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Majestic Star Casino reports results

Consolidated Results: Three-Month Period Ended June 30, 2007

The Company's net revenues for the three-month period ended June 30, 2007 were $92.9 million, an increase of $7.3 million, or 8.6%, from the same period in 2006. Casino revenues increased $6.2 million, or 6.9%, to $96.1 million. The Majestic Properties contributed an increase in net and casino revenues of $6.8 million and $7.7 million, respectively. During the second quarter the Majestic Properties continued to be aggressive with marketing and promotions in order to drive casino volumes and enhance customer loyalty. At Fitzgeralds Tunica, we experienced higher net revenues of $1.2 million and lower casino revenues of $1.0 million, and at Fitzgeralds Black Hawk, net and casino revenues decreased by $0.6 million and $0.5 million, respectively, all of which is further described below.

The Company expects to report a net loss of $3.9 million compared to a net loss of $2.7 million for the same period in 2006. The $1.2 million increase in net loss from the three months ended June 30, 2006 was mainly due to increased operating expenses totaling $8.2 million, primarily from casino, room, food and beverage, advertising and promotion, and gaming tax expenses, and an $0.8 million loss related to the sale and write-down of obsolete slot machines. Higher interest expense also contributed $0.5 million to the increase in net loss.

For the three-month period ended June 30, 2007, adjusted EBITDA (defined as earnings before interest, taxes, depreciation, amortization, and other non-operating expenses (which is primarily non-usage fees on the credit facility) and certain non-recurring charges) was $20.3 million, compared to adjusted EBITDA of $20.1 million in the same period last year, an increase of $0.2 million, or 0.9%. Company wide adjusted EBITDA margin for the second quarter of 2007 was 21.8% compared to 23.5% in the prior year. The table at the end of this press release reconciles net income (loss) to EBITDA and adjusted EBITDA. See the detailed explanation below as to the usefulness and limitations of using EBITDA and adjusted EBITDA as financial measures.

Consolidated Results: Six-Month Period Ended June 30, 2007

The Company's net revenues for the six-month period ended June 30, 2007 were $184.6 million, a decrease of $0.9 million, or 0.5%, from the same period in 2006. Casino revenues decreased $2.6 million, or 1.3%, to $191.3 million. The Majestic Properties contributed an increase in net and casino revenues of $0.5 million and $3.1 million, respectively, as a consequence of the aggressive marketing and promotions mentioned above. We experienced lower net and casino revenues at Fitzgeralds Black Hawk of $1.3 million and $1.4 million, respectively, and at Fitzgeralds Tunica casino revenues declined $4.2 million, while net revenues were flat with the prior year, all of which is further described below.

The Company expects to report a net loss of $8.6 million compared to net income of $1.0 million for the same period in 2006. The $9.6 million decline in net income was again due to increased operating expenses of $8.0 million, with the principal increases coming in the areas of casino, food and beverage, and advertising and promotional expenses, and a loss on sale and write-down of slot machines. A $0.9 million increase in interest expense also contributed to our net loss.

For the six-month period ended June 30, 2007, adjusted EBITDA was $38.8 million, compared to adjusted EBITDA of $46.3 million in the same period last year, a decrease of $7.5 million, or 16.1%. The Company wide adjusted EBITDA margin was 21.0% compared to 25.0% in the prior year.

Total cash and cash equivalents at June 30, 2007 was $27.6 million as compared to $25.5 million at December 31, 2006. Total debt outstanding at June 30, 2007 was $607.6 million compared to $597.1 million at December 31, 2006. The Company had $26.9 million available on its $80.0 million credit facility at June 30, 2007.

Majestic Star and Majestic Star II ("Majestic Properties")

The Majestic Properties' net revenues increased from $56.1 million in the second quarter of 2006 to $62.9 million in the second quarter of 2007, and from $125.6 million in the six-month period ended June 30, 2006 to $126.1 million in the same period in 2007. Increases in net revenues were due to improved casino, and food and beverage revenues, offset by higher promotional allowances. Casino revenues improved $7.7 million, or 13.3%, to $65.8 million in the second quarter of 2007 and $3.1 million, or 2.4 %, to $132.3 million in the six-month period ended June 30, 2007. The increase in casino revenues in the second quarter of 2007, as compared to the prior year quarter, resulted in part from a $3.9 million improvement in table games revenue primarily due to a 54.3% increase in table games handle and a $0.4 million increase in poker revenue. In May 2007 we opened a new baccarat room which has enhanced our table games volumes from Asian customers. A 2.7% increase in slot machine coin-in along with a slightly higher hold percentage resulted in a $3.4 million increase in slot revenue. The increase in casino revenues of $3.1 million in the six-month period ended June 30, 2007, as compared to the same period in 2006, was mainly due to a 15.9% increase in table games handle; however, our table game revenues would have been even stronger had we not experienced a 0.6% decline in hold percentage. Poker revenue also increased $0.8 million in the first six months of 2007 as compared to the same period in 2006. Food and beverage revenues increased $2.6 million, or 291.2 %, to $3.5 million in the second quarter of 2007 and $4.2 million, or 199.0%, to $6.3 million in the six-month period ended June 30, 2007. The improvement in food and beverage revenues resulted from our taking over the restaurant operations within the Buffington Harbor pavilion on February 1, 2007. These food operations were previously operated by a third party. Partially offsetting our greater casino, and food and beverage revenues were higher promotional allowances of $4.0 million, or an 81.8% increase, to $8.9 million in the second quarter of 2007 and $7.4 million, or a 75.8% increase to $17.2 million in the six-month period ended June 30, 2007. Management has been aggressive with promotions in order to drive casino volumes and enhance customer loyalty.

