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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

       (Mark One)
[X]    Annual report pursuant to section 13 or 15(d) of the Securities Exchange
       Act of 1934 [No Fee Required]

For the fiscal year ended December 31, 2001.

[  ]   Transition report pursuant to sections 13 or 15(d) of the Securities
       Exchange Act of 1934 [Fee Required]

For the transition period from                 to
                               ---------------     -------------------

                        Commission file number 000-21430

                          RIVIERA HOLDINGS CORPORATION
              (Exact name of Registrant as specified in its charter)

            Nevada                                      88-0296885
-------------------------------                      ----------------
(State of Incorporation)                    (I.R.S. Employer Identification No.)

2901 Las Vegas Boulevard South
Las Vegas, Nevada                                                      89109
---------------------------------------                             -----------
(Address of principal executive offices)                             (Zip Code)

Registrant's telephone number, including area code:  (702) 734-5110
                                                     --------------

Securities registered pursuant to Section 12(b) of the Act:  None
                                                             ----
Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $.001 par value
                                (Title of class)

           Indicate  by check  mark  whether  the  Registrant  (1) has filed all
reports  required to be filed by Section 13 or 15(d) of the Securities  Exchange
Act of 1934 during the preceding 12 months (or for such shorter  period that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.
YES   X    NO _____
    -----

           Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  Registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated by reference in Part III of this Form 10-K or amendment
to this Form 10-K.

           Based on the average bid price for the  Registrant's  Common Stock as
of March 18,  2002,  the  aggregate  market  value of the  voting  stock held by
non-affiliates of the Registrant was approximately $18,546,950.  As of March 18,
2002  the  number  of  outstanding  shares  (net  of  treasury  shares)  of  the
Registrant's Common Stock was 3,566,721.

Documents incorporated by reference:



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                               Page 1 of 40 pages
                    Exhibit Index Appears on Page 35 hereof.


                                                1
<PAGE>
<TABLE>
<CAPTION>


                   RIVIERA HOLDINGS CORPORATION AND SUBSIDIARY
                    ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
                          YEAR ENDED DECEMBER 31, 2001

                                TABLE OF CONTENTS

<S>            <C>                                                                                    <C>
Item 1.   Business.....................................................................................3
             General ..................................................................................3
             Riviera Las Vegas.........................................................................3
             Riviera Black Hawk........................................................................7
             Geographical Markets......................................................................8
             Management Activities.....................................................................9
             Competition............................................................................. 10
             Employees and Labor Relations............................................................11
             Regulation and Licensing.................................................................12
             Federal Registration.....................................................................20

Item 2.   Properties..................................................................................20

Item 3.   Legal Proceedings...........................................................................21

Item 4.   Submission of Matters to a Vote of Security Holders.........................................21

Item 5.   Market for the Registrant's Common Stock and Related Security Holder Matters................22

Item 6.   Selected Financial Data.....................................................................22

Item 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations.......23
             Results of Operations....................................................................23
             2001 Compared to 2000....................................................................23
             2000 Compared to 1999....................................................................25
             Liquidity and Capital Resources..........................................................27
             Critical Accounting Policies.............................................................29
             Accounting pronouncements................................................................29

Item 7A.  Qualitative and Quantitative Disclosure About Market Risk...................................31
             Forward Looking Statements...............................................................31

Item 8.   Financial Statements and Supplementary Data.................................................32

Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........32

Item 10.  Directors and Executive Officers of the Registrant..........................................32

Item 11.  Executive Compensation......................................................................32

Item 12.  Principal Shareholders......................................................................32

Item 13.  Certain Relationships and Related Transactions .............................................32

Item 14.  Exhibits and Reports on Form 8-K............................................................33
</TABLE>


                                                2
<PAGE>


         PART I

Item 1.    Business

General

           Riviera  Holdings  Corporation,  a Nevada  corporation (the Company),
through its wholly owned  subsidiary,  Riviera Operating  Corporation,  a Nevada
corporation,  owns and operates the Riviera  Hotel & Casino  (Riviera Las Vegas)
located on Las Vegas Boulevard in Las Vegas, Nevada. Opened in 1955, the Riviera
Las Vegas has developed a long-standing  reputation for delivering high quality,
traditional Las Vegas-style gaming, entertainment and other amenities.

           Riviera Holdings  Corporation,  through its wholly owned  subsidiary,
Riviera  Black Hawk,  Inc.,  owns and  operates  the  Riviera  Black Hawk Casino
(Riviera  Black  Hawk) a  limited-stakes  casino in Black Hawk,  Colorado  which
opened on February 4, 2000.


Riviera Las Vegas

General

           Riviera Las Vegas is located on the corner of Las Vegas Boulevard and
Riviera Boulevard in Clark County,  Nevada,  across from Circus Circus.  Riviera
Las Vegas  targets  slot and  mid-level  table  game  customers  with a focus on
creating repeat customers and increasing  walk-in traffic.  Key elements of this
strategy include offering a value-oriented  experience by providing a variety of
hotel rooms, restaurants and entertainment, with some of Las Vegas' most popular
shows, all at reasonable prices.

Gaming

           Riviera Las Vegas has 110,000 square feet of casino space. The casino
currently has approximately 1,500 slot machines and 34 gaming tables,  including
blackjack,  craps,  roulette,  pai gow poker,  Caribbean  Stud(R) poker,  Let It
Ride(R) and mini-baccarat. The casino also includes a keno lounge and a 200-seat
race and sports book.

           Gaming  operations  at Riviera Las Vegas are  continually  updated to
respond to both changing  market  conditions and customer demand in an effort to
attract new customers and encourage  repeat  customer  business  through  player
tracking and database management. We maintain a slot players club, through which
members receive  special  promotions and targeted  mailings.  New and innovative
slot and table games have been introduced based on customer feedback. Management
devotes substantial time and attention to the type, location and player activity
of all its slot  machines.  We  maintain a capital  investment  program  for the
upgrade of our slot machines.

           Our  current  management  team  redirected  our  business  away  from
high-stakes  wagerers in favor of the less volatile  mid-level gaming customers.
In order to effectively pursue this strategy,  we made several strategic changes
including  reconfiguring the casino space, installing new slot machines and bill
acceptors,  reducing the number of gaming  tables and  eliminating  the baccarat
room. In addition,  we implemented  stricter credit policies.  As a result,  the
percentage of table game dollar volume  represented by credit play declined from
approximately 24% in 1993 to 6% in 2001. Also, in 2001,  revenues from slots and
tables were approximately 78% and 22% of total gaming revenue,  respectively, as
compared to 60% and 34%, respectively, in 1993.

           During  2001,  we  continued a number of  initiatives  at Riviera Las
Vegas to increase slot play,  including the  replacement  of older slot machines
and maintaining our slot host program. Slot hosts are our employees who interact
with patrons as goodwill  ambassadors  to generate  loyalty.  Our strategy is to
continue  to  increase   slot  play   through   marketing   programs  and  other
improvements,  including (i) our ongoing slot upgrade program,  (ii) addition of
new  signage,  (iii)  promotion  of the Riviera Las Vegas  Player's  Club,  (iv)
sponsorship  of slot  tournaments,  (v) creation of promotional  programs,  (vi)
marketing of the "Slot Frenzy" and "$40 for $20(R)" slot  promotions,  and (vii)
"Nickel Town(R)". At the end of 1997, we opened Nickel Town on the corner of Las
Vegas  Boulevard and Riviera  Boulevard at the crosswalk  from Circus Circus and
the local Las Vegas  Boulevard bus stop.  Nickel Town is comprised  primarily of
nickel slot machines, the fastest growing segment of the Las Vegas slot market.


                                                3
<PAGE>

Hotel

           Riviera  Las Vegas'  hotel is  comprised  of five hotel  towers  with
approximately 2,100 guest rooms,  including 169 suites. Built in 1955 as part of
the original casino/hotel,  the nine-story North Tower features 391 rooms and 11
suites.  In 1967,  the  12-story  South  Tower was  built  with 147 rooms and 31
suites. Another 220 rooms and 72 suites,  including penthouse suites, were added
to the property  through the  construction  of the 17-story Monte Carlo Tower in
1974.  In 1977,  the  six-story San Remo Tower added 243 rooms and six suites to
the south side of the  resort.  The most  recent  phase of hotel  expansion  was
completed in 1988 upon the opening of the 930 room,  49 suite,  24-story  Monaco
Tower. By the end of 2001 we completed refurbishment of all of our approximately
2,100 hotel rooms and suites.  Despite the significant  increase in rooms on the
Las Vegas Strip  since 1997,  we believe  Riviera  Las Vegas has  attained  room
occupancy rates that are among the highest on the Las Vegas Strip with 97.5% for
1994,  97.0% for 1995, 98.2% for 1996, 95.7% for 1997, 95.2% for 1998, 97.5% for
1999, 96.6% for 2000 and 91.5% for 2001 (based on available rooms).  The average
occupancy rate citywide was 88.9% in 2001 according to the Las Vegas  Convention
and Visitors Authority.

Restaurants

           The  quality,  value and  variety of food  services  are  critical to
attracting Las Vegas  visitors.  Riviera Las Vegas offers five (5) bars and four
(4)  restaurants  and serves an average of  approximately  5,312  meals per day,
including banquets and room service.  Riviera completely remodeled its buffet in
2001  upgrading  the ambiance and food quality,  featuring  cuisine from various
countries as well as a carving station.  The following table outlines,  for each
restaurant, the type of service provided and total seating capacity:
<TABLE>
<CAPTION>

                                                                Seating Capacity
        Name                         Type
<S>     <C>                          <C>                                <C>
        Kady's                       Coffee Shop                        290
        Kristofer's                  Steak and Seafood                  162
        Ristorante Italiano          Italian                            126
        World's Fare Buffet          All-you-can-eat                    366
                                                                        ---
                                                                        944
                                                                        ===
</TABLE>

           In addition,  Riviera Las Vegas operates a snack bar and  continental
breakfast  buffet as well as a fast-food  court  operated by a third party.  The
food court has 200 seats and several  fast-food  restaurants,  including  Burger
King(R), Pizza Hut(R), Panda Express(R), Quiznos(R) and La Salsa(R).

Convention Center

           Riviera Las Vegas features 160,000 square feet of convention, meeting
and banquet space. The convention  center is one of the largest in Las Vegas and
is  an  important  feature  that  attracts   customers.   The  facility  can  be
reconfigured for multiple  meetings of small groups or large gatherings of up to
5,000 people.  Riviera Las Vegas hosted  approximately  382 conventions in 2001.
The hotel  currently has over 740,000  convention  related  advance  bookings of
rooms through 2005 consisting of  approximately  490,700  definite  bookings and
approximately  249,360 tentative  bookings.  In 2001 approximately  30.4% of the
rooms were occupied for conventions,  and management estimates that 32.5% of its
rooms will be occupied for conventions in 2002.

           The Royal Pavilion portion of the convention center,  which opened in
February 1999, and represents approximately 60,000 square feet of our convention
facility, features state-of-the-art convention,  meeting and banquet facilities,
teleconferencing and satellite uplink capability and twelve (12) skyboxes.

Entertainment

           Riviera  Las  Vegas  has  one of  the  most  extensive  entertainment
programs in Las Vegas,  offering five different  regularly  scheduled  shows and
special   appearances   by  headline   entertainers   in  concert.   We  believe
entertainment  provides an attractive marketing tool to attract customers to the
Riviera.  Riviera Las Vegas'  entertainment  program includes such well received
shows as  Splash(R)  (a  variety  show),  An  Evening  at La  Cage(R)  (a female
impersonation  show),  Crazy  Girls(R)  (an adult  revue),  as well as  featured
comedians  at the  Riviera  Comedy  Club.  We update  our shows  continually  in
response to customer  surveys and to keep them fresh.  Tickets for the shows are
offered  at  reasonable  prices  in  keeping  with  our  emphasis  on  mid-level
customers.  The  Riviera  Mardi  Gras shows of "La Cage" and the  "Comedy  Club"
received First Place and Third Place awards,  respectively,  for "Best Las Vegas
Shows" from What's On Magazine.

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<PAGE>

           The following table outlines, for each entertainment center, the type
of service provided and total seating capacity:
<TABLE>
<CAPTION>

           Name                Type                         Seating Capacity

<S>        <C>                 <C>                              <C>
           Splash              Variety                          875
           La Cage             Female impersonation             575
           Crazy Girls         Adult Revue                      375
           Comedy Club         Comedy                           350
           Le Bistro           Variety                          190
                                                              -----
                                                              2,365
                                                              =====
</TABLE>

           In addition,  Riviera Las Vegas  presents  major concerts which since
1998 have  included  performers  such as The Beach Boys,  Billy Ray Cyrus,  Rich
Little,  Drew Carey,  Damon Wayans,  Titus,  Brett Butler and D.L. Hughley.  The
addition of the Royale Pavilion has enabled us to increase attendance at special
events since,  in the past, the then existing  facilities  could not accommodate
the demand for tickets.

