Alliance Gaming Reports Third Quarter Earnings and Provides Updated Guidance For Fiscal 2001

Apr 11, 2001, 01:00 ET from Alliance Gaming Corporation

    LAS VEGAS, April 11 /PRNewswire/ -- Alliance Gaming Corporation
 (Nasdaq:   ALLY) today announced record earnings of $6.8 million, or $0.63 per
 diluted share, for its third fiscal quarter ended March 31, 2001.  This
 represents the fourth successive quarter of increased earnings.  For the
 comparable quarter ended March 31, 2000, the Company reported a loss of
 $0.89 per diluted share.
     Earnings guidance for fiscal 2001 has been increased to $2.12 per diluted
 share, which will result in the Company's first profitable fiscal year since
 its acquisition of Bally Gaming International, Inc. in 1996.
 
     The Company will hold its conference call on Thursday, April 12th at
     10 a.m. PDT (1 p.m. EDT).  The Company intends to broadcast the conference
     call live over the Internet using Vcall; however the Company has been
     notified that Vcall is currently experiencing technical difficulties which
     may not be resolved by the time of our conference call.  All interested
     parties are asked to attempt to log in to the call at www.vcall.com
     approximately 15 minutes prior to the start of the call, and if the
     technical difficulties are not resolved, then please connect into the
     conference call by dialing 1-913-981-5532.
 
     Operating results for the March 2001 quarter include:
     --  Consolidated revenues of $139.6 million, an increase of 19% from the
         $117.5 million in the prior year quarter. Double-digit revenue growth
         was reported in the Bally Gaming and Systems, Casino Operations and
         the Wall Machine and Amusement Games business units.
     --  Consolidated EBITDA of $23.2 million, an increase of 104% from the
         $11.4 million (before unusual items) in the prior year quarter.
         Significant EBITDA growth was reported in the Bally Gaming and
         Systems, Casino Operations, and Wall Machine and Amusement Games
         business units.
     --  Consolidated operating income totaled $16.1 million vs. $1.1 million
         in the prior year quarter.
     --  Sales of Bally games totaled 2,700; Sales of German wall machines
         totaled 3,650; Bally SDS installed in excess of 8,300 game monitoring
         units and Bally Gaming operations added 330 recurring revenue units.
 
     EBITDA Summary
                                    Three Months Ended      Nine Months Ended
                                        March 31,               March 31,
                                    2001         2000       2001         2000
                                              (Dollars in Millions)
      Bally Gaming and Systems      $7.7        $0.7         24.2         7.4
      Route Operations               6.2         6.6         18.1        18.3
      Casino Operations              8.1         7.7         20.9        19.3
      Bally Wulff                    3.9        (0.1)         9.3         1.7
      Corporate office expense      (2.7)       (3.5)        (7.8)      (10.9)
      Unusual Items                   --        (3.6)          --        (4.1)
 
      Alliance total EBITDA        $23.2        $7.8        $64.7       $31.7
 
     Bally Gaming and Systems Revenues Increases 59%, EBITDA Increases
 $7.0 Million
 
     The following chart summarizes the financial information for the Bally
 Gaming and Systems business unit:
 
                                    Three Months Ended      Nine Months Ended
                                        March 31,               March 31,
                                    2001         2000       2001        2000
                                             (Dollars in Millions)
      Revenues
      Game sales                   $ 23.8       $ 13.7      $ 62.0     $ 54.0
      System sales                   11.0          6.1        31.7       28.0
      Gaming operations               6.6          6.2        19.9       14.3
      Total revenues               $ 41.4       $ 26.0     $ 113.6     $ 96.3
 
      EBITDA                         $7.7         $0.7      $ 24.2       $7.4
 
      EBITDA Margin                  18.5%         3.0%       21.3%       7.6%
 
      Operating Income (loss)        $5.4       $ (5.8)     $ 17.8      $(3.6)
 
      New Gaming Devices Sold       2,700        1,180       7,400      6,200
      Game Monitoring Units Sold    8,300        3,000      22,800     25,000
      Installed base of linked and
       non-linked games             2,670        2,200       2,670      2,200
 