Adjusted EBITDA decreased in the three- and six-month periods ended June 30, 2007 to $15.2 million and $29.7 million, respectively, from $15.4 million and $35.2 million, respectively, in the same periods last year. In the three- and six-month periods ended June 30, 2007, the adjusted EBITDA margins were 24.1% and 23.6%, respectively, compared to 27.4% and 28.1% in the similar prior year periods. In computing adjusted EBITDA in the three and six-months ended June 30, 2007, the Company is adding back approximately $0.8 million of losses related to the sale and write-down of obsolete slot machines.

Fitzgeralds Tunica

Fitzgeralds Tunica's net revenues increased to $22.4 million in the second quarter of 2007 from $21.2 million in the same quarter last year. Net revenues for the six-month period ended June 30, 2007 came in at $42.9 million, which was flat with the prior year. Casino revenues declined to $21.9 million in the second quarter of 2007 from $22.9 million in the second quarter of 2006 and to $42.0 million in the six-month period ended June 30, 2007 from $46.3 million in the same period last year. The decline in casino revenues is attributable to the implementation of downloadable promotional credits on the property's slot machines. The property does not recognize slot revenues as these promotional credits are played. The impact to slot revenues in the three- and six-month periods ended June 30, 2007 was $2.2 million and $4.4 million, respectively, when compared to the prior year periods. The property continues to show improved table games handle, which increased 26.2% over the prior year second quarter and 27.0% over the first six months of last year. Table game win percentages continue to fluctuate. While the property's table game win percentage improved 1.4% in the second quarter, we are still down 3.3% from the prior year six month period. Promotional allowances declined $1.7 million from the second quarter of 2006 and $4.0 million from the first half of 2006 due to the elimination of the majority of cash coupons redeemed at the casino. The previously mentioned downloadable promotional credit program has replaced our cash coupon program. Room revenues for the six-month period ending June 30, 2007, as compared to the year earlier period, declined $0.3 million primarily due to a hotel room remodel project, which was not completed until April 2007.

EBITDA for the three-month period ended June 30, 2007 increased to $4.7 million from $4.1 million in the year earlier period and EBITDA margin increased to 21.0% from 19.3%. For the six-month period ended June 30, 2007, EBITDA decreased to $8.2 million from $9.9 million in the year earlier period and the EBITDA margin declined from 23.1% to 19.2%. The decrease in EBITDA and the EBITDA margin in the six-month period ended June 30, 2007 resulted primarily from a low win percentage in table games and increased casino bad debts, particularly in the table games department, junket costs, expenses associated with producing our direct mail, and player development events. These increased expenses were offset by a decline in gaming tax expense due to lower casino revenues.

Fitzgeralds Black Hawk

Fitzgeralds Black Hawk's net revenues were $7.6 million and $15.6 million, respectively, for the three- and six-month periods ended June 30, 2007 down $0.6 million and $1.3 million as compared to the year earlier period. These declines in net revenues directly resulted from declines in casino revenue of $0.5 million and $1.4 million, respectively, in the three- and six-month periods ended June 30, 2007. Part of the decrease during the second quarter of 2007 resulted from reduced traffic flow from repaving and rock mitigation work on Highway 6 (the main highway) into Black Hawk, which closed the road until 3:30 PM daily during the weekdays from April 30 to May 25. Also, our revenues continue to be impacted by the improved facilities and marketing efforts of our competitors.

EBITDA for the three- and six- month periods ended June 30, 2007 declined $0.4 million and $0.5 million, respectively, from the year earlier period to $2.1 million and $4.4 million, respectively. EBITDA margin for the second quarter of 2007 was 28.0% as compared to 30.8% for the year earlier period. For the six months ended June 30, 2007, as compared to the year earlier period, EBITDA margin percentage decreased from 28.7% to 28.0%, respectively.

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