           We believe that our substantial entertainment revenue is attributable
to the popularity of the in-house productions  supplemented by focused marketing
and consistent advertising messages.

Future Expansions

           We continue to explore the possible  development of an  approximately
60,000  square-foot  entertainment  complex to be constructed  directly over the
casino,  which could contain a specialty themed  restaurant,  and  entertainment
that will appeal to the Riviera Las Vegas' main target audience,  adults aged 45
to 65. The exit from the complex would be by an escalator  delivering patrons to
the  casino.  We would  require  partners  to  finance,  develop and operate the
entertainment  attraction  and  restaurant.  To date no such  partners have been
identified.

           We are  exploring  a number of  options  for the  development  of our
existing 26-acre site. These options include a joint venture for the development
of a  time-share  condominium  tower or an  additional  hotel  tower and parking
garage. Under the terms of our $175 million Bond Indenture,  we could contribute
up to 6 acres of land to such  projects and if we decide to develop a time-share
tower a third  party  would  construct  and sell  time-share  units and  arrange
financing. We believe that additional rooms adjacent to the Las Vegas Convention
Center would be particularly  attractive to business customers and would provide
a base for additional casino  customers.  The development of a time-share tower,
hotel tower or parking facility would require  additional  financing and, in the
case of the time-share tower, a joint venture partner,  none of which we have in
place at this time.

Marketing Strategies-Las Vegas

           We have  developed  a marketing  program  intended to develop a loyal
following of repeat slot and mid-level table game customers.  We believe we have
been able to  successfully  attract  these  patrons  using  Riviera  Las  Vegas'
restaurants,  hotel accommodations and entertainment and by focusing on customer
service.  We have  adopted a selective  approach to the  extension  of credit to
these customers in order to reduce volatility of operating  results.  We use our
research data to tailor  promotional  offers to the specific  tastes of targeted
customers.  All slot and table  players are  encouraged  to join the Riviera Las
Vegas  Player's  Club and to fill out  surveys  that  provide  us with  personal
information  and  preferences  and tracks  their  level of play.  Members of the
Riviera  Las Vegas  Player's  Club earn bonus  points  based upon their level of
play,  redeemable  for  free  gifts,  complimentary  services  or cash  rebates.
Promotional  offers are made to  qualifying  customers  through  direct mail and
telemarketing.

           Riviera Las Vegas will continue to emphasize  marketing programs that
appeal to slot and  mid-level  table  game  customers  with a focus on  creating
repeat customers and increasing  walk-in traffic.  In addition,  a key marketing
focus is  expanding  Riviera Las Vegas' core  conventioneer  customer  base.  In
developing an overall marketing program, we conduct extensive,  ongoing research
of our target customers' preferences through surveys,  one-on-one interviews and
focus groups.

           Create Repeat Customers

           Generating  customer loyalty is a critical  component of our business
strategy as retaining  customers is less expensive than  attracting new ones. We
have developed a focused and coordinated marketing program intended to develop a

                                                5
<PAGE>

loyal  customer base which  emphasizes  (i) providing a high level of service to
our customers to ensure an enjoyable  experience while at the Riviera Las Vegas,
(ii)  responding to customer  surveys and (iii) focusing  marketing  efforts and
promotional  programs on customers  with positive  gaming  profiles.  We use our
research data to tailor  promotional  offers to the specific  tastes of targeted
customers.  All slot and table  players are  encouraged  to join the Riviera Las
Vegas  Player's  Club which tracks their level of play,  and to fill out surveys
that provide the Riviera Las Vegas with personal  information  and  preferences.
Members of the  Riviera Las Vegas  Player's  Club earn bonus  points  based upon
their level of play, redeemable for free gifts,  complimentary  services or cash
rebates. Promotional offers are made to qualifying customers through direct mail
and  telemarketing.  We design  promotional offers targeted at certain mid-level
gaming  patrons that are  expected to provide  significant  revenues  based upon
their  historical  gaming  patterns.   We  contact  these  customers  through  a
combination of direct mail and telemarketing by an in-house  marketing staff and
independent  representatives  located in major cities.  Riviera Las Vegas uses a
proprietary  database  which is linked  to our  player  tracking  system to help
identify customers'  requirements and preferences,  thereby allowing Riviera Las
Vegas to customize  promotions to attract repeat  visitors.  We offer  customers
personalized   service,   credit   availability  and  access  to  a  variety  of
complimentary or reduced-rate  room, dinner and entertainment  reservations.  We
use a specialized  multi-tiered  marketing approach to attract customers in each
of our major  markets.  Slot and table game  tournaments  and special events are
designed for specific  levels of play.  Utilizing our  proprietary  database our
marketing department then targets and invites the customers most appropriate for
the  customized  events.  In  addition,  we host an  array  of  special  events,
including  slot and table  tournaments,  designed  to attract  customers  for an
extended  stay. We have found that this  individualized  marketing  approach has
provided significant revenues and profitable repeat business.

           Provide Extensive Entertainment Options

           We  also  focus  on  attracting   our  guests   through  a  range  of
entertainment  opportunities.  Riviera  Las Vegas has one of the most  extensive
entertainment  programs  in Las Vegas with four  different  regularly  scheduled
shows and special appearances by headline entertainers. In addition to providing
a positive  impact on our  profitability,  the shows attract  additional  gaming
revenue.  Surveys indicate that  approximately 30% of the show patrons come from
outside the hotel and approximately  67% of these individuals  gamble at Riviera
Las Vegas before or after the shows.

           Attract Walk-In Traffic

           We seek to maximize  the number of people who  patronize  the Riviera
Las Vegas who are not guests in the hotel by  capitalizing on Riviera Las Vegas'
prime Strip  location,  convention  center  proximity and the Riviera's  several
popular  in-house  productions.  Riviera  Las Vegas is well  situated on the Las
Vegas Strip near Circus Circus,  Stardust  Hotel & Casino,  Westward Ho Casino &
Hotel,  Sahara  Hotel & Casino,  Las Vegas  Hilton and the Las Vegas  Convention
Center.  We  strive to  attract  customers  from  those  facilities,  as well as
capitalize on the visitors in Las Vegas in general,  with the goal of increasing
walk-in  traffic by (i) the  development  and  promotion  of Nickel  Town,  (ii)
providing a variety of quality,  value-priced  entertainment and dining options,
and (iii)  promoting  "Slot  Frenzy," the "Free Pull" and the "$40 for $20" slot
promotions, and placing them inside the casino.

           Focus on Convention Customers

           This market consists of two groups: (i) those trade organizations and
groups that hold their  events in the banquet  and meeting  space  provided by a
single hotel and (ii) those attending city-wide events,  usually held at the Las
Vegas Convention Center.  Riviera Las Vegas targets convention  business because
it typically  provides  patrons willing to pay higher room rates and we are able
to provide  certain advance  planning  benefits,  since  conventions are usually
booked two years in advance of the event date. We focus our marketing efforts on
conventions  whose  participants  have the most active gaming profile and higher
room rate, banquet and function spending habits. Riviera Las Vegas also benefits
from our proximity to the Las Vegas Convention  Center which makes us attractive
to city-wide conventioneers looking to avoid the congestion that occurs during a
major convention,  particularly at the south end of the Las Vegas Strip. In 2001
we derived  approximately 30.4% of our hotel occupancy from convention customers
and consider them a critical component of our customer base. We believe that the
completed  expansion of the Riviera Las Vegas'  convention  facility in February
1999, from 100,000 to 160,000 square feet, has  accommodated  the growth in size
and number of groups that  presently use the facility,  attracted new convention
groups and increased the percentage of rooms occupied by conventioneers.

           Tour and Travel Operators

           We have  found  that  many  of our  customers  use  tour  and  travel
"package" options to reduce the cost of travel, lodging and entertainment. These
packages are produced by wholesale  operators  and travel  agents and  emphasize

                                                6
<PAGE>

mid-week stays.  Tour and travel patrons often book at off-peak periods enabling
us to maintain  occupancy  rates at the highest  levels  throughout the year. We
have developed specialized marketing programs and cultivated  relationships with
wholesale  operators,  travel  agents and major  domestic air carriers to expand
this market.  Our four largest tour and travel operators  currently  account for
approximately  26.3% of the available  2,100 room bookings per night. We make an
effort to convert many tour and travel  customers  who meet our target  customer
gaming profile into repeat slot customers.


Riviera Black Hawk

Business

           Our wholly owned  subsidiary,  Riviera Black Hawk, opened on February
4, 2000. Located in Black Hawk, Colorado, approximately 40 miles west of Denver,
our casino is one of the first three  encountered  when traveling from Denver to
the adjacent  gaming cities of Black Hawk and Central City. Our casino  features
the fourth largest number of gaming devices in the market with approximately 986
slot machines and 12 blackjack tables.  In Colorado,  each slot machine and each
table game is considered one gaming device.

           We also offer a variety of non-gaming  amenities  designed to further
differentiate our casino including:

o        parking for 520 vehicles, of which 92% are covered, with convenient and
         free self-park and valet options;

o        a newly remodeled 252-seat casual buffet-styled restaurant;

o        a Pizza Hut(R);

o        two themed bars; and

o        an entertainment center with seating for approximately 440 people.

           The initial  participants  in this market were small,  privately held
gaming  facilities whose inability to offer convenient  parking and a full range
of traditional casino amenities limited the growth of this market. Subsequently,
larger  casinos  offering  such  amenities  have  entered the market,  have been
gaining  market  share  and have  contributed  to the  consistent  growth in the
overall  market.  As of December  31,  2001,  there were 25 casinos in the Black
Hawk/Central  City market,  with 11 casinos each  offering  more than 400 gaming
devices.  Isle of  Capri,  located  across  the  street  from  our  casino  with
approximately  1,145 gaming machines and 1,000 covered parking spaces,  has been
the market leader in terms of win per gaming device. The Hyatt Casino with 1,332
gaming machines and 22 table games opened on December 20, 2001.

Marketing strategy

           We  attract  customers  to  our  casino  by  implementing   marketing
strategies and promotions designed specifically for this market. In so doing, we
hope to create customer loyalty and benefit from repeat visits by our customers.
Specific  marketing  programs to support this strategy include the Riviera Black
Hawk Player's Club and "V.I.P." services offered to repeat gaming customers. The
Riviera  Black Hawk Player's  Club is a promotion  that rewards  casino play and
repeat visits to the casino with various  privileges  and amenities such as cash
bonuses,  logo gift items and invitations to special events, such as parties and
concerts.  We have used the Player's  Club  promotion in our casino in Las Vegas
and, in our capacity as manager of the Riviera Black Hawk,  are tailoring it for
the Black Hawk/Central City market to implement at our casino. "V.I.P." services
are  available  to the highest  level of players and include  special  valet and
self-parking  services,  complimentary  food  and  entertainment  offerings  and
special events specifically designed for this group of customers.

           We benefit from strong "walk-in"  traffic due to the proximity of our
casino to the Colorado Central Station and the Isle of Capri Casino. We have and
continue  to develop  specific  marketing  programs  designed  to attract  these
"walk-in"  customers.  We emphasize  quality food and  beverage  amenities  with
customer  friendly  service  as  a  marketing  tool.  In  addition,  we  provide
entertainment  programs  designed  to meet the tastes of the Black  Hawk/Central
City market,  such as live music  performances by popular  regional and national
groups, comedians and boxing.

                                                7
<PAGE>

           We rely on  database  marketing  in  order  to best  identify  target
customer  segments of the population  and to tailor the casino's  promotions and
amenities  to our core  group  of  customers.  We use the  current  database  to
identify and stratify slot players living  primarily in Colorado for appropriate
incentives.  Approximately 150,000 of these slot players have been identified as
of December  31,  2001.  In addition,  we promote our casino by  advertising  in
newspapers, on billboards and on the radio in the local areas.


