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Elixir Gaming to raise $50 million

The Company expects to use the net proceeds from the financing to repay debt, fund the purchase of electronic gaming machines pursuant to its agreement with Elixir Group Limited ("Elixir Group") and for general working capital purposes. To date, Elixir Group has delivered agreements for the placement of 3,294 electronic gaming machines to be placed on a long-term participation basis in gaming venues in several Asian-Pacific markets.

In conjunction with the financing, Elixir Gaming also announced it has entered into an exchange agreement with Elixir Group whereby certain outstanding vested and unvested warrants issued to Elixir Group pursuant to the "Earn-In" provision of the June 2007 Securities Purchase and Product Participation Agreement will be cancelled in exchange for Elixir Gaming's issuance of its common shares. The transactions under the exchange agreement are subject to the approval of the shareholders of Elixir Gaming. In total, Elixir Group currently has 38 million vested warrants to purchase a total of 38 million Elixir Gaming shares and 66 million unvested warrants which, upon vesting, would allow Elixir Group to purchase up to an additional 66 million Elixir Gaming shares based upon agreements for and placements of slot machines on a participation basis. Pursuant to the exchange agreement, Elixir Group will exchange 12 million of its 38 million vested warrants for 4.8 million Elixir Gaming shares. Elixir Group has also agreed that it will exchange its rights for up to an additional 66 million unvested warrants for rights to up to 26.4 million Elixir Gaming shares. The parties exchange of the 66 million unvested warrants is subject to the satisfaction of the vesting and performance conditions set forth in the warrants relating to Elixir Gaming's agreements for and placements of slot machines on a participation basis.

The exchange agreement was negotiated and approved by a Special Committee of the Board of Directors of Elixir Gaming, comprised solely of independent directors of the company. The Special Committee received a fairness opinion from Capstone Valuation Services, LLC that the terms of the warrant for share exchange are fair to the minority shareholders of Elixir Gaming, (that is the shareholders other than Elixir Group). The transactions under the exchange agreement are subject to the approval by Elixir Gaming's shareholders at the company's Annual Shareholders' Meeting to be held in December 2007. Elixir Gaming intends to ask that the exchange agreement be approved by a majority of the shares in attendance at the meeting other than those held by Elixir Group.

Gordon Yuen, Executive Chairman and CEO of Elixir Gaming, commented, "We believe the equity offering and warrant transaction represent important positive developments in the growth of Elixir Gaming. This financing provides us with financial flexibility to purchase the electronic gaming devices necessary to fulfill the placement commitments announced to date and to continue pursuing our strategies for expansion. We appreciate the confidence of the participating investors in Elixir Gaming and our long-term plans for growth.

"With the proposed revisions to the warrant agreements, we will simplify our capital structure and materially reduce the fully diluted share count. We value the support of our major shareholder in facilitating the warrant-equity exchange."

The shares of common stock sold in the private placement have not been registered under the Securities Act of 1933, as amended, or state securities laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission ("SEC") or an applicable exemption from the registration requirements. The shares were offered and sold only to a limited number of accredited investors. The Company has agreed to file a registration statement with the SEC covering the resale of the common stock issued in the private placement. This press release does not constitute an offer to sell or the solicitation of an offer to buy any of these securities.

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