     Bally Gaming and Systems business unit reported a 59% increase in revenues
 over the prior year's quarter.  Revenues from sales of gaming devices
 increased 73% over the prior year's quarter primarily as a result of increases
 in both the number of units sold and average new unit selling price.  Systems
 revenues increased 82% over the prior year quarter primarily as a result of
 higher volume of game monitoring unit installations driven by continued
 consolidation within the casino operators that has caused displacement of
 competitor systems and new systems installations in California.  Revenue from
 the recently announced system sale to Foxwood Casino will begin to be
 recognized in the June quarter and will carry over into the September 2001
 quarter.  Gaming Operations revenues increased 7% over the prior year's
 quarter as a result of the increase in number of wide-area progressive games
 deployed, which now totals 1,240 units, offset by a decrease in the number of
 daily-fee games, which now total 1,430.  The Company began the rollout of its
 latest wide-area progressive games, Blondie, late in March and therefore these
 new units did not contribute materially to the quarter's revenues.  A total of
 160 Blondie were installed at quarter end with a backlog of an additional
 600 units, and there has been almost no degradation in the installed base of
 Betty Boop progressives, which now totals 1,080 games.
     The gross margin for Bally Gaming and Systems declined to 48% from 53% in
 the prior quarter.  This margin decline was due to a $2.8 million non-cash
 charge for inventory write-downs that resulted primarily from the planned
 transition to the EVO platform.  Exclusive of this non-cash charge, the gross
 margin percentage was in line with the prior year period.  Gaming operations
 reported a gross margin for the quarter of 67%.
     The Bally Gaming and Systems EBITDA improved to $7.7 million, compared to
 $0.7 million in the prior year period, and resulted from above mentioned
 increases in revenues, as well as the reduced overhead cost structure and the
 elimination of the foreign sales office costs as a result of their closure in
 the prior year.
     The current quarter unit sales for Bally Gaming included approximately
 280 units to the Nevada and Atlantic City markets, 110 units to Canada,
 150 units to international markets and 2,160 units to Native American casinos,
 riverboats, and other domestic markets.
 
     Route Operations Revenues Increase 5%, EBITDA Before Games Rents Increases
 $0.2 Million
 
     The following chart summarizes the combined financial information for the
 Nevada route operations and the Louisiana-based Video Services, Inc. (VSI)
 operations:
 
                                     Three Months Ended     Nine Months Ended
                                          March 31,             March 31,
                                      2001        2000      2001        2000
                                              (Dollars in Millions)
      Revenues
       Nevada                         $52.0       $48.4     $150.4     $133.2
       Louisiana                        4.4         5.1       12.8       14.6
        Total revenues                 56.4        53.5      163.2      147.8
 
      EBITDA
       Nevada                           5.4         5.6       15.7       15.2
       Louisiana                        0.8         1.0        2.5        3.1
        Total EBITDA                    6.2         6.6       18.2       18.3
 
      EBITDA Margin
       Nevada                            10%         12%        10%        11%
       Louisiana                         18%         20%        19%        21%
 
      Operating Income                 $3.7        $4.3      $11.2      $11.2
 
      Average Number of Gaming Devices
       Nevada                         8,180       7,900      8,060      7,720
       Louisiana                        680         700        680        680
        Total Gaming Devices          8,860       8,600      8,740      8,400
 
     For the Nevada route operations, EBITDA before game rental costs increased
 $0.2 million compared to the prior year quarter.  Net win per day per gaming
 machine increased 6% to $70.20 in the current quarter compared to $66.40 in
 the prior year quarter.  The average number of gaming machines deployed also
 increased 4% over the prior year quarter.  At March 31, 2001, the Gamblers
 Bonus product was available at approximately 365 locations and was installed
 in over 3,770 gaming machines or 47% of the Nevada route's total installed
 base of gaming machines.
     The decrease in revenues at VSI is due primarily to a slightly lower
 average number of gaming units deployed and a 13% decrease in net win per day
 per gaming machine to $70.30 from $80.50 in the prior year quarter, which
 reflects the significant increase in the number of truck stop casinos in the
 metro New Orleans area.
     The Combined Route Operations EBITDA of $6.2 million declined
 $0.4 million, or 6%, compared to the prior year period.  This decline was a
 result of the lower results at VSI, and game rental costs in Nevada that
 totaled $1.3 million in the current quarter, compared to $0.9 million in the
 prior year quarter.
     The Company has signed a definitive agreement with UC Acquisitions
 Company, LLC, an independent third-party gaming operator, for the sale of its
 Nevada-based route operations.  The gross selling price, which is based on a
 multiple of cash flows for the 12 month period prior to closing, is estimated
 to be approximately $118 million including $6 million in preferred stock.  The
 sale is expected to be completed by August 2001.
 
