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Seneca Gaming Results Up

NIAGARA FALLS, New York – (PRESS RELEASE) -- Seneca Gaming Corporation (SGC) today reported its second quarter financial results for the three months ended March 31, 2005 (Second Quarter 2005).

SGC is a wholly owned, tribally chartered corporation of the Seneca Nation of Indians (Nation) that operates all of the Nation's Class III gaming operations in Western New York. SGC, through its wholly owned subsidiaries, Seneca Niagara Falls Gaming Corporation (SNGFC) and Seneca Territory Gaming Corporation (STGC), operates two casinos in Niagara Falls, New York (Seneca Niagara Casino) and Salamanca, New York (Seneca Allegany Casino), respectively.

SGC was chartered by the Nation in August 2002 and opened the Seneca Niagara Casino and Seneca Allegany Casino on December 31, 2002 and May 1, 2004, respectively. Since the opening of the Seneca Allegany Casino occurred approximately a year and a half after the Seneca Niagara Casino, the comparisons discussed below between the Second Quarter 2005 and the three months ended March 31, 2004 (Second Quarter 2004), and comparisons between the six months ended March 31, 2005 and the six months ended March 31, 2004, are not directly comparable.

Second Quarter Fiscal 2005 Financial Results Summary

Consolidated Revenues and EBITDA. For the Second Quarter 2005 consolidated net gaming revenues were $100.5 million compared to $74.1 million for the Second Quarter 2004, or a 36% increase. Our net revenues during the comparative periods also increased from $78.4 million to $106.3 million, or a 36% increase. SGC's consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) was $37.9 million for the Second Quarter 2005, compared to $31.9 million for the Second Quarter 2004, or a 19% increase.

Seneca Niagara Casino Revenues and EBITDA. Although our consolidated net revenues during the comparative period increased by 36%, we experienced a 5% decline in net gaming revenues at our Seneca Niagara Casino during the comparative periods. For the Second Quarter 2005, the Seneca Niagara Casino net gaming revenues were $70.2 million compared to $74.1 million in the Second Quarter 2004, or a 5% decrease. Net revenues for the Second Quarter 2005 also declined from $78.4 million to $74.3 million during the comparative periods, or a 5% decrease. Seneca Niagara Casino generated EBITDA for the Second Quarter 2005 and Second Quarter 2004 of $28.8 million and $32.9 million, respectively, a decrease of 12%.

A significant portion of the overall revenue decline at the Seneca Niagara Casino is attributable to a decrease in revenues from our table games. Table games revenue decreased from $14.6 million to $11.5 million, or 21%, during the comparative periods. The amount of money wagered, or dropped, at the Seneca Niagara Casino table games during the comparative periods declined from $86.7 million to $78.0 million and our hold percentage decreased by 13%. We attribute the decline in table games revenues to several factors including, but not limited to, the opening of the Seneca Allegany Casino, which has attracted a few of our larger table game players that live closer to the Seneca Allegany Casino, unusually lower hold percentage as one patron won in excess of $600,000 during the quarter, increased competition from the recently opened Niagara Fallsview Casino Resort, in Niagara Falls, Canada, harsher winter weather, and one less gaming day in the Second Quarter 2005 compared to the Second Quarter 2004 due to 2004 being a leap year.

Seneca Allegany Casino Revenues and EBITDA. As mentioned above, the Seneca Allegany Casino was not operational in the Second Quarter 2004. During the Second Quarter 2005, Seneca Allegany Casino had net gaming revenues and net revenues of $30.3 million and $31.9 million, respectively. Seneca Allegany Casino generated $9.6 million of EBITDA in the Second Quarter 2005.

Consolidated Net Income. Our consolidated net income for the Second Quarter 2005 and Second Quarter 2004 was $21.6 million and $23.7 million, respectively, or a 9% decrease. The $2.1 million decrease represents reduced earnings from our Seneca Niagara Casino and higher interest costs associated with the May 2004 offering of $300 million 7 1/4% Senior Notes, and the interest costs from having borrowed an additional $22.7 million available under SNFGC's existing term loan in April 2004.

Six Months Ended Fiscal 2005 Financial Results Summary

Consolidated Revenues and EBITDA. For the six months ended March 31, 2005, consolidated net gaming revenues were $202.4 million compared to $142.0 million, or a 43% increase. Our net revenues during the comparative periods also increased from $150.1 million to $214.2 million, or a 43% increase. Our consolidated EBITDA was $76.3 million for the six months ended March 31, 2005 compared to $59.3 million for the six months ended March 31, 2004, or a 29% increase.

Seneca Niagara Casino Revenues and EBITDA. Seneca Niagara Casino net gaming revenues were $141.4 million and $142.0 million for the six months ended March 31, 2005 and 2004, respectively. Included in the six months ended March 31, 2005 net gaming revenues is $1.4 million of Class II poker revenues, which operation, as discussed below, are no longer operated by SGC but by the Nation directly. Net revenues for the six months ended March 31, 2005 and 2004 were $149.9 million and $150.1 million, respectively. Seneca Niagara Casino generated EBITDA for the six months ended March 31, 2005 and 2004 of $57.2 million and $60.5 million, respectively, a decrease of $3.3 million, or 5%. The decrease is attributed to the factors discussed above in "Second Quarter Fiscal 2005 Financial Results Summary - Seneca Niagara Casino Revenues and EBITDA".