Geographical Markets

The Las Vegas Market

           Las Vegas is one of the  largest and  fastest  growing  entertainment
markets in the  country.  According  to the Las Vegas  Convention  and  Visitors
Authority,  the number of visitors  who traveled to Las Vegas during the 14-year
period from 1986 through 2000  increased at a steady and  significant  rate from
15.2 million in 1986 to 35.8 million in 2000, a compound  annual  growth rate of
6.3%. Just over 35 million people visited Las Vegas in 2001, a 2.3% decline from
2000.  Visitor volume dropped  drastically  following the September 11 terrorist
attacks.  Clark County gaming continued to be a strong and growing business with
Clark County gaming revenues increasing at a compound annual growth rate of 8.7%
from $2.4  billion  in 1986 to just under $7.7  billion  in 2000.  Clark  County
gaming  revenues  dropped 0.1% to just over $7.6 billion in 2001.  The terrorist
attacks of September  11, 2001 have had,  and may  continue to have,  an adverse
effect on the number of visitors traveling to Las Vegas.

           Gaming  and  tourism  are  the  major   attractions   of  Las  Vegas,
complemented   by  warm  weather  and  the   availability   of  many  year-round
recreational  activities.  Although Las Vegas' principal markets are the western
region of the United States, most significantly Southern California and Arizona,
Las Vegas also serves as a  destination  resort for  visitors  from all over the
world.  A significant  percentage of visitors  originate  from Latin America and
Pacific Rim countries such as Japan, Taiwan, Hong Kong and Singapore. The events
of September 11, 2001 have had, and may continue to have,  an adverse  impact on
the number of Latin American and Pacific Rim visitors coming to Las Vegas. Japan
Air Lines ceased its daily  non-stop  service  between Tokyo and Las Vegas after
September 11 but has plans of reinstituting that service in March 2002.

           Historically, Las Vegas has had one of the strongest hotel markets in
the country.  The number of hotel and motel rooms in Las Vegas has  increased by
over 85% from  approximately  67,000 at the end of 1989 to 126,610 at the end of
2001,  giving Las Vegas the most hotel and motel rooms of any metropolitan  area
in the world.  Despite this significant increase in the supply of rooms, the Las
Vegas hotel  occupancy rate exceeded 84% for each of the years from 1993 through
2001. During the calendar year 2001 approximately  2,340 hotel rooms opened as a
result of the opening of the Palms and Green Valley Ranch casinos, which are off
the strip.

           We believe that the growth in the Las Vegas market has been  enhanced
as a result of (i) a dedicated  program by the Las Vegas Convention and Visitors
Authority  and major Las Vegas  casino/hotels  to  promote  Las Vegas as a major
convention  site, (ii) the increased  capacity of McCarran Airport and (iii) the
introduction  of large themed "must see"  destination  resorts in Las Vegas.  In
1988,  approximately 1.7 million delegates attended conventions in Las Vegas and
generated  approximately  $1.3  billion  of  economic  impact.  Even  though the
terrorist attacks negatively impacted major city-wide conventions, the number of
convention delegates had increased to 4.0 million in 2001 with in excess of $4.8
billion of economic impact.

           During  the past eight  years,  McCarran  Airport  has  expanded  its
facilities to accommodate the increased  number of airlines and passengers which
it services.  The number of passengers  traveling  through  McCarran Airport has
increased from  approximately  22.5 million in 1993 to an estimated 35.2 million
in  2001.   Construction   has  recently  been  completed  on  numerous  roadway
enhancements to improve access to the Airport.  McCarran Airport is ranked among
the 10 busiest airports in the world based on passenger activity.

The Black Hawk/Central City Market

           Gaming was first introduced to the Black  Hawk/Central City market in
October 1991 following a state-wide  referendum  where Colorado  voters approved
limited  stakes  gaming for three  historic  mining  towns,  namely  Black Hawk,
Central City and Cripple  Creek.  Limited  stakes gaming is defined as a maximum
single bet of $5.  Black Hawk and Central  City are  contiguous  cities  located
approximately  40 miles  west of Denver and about 10 miles  north of  Interstate
Highway 70, the main east-west artery from Denver. Historically,  these two gold

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<PAGE>

mining communities were popular tourist towns.  However,  since the inception of
casino gaming in October 1991, gaming  establishments  has displaced many of the
former tourist-related businesses.

           The first casino in the Black  Hawk/Central City market was opened in
October 1991 with 14 casinos open by the end of that year. The pace of expansion
increased further in 1992 with the number of casinos in the market peaking at 42
casinos.  However,  due to a  trend  of  consolidation  in the  market  and  the
displacement  of small  casinos  by the  entry  of  larger,  better  capitalized
operators, the number of casinos has declined to 25 as of December 31, 2001.

           The Black  Hawk/Central  City market  primarily  caters to "day-trip"
customers  from  Denver,  Boulder,  Fort Collins and Golden as well as Cheyenne,
Wyoming.  We believe an estimated adult population  exceeding 2.4 million people
resides within this 100-mile radius of Black Hawk. In addition,  we believe that
residents  within a 100-mile  radius of the City of Black Hawk had an  estimated
average household income in excess of $50,000 per annum in 2001.

           Since 1992,  the number of gaming  devices in the Black  Hawk/Central
City  market has grown  approximately  78% from 7,252  devices in 1992 to 12,907
devices in 2001. Win per gaming device per day has continued to grow despite the
increase  in the  number  of  gaming  devices.  Gaming  revenues  in  the  Black
Hawk/Central  City market grew by 8.2% in 2001 over 2000. The City of Black Hawk
itself experienced a 10.3% increase in gaming revenue in 2001.

           The City of Black Hawk has  experienced  more  significant  growth in
gaming  revenues than Central City since 1992.  The  popularity of Black Hawk in
comparison to Central City is due primarily to Black Hawk's  superior  access to
major highways,  as patrons must first pass through Black Hawk to access Central
City from Denver.  Due to this superior  location,  larger casino operators have
focused on  building in the City of Black  Hawk.  As a result,  casinos in Black
Hawk now generally  feature a larger average number of gaming  devices,  a wider
variety of amenities and convenient free parking for patrons. These factors have
contributed to growth in Black Hawk gaming  revenues of 783% since 1992 compared
to a negative growth for Central City of 16% over the same period. The number of
gaming  devices in the City of Black Hawk has increased  242% since 1992,  while
the  number of gaming  devices in Central  City has  declined  43% over the same
period.

Management Activities

           In order to capitalize on our expertise and  reputation as successful
operators of casino properties,  we formed Riviera Gaming Management,  Inc., our
wholly owned subsidiary,  for the primary purpose of obtaining casino management
contracts in Nevada and other jurisdictions.  Riviera Gaming Management provides
services  such as assisting  new venue  licensee  applicants  in  designing  and
planning  their  gaming  operations  and  managing  the  start-up  of new gaming
operations. These services include casino design, equipment selection,  employee
recruitment  and  training,  control  and  accounting  systems  development  and
marketing  programs.  We believe that management  contracts  provide high margin
income with limited  additional  overhead  and little or no capital  expenditure
requirements.  We are  continually  evaluating  opportunities  to  manage  other
casinos/hotels.  Our  objective is to obtain the right to a  substantial  equity
position  in  projects  we  would  manage  as part of the  compensation  for our
services.

Four Queens Management Agreement

           Riviera Gaming  Management-Elsinore,  Inc., our indirect wholly owned
subsidiary,  operated the Four Queens Hotel and Casino,  located adjacent to the
Golden Nugget on Fremont Street in Downtown Las Vegas,  pursuant to a Management
Agreement  effective as of February  27,  1997.  This  agreement  terminated  on
December 30, 1999.

Other Management Opportunities

           We are  continuously  reviewing  opportunities to expand and become a
multi-jurisdictional  casino company with greater capital resources to enable us
to compete more effectively.  The jurisdictions include, but are not limited to,
California,  Mississippi,  Pennsylvania,  Missouri,  New Mexico and Iowa. We may
also become  involved  in  financially  distressed  casino  properties  where we
believe  we may be able to  effect  a  turn-around  (similar  to that  which  we
achieved at Riviera Las Vegas) and can obtain a  significant  equity  stake.  On
September 29, 1999,  Riviera  Gaming  Management  entered into an agreement with
Peninsula  Gaming LLC to provide  consulting  services to Diamond Jo's Riverboat
Casino in Dubuque, Iowa. This agreement terminated on September 30, 2000.


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<PAGE>

Competition

Las Vegas, Nevada

           Intense  competition  exists among companies in the gaming  industry,
many of which have significantly greater resources than our Company. Riviera Las
Vegas faces competition from all other casinos and hotels in the Las Vegas area.
We  believe  that  our  most  direct   competition   comes  from  certain  large
casino/hotels  located on or near the Las Vegas Strip which offer  amenities and
marketing programs similar to those offered by the Riviera Las Vegas.

           At December 31, 2001, the Las Vegas Convention and Visitors Authority
indicated that there were 24 casinos on the Las Vegas Strip which had over 1,000
available hotel rooms. Riviera Las Vegas is ranked as the 20th largest Las Vegas
Strip hotel/casino, based upon number of available hotel rooms.

           Las Vegas gaming square  footage and room capacity are  continuing to
grow and are  expected to continue to increase  during the next  several  years.
During calendar year 2001, approximately 2,340 new hotel rooms opened, and as of
December 31, 2001,  there were no hotel rooms under  construction.  Existing and
future  expansions,  additions  and  enhancements  to  existing  properties  and
construction  of new  properties  by our  competitors  could  divert  additional
business  from our  facilities.  There can be no assurance  that we will compete
successfully in the Las Vegas market in the future.

           During 2001,  available room nights in the Las Vegas market increased
from 44.7  million to 45.6  million or 2.1%,  while total room  nights  occupied
decreased  from 39.8 million to an estimated  38.6 million,  or 2.9%. The ending
room inventory at December 31, 2001 was 126,610  compared to 124,270 at December
31,  2000,  an  increase  of 2,340  rooms or 1.9%.  This has had the  effect  of
intensifying  competition.  At Riviera Las Vegas, room occupancy  decreased from
96.7% in 2000 to 91.6% in 2001  (still  much  higher  than the Las  Vegas  Strip
average). However, room rates increased by $3.52, or 6.0% from $58.86 in 2000 to
$62.46 in 2001,  due  primarily  to an increase in  convention  rooms sold and a
reduction  in tour and  travel  rooms  sold as a result  of the  September  11th
terrorist attacks.

           We  also  compete  to some  extent  with  casinos  in  other  states,
riverboat and Native American gaming ventures,  state-sponsored  lotteries,  on-
and off-track wagering,  card parlors and other forms of legalized gaming in the
United States, as well as with gaming on cruise ships and  international  gaming
operations.  In  addition,   certain  states  have  recently  legalized  or  are
considering legalizing casino gaming in specific geographical areas within those
states. Any future development of casinos, lotteries or other forms of gaming in
other states, particularly areas close to Nevada, such as California, could have
a material adverse effect on our results of operations.

           The  number of  casinos  on  Indian  lands  has  increased  since the
enactment of the Indian Gaming  Regulatory  Act of 1988. The voters in the State
of California  addressed this issue on March 7, 2000 when they voted in favor of
Proposition 1A, an amendment to the California  State  constitution  that allows
Las  Vegas-style  gambling  on  Indian  lands in the  state.  While  new  gaming
jurisdictions  have  traditionally  not  materially   impacted  Las  Vegas,  the
expansion of gaming into California poses a more serious threat to the continued
growth of Las Vegas.

           Our  current  business  is highly  dependent  on gaming in Las Vegas.
Riviera  Las  Vegas  derives  a  substantial  percentage  of its  business  from
tourists,  principally  from Southern  California  and the  southwestern  United
States.  Weakness  in the economy of Southern  California  has in the past,  and
could in the  future,  adversely  affect our  financial  results.  Recent  power
shortages,  and  possible  utility  rate  increases  in  California  could  also
adversely  affect our financial  results.  The events of September 11, 2001 have
had the most serious effect, and could continue to have an adverse effect on our
financial results.

Black Hawk, Colorado

           The Black Hawk/Central City gaming market is characterized by intense
competition.  The  primary  competitive  factors  in the  market  are  location,
availability  and  convenience  of parking,  number of slot  machines and gaming
tables,  promotional  incentives,  hotel rooms,  types and pricing of non-gaming
amenities, name recognition and overall atmosphere. Our main competitors are the
larger gaming facilities, particularly those with considerable on-site or nearby
parking and established reputations in the local market. As of December 31, 2001
there were 25 gaming  facilities  in the Black Hawk market with 11 casinos  each
offering more than 400 gaming positions.  The Hyatt Casino, which features 1,335
slot  machines,  opened on December  20,  2001.  Other  projects  have also been

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<PAGE>

announced,  proposed,  discussed  or  rumored  for the Black  Hawk/Central  City
market.