     Casino Operations Reports 10% Increase in Revenues, 6% Increase in EBITDA
 
     The following chart summarizes combined financial information for the
 Rainbow Casino in Vicksburg, Mississippi, and the Rail City Casino in Sparks,
 Nevada:
 
                                       Three Months Ended    Nine Months Ended
                                            March 31,            March 31,
                                        2001       2000        2001      2000
                                     (Dollars in Millions)
      Revenues
       Rainbow Casino                   $16.3      $14.8      $43.9     $39.1
       Rail City Casino                   5.0        4.6       14.4      13.1
        Total Revenues                   21.3       19.4       58.3      52.2
 
      EBITDA
       Rainbow Casino                     6.7        6.4       17.1      15.7
       Rail City Casino                   1.4        1.3        3.8       3.6
        Total EBITDA                      8.1        7.7       20.9      19.3
 
      EBITDA Margin
       Rainbow Casino                      41%        43%        39%       40%
       Rail City Casino                    27%        29%        27%       27%
 
      Operating Income                   $7.5       $7.2      $19.2     $17.7
 
      Average Number of Gaming Devices
       Rainbow Casino                     935        995        960       830
       Rail City Casino                   510        495        495       490
         Total Gaming Devices           1,445      1,490      1,455     1,320
      Average Number of Table Games        24         23         23        23
 
     Rainbow Casino's revenues increased 9% as a result of a 19% increase in
 the win per day to $173, offset by a 6% decrease in the average number of
 gaming machines on the floor.  Slot handle at the Rainbow Casino increased 6%
 over the prior year quarter.  Table win increased 14% due to a 3% increase in
 the average table game hold. Volume of table game play, measured by the drop,
 decreased by 4% compared to the prior year quarter.  Revenues at Rail City
 increased $0.4 million due to an 11% increase in slot revenues, a 21% increase
 in table revenues, and an 8% increase in keno win.  Slot win per day at Rail
 City increased 8% to $88.
     EBITDA at Rainbow grew 6% to $6.7 million compared to the prior year
 quarter, while its EBITDA margin decreased slightly to 41%.  Both measures
 were negatively impacted by higher marketing costs incurred in the very
 competitive Vicksburg market.
 
     Wall Machines and Amusement Games Revenues Increase 10%, EBITDA increases
 $4.0 million
 
     The following chart summarizes the financial results for the Wall Machines
 and Amusement Games business unit, which is based in Germany:
 
                                      Three Months Ended     Nine Months Ended
                                           March 31,             March 31,
                                       2001       2000         2001     2000
                                     (Dollars in Millions)
 
      Revenues                        $20.5        $18.7      $56.0    $52.9
 
      EBITDA                           $3.9        $(0.1)      $9.3     $1.7
 
      EBITDA Margin                      19%         (1)%        17%       3%
 
      Operating Income (loss)          $2.6        $(3.0)      $5.2    $(4.6)
 
      Approximate Number of New Wall
       Machines Sold                  3,650        2,000      9,900    6,500
      Approximate Number of New Wall
       Machines Leased                1,020          940      2,910    2,500
      Installed Base of Leased
       Machines                       5,960        5,170      5,960    5,200
 
     The revenue increase for the Wall Machines and Amusement Games business
 unit resulted from an 84% increase in units sold and a 1% increase in the
 average selling price.  As a result of the 7% decline in the Deutschemark
 against the U.S. dollar, the reported revenues and EBITDA were reduced by
 $1.3 million and $0.3 million, respectively.
     Gross margin for the quarter was 47% compared to 34% in the prior year
 quarter.  This increase was due to the favorable impact of increased sales
 prices, a higher volume of trade-ins on used equipment related to sales of new
 wall machines and an improved fixed cost absorption rate.
     Consolidated net interest expense for the quarter ended March 31, 2001,
 totaled $8.4 million compared to $8.8 million in the prior year period;
 however, the prior year period included $0.5 million in fees paid to amend the
 bank credit agreement.  The net interest expense was impacted by the higher
 balance of working capital borrowings which were entered into in December
 1999, offset by the decline in the LIBOR based interest rates.  The Company
 recorded an income tax provision of $0.1 million in the current quarter
 compared to $0.2 million in the prior year quarter primarily as a result of
 state income taxes.
     The Company has not purchased any additional shares of its common stock
 during the quarter ended March 31, 2001.  During the six months ended December
 31, 2000, the Company purchased a total of 104,000 shares at an average price
 of $4.20.
 
     The disclosures herein include statements that are "forward looking"
 within the meaning of Section 27A of the Securities Act of 1933, as amended,
 and Section 21E of the Securities Act of 1934, as amended, and are subject to
 the safe harbor created thereby.  Such forward looking information involves
 important risks and uncertainties that could significantly affect results in
 the future and, accordingly, such results may differ from those expressed in
 any forward looking statements made by or on behalf of the Company.  Future
 operating results may be adversely affected as a result of a number of factors
 enumerated in the Company's public reports and prospectuses such as the impact
 of competition, uncertainties concerning such matters as the Company's high
 leverage, its ability to service debt, its holding company structure, its
 operating history and recent losses, competition, product development,
 customer financing, sales to non-traditional gaming markets, foreign
 operations, dependence on key personnel, strict regulation by gaming
 authorities, gaming taxes and value added taxes, change in control,  and other
 risk factors listed from time to time in the Company's SEC reports, including
 but not limited to the most recent reports on Form 10-K and 10-Q.
 
