels to date.

"We are extremely happy with our fourth quarter results, as well as our slot win growth for 2004 as a whole," stated Denis McGlynn, President and Chief Executive Officer. "Our level of play is increasing, but more importantly, our level of play from our Club customers is increasing faster. The increase in rated play has, and will continue to allow us to more effectively market to our customers with our recently installed slot data system."

Occupancy levels for the Dover Downs Hotel and Conference Center remained strong, averaging more than 93% for the fourth quarter and almost 95% for calendar 2004.

The Company continued the transformation of its casino floor to the new ticket in/ticket out technology, with 528 ticket in/ticket out games on line at the end of December 2004. The Company expects to have approximately 1,900 ticket in/ticket out games by the end of 2005.

For the year ended December 31, 2004, gross revenues increased 9.7% to $227,717,000 compared with $207,499,000 for 2003.

On the pro-forma basis described above, net earnings were $17,719,000 or $.67 per diluted share for the year ended December 31, 2004 compared with $16,466,000 or $.62 per diluted share for the year ended December 31, 2003. Without the pro-forma adjustments, net earnings were $16,381,000 or $.62 per diluted share compared with $17,237,000 or $.65 per diluted share for 2003.

The Company announced yesterday that its Board of Directors declared a quarterly dividend of $.06 per share. The dividend is payable on March 10, 2005 to shareholders of record at the close of business on February 10, 2005.

Also during the quarter, the Company successfully completed a self tender of 1,600,000 shares of Class A common stock and 1,040,421 shares of common stock at a purchase price of $12.00 per share. The repurchase represented approximately 10% of the Company's outstanding shares.