           The gaming  facilities near the intersection of Main and Mill Streets
provide significant  competition to our casino.  Colorado Central Station, which
has been one of the most successful  casinos in Colorado,  is located across the
street from our casino and has approximately 700 slot machines, 20 gaming tables
and approximately 700 valet parking spaces.  The Isle of Capri Casino,  the most
successful  casino in  Colorado,  operated by Casino  America,  which  opened in
December  1998,  is  located  directly  across  the  street  from our casino and
features  approximately  1,145 slot  machines,  14 table  games,  1,000  parking
spaces, and 235 hotel rooms.

           The number of hotel rooms  currently in the Black  Hawk/Central  City
market is approximately  450, with only three gaming facilities  providing hotel
accommodations to patrons.  These include Harvey's Wagon Wheel Casino Hotel with
approximately 120 rooms, the Lodge at Black Hawk with approximately 50 rooms and
the Isle of Capri Casino with 235 rooms.  Casinos offering hotel  accommodations
for overnight stay may have a competitive advantage over our casino. However, we
believe that self-parking is a more effective utilization of our available space
and that providing hotel  accommodations  will not be a significant  factor, but
instead will contribute to growth in the overall market.

           Historically,  the city of Black Hawk has enjoyed an  advantage  over
Central City because customers have to drive through Black Hawk to reach Central
City.  Central City has received approval for the development of a road directly
connecting  Central  City and Black Hawk with  Interstate  70 which  would allow
customers to reach Central City without driving by or through Black Hawk.  There
remain significant financial obstacles to the development of this road and it is
uncertain  whether it will be developed over the near to  intermediate  term, or
developed at all.

           Currently,  limited  stakes  gaming in Colorado  is  constitutionally
authorized in Central City,  Black Hawk,  Cripple Creek and two Native  American
reservations in southwest Colorado.  However,  gaming could be approved in other
Colorado  communities in the future. The legalization of gaming closer to Denver
would likely have a material adverse effect on our future results of operations.
We also  compete  with  other  forms of gaming in  Colorado,  including  lottery
gaming, and horse and dog racing as well as other forms of entertainment.

           It is also  possible  that new forms of gaming could compete with our
casino.  Currently,  Colorado law does not authorize  video  lottery  terminals.
However,  Colorado law permits the  legislature,  with  executive  approval,  to
authorize new types of lottery gaming,  such as video lottery  terminals.  Video
lottery  terminals are games of chance,  similar to slot machines,  in which the
player  pushes a button that causes a random set of numbers or  characters to be
displayed on a video  screen.  The player may be awarded a ticket,  which can be
exchanged  for cash or credit play.  This form of gaming could compete with slot
machine gaming.

           Pursuant to a license  agreement,  Riviera Las Vegas licenses the use
at the Black Hawk casino of all of the trademarks,  service marks and logos used
by  Riviera  Las  Vegas.  In  addition,  the  license  agreement  provides  that
additional  trademarks,  service marks and logos acquired or developed by us and
used at our other facilities will be subject to the license agreement.


Employees and Labor Relations

Riviera Las Vegas

           As of December  31, 2001  Riviera Las Vegas had  approximately  1,411
full-time  equivalent  employees and had  collective  bargaining  contracts with
eight unions  covering  approximately  813 of such employees  including food and
beverage employees,  rooms department employees,  carpenters,  engineers,  stage
hands, musicians, electricians,  painters and teamsters. Our agreements with the
Southern Nevada Culinary and Bartenders Union and Stage Hands Union, which cover
the majority of our unionized employees, were renegotiated in 1998 and expire in
the year 2002. Collective Bargaining Agreements with the Operating Engineers and
Musicians expired in 1999. The Operating Engineers approved a new agreement that
expires in the year 2004.  We are currently in  negotiations  with the Musicians
Union.  The Agreements  with the  Carpenters  and Painters  expired in 2000. New
agreements,  which expire in 2005, were negotiated with the Painters in 2000 and
Carpenters in 2001. New agreements  were  negotiated  with the Teamsters in 1998
and Electricians in 1999 and expire in 2003 and 2004, respectively.  On November
27,  2000,  the  Transport  Workers  Union  filed a  petition  with  the NLRB to
represent the Blackjack, Dice and Poker Dealers (or, the "Dealers"). On February

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<PAGE>

8 and 9, 2001, the Dealers voted against  representation by this Union by a vote
of 107 to 61. This group  totaled 190 at the time of the vote.  Although  unions
have been  active  in Las  Vegas,  we  consider  our  employee  relations  to be
satisfactory.  There can be no assurance,  however,  that new agreements will be
reached without union action or will be on terms satisfactory to us.

Riviera Black Hawk

           Riviera Black Hawk opened on February 4, 2000 with  approximately 450
employees.  As of December 31, 2001,  the total number of employees was 371. The
Black  Hawk/Central  City labor market is very  competitive.  Riviera Black Hawk
believes that it will be able to maintain its current employee level.  There can
be no assurance,  however, that new and existing casinos will not affect Riviera
Black Hawk's ability to maintain its current employee level.

There are currently no collective bargaining agreements in Black Hawk casinos.


Regulation and Licensing

Nevada

Nevada Gaming Authority

           The ownership and operation of casino gaming facilities in Nevada are
subject to: (i) The Nevada Gaming  Control Act and the  regulations  promulgated
thereunder  (collectively,  the "Nevada Act") and (ii) various local  ordinances
and  regulations.  Our  gaming  operations  are  subject  to the  licensing  and
regulatory  control of the Nevada Gaming  Commission (the "Nevada  Commission"),
the State of Nevada Gaming Control Board,  the Clark County Business  Department
(collectively,  the  "Clark  County  Board"),  collectively  referred  to as the
"Nevada Gaming Authorities."

           The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities  are based upon  declarations  of public  policy which are concerned
with, among other things:  (i) the prevention of unsavory or unsuitable  persons
from having a direct or indirect  involvement with gaming at any time and in any
capacity;  (ii) the  establishment  and  maintenance of  responsible  accounting
practices and procedures;  (iii) the maintenance of effective  controls over the
financial  practices  of  licensees,  including  the  establishment  of  minimum
procedures  for  internal  fiscal  affairs  and the  safeguarding  of assets and
revenues, providing reliable record keeping and requiring the filing of periodic
reports with the Nevada Gaming Authorities;  (iv) the prevention of cheating and
fraudulent  practices;  and (v)  providing a source of state and local  revenues
through  taxation and  licensing  fees.  Changes in such laws,  regulations  and
procedures could have an adverse effect on our gaming operations.

           Riviera  Operating  Corporation  is  required  to be  licensed by the
Nevada  Gaming  Authorities.  The  gaming  license  held  by  Riviera  Operating
Corporation  requires  the  periodic  payment  of  fees  and  taxes  and  is not
transferable.  Riviera Operating  Corporation is also licensed as a manufacturer
and  distributor  of gaming  devices.  Such  licenses  also require the periodic
payment  of fees  and are not  transferable.  We are  registered  by the  Nevada
Commission as a publicly  traded  corporation (a "Registered  Corporation")  and
have been  found  suitable  to own the stock of Riviera  Operating  Corporation.
Riviera Operating  Corporation is also registered by the Nevada Commission as an
intermediary  company  and has been found  suitable  to own the stock of Riviera
Gaming  Management,  which has been  registered  by the Nevada  Commission as an
Intermediary  company  and has  been  found  suitable  to own the  stock  of its
subsidiary     Riviera     Gaming     Management-Elsinore.     Riviera    Gaming
Management-Elsinore  was  licensed  as the manager of the Four  Queens.  Riviera
Operating Corporation is, and Riviera Gaming  Management-Elsinore  was corporate
licensee  ("Corporate  Licensee")  under  the  terms  of the  Nevada  Act.  As a
Registered  Corporation,   we  are  required  periodically  to  submit  detailed
financial  and  operating  reports to the Nevada  Commission  and to furnish any
other information which the Nevada Commission may require.  No person may become
a  stockholder  of, or receive  any  percentage  of profits  from,  a  Corporate
Licensee (a licensed casino) without first obtaining licenses and approvals from
the  Nevada  Gaming  Authorities.  We and  Riviera  Operating  Corporation  have
obtained,  and Riviera Gaming Management and Riviera Gaming  Management-Elsinore
previously   obtained,   from  the  Nevada  Gaming   Authorities,   the  various
registrations, approvals, permits, findings of suitability and licenses required
in order to engage in  gaming  activities  and  manufacturing  and  distribution
activities   in  Nevada.   The   management   agreement   for   Riviera   Gaming
Management-Elsinore  to manage the Four Queens terminated  December 30, 1999 and
therefore the registration and license of Riviera Gaming Management-Elsinore are
no longer in effect after that date.

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<PAGE>

           All gaming devices that are manufactured, sold or distributed for use
or play in Nevada, or for distribution  outside of Nevada,  must be manufactured
by licensed  manufacturers,  distributed  or sold by licensed  distributors  and
approved  by the Nevada  Commission.  The  approval  process  includes  rigorous
testing by the Nevada Board, a field trial and a determination as to whether the
gaming  device  meets  strict  technical  standards  that  are set  forth in the
regulations  of the Nevada  Gaming  Authorities.  Associated  equipment  must be
administratively  approved  by the  Chairman  of the Nevada  Board  before it is
distributed for use in Nevada.

           The Nevada Gaming  Authorities may investigate any individual who has
a  material  relationship  to,  or  material  involvement  with,  us or  Riviera
Operating  Corporation in order to determine whether such individual is suitable
or should be licensed as a business  associate of a gaming  licensee.  Officers,
directors and certain key employees of Riviera  Operating  Corporation must file
applications  with the  Nevada  Gaming  Authorities  and may be  required  to be
licensed  or found  suitable by the Nevada  Gaming  Authorities.  Our  officers,
directors and key employees who are actively and directly involved in the gaming
activities of Riviera  Operating  Corporation  may be required to be licensed or
found suitable by the Nevada Gaming  Authorities.  The Nevada Gaming Authorities
may deny an application for licensing for any cause which they deem  reasonable.
A finding of suitability is comparable to licensing, and both require submission
of  detailed  personal  and  financial   information   followed  by  a  thorough
investigation.  The applicant for licensing or a finding of suitability must pay
all the costs of the  investigation.  Any change in a  corporate  position  by a
licensed  person  must be  reported  to the Nevada  Gaming  Authorities  and, in
addition to their  authority to deny an application for a finding of suitability
or licensure,  the Nevada Gaming  Authorities have  jurisdiction to disapprove a
change in a corporate position.

           If the Nevada Gaming Authorities were to find an officer, director or
key  employee  unsuitable  for  licensing  or  unsuitable  to continue  having a
relationship with us or Riviera Operating  Corporation,  the companies  involved
would have to sever all relationships with such person. In addition,  the Nevada
Commission  may require us or Riviera  Operating  Corporation  to terminate  the
employment  of  any  person  who  refuses  to  file  appropriate   applications.
Determinations  of suitability  or of questions  pertaining to licensing are not
subject to judicial review in Nevada.

           We and Riviera Operating  Corporation are required to submit detailed
financial  and operating  reports to the Nevada  Commission.  Substantially  all
material loans, leases,  sales of securities and similar financing  transactions
by Riviera  Operating  Corporation must be reported to or approved by the Nevada
Commission.

           If it were  determined  that the Nevada Act was  violated  by Riviera
Operating   Corporation,   the  gaming   license  it  holds  could  be  limited,
conditioned,  suspended or revoked, subject to compliance with certain statutory
and regulatory procedures.  In addition, we or Riviera Operating Corporation and
the persons  involved  could be subject to  substantial  fines for each separate
violation of the Nevada Act at the discretion of the Nevada Commission. Further,
a supervisor  could be appointed by the Nevada  Commission to operate the casino
and, under certain  circumstances,  earnings  generated  during the supervisor's
appointment  (except  for  reasonable  rental  value  of the  casino)  could  be
forfeited to the State of Nevada. Limitation,  conditioning or suspension of the
gaming  license  of  Riviera  Operating  Corporation  or  the  appointment  of a
supervisor  could  (and  revocation  of any  gaming  license  would)  materially
adversely affect our gaming operations.

           Any  beneficial  holder of our voting  securities,  regardless of the
number of shares owned, may be required to file an application, be investigated,
and have  his  suitability  as a  beneficial  holder  of our  voting  securities
determined if the Nevada  Commission  has reason to believe that such  ownership
would  otherwise  be  inconsistent  with the  declared  policies of the State of
Nevada. The applicant must pay all costs of investigation incurred by the Nevada
Gaming Authorities in conducting any such investigation.