     Alliance Gaming Corporation is a diversified gaming company headquartered
 in Las Vegas, Nevada.  The Company is engaged in the design, manufacture,
 operation and distribution of advanced gaming devices and systems worldwide
 and is the nation's largest gaming machine route operator and operates two
 casinos.  Additional information about the Company can be found on the
 Alliance Gaming web site at: www.ally.com.
 
 
                          ALLIANCE GAMING CORPORATION
                  SUMMARY CONSOLIDATED STATEMENT OF OPERATIONS
 
                                                       Three Months Ended
                                                           March 31,
                                                       2001          2000
                                          (In 000's, except per share amounts)
 
     Revenues                                       $ 139,585      $ 117,544
     Cost of operations (a)                            86,307         76,227
     Selling, general and administrative expenses      26,535         27,267
     Research and development costs                     3,553          4,589
     Unusual items, net (b)                                --          1,638
 
     EBITDA                                            23,190          7,823
     Depreciation and amortization                      7,048          6,767
 
     Operating income                                  16,142          1,056
 
     Net interest expense (c)                          (8,421)        (8,770)
     Minority interest and other                         (752)        (1,153)
 
     Income (loss) before income taxes                  6,969         (8,867)
     Income tax provision                                (149)          (223)
 
     Net income (loss)                                 $6,820        $(9,090)
 
     Basic earnings (loss) per share                    $0.65         $(0.89)
 
     Diluted earnings (loss) per share                  $0.63         $(0.89)
 
     Weighted average common shares outstanding        10,431         10,253
 
     Weighted average common and common
      share equivalents outstanding                    10,815         10,253
 
     Memo:
     For the March 31, 2000 quarter, special charges included:
 
     (a)  Unusual charge of $1.9 million for write-down of inventory in
          Australia as a result of the decision to exit that market.
     (b)  Restructuring costs of $4.7 million, net of $3.0 million gain on sale
          of certain gaming development and management rights.
     (c)  Fees totaling $0.5 million for an amendment to the Company's bank
          credit agreement.
 
 
                          ALLIANCE GAMING CORPORATION
                  SUMMARY CONSOLIDATED STATEMENT OF OPERATIONS
 
                                                       Nine Months Ended
                                                           March 31,
                                                      2001           2000
                                          (In 000's, except per share amounts)
 
     Revenues                                       $ 391,127      $ 349,233
     Cost of operations (a)                           240,743        225,160
     Selling, general and administrative expenses      75,517         78,752
     Research and development costs                    10,217         11,467
     Unusual items, net (b)                                --          2,164
 
     EBITDA                                            64,650         31,690
     Depreciation and amortization                     20,219         19,792
 
     Operating income                                  44,431         11,898
 
     Net interest expense (c)                         (25,944)       (25,036)
     Minority interest and other                       (1,932)        (2,205)
 
     Income (loss) before income taxes                 16,555        (15,343)
     Income tax provision                                (861)          (478)
 
     Net income (loss)                                $15,694       $(15,821)
 
     Basic earnings (loss) per share                    $1.54        $ (1.55)
 
     Diluted earnings (loss) per share                  $1.51        $ (1.55)
 
     Weighted average common shares outstanding        10,224         10,221
 
     Weighted average common and common
      share equivalents outstanding                    10,424         10,221
 
     Memo:
     Special Charges of $5.1 million for the nine months ended March 2000 are
     as follows:
     (a)  Unusual charge of $1.9 million for write-down of inventory in
          Australia as a result of the decision to exit that market.
     (b)  Restructuring costs of $6.2 million, net of $3.0 million gain on sale
          of certain gaming development and management rights, and $1.0 million
          gain on the release of an option the Company had to operate gaming
          machines at a dormant dog racing track in Kansas.
     (c)  Fees totaling $1.0 million for an amendment to the Company's bank
          credit agreement.
 
 
                          ALLIANCE GAMING CORPORATION
                          SELECTED BALANCE SHEET DATA
 
                                                              As of
                                                    March 31,         June 30,
                                                       2001            2000
                                                            (In 000's)
 
     Cash and cash equivalents                       $ 46,474       $ 32,044
     Working capital                                  119,127        115,979
     Total assets                                     355,037        351,287
     Total long term debt,
      including current maturities                    332,570        345,059
     Total stockholders' deficiency                   (39,776)       (50,795)
 
     For further information, please contact Robert L. Saxton of Alliance
 Gaming Corporation, 702-270-7600.
 