Seneca Allegany Casino Revenues and EBITDA. Seneca Allegany Casino had net gaming revenues and net revenues of $61.0 million and $64.3 million, respectively, for the six months ended March 31, 2005. Included in the six months ended March 31, 2005 net gaming revenues is $1.9 million of Class II poker, video lottery terminals, and bingo revenues, which operations, as discussed below, are no longer operated by SGC but by the Nation directly.

Consolidated Net Income. Our consolidated net income for the six months ended March 31, 2005 and 2004 was $42.7 million and $42.8 million, respectively. This decrease is attributable to the factors discussed above in "Second Quarter Fiscal 2005 Financial Results Summary".

Termination of Class II Operations

Effective January 1, 2005, SGC discontinued all of its Class II gaming operations. These Class II operations are now directly managed by the Nation. The transfer and or termination by us of the Class II operations is consistent with our understanding of the Nation's Council intent that we operate and manage the Nation's Class III operations exclusively and that Council directly manages and operates the Nation's Class II operations as it has historically done.

John Pasqualoni, Interim Chief Executive Officer and President stated the following: "While we are disappointed with the operating results of Seneca Niagara Casino, the performance of Seneca Allegany Casino has exceeded our expectations, and our consolidated operating performance remains strong. The transfer of Class II poker, effective January 1, 2005, affected our operating performance at Seneca Niagara Casino. We have started to implement both cost saving and revenue enhancement programs to improve the operating performance of our Seneca Niagara Casino. Finally, with the resolution of the Independent Counsel review, management can devote their efforts to maximizing the operational and financial performance of our properties."

Property Expansions

During the six months ended March 31, 2005, SGC spent $83.5 million for construction and the purchase of property and equipment compared to $52.0 million in the comparable 2004 period, or a 61% increase. In the six month period ended March 31 2005, SGC expended $37.4 million for the construction of the luxury hotel at Seneca Niagara Casino and $23.6 million for the construction of the Seneca Allegany Casino parking garage and resort hotel. The remaining balance of capital expenditures relates to other construction and equipment purchases for both Casinos.

As of this date, construction on the luxury hotel remains on schedule. We continue to expect that the hotel will have a partial opening by December 31, 2005, and all rooms will be available by March 31, 2006. The estimated cost to construct and equip the luxury hotel is $200.0 million.

The opening of the Seneca Allegany Casino's 1,850 space-parking garage has been delayed due to weather and construction issues. The construction issues relate to a portion of the garage being out-of acceptable plumb tolerance limits. The SGC Board of Directors (Board) has accepted the recommendation from the garage construction manager to dismantle, partially, to the extent necessary, and reassemble, to correct the out of plumb condition with the southeast portion of the garage. The Board accepted this recommendation because, based on the construction manager's representations, it will correct the problem with certainty. This process will delay the opening of the parking garage until August 2005.

The construction of the Seneca Allegany Casino resort hotel has been delayed due to the delayed opening of the parking garage. The foundation for the hotel has been completed, and construction of the hotel will commence upon the completion and opening of the parking garage. We anticipate that the resort hotel will open in November 2006. The estimated cost to construct the parking garage, and construct and equip the resort hotel is between $180.0 and $185.0 million.

As of March 31, 2005, the Company has cash and cash equivalents of $69.8 million and short-term investments of $111.8 million.

Barry E. Snyder, Sr. President of the Nation and Chairman of the SGC Board of Directors commented: "The progress at both the luxury hotel in Niagara Falls, and the remediation of the garage at our Seneca Allegany Casino remains on schedule. The opening of the luxury hotel at our Seneca Niagara Casino will significantly improve our marketing reach, both geographically and demographically. The garage at Seneca Allegany Casino will offer 1,850 parking spaces with an enclosed connector to our existing gaming facility. With completion of these projects, the Seneca Nation of Indians continues to fulfill their commitment to provide world class gaming and entertainment facilities in the Western New York region. Finally, I am glad to report that the independent investigation called for by the Nation's Council has been satisfactorily concluded and that our senior management team at the Seneca Gaming Corporation can devote 100% of their time and energy to do what they do best -- operate and manage the Seneca Niagara Casino and Seneca Allegany Casino."

Freemantle Term Loan

SNFGC, the Nation and Freemantle Limited have reached a tentative agreement to terminate the Term Loan Agreement, dated as of November 22, 2002 between SNFGC, as Borrower, and Freemantle Limited, as Lender, as amended on December 6, 2002, allowing SNFGC to pay the term loan at a negotiated amount. The parties are still in the process of finalizing a definitive agreement to effectuate the payment of the negotiated amount. At this time, we cannot provide any assurance that the parties will be able to agree to a definitive agreement.

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