           The Nevada Act  requires  any person who  acquires  more than 5% of a
Registered  Corporation's (a corporate licensee) voting securities to report the
acquisition to the Nevada  Commission.  The Nevada Act requires that  beneficial
owners of more than 10% of our voting  securities apply to the Nevada Commission
for a finding of suitability within thirty days after the Chairman of the Nevada
Board  mails  the  written   notice   requiring   such  filing.   Under  certain
circumstances,  an "institutional investor," as defined in the Nevada Act, which
acquires  more than 10%,  but not more than 15%,  of our voting  securities  may
apply to the Nevada  Commission  for a waiver of such finding of  suitability if
such institutional  investor holds our voting securities for investment purposes
only.  An  institutional  investor  shall  not be  deemed  to  hold  our  voting
securities for investment  purposes  unless the voting  securities were acquired
and are held in the ordinary course of business as an institutional investor and
not for the  purpose of  causing,  directly  or  indirectly,  the  election of a
majority of the members of our board of  directors,  any change in our corporate
charter,  bylaws,  management,  policies  or  operations,  or any of our  gaming
affiliates,  or any  other  action  which  the  Nevada  Commission  finds  to be
inconsistent  with holding our voting  securities for investment  purposes only.
Activities which are deemed to be consistent with holding our voting  securities

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<PAGE>

for  investment  purposes  only  include:  (i) voting on all matters voted on by
stockholders;  (ii) making  financial  and other  inquiries of management of the
type normally made by securities analysts for informational  purposes and not to
cause a change in its management,  policies or operations;  and (iii) such other
activities as the Nevada  Commission  may  determine to be consistent  with such
investment intent. If the beneficial holder of our voting securities who must be
found suitable is a corporation,  partnership or trust,  it must submit detailed
business and financial  information  including a list of beneficial  owners. The
applicant is required to pay all costs of investigation.

           Any person who fails or refuses to apply for a finding of suitability
or a license  within  thirty  days  after  being  ordered to do so by the Nevada
Commission or the Chairman of the Nevada  Board,  may be found  unsuitable.  The
same  restrictions  apply to a record owner if the record owner,  after request,
fails to identify the beneficial owner. Any stockholder found unsuitable and who
holds,  directly or  indirectly,  any  beneficial  ownership of the common stock
beyond such period of time as may be prescribed by the Nevada  Commission may be
guilty of a criminal offense. We are subject to disciplinary action if, after we
receive  notice that a person is unsuitable  to be a stockholder  or to have any
other  relationship  with us or Riviera Operating  Corporation,  we (i) pay that
person any  dividend or interest  upon  voting our  securities,  (ii) allow that
person to exercise,  directly or indirectly,  any voting right conferred through
securities  held by that  person,  (iii)  pay  remuneration  in any form to that
person for  services  rendered or  otherwise,  or (iv) fail to pursue all lawful
efforts to require such  unsuitable  person to relinquish his voting  securities
including,  if necessary,  the immediate  purchase of said voting securities for
cash  at fair  market  value.  Additionally,  the  Clark  County  Board  has the
authority  to  approve  all  persons  owning  or  controlling  the  stock of any
corporation controlling a gaming licensee.

           The Nevada  Commission may, in its discretion,  require the holder of
any of our debt  security to file  applications,  be  investigated  and be found
suitable to own our debt security of a Registered Corporation,  if it has reason
to believe that such ownership would be inconsistent  with the declared policies
of the State of Nevada.  If the Nevada  Commission  determines  that a person is
unsuitable  to own such  security,  then  pursuant  to the Nevada Act, we can be
sanctioned,  including the loss of our approvals,  if without the prior approval
of the Nevada  Commission,  we (i) pay to the  unsuitable  person any  dividend,
interest,  or any  distribution  whatsoever;  (ii) recognize any voting right by
such  unsuitable  person  in  connection  with  such  securities;  (iii) pay the
unsuitable  person  remuneration  in any form;  or (iv) make any  payment to the
unsuitable  person  by  way  of  principal,  redemption,  conversion,  exchange,
liquidation, or similar transaction.

           We are  required to maintain a current  stock  ledger in Nevada which
may be examined by the Nevada Gaming  Authorities at any time. If any securities
are held in trust by an agent or by a nominee, the record holder may be required
to  disclose  the  identity  of  the  beneficial  owner  to  the  Nevada  Gaming
Authorities.  A failure to make such  disclosure  may be grounds for finding the
record holder  unsuitable.  We are also required to render maximum assistance in
determining the identity of the beneficial  owner. The Nevada Commission has the
power to require our stock  certificates  to bear a legend  indicating  that the
securities  are  subject  to the  Nevada  Act.  However,  to  date,  the  Nevada
Commission has not imposed such a requirement on us.

           We may not make a public offering of our securities without the prior
approval of the Nevada  Commission if the  securities or proceeds  therefrom are
intended  to be used to  construct,  acquire or  finance  gaming  facilities  in
Nevada,  or to retire or  extend  obligations  incurred  for such  purposes.  In
addition,  (i) a Corporate  Licensee  may not  guarantee a security  issued by a
Registered  Corporation pursuant to a public offering, or hypothecate its assets
to secure the payment or  performance  of the  obligations  evidenced  by such a
security,  without the prior approval of the Nevada Commission,  (ii) the pledge
of the stock of a Corporate Licensee ("Stock Pledge"), such as Riviera Operating
Corporation,  is void without the prior approval of the Nevada  Commission,  and
(iii) restrictions upon the transfer of an equity security issued by a Corporate
Licensee or Intermediary  company and agreements not to encumber such securities
(collectively,  "Stock Restrictions") are ineffective without the prior approval
of the Nevada Commission.

           Changes in control of Riviera  Holdings  Corporation  through merger,
consolidation, stock or asset acquisitions, management or consulting agreements,
or any act or conduct by a person  whereby  he  obtains  control,  may not occur
without the prior approval of the Nevada Commission. Entities seeking to acquire
control of a  Registered  Corporation  must  satisfy the Nevada Board and Nevada
Commission in a variety of stringent standards prior to assuming control of such
Registered  Corporation.  The Nevada  Commission  may also  require  controlling
stockholders,   officers,   directors  and  other  persons   having  a  material
relationship or involvement with the entity proposing to acquire control,  to be
investigated  and  licensed  as part of the  approval  process  relating  to the
transaction.

           The Nevada legislature has declared that some corporate  acquisitions
opposed by management,  repurchases of voting  securities and corporate  defense
tactics affecting Nevada corporate gaming Licensees and Registered  Corporations

                                                14
<PAGE>

that are  affiliated  with  those  operations,  may be  injurious  to stable and
productive  corporate gaming. The Nevada Commission has established  regulations
to ameliorate the potentially  adverse effects of these business  practices upon
Nevada's  gaming  industry  and to  further  Nevada's  policy to: (i) assure the
financial  stability of corporate  gaming Licensees and their  affiliates;  (ii)
preserve the beneficial  aspects of conducting  business in the corporate  form;
and (iii) promote a neutral  environment for the orderly governance of corporate
affairs.  Approvals  are,  in certain  circumstances,  required  from the Nevada
Commission before the Registered Corporation can make exceptional repurchases of
voting  securities above the current market price thereof and before a corporate
acquisition  opposed  by  management  can be  consummated.  The  Nevada Act also
requires prior approval of a plan of recapitalization proposed by the Registered
Corporation's  Board of Directors in response to a tender offer made directly to
the Registered Corporation's  stockholders for the purposes of acquiring control
of the Registered Corporation.

           License  fees and taxes,  computed in various  ways  depending on the
type of gaming or activity  involved,  are payable to the State of Nevada and to
the County in which the Riviera Operating Corporation, Riviera Gaming Management
and Riviera Gaming Management-Elsinore  operations are conducted. Depending upon
the  particular  fee or tax  involved,  these fees and taxes are payable  either
monthly,  quarterly or annually and are based upon either:  (i) a percentage  of
the gross  revenues  received;  (ii) the number of gaming devices  operated;  or
(iii) the number of table games  operated.  A casino  entertainment  tax is also
paid by casino  operations  where  entertainment is furnished in connection with
the selling of food,  refreshments or merchandise.  Nevada Licensees that hold a
license to manufacture and distribute slot machines and gaming devices,  such as
Riviera Operating  Corporation,  also pay certain fees and taxes to the State of
Nevada.

           Any person who is  licensed,  required  to be  licensed,  registered,
required  to be  registered,  or is  under  common  control  with  such  persons
(collectively,  "Licensees"),  and who  proposes to become  involved in a gaming
venture  outside of Nevada,  is required to deposit with the Nevada  Board,  and
thereafter  maintain,  a  revolving  fund in the  amount of  $10,000  to pay the
expenses of  investigation  by the Nevada Board of their  participation  in such
foreign  gaming.  The  revolving  fund is subject to increase or decrease in the
discretion  of the Nevada  Commission.  Thereafter,  Licensees  are  required to
comply with certain reporting  requirements imposed by the Nevada Act. Licensees
are also  subject  to  disciplinary  action  by the  Nevada  Commission  if they
knowingly violate any laws of the foreign jurisdiction pertaining to the foreign
gaming  operation,  fail to conduct the foreign  gaming  operation in accordance
with  the  standards  of  honesty  and  integrity   required  of  Nevada  gaming
operations,  engage in activities or enter into associations that are harmful to
the State of Nevada or its ability to collect  gaming taxes and fees, or employ,
have contact with or associate  with a person in the foreign  operation  who has
been  denied a license  or  finding  of  suitability  in Nevada on the ground of
personal unsuitability.

Other Nevada Regulation

           The sale of  alcoholic  beverages  at Riviera Las Vegas is subject to
licensing,  control and  regulation by the Clark County Board.  All licenses are
revocable  and are not  transferable.  The Clark  County Board has full power to
limit, condition,  suspend or revoke any such license, and any such disciplinary
action  could (and  revocation  would) have a material  adverse  affect upon the
operations of Riviera Operating Corporation.

Colorado

Colorado Gaming and Liquor Regulation

Summary

         In general we, Riviera Black Hawk, our principal executive officers and
those of Riviera  Holdings,  and any of our  employees  who are  involved in our
gaming  operations,  are  required to be found  suitable  for  licensure  by the
Colorado Gaming Commission. Colorado also requires that significant stockholders
of 5% or more of our stock be certified as suitable for licensure. Riviera Black
Hawk's  original  retail  gaming  license was  approved by the  Colorado  Gaming
Commission  on  November  18,  1999,  and has  been  successfully  renewed  each
subsequent year.

Background

           Pursuant to an amendment to the Colorado Constitution, limited stakes
gaming became lawful in the cities of Central City, Black Hawk and Cripple Creek
on October 1, 1991.  Limited  stakes  gaming means a maximum  single bet of five
dollars on slot machines and in the card games of blackjack and poker.

                                                15
<PAGE>

           Limited  stakes  gaming is confined to the  commercial  districts  of
these cities as defined by Central City on October 7, 1981, by Black Hawk on May
4, 1978,  and by Cripple  Creek on December 3, 1973.  In addition,  the Colorado
Amendment  restricts  limited  stakes gaming to  structures  that conform to the
architectural  styles and  designs  that were common to the areas prior to World
War I, and which  conform to the  requirements  of  applicable  city  ordinances
regardless of the age of the structures.  Under the Colorado Amendment,  no more
than 35% of the square  footage of any  building and no more than 50% of any one
floor of any building may be used for limited stakes  gaming.  Persons under the
age of 21 cannot  participate in limited stakes gaming.  The Colorado  Amendment
also  prohibits  limited  stakes gaming  between the hours of 2:00 a.m. and 8:00
a.m., and allows limited  stakes gaming to occur in  establishments  licensed to
sell alcoholic beverages.

           Further,  the Colorado Act  provides  that,  in addition to any other
applicable  license fees,  up to a maximum of 40% of the total  amounts  wagered
less  payouts to players  may be payable  by a  licensee  for the  privilege  of
conducting  limited stakes gaming.  Such  percentage is to be established by the
Colorado Commission annually.

           The Colorado Act declares  public policy on limited  stakes gaming to
be that:  (1) the  success of limited  stakes  gaming is  dependent  upon public
confidence and trust that licensed  limited stakes gaming is conducted  honestly
and  competitively;  the rights of the  creditors  of licensees  are  protected;
gaming is free from criminal and corruptive elements;  (2) public confidence and
trust can be maintained  only by strict  regulation  of all persons,  locations,
practices,  associations  and  activities  related to the  operation of licensed
gaming  establishments and the manufacture or distribution of gaming devices and
equipment;  (3) all  establishments  where limited gaming is conducted and where
gambling devices are operated,  and all manufacturers,  sellers and distributors
of certain gambling devices and equipment must therefore be licensed, controlled
and assisted to protect the public  health,  safety,  good order and the general
welfare of the  inhabitants  of the state to foster the stability and success of
limited stakes gaming and to preserve the economy, policies and free competition
in Colorado;  and (4) no applicant for a license or other affirmative commission
approval has any right to a license or to the  granting of the approval  sought.
Any  license  issued  or  other  commission  approval  granted  pursuant  to the
provisions of this Article is a revocable privilege,  and no holder acquires any
vested rights therein.