 

SOURCE Alliance Gaming Corporation
    LAS VEGAS, April 11 /PRNewswire/ -- Alliance Gaming Corporation
 (Nasdaq:   ALLY) today announced record earnings of $6.8 million, or $0.63 per
 diluted share, for its third fiscal quarter ended March 31, 2001.  This
 represents the fourth successive quarter of increased earnings.  For the
 comparable quarter ended March 31, 2000, the Company reported a loss of
 $0.89 per diluted share.
     Earnings guidance for fiscal 2001 has been increased to $2.12 per diluted
 share, which will result in the Company's first profitable fiscal year since
 its acquisition of Bally Gaming International, Inc. in 1996.
 
     The Company will hold its conference call on Thursday, April 12th at
     10 a.m. PDT (1 p.m. EDT).  The Company intends to broadcast the conference
     call live over the Internet using Vcall; however the Company has been
     notified that Vcall is currently experiencing technical difficulties which
     may not be resolved by the time of our conference call.  All interested
     parties are asked to attempt to log in to the call at www.vcall.com
     approximately 15 minutes prior to the start of the call, and if the
     technical difficulties are not resolved, then please connect into the
     conference call by dialing 1-913-981-5532.
 
     Operating results for the March 2001 quarter include:
     --  Consolidated revenues of $139.6 million, an increase of 19% from the
         $117.5 million in the prior year quarter. Double-digit revenue growth
         was reported in the Bally Gaming and Systems, Casino Operations and
         the Wall Machine and Amusement Games business units.
     --  Consolidated EBITDA of $23.2 million, an increase of 104% from the
         $11.4 million (before unusual items) in the prior year quarter.
         Significant EBITDA growth was reported in the Bally Gaming and
         Systems, Casino Operations, and Wall Machine and Amusement Games
         business units.
     --  Consolidated operating income totaled $16.1 million vs. $1.1 million
         in the prior year quarter.
     --  Sales of Bally games totaled 2,700; Sales of German wall machines
         totaled 3,650; Bally SDS installed in excess of 8,300 game monitoring
         units and Bally Gaming operations added 330 recurring revenue units.
 
     EBITDA Summary
                                    Three Months Ended      Nine Months Ended
                                        March 31,               March 31,
                                    2001         2000       2001         2000
                                              (Dollars in Millions)
      Bally Gaming and Systems      $7.7        $0.7         24.2         7.4
      Route Operations               6.2         6.6         18.1        18.3
      Casino Operations              8.1         7.7         20.9        19.3
      Bally Wulff                    3.9        (0.1)         9.3         1.7
      Corporate office expense      (2.7)       (3.5)        (7.8)      (10.9)
      Unusual Items                   --        (3.6)          --        (4.1)
 
      Alliance total EBITDA        $23.2        $7.8        $64.7       $31.7
 
     Bally Gaming and Systems Revenues Increases 59%, EBITDA Increases
 $7.0 Million
 
     The following chart summarizes the financial information for the Bally
 Gaming and Systems business unit:
 
                                    Three Months Ended      Nine Months Ended
                                        March 31,               March 31,
                                    2001         2000       2001        2000
                                             (Dollars in Millions)
      Revenues
      Game sales                   $ 23.8       $ 13.7      $ 62.0     $ 54.0
      System sales                   11.0          6.1        31.7       28.0
      Gaming operations               6.6          6.2        19.9       14.3
      Total revenues               $ 41.4       $ 26.0     $ 113.6     $ 96.3
 
      EBITDA                         $7.7         $0.7      $ 24.2       $7.4
 
      EBITDA Margin                  18.5%         3.0%       21.3%       7.6%
 
      Operating Income (loss)        $5.4       $ (5.8)     $ 17.8      $(3.6)
 
      New Gaming Devices Sold       2,700        1,180       7,400      6,200
      Game Monitoring Units Sold    8,300        3,000      22,800     25,000
      Installed base of linked and
       non-linked games             2,670        2,200       2,670      2,200
 
     Bally Gaming and Systems business unit reported a 59% increase in revenues
 over the prior year's quarter.  Revenues from sales of gaming devices
 increased 73% over the prior year's quarter primarily as a result of increases
 in both the number of units sold and average new unit selling price.  Systems
 revenues increased 82% over the prior year quarter primarily as a result of
 higher volume of game monitoring unit installations driven by continued
 consolidation within the casino operators that has caused displacement of
 competitor systems and new systems installations in California.  Revenue from
 the recently announced system sale to Foxwood Casino will begin to be
 recognized in the June quarter and will carry over into the September 2001
 quarter.  Gaming Operations revenues increased 7% over the prior year's
 quarter as a result of the increase in number of wide-area progressive games
 deployed, which now totals 1,240 units, offset by a decrease in the number of
 daily-fee games, which now total 1,430.  The Company began the rollout of its
 latest wide-area progressive games, Blondie, late in March and therefore these
 new units did not contribute materially to the quarter's revenues.  A total of
 160 Blondie were installed at quarter end with a backlog of an additional
 600 units, and there has been almost no degradation in the installed base of
 Betty Boop progressives, which now totals 1,080 games.
     The gross margin for Bally Gaming and Systems declined to 48% from 53% in
 the prior quarter.  This margin decline was due to a $2.8 million non-cash
 charge for inventory write-downs that resulted primarily from the planned
 transition to the EVO platform.  Exclusive of this non-cash charge, the gross
 margin percentage was in line with the prior year period.  Gaming operations
 reported a gross margin for the quarter of 67%.
     The Bally Gaming and Systems EBITDA improved to $7.7 million, compared to
 $0.7 million in the prior year period, and resulted from above mentioned
 increases in revenues, as well as the reduced overhead cost structure and the
 elimination of the foreign sales office costs as a result of their closure in
 the prior year.
     The current quarter unit sales for Bally Gaming included approximately
 280 units to the Nevada and Atlantic City markets, 110 units to Canada,
 150 units to international markets and 2,160 units to Native American casinos,
 riverboats, and other domestic markets.
 
     Route Operations Revenues Increase 5%, EBITDA Before Games Rents Increases
 $0.2 Million
 
     The following chart summarizes the combined financial information for the
 Nevada route operations and the Louisiana-based Video Services, Inc. (VSI)
 operations:
 
                                     Three Months Ended     Nine Months Ended
                                          March 31,             March 31,
                                      2001        2000      2001        2000
                                              (Dollars in Millions)
      Revenues
       Nevada                         $52.0       $48.4     $150.4     $133.2
       Louisiana                        4.4         5.1       12.8       14.6
        Total revenues                 56.4        53.5      163.2      147.8
 
      EBITDA
       Nevada                           5.4         5.6       15.7       15.2
       Louisiana                        0.8         1.0        2.5        3.1
        Total EBITDA                    6.2         6.6       18.2       18.3
 
      EBITDA Margin
       Nevada                            10%         12%        10%        11%
       Louisiana                         18%         20%        19%        21%
 
      Operating Income                 $3.7        $4.3      $11.2      $11.2
 
      Average Number of Gaming Devices
       Nevada                         8,180       7,900      8,060      7,720
       Louisiana                        680         700        680        680
        Total Gaming Devices          8,860       8,600      8,740      8,400
 
     For the Nevada route operations, EBITDA before game rental costs increased
 $0.2 million compared to the prior year quarter.  Net win per day per gaming
 machine increased 6% to $70.20 in the current quarter compared to $66.40 in
 the prior year quarter.  The average number of gaming machines deployed also
 increased 4% over the prior year quarter.  At March 31, 2001, the Gamblers
 Bonus product was available at approximately 365 locations and was installed
 in over 3,770 gaming machines or 47% of the Nevada route's total installed
 base of gaming machines.
     The decrease in revenues at VSI is due primarily to a slightly lower
 average number of gaming units deployed and a 13% decrease in net win per day
 per gaming machine to $70.30 from $80.50 in the prior year quarter, which
 reflects the significant increase in the number of truck stop casinos in the
 metro New Orleans area.
     The Combined Route Operations EBITDA of $6.2 million declined
 $0.4 million, or 6%, compared to the prior year period.  This decline was a
 result of the lower results at VSI, and game rental costs in Nevada that
 totaled $1.3 million in the current quarter, compared to $0.9 million in the
 prior year quarter.
     The Company has signed a definitive agreement with UC Acquisitions
 Company, LLC, an independent third-party gaming operator, for the sale of its
 Nevada-based route operations.  The gross selling price, which is based on a
 multiple of cash flows for the 12 month period prior to closing, is estimated
 to be approximately $118 million including $6 million in preferred stock.  The
 sale is expected to be completed by August 2001.
 