Regulatory Structure

           The  Colorado Act subjects  the  ownership  and  operation of limited
stakes gaming  facilities in Colorado to extensive  licensing and  regulation by
the  Colorado  Commission.  The  Colorado  Commission  has  full  and  exclusive
authority to promulgate,  and has promulgated,  rules and regulations  governing
the licensing,  conducting and operating of limited stakes gaming.  The Colorado
Act also created the  Colorado  Division of Gaming  within the Colorado  Revenue
Department  to license,  regulate and  supervise  the conduct of limited  stakes
gaming in Colorado.  The division is supervised and administered by the Director
of the Division of Gaming.

Gaming licenses

The Colorado Commission may issue:

    o   slot machine manufacturer or distributor,

    o   operator,

    o   retail gaming,

    o   support, and

    o   key employee gaming licenses.

           The first  three  licenses  require  annual  renewal by the  Colorado
Commission.  Support and key employee  licenses are issued for two-year  periods
and are renewable by the Division  Director.  The Colorado  Commission has broad
discretion to condition, suspend for up to six months, revoke, limit or restrict
a license at any time and also has the authority to impose fines.

                                                16
<PAGE>

           An  applicant  for  a  gaming  license  must  complete  comprehensive
application forms, pay required fees and provide all information required by the
Colorado Commission and the Division of Gaming.  Prior to licensure,  applicants
must satisfy the  Colorado  Commission  that they are  suitable  for  licensing.
Applicants have the burden of proving their qualifications and must pay the full
cost of any  background  investigations.  There  is no limit on the cost of such
background investigations.

           Gaming employees must hold either a support or key employee  license.
Every retail gaming licensee must have a key employee  licensee in charge of all
limited stakes gaming  activities when limited stakes gaming is being conducted.
The Colorado  Commission may determine that a gaming  employee is a key employee
and, require that such person apply for a key employee license.

           A retail  gaming  license  is  required  for all  persons  conducting
limited stakes gaming on their  premises.  In addition,  an operator  license is
required  for all  persons who engage in the  business of placing and  operating
slot machines on the premises of a retailer. However, a retailer is not required
to hold an operator  license.  No person may have an ownership  interest in more
than three retail gaming  licenses.  A slot machine  manufacturer or distributor
license is required for all persons who manufacture,  import and distribute slot
machines in Colorado.

           The Colorado  Regulations require that every officer,  director,  and
stockholder of private  corporations or equivalent  office or ownership  holders
for non-corporate applicants, and every officer, director or stockholder holding
either a 5% or greater  interest or  controlling  interest of a publicly  traded
corporation  or owners of an  applicant  or  licensee  shall be a person of good
moral character and submit to a full background  investigation  conducted by the
Division of Gaming and the  Colorado  Commission.  The Colorado  Commission  may
require any person having an interest in a license to undergo a full  background
investigation  and pay the  cost  of  investigation  in the  same  manner  as an
applicant.

           Persons found  unsuitable by the Colorado  Commission may be required
immediately  to  terminate  any  interest,  association,  or  agreement  with or
relationship  to a  licensee.  A finding of  unsuitability  with  respect to any
officer, director, employee, associate, lender or beneficial owner of a licensee
or applicant  also may  jeopardize  the  licensee's  license or the  applicant's
application.  A license  approval may be conditioned upon the termination of any
relationship with unsuitable  persons.  A person may be found unsuitable because
of prior acts,  associations or financial conditions.  Acts that would lead to a
finding of  unsuitability  are those that would  violate the Colorado Act or the
Colorado  Regulations or that contravene the legislative purpose of the Colorado
Act.

Duties of licensees

           An  applicant  or licensee  must report to the  Division of Gaming or
Colorado  Commission  all leases not later than 30 days after the effective date
of the lease. Also, an applicant or a licensee, upon the request of the Colorado
Commission or the Division  Director,  must submit copies of all written  gaming
contracts and  summaries of all oral gaming  contracts to which it is or intends
to become a party. The Division Director or the Colorado  Commission may require
changes in the lease or gaming  contract  before an  applicant  is  approved  or
participation  in such  agreement is allowed or may require  termination  of the
lease or gaming contract.

           The Colorado Act and the Colorado  Regulations  require  licensees to
maintain  detailed records that account for all business  transactions.  Records
must be furnished upon demand to the Colorado Commission, the Division of Gaming
and other law enforcement  authorities.  The Colorado Regulations also establish
extensive  playing  procedures  and rules of play for poker,  blackjack and slot
machines.  Retail gaming  licenses  must adopt  comprehensive  internal  control
procedures.  Such  procedures  must be  approved  in advance by the  Division of
Gaming and  include the areas of  accounting,  surveillance,  security,  cashier
operations,  key control and fill and drop procedures,  among others.  No gaming
devices  may be used in  limited  stakes  gaming  without  the  approval  of the
Division Director or the Colorado Commission.

           Licensees  have  a  continuing  duty  to  immediately  report  to the
Division  of Gaming the name,  date of birth and social  security  number of all
persons who obtain an ownership, financial or equity interest in the licensee of
5% or  greater,  who have the  ability to  control  the  licensee,  who have the
ability to  exercise  significant  influence  over the  licensee or who loan any
money or other  thing of value to the  licensee.  Licensees  must  report to the
Division  of  Gaming  all  gaming  licenses,  and all  applications  for  gaming
licenses, in foreign jurisdictions.


                                                17
<PAGE>

           With limited  exceptions  applicable  to licensees  that are publicly
traded  entities,  no person may sell,  lease,  purchase,  convey or acquire any
interest in a retail  gaming or operator  license or business  without the prior
approval of the Colorado Commission.

           All agreements,  contracts,  leases,  or arrangements in violation of
the Colorado  Amendment,  the Colorado Act or the Colorado  Regulations are void
and unenforceable.

Taxes, fees and fines

           The  Colorado  Amendment  requires  an annual tax of up to 40% on the
total  amount  wagered  less all  payouts to players.  With  respect to games of
poker, the tax is calculated based on the sums wagered which are retained by the
licensee as  compensation.  Annually  during April,  May and June,  the Colorado
Commission,  as mandated by the Colorado Regulations,  shall conduct rule-making
hearings  concerning  the gaming tax rate and device fee rate for the subsequent
gaming year.  However,  rigid  compliance  with the Colorado  Regulations is not
mandatory  and shall in no way be construed to limit the time periods or subject
matters which the Colorado  Commission may consider in  determining  the various
tax rates. Currently, the gaming tax is:

    o   .25% on the first $2 million of these amounts;

    o   2% on amounts from $2 million to $4 million;

    o   4% on amounts from $4 million to $5 million;

    o   11% on amounts from $5 million to $10 million;

    o   16% on amounts from $10 million to $15 million; and

    o   20% on amounts over $15 million.

           The Colorado  Commission  has  eliminated  the annual  device fee for
gaming device machines, blackjack tables and poker tables.

           The  municipality  of Black  Hawk  assesses  an annual  device fee of
$62.50 per device on all devices  exceeding  50. There is no statutory  limit on
state or city device  fees,  which may be  increased  at the  discretion  of the
Colorado Commission or the city. In addition,  a business  improvement fee of as
much as $7.42 per device and a monthly  transportation  authority  device fee of
$8.84 per device also may apply  depending  upon the  location  of the  licensed
premises in Black Hawk.

           Black  Hawk  also  imposes  taxes  and fees on other  aspects  of the
businesses of gaming licensees, such as parking, alcoholic beverage licenses and
other municipal taxes and fees.  Significant  increases in these fees and taxes,
or the imposition of new taxes and fees, may occur.

           Violation  of the  Colorado  Gaming Act or the  Colorado  Regulations
constitutes  a class 1  misdemeanor  which may subject the  violator to fines or
incarceration  or both.  A licensee  who  violates  the  Colorado  Gaming Act or
Colorado  Regulations is subject to suspension of the license for a period of up
to six months, fines or both, or to license revocation.

Requirements for publicly traded corporations

           The  Colorado   Commission   has  enacted  Rule  4.5,  which  imposes
requirements on publicly traded corporations holding gaming licenses in Colorado
and on gaming  licenses  owned  directly  or  indirectly  by a  publicly  traded
corporation,  whether  through a subsidiary or  intermediary  company.  The term
"publicly traded corporation"  includes  corporations,  firms, limited liability
companies, trusts, partnerships and other forms of business organizations.  Such
requirements  automatically  apply to any ownership  interest held by a publicly
traded corporation,  holding company or intermediary company thereof,  where the
ownership  interest  directly or indirectly  is, or will be upon approval of the
Colorado  Commission,  5% or more of the entire  licensee.  In any event, if the
Colorado  Commission  determines  that  a  publicly  traded  corporation,  or  a
subsidiary,  intermediary  company or holding  company has the actual ability to

                                                18
<PAGE>

exercise  influence  over a licensee,  regardless of the percentage of ownership
possessed by said  entity,  the  Colorado  Commission  may require the entity to
comply with the disclosure regulations contained in Rule 4.5.

           Under  Rule  4.5,   gaming   licensees,   affiliated   companies  and
controlling  persons  commencing  a public  offering of voting  securities  must
notify the Colorado Commission no later than ten business days after the initial
filing of a registration  statement with the Securities and Exchange Commission.
Licensed publicly traded corporations are also required to send proxy statements
to the Division of Gaming within 5 days after their  distribution.  Licensees to
whom Rule 4.5 applies must include in their charter  documents  provisions that:
restrict the rights of the  licensees to issue  voting  interests or  securities
except in accordance with the Colorado Gaming Act and the Colorado  Regulations;
limit the  rights of persons to  transfer  voting  interests  or  securities  of
licensees  except in  accordance  with the Colorado  Gaming Act and the Colorado
Regulations;  and provide that  holders of voting  interests  or  securities  of
licensees  found  unsuitable by the Colorado  Commission  may, within 60 days of
such finding of unsuitability, be required to sell their interests or securities
back  to the  issuer  at the  lesser  of the  cash  equivalent  of the  holders'
investment  or the market price as of the date of the finding of  unsuitability.
Alternatively,   the  holders   may,   within  60  days  after  the  finding  of
unsuitability, transfer the voting interests or securities to a suitable person,
as  determined  by the  Colorado  Commission.  Until  the  voting  interests  or
securities  are held by suitable  persons,  the issuer may not pay  dividends or
interest,  the  securities  may not be voted,  they may not be  included  in the
voting or securities of the issuer,  and the issuer may not pay any remuneration
in any form to the holders of the securities.

         Pursuant to Rule 4.5, persons who acquire direct or indirect beneficial
         ownership of

    o  5% or more of any class of voting securities of a publicly traded
       corporation that is required to include in its articles of organization
       the Rule 4.5 charter language provisions or

   o   5% or more of the beneficial interest in a gaming licensee directly or
       indirectly through any class of voting securities of any holding company
       or intermediary company of a licensee, referred to as qualifying persons,
       shall notify the Division of Gaming within 10 days of such acquisition,
       are required to submit all requested information and are subject to a
       finding of suitability as required by the Division of Gaming or the
       Colorado Commission.  Licensees also must notify any qualifying persons
       of these requirements.  A qualifying person other than an institutional
       investor whose interest equals 10% or more must apply to the Colorado
       Commission for a finding of suitability within 45 days after acquiring
       such securities.  Licensees must also notify any qualifying persons of
       these requirements.  Whether or not notified, qualifying persons are
       responsible for complying with these requirements.

           A qualifying  person who is an institutional  investor under Rule 4.5
and who,  individually  or in  association  with others,  acquires,  directly or
indirectly,  the  beneficial  ownership  of 15% or more of any  class of  voting
securities  must apply to the Colorado  Commission  for a finding of suitability
within 45 days after acquiring such interests.

           The  Colorado   Regulations  also  provide  for  exemption  from  the
requirements  for a finding of suitability  when the Colorado  Commission  finds
such action to be consistent with the purposes of the Colorado Act.