     Casino Operations Reports 10% Increase in Revenues, 6% Increase in EBITDA
 
     The following chart summarizes combined financial information for the
 Rainbow Casino in Vicksburg, Mississippi, and the Rail City Casino in Sparks,
 Nevada:
 
                                       Three Months Ended    Nine Months Ended
                                            March 31,            March 31,
                                        2001       2000        2001      2000
                                     (Dollars in Millions)
      Revenues
       Rainbow Casino                   $16.3      $14.8      $43.9     $39.1
       Rail City Casino                   5.0        4.6       14.4      13.1
        Total Revenues                   21.3       19.4       58.3      52.2
 
      EBITDA
       Rainbow Casino                     6.7        6.4       17.1      15.7
       Rail City Casino                   1.4        1.3        3.8       3.6
        Total EBITDA                      8.1        7.7       20.9      19.3
 
      EBITDA Margin
       Rainbow Casino                      41%        43%        39%       40%
       Rail City Casino                    27%        29%        27%       27%
 
      Operating Income                   $7.5       $7.2      $19.2     $17.7
 
      Average Number of Gaming Devices
       Rainbow Casino                     935        995        960       830
       Rail City Casino                   510        495        495       490
         Total Gaming Devices           1,445      1,490      1,455     1,320
      Average Number of Table Games        24         23         23        23
 
     Rainbow Casino's revenues increased 9% as a result of a 19% increase in
 the win per day to $173, offset by a 6% decrease in the average number of
 gaming machines on the floor.  Slot handle at the Rainbow Casino increased 6%
 over the prior year quarter.  Table win increased 14% due to a 3% increase in
 the average table game hold. Volume of table game play, measured by the drop,
 decreased by 4% compared to the prior year quarter.  Revenues at Rail City
 increased $0.4 million due to an 11% increase in slot revenues, a 21% increase
 in table revenues, and an 8% increase in keno win.  Slot win per day at Rail
 City increased 8% to $88.
     EBITDA at Rainbow grew 6% to $6.7 million compared to the prior year
 quarter, while its EBITDA margin decreased slightly to 41%.  Both measures
 were negatively impacted by higher marketing costs incurred in the very
 competitive Vicksburg market.
 
     Wall Machines and Amusement Games Revenues Increase 10%, EBITDA increases
 $4.0 million
 
     The following chart summarizes the financial results for the Wall Machines
 and Amusement Games business unit, which is based in Germany:
 
                                      Three Months Ended     Nine Months Ended
                                           March 31,             March 31,
                                       2001       2000         2001     2000
                                     (Dollars in Millions)
 
      Revenues                        $20.5        $18.7      $56.0    $52.9
 
      EBITDA                           $3.9        $(0.1)      $9.3     $1.7
 
      EBITDA Margin                      19%         (1)%        17%       3%
 
      Operating Income (loss)          $2.6        $(3.0)      $5.2    $(4.6)
 
      Approximate Number of New Wall
       Machines Sold                  3,650        2,000      9,900    6,500
      Approximate Number of New Wall
       Machines Leased                1,020          940      2,910    2,500
      Installed Base of Leased
       Machines                       5,960        5,170      5,960    5,200
 
     The revenue increase for the Wall Machines and Amusement Games business
 unit resulted from an 84% increase in units sold and a 1% increase in the
 average selling price.  As a result of the 7% decline in the Deutschemark
 against the U.S. dollar, the reported revenues and EBITDA were reduced by
 $1.3 million and $0.3 million, respectively.
     Gross margin for the quarter was 47% compared to 34% in the prior year
 quarter.  This increase was due to the favorable impact of increased sales
 prices, a higher volume of trade-ins on used equipment related to sales of new
 wall machines and an improved fixed cost absorption rate.
     Consolidated net interest expense for the quarter ended March 31, 2001,
 totaled $8.4 million compared to $8.8 million in the prior year period;
 however, the prior year period included $0.5 million in fees paid to amend the
 bank credit agreement.  The net interest expense was impacted by the higher
 balance of working capital borrowings which were entered into in December
 1999, offset by the decline in the LIBOR based interest rates.  The Company
 recorded an income tax provision of $0.1 million in the current quarter
 compared to $0.2 million in the prior year quarter primarily as a result of
 state income taxes.
     The Company has not purchased any additional shares of its common stock
 during the quarter ended March 31, 2001.  During the six months ended December
 31, 2000, the Company purchased a total of 104,000 shares at an average price
 of $4.20.
 
     The disclosures herein include statements that are "forward looking"
 within the meaning of Section 27A of the Securities Act of 1933, as amended,
 and Section 21E of the Securities Act of 1934, as amended, and are subject to
 the safe harbor created thereby.  Such forward looking information involves
 important risks and uncertainties that could significantly affect results in
 the future and, accordingly, such results may differ from those expressed in
 any forward looking statements made by or on behalf of the Company.  Future
 operating results may be adversely affected as a result of a number of factors
 enumerated in the Company's public reports and prospectuses such as the impact
 of competition, uncertainties concerning such matters as the Company's high
 leverage, its ability to service debt, its holding company structure, its
 operating history and recent losses, competition, product development,
 customer financing, sales to non-traditional gaming markets, foreign
 operations, dependence on key personnel, strict regulation by gaming
 authorities, gaming taxes and value added taxes, change in control,  and other
 risk factors listed from time to time in the Company's SEC reports, including
 but not limited to the most recent reports on Form 10-K and 10-Q.
 
     Alliance Gaming Corporation is a diversified gaming company headquartered
 in Las Vegas, Nevada.  The Company is engaged in the design, manufacture,
 operation and distribution of advanced gaming devices and systems worldwide
 and is the nation's largest gaming machine route operator and operates two
 casinos.  Additional information about the Company can be found on the
 Alliance Gaming web site at: www.ally.com.
 
 
                          ALLIANCE GAMING CORPORATION
                  SUMMARY CONSOLIDATED STATEMENT OF OPERATIONS
 
                                                       Three Months Ended
                                                           March 31,
                                                       2001          2000
                                          (In 000's, except per share amounts)
 
     Revenues                                       $ 139,585      $ 117,544
     Cost of operations (a)                            86,307         76,227
     Selling, general and administrative expenses      26,535         27,267
     Research and development costs                     3,553          4,589
     Unusual items, net (b)                                --          1,638
 
     EBITDA                                            23,190          7,823
     Depreciation and amortization                      7,048          6,767
 
     Operating income                                  16,142          1,056
 
     Net interest expense (c)                          (8,421)        (8,770)
     Minority interest and other                         (752)        (1,153)
 
     Income (loss) before income taxes                  6,969         (8,867)
     Income tax provision                                (149)          (223)
 
     Net income (loss)                                 $6,820        $(9,090)
 
     Basic earnings (loss) per share                    $0.65         $(0.89)
 
     Diluted earnings (loss) per share                  $0.63         $(0.89)
 
     Weighted average common shares outstanding        10,431         10,253
 
     Weighted average common and common
      share equivalents outstanding                    10,815         10,253
 
     Memo:
     For the March 31, 2000 quarter, special charges included:
 
     (a)  Unusual charge of $1.9 million for write-down of inventory in
          Australia as a result of the decision to exit that market.
     (b)  Restructuring costs of $4.7 million, net of $3.0 million gain on sale
          of certain gaming development and management rights.
     (c)  Fees totaling $0.5 million for an amendment to the Company's bank
          credit agreement.
 
 
                          ALLIANCE GAMING CORPORATION
                  SUMMARY CONSOLIDATED STATEMENT OF OPERATIONS
 
                                                       Nine Months Ended
                                                           March 31,
                                                      2001           2000
                                          (In 000's, except per share amounts)
 
     Revenues                                       $ 391,127      $ 349,233
     Cost of operations (a)                           240,743        225,160
     Selling, general and administrative expenses      75,517         78,752
     Research and development costs                    10,217         11,467
     Unusual items, net (b)                                --          2,164
 
     EBITDA                                            64,650         31,690
     Depreciation and amortization                     20,219         19,792
 
     Operating income                                  44,431         11,898
 
     Net interest expense (c)                         (25,944)       (25,036)
     Minority interest and other                       (1,932)        (2,205)
 
     Income (loss) before income taxes                 16,555        (15,343)
     Income tax provision                                (861)          (478)
 
     Net income (loss)                                $15,694       $(15,821)
 
     Basic earnings (loss) per share                    $1.54        $ (1.55)
 
     Diluted earnings (loss) per share                  $1.51        $ (1.55)
 
     Weighted average common shares outstanding        10,224         10,221
 
     Weighted average common and common
      share equivalents outstanding                    10,424         10,221
 
     Memo:
     Special Charges of $5.1 million for the nine months ended March 2000 are
     as follows:
     (a)  Unusual charge of $1.9 million for write-down of inventory in
          Australia as a result of the decision to exit that market.
     (b)  Restructuring costs of $6.2 million, net of $3.0 million gain on sale
          of certain gaming development and management rights, and $1.0 million
          gain on the release of an option the Company had to operate gaming
          machines at a dormant dog racing track in Kansas.
     (c)  Fees totaling $1.0 million for an amendment to the Company's bank
          credit agreement.
 
 
                          ALLIANCE GAMING CORPORATION
                          SELECTED BALANCE SHEET DATA
 
                                                              As of
                                                    March 31,         June 30,
                                                       2001            2000
                                                            (In 000's)
 
     Cash and cash equivalents                       $ 46,474       $ 32,044
     Working capital                                  119,127        115,979
     Total assets                                     355,037        351,287
     Total long term debt,
      including current maturities                    332,570        345,059
     Total stockholders' deficiency                   (39,776)       (50,795)
 
     For further information, please contact Robert L. Saxton of Alliance
 Gaming Corporation, 702-270-7600.
 
 SOURCE  Alliance Gaming Corporation