           Pursuant  to Rule  4.5,  persons  found  unsuitable  by the  Colorado
Commission  must be  removed  from any  position  as an  officer,  director,  or
employee  of a  licensee,  or  from a  holding  or  intermediary  company.  Such
unsuitable  persons also are  prohibited  from any  beneficial  ownership of the
voting  securities of any such entities.  Licensees,  or affiliated  entities of
licensees,  are subject to sanctions for paying  dividends or  distributions  to
persons found unsuitable by the Colorado  Commission,  or for recognizing voting
rights of, or paying a salary or any  remuneration  for services to,  unsuitable
persons.  Licensees or their  affiliated  entities  also may be  sanctioned  for
failing to pursue  efforts to require  unsuitable  persons to  relinquish  their
interest.  The Colorado  Commission  may  determine  that anyone with a material
relationship  to, or material  involvement  with,  a licensee  or an  affiliated
company must apply for a finding of suitability or must apply for a key employee
license.

                                                19
<PAGE>

Alcoholic Beverage Licenses

           The sale of alcoholic  beverages in gaming  establishments is subject
to strict  licensing,  control and  regulation  by state and local  authorities.
Alcoholic beverage licenses are revocable and  nontransferable.  State and local
licensing authorities have full power to limit,  condition,  suspend for as long
as six months or revoke any such licenses. Violation of state alcoholic beverage
laws may constitute a criminal  offense  resulting in  incarceration,  fines, or
both.

           There are  various  classes of retail  liquor  licenses  which may be
issued under the Colorado Liquor Code. A gaming  licensee may sell malt,  vinous
or  spirituous  liquors  only by the  individual  drink for  consumption  on the
premises.  Even though a retail gaming licensee may be issued various classes of
retail liquor  licenses,  such gaming  licensee may only hold liquor licenses of
the same class.  An application  for an alcoholic  beverage  license in Colorado
requires notice,  posting and a public hearing before the local liquor licensing
authority  prior to approval of the same.  The Colorado  Department of Revenue's
Liquor  Enforcement  Division must also approve the  application.  Riviera Black
Hawk's  hotel  and  restaurant  license  has been  approved  by both  the  local
licensing authority and the State Division of Liquor Enforcement.

Federal Registration

           Riviera  Operating  Corporation is required to annually file with the
Attorney   General  of  the  United  States  in   connection   with  the  sales,
distribution,  or operations  of slot  machines.  All requisite  filings for the
present year have been made.

Item 2.    Properties

           Riviera Hotel and Casino

           The Riviera Las Vegas  complex is located on the Las Vegas Strip,  at
2901 Las Vegas Boulevard South, Las Vegas, Nevada and occupies  approximately 26
acres. The buildings comprise  approximately 1.8 million square feet,  including
110,000 square feet of casino space, a 160,000 square foot  convention,  meeting
and banquet facility,  approximately 2,100 hotel rooms (including  approximately
169 luxury suites) in five towers, three restaurants,  a buffet, four showrooms,
a lounge and  approximately  2,300 parking  spaces.  In addition,  executive and
other offices for Riviera Las Vegas are located on the property.

           There are 40 food and retail  concessions  operated under  individual
leases with third parties. The leases are for periods from one year to ten years
and expire over the next five years.

           The entire Riviera Las Vegas complex is encumbered by a first deed of
trust securing the 10% Notes.

           Riviera Black Hawk

           Riviera  Black  Hawk is  located  on 1.63  acres  of land at 400 Main
Street, Black Hawk, Colorado. The buildings include approximately 325,000 square
feet and comprise 32,000 square feet of gaming space,  parking for approximately
520 vehicles  (substantially  all of which are covered),  a 252-seat buffet, two
bars and an entertainment center with seating for approximately 440 people.

           The entire  Riviera  Black Hawk complex is encumbered by a first deed
of trust securing the 13% Notes.

           See "Management's Discussion and Analysis of Financial Condition and
           Results of Operations."




                                                20
<PAGE>

Item 3.    Legal Proceedings

           Paulson, et al. v. Jefferies,  Riviera Holdings Corporation,  et al.,
United States  District  Court for the Central  District of  California,  No. CV
98-2644 (ABC) (the  "California  Action").  We and the plaintiffs to this action
entered into a Settlement  Agreement  dated as of July 2, 1999.  The  Settlement
Agreement was conditioned  upon the United States District Court for the Central
District of California  (the "Court")  entering a Settlement Bar Order and Final
Judgment and provided that upon the entering of such an Order:  (i) we would pay
plaintiff Allen E. Paulson (and his heirs or successors)  ("Paulson") $3,477,412
($7.50 per share) for the 463,655 shares of Riviera Holdings  Corporation common
stock owned by Paulson,  (ii) Paulson would receive $1,522,587.50 from the funds
being  held  in  escrow  for  the   benefit  of  holders  of  Riviera   Holdings
Corporation's  Contingent  Value  Rights  ("CVRs"),  (iii) the  remainder of the
escrow of  approximately  $4,340,000  would be distributed to the holders of the
CVRs,  and  (iv)  Paulson  would  file an  amended  complaint  which  eliminated
allegations of wrongdoing against us.

           On October  7, 1999,  the Court  entered a  Settlement  Bar Order and
Final Judgment which dismissed the California  Action against us with prejudice,
and barred the other  defendants  to the lawsuit  from  seeking  indemnification
against us for claims arising under the federal securities laws or for state law
claims  arising  out of the  transactions  underlying  the  plaintiffs'  federal
security law claims.

           Shortly  after the entry of the  Settlement  Bar Order,  we  acquired
Paulson's  stock,  and funds were  disbursed from escrow as per the terms of the
Settlement Agreement.

Morgens,  Waterfall, Vintiadis & Company, Inc., v. Riviera Holdings Corporation,
-------------------------------------------------------------------------------
William L. Westerman, Robert R. Barengo, Richard L. Barovick  and James N. Land,
-------------------------------------------------------------------------------
Jr., as Directors of Riviera  Holdings  Corporation,  United  States  District
----------------------------------------------------
Court for the District of Nevada (CV-S-99-1383-JBR (RLH)) (the "Nevada Action").
The plaintiff in this action ("Morgens,  Waterfall") is a shareholder of Riviera
Holdings  Corporation  and a defendant to the California  Action.  On September
30, 1999,  Morgens,  Waterfall  commenced  this  action  in Nevada state court,
where it sought an order  enjoining us from obtaining a Settlement  Bar Order in
the California Action. We and the other  defendants to the Nevada Action removed
the  action  to  the United States  District Court for the District of Nevada on
October 1, 1999. This  removal to federal court  divested  the  state  court of
jurisdiction  to consider  Morgens,  Waterfall's  motion  for injunctive relief.
Morgens, Waterfall filed a complaint with  the court, but it did  not serve the
complaint on any of the defendants.

           On November 1, 1999, Morgens,  Waterfall served a notice of motion to
remand the Nevada  Action  from the Nevada  federal  court back to Nevada  state
court. We and the other defendants  opposed the motion, and on May 24, 2000, the
Court denied Morgens, Waterfall's motion.

           On January 31, 2000, Morgens, Waterfall served an Amended Summons and
a  First  Amended  Verified  Complaint  on  Riviera  Holdings  Corporation  with
subsequent service on directors.  The Amended Complaint asserted four claims for
relief.

           On April 17,  2000,  the Company and its  directors  moved to dismiss
Morgens,  Waterfall's Amended Complaint. In response, Morgens, Waterfall opposed
the  directors'  motion but  "conceded"  its claim  against  the  Company.  As a
consequence,  Morgens,  Waterfall  no  longer  asserted  any claim  against  the
Company, but it has opposed dismissing the Company from the action on the ground
that the Company was a "nominal defendant" with respect to the derivative claims
asserted by Morgens, Waterfall against the directors.

           On October 1, 2001 Morgens,  Waterfall, the Company and the directors
entered into a Settlement  Agreement settling the Nevada Action. That Settlement
Agreement  provides  that  plaintiff  would  release its claims  with  prejudice
against  each  defendant  and each  defendant  would  release  its  claims  with
prejudice against plaintiff  conditioned upon Mr. Westerman accepting service of
a  subpoena  to  personally  appear and  testify at the trial of the  California
Action and that Mr.  Westerman appear and testify at the trial of the California
Action.

           We are also a party to several routine lawsuits both as plaintiff and
as defendant  arising from the normal  operations of a hotel.  We do not believe
that the  outcome of such  litigation,  in the  aggregate,  will have a material
adverse effect on the financial position or results of our operations.

Item 4.    Submission of Matters to a Vote of Security Holders

           Not applicable.


                                                21
<PAGE>

           PART II

Item 5.    Market for the Registrant's Common Stock and Related Security Holder
           Matters

           The  Company's  Common  Stock  began  trading on the  American  Stock
Exchange on May 13, 1996 and was reported on the NASDAQ  Bulletin Board prior to
that date.  As of March 2, 2002,  based upon  information  available  to it, the
Company  believes that there were  approximately  600 beneficial  holders of the
Company's Common Stock.

           The Company has never paid any dividends on its Common Stock and does
not  currently  expect to pay any  dividends  (cash or  otherwise) on its Common
Stock for the  foreseeable  future.  The  Company's  ability to pay dividends is
primarily  dependent  upon receipt of dividends and  distributions  from Riviera
Operating  Corporation.  In addition, the indenture for the First Mortgage Notes
restricts the Company's ability to pay dividends on its Common Stock.

           The table  below sets  forth the bid and ask sales  prices by quarter
for the years ended December 31, 2001 and 2000, based on information provided by
certain brokers who have had  transactions in the Company's  Common Stock during
the year:
<TABLE>
<CAPTION>

                         First          Second            Third          Fourth
                        Quarter         Quarter          Quarter         Quarter
                        --------        -------          -------         -------

         2001
         ----
<S>      <C>               <C>             <C>             <C>             <C>
         HIGH             $7.38           $6.70           $6.35           $4.35
          LOW              6.00            5.96            4.00            3.15

         2000
         ----
         HIGH             $7.88           $8.13           $8.13           $7.63
          LOW              5.88            6.75            6.75            6.50
</TABLE>


           On March 18,  2002,  (the most  recent  trade  date of the  Company's
common stock), 1,500 shares were traded closing at $5.20 per share.

Item 6.  Selected Financial Data

           The following  table sets forth a summary of selected  financial data
for the Company for the years ended December 31, in thousands (except Net Income
(Loss) per Common Share):
<TABLE>
<CAPTION>

           ---------------------------------- ------------ ------------ ----------- ------------ ------------
                                                 2001         2000         1999        1998         1997
           ---------------------------------- ------------ ------------ ----------- ------------ ------------
<S>                                              <C>          <C>         <C>          <C>          <C>
           Net Operating Revenue                 $202,031     $201,531    $157,268     $159,955     $153,793
           Net Income (Loss)                      (6,407)      (4,215)     (2,869)      (4,057)        2,088
           Net Income (Loss) Per Diluted
           Common Share                           ($1.79)      ($1.05)     ($0.58)      ($0.81)        $0.40
           Total Assets                           267,818      283,710     288,990      244,909      347,866
           Long-Term Debt                         220,439      226,043     229,052      179,439      175,512
           ---------------------------------- ------------ ------------ ----------- ------------ ------------
</TABLE>




                                                  22
<PAGE>



Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Results of Operations

2001 Compared to 2000

Special Factors Effecting Comparability of Results of Operations

           Riviera  Black  Hawk was in the  development  stage  during the first
quarter of 2000 until  February 4, 2000 when it opened the casino.  Accordingly,
the results of operations for the fiscal 2001 and fiscal 2000 results may not be
comparable.

           The following table sets forth,  for the periods  indicated,  certain
operating  data for  Riviera  Las Vegas and Riviera  Black  Hawk.  Net  revenues
displayed in this table and  discussed  in this  section are net of  promotional
allowances.  Operating  income  from  properties  is  presented  as shown on the
Consolidated Statement of Operations. EBITDA from properties for the purposes of
this table excludes  corporate  expense,  pre-opening  expense and inter-company
management fees.
<TABLE>
<CAPTION>

                                          Year Ended December 31,         $ Change        % Change
(In Thousands)                              2001            2000         Inc/(Decr)     Incr/(Decr)

Net revenues:
<S>                                         <C>             <C>              <C>              <C>
  Riviera Las Vegas                      $ 152,985       $ 166,038        $(13,053)        (7.9)%
  Riviera Black Hawk                        49,046          35,261          13,785         39.1 %
  Riviera Gaming Management                     -              232            (232)      (100.0)%
                                         ---------       ---------        ---------      --------
           Total Net Revenues            $ 202,031       $ 201,531           $ 500          0.2 %
                                         =========       =========        =========      ========
Operating Income
  Riviera Las Vegas                        $ 9,350        $ 14,910        $ (5,560)         (37.2)%
  Riviera Black Hawk                         7,622           1,881           5,741          305.2 %
  Riviera Gaming Management                     (1)             88             (89)        (101.1)%
                                          ---------       ---------        ---------      --------
           Total Operating Income         $ 16,971        $ 16,879            $ 92            0.5 %
                                          =========       =========        =========      ========
EBITDA:(1)
  Riviera Las Vegas                       $ 21,493        $ 29,243        $ (7,750)        (26.5)%
  Riviera Black Hawk                        12,722           6,597           6,125          92.8 %
  Riviera Gaming Management                     (1)             88             (89)       (101.1)%
                                          ---------       ---------        ---------      --------
           Total EBITDA                   $ 34,214        $ 35,928        $ (1,714)         (4.8)%
                                          =========       =========        =========      ========
EBITDA margin
  Riviera Las Vegas                         14.0 %          17.5 %            (3.5)%
  Riviera Black Hawk                        25.9 %          18.7 %             9.3 %
  Riviera Gaming Management                                 37.8 %           (37.8)%
                                            ------          ------           -------
           Total EBITDA Margin              16.9 %          17.4 %            (0.5)%
                                            ======          ======           =======
</TABLE>

(1)   EBITDA consists of Earnings Before Interest,  income Taxes,  Depreciation,
      Amortization, preopening expenses, and other, net. While EBITDA should not
      be construed as a substitute for operating income or a better indicator of
      liquidity than cash flows from operating activities,  which are determined
      in accordance with generally accepted accounting  principles ("GAAP"),  it
      is included herein to provide  additional  information with respect to the
      ability  of  the  Company  to  meet  its  future  debt  service,   capital
      expenditures  and working  capital  requirements.  Although  EBITDA is not
      necessarily  a measure of the  Company's  ability to fund its cash  needs,
      management believes that certain investors find EBITDA to be a useful tool
      for  measuring  the  ability of the  Company to service  its debt.  EBITDA
      margin is EBITDA as a percent of net revenues. The Company's definition of
      EBITDA may not be comparable to other companies' definitions.



                                                23
<PAGE>

Riviera Las Vegas

Revenues

         Riviera  Las  Vegas  net  revenues  decreased  by  approximately  $13.1
million,  or  7.9%,  from  $166.0  million  in 2000 to  $153.0  million  in 2001
primarily  due to the effects of the  recession  and the  September 11 terrorist
attacks.  Casino  revenues  decreased  approximately  $6.7 million or 9.0%, from
$74.1 million during 2000 to $67.4 million during 2001.  Slot revenues were down
7.0%,  while table games  revenues were down 13.6%.  The hold  percentages  were
comparable  for both  table  games  and slot  machines  in 2001 and  2000.  Room
revenues were  comparable to the prior year, as the average room rate  increased
$3.50 or 6% from $59.00 to $62.50 and hotel  occupancy  decreased  from 96.6% to
91.6%. The decrease in air travel,  especially  long-haul  flights from the east
coast,  affected  Riviera  Las  Vegas  more than  many of its  competitors.  The
Company's  marketing  efforts had been  concentrated  on airline  customers  who
traveled longer  distances,  paid more for their tickets and had a larger gaming
and entertainment budget. While this strategy was successful in prior years, the
effects of the September 11th terrorist  attacks were devastating to this market
segment.  Subsequent  to September  11th,  gaming  marketing  expenditures  were
increased  to  protect  and  promote  the slot  customer  base.  Increased  room
marketing  efforts  focus on  customers in the western  United  States and these
efforts appear to be  successful,  based on the pace of advance  bookings.  Call
volumes,  booking patterns and occupancy began to normalize in mid-January 2002.
In February 2002 Super Bowl,  Chinese New Year and  Presidents' Day weekend were
successful and occupancy is expected to increase  steadily  during the first and
second quarter of 2002.  Although  occupancy is recovering on the weekends,  the
midweek  occupancy  rates vary  significantly  from day to day  primarily due to
competitive  pressures.  Entertainment  revenues decreased by approximately $4.1
million,  or 16.7%,  from $24.5 million during 2000 to $20.4 million during 2001
as attendance decreased approximately 27%, which was partially offset by a 13.6%
increase  in  ticket  price.  Competition  for  Riviera  show  customers,  while
significant  all year,  intensified  after  September 11th. Tour and travel room
sales were down  approximately  50% in the fourth  quarter of 2001,  which is an
important  producer  of show  ticket  sales and slot  revenues.  Other  revenues
decreased by approximately $1.4 million, or 13.9%, from $9.9 million during 2000
to $8.5 million during 2001 due primarily to lower telephone revenues.

Income from Operations

         Income  from  operations  decreased  $5.6  million  or 37.2% from $14.9
million in 2000 to $9.3  million in 2001 due to the  decreased  revenues,  which
were partially  offset by lower  entertainment  contract  expenses and a 9.4% or
$1.4 million reduction in depreciation expense.  Entertainment costs are tied to
revenues and as a result of this  relationship,  the  departmental  results were
similar to the prior year.  Depreciation  decreased, as $20 million of equipment
purchased in 1993 became fully  depreciated in 2000. In addition,  the September
11th terrorist  attacks caused management to accelerate the timing and magnitude
of staffing  reductions.  In excess of 300 full-time  equivalent  employees were
laid off,  based on the  reduction  in  volumes.  These  events  have caused the
industry to reevaluate their cost structures and adjust payrolls accordingly.

EBITDA

         Riviera Las Vegas EBITDA, as defined,  decreased by approximately  $7.8
million,  or 26.5%,  from $29.2 million in 2000 to $21.5 million in 2001. During
the same periods, EBITDA margin decreased from 17.5 % to 14.0% of net revenues.

Riviera Black Hawk

Special Factors Effecting Comparability of Results of Operations

Riviera Black Hawk was in the  development  stage during 1999 and until February
4, 2000  when the  casino  opened.  Accordingly,  the  consolidated  results  of
operations for fiscal 2001 and 2000 may not be comparable.

Revenues

         Riviera  Black  Hawk net  revenues  increased  by  approximately  $13.8
million,  or 39.1%, from $35.3 million in the 11 months of 2000 to $49.0 million
in the 12 months ended  December 31, 2001 as the  operation  gained market share
and was, for the most part,  unaffected  by the events of September  11.  Casino
revenues,  primarily slot machines, increased by approximately $13.0 million, or
38.7%,  from $33.6  million in the 11 months of 2000 to $46.7  million in the 12
months ended December 31, 2001. Average slot machine win per unit increased from
$114 per day in 2000 to $148 in 2001.  Food and beverage  revenues  increased by


                                                24
<PAGE>

approximately $1.5 million, or 38.3%, from $4.0 million in the 11 months of 2000
to $5.6 million in the 12 months ended December 31, 2001.  The remodeled  buffet
and related marketing efforts resulted in a 45.6% increase in covers (customers)
and a 26.4% increase in average check (price).

Income from Operations

Income from  operations  increased $5.7 million or 305% from $1.9 million in the
11 months of 2000 to $7.6 million in the 12 months  ended  December 31, 2001 due
to the  increase  in  revenues  and  better  margins  as  marketing  costs  were
stabilized.  Staffing was also optimized as full-time  equivalent employees were
reduced  from 450 at the  opening  in  February  2000 to 350 at the end of 2001.
Although  general and  administrative  costs  increased $1.7 million,  they were
23.5% of revenues in the current year  compared  with 27% in 2000.  Depreciation
increased $809,000 or 27.5% in 2001 compared with the 11 months of operations in
2000.

EBITDA

         Riviera Black Hawk EBITDA, as defined,  increased by approximately $6.1
million,  or 92.8%,  from $6.6 million in the 11 months of 2000 to $12.7 million
in the 12 months ended December 31, 2001. During the same periods, EBITDA margin
increased from 18.7% to 25.9% of net revenues.

Consolidated Operations

Other Income (Expense)

         Interest expense on the $175 million 10% First Mortgage Notes issued by
the  Company  of  $17.5  million  plus  related  amortization  of loan  fees and
equipment and other financing costs totaled  approximately $20.1 million in 2001
and 2000. Interest expense on the $45 million 13% First Mortgage Notes issued by
Riviera Black Hawk in June 1999  combined with its interest from capital  leases
totaled $6.7  million in 2001  compared  with $7.7 million in 2000.  Capitalized
interest  of  $616,000  in 2000 was  primarily  from the  Black  Hawk,  Colorado
project.

         Other  expenses,  net  include an  insurance  reimbursement  of Paulson
litigation costs of $1.2 million in 2000.

Net Loss

         The  consolidated  net loss increased  approximately  $2.2 million from
$4.2 million in 2000 to $6.4 million in 2001.  The effective  income tax benefit
rates decreased from 37.2% in 2000 to 25.9% in 2001 because of permanent  timing
differences  for  certain  travel  and   entertainment   expenses,   along  with
adjustments for tax credits which were considered deductions in prior years.

EBITDA

                Consolidated  EBITDA, as defined,  decreased  approximately $1.7
million,  or 4.8%,  from $35.9 million in 2000 to $34.2 million in 2000.  During
the same periods, EBITDA margin decreased from 17.4% to 16.9% of net revenues.

Revenues

2000 Compared to 1999

Special Factors Effecting Comparability of Results of Operations

           Riviera Black Hawk was in the development stage during 1999 and until
February 4, 2000 when the casino opened.  Accordingly,  the consolidated results
of operations for fiscal 2000 and 1999 may not be comparable.




                                                25
<PAGE>


The following table sets forth,  for the periods  indicated,  certain  operating
data for Riviera Las Vegas and Riviera Black Hawk.  EBITDA from  properties  for
the purposes of this table excludes  corporate  expense,  preopening expense and
intercompany  management fees.  Operating income from properties is presented as
shown on the Consolidated Statement of Operations.
<TABLE>
<CAPTION>

                                         Year Ended December 31,         $ Change        % Change
(In Thousands)                             2000            1999         Inc/(Decr)     Incr/(Decr)

Net revenues:
<S>                                     <C>             <C>               <C>              <C>
  Riviera Las Vegas                     $ 166,038       $ 156,204         $ 9,834          6.2 %
  Riviera Black Hawk                       35,261               0          35,261
  Riviera Gaming Management                   232           1,064            (832)       (78.2)%
                                        ---------       ---------        --------        ------
           Total Net Revenues           $ 201,531       $ 157,268        $ 45,263         29.0 %
                                        =========       =========        ========        =======
Income (loss) from Operations
  Riviera Las Vegas                      $ 14,910        $ 10,641         $ 4,269         40.1 %
  Riviera Black Hawk                        1,881            (595)          2,476       (416.0)%
  Riviera Gaming Management                    88           1,047            (959)       (91.6)%
                                         --------        --------         -------        ------
           Total Operating Income        $ 16,879        $ 11,093         $ 5,786        (52.1)%
                                         ========        ========         =======        ======
EBITDA:(1)
  Riviera Las Vegas                      $ 29,243        $ 24,631         $ 4,612         18.7 %
  Riviera Black Hawk                        6,597               1           6,596
  Riviera Gaming Management                    88           1,047            (959)       (91.6)%
                                         --------        --------        --------        ------
           Total EBITDA                  $ 35,928        $ 25,679        $ 10,249         39.9 %
                                         ========        ========        ========        ======
EBITDA margin
  Riviera Las Vegas                        17.61%          15.87%           2.00%         11.00%
  Riviera Black Hawk                       18.71%
  Riviera Gaming Management                37.93%          98.40%          (60.0)%        (61.5)%
                                          -------         -------          ------         -------
           Total EBITDA Margin             17.83%          16.33%           1.00%          8.50%
                                          =======         =======          ======         =======
</TABLE>

Riviera Las Vegas

Revenues

           Net revenues increased by approximately  $9.8 million,  or 6.2%, from
$156.2 million in 1999 to $166.0 million in 2000 due primarily to increased room
and  entertainment  revenues as described  below.  Casino revenues  increased by
approximately  $0.8 million,  or 1.1%,  from $73.2 million  during 1999 to $74.0
million  during 2000 due to an increase in slot machine  revenue.  Room revenues
increased by approximately $3.9 million,  or 9.8% from $39.9 million during 1999
to $43.8 million  during 2000 as a result of an increase in average room rate of
$5.16,  or 10%,  which was offset by a slight  decrease in hotel  occupancy from
97.5% to 96.6%. Food and beverage revenues increased approximately $1.7 million,
or 6.4%,  from $25.1  million  during 1999 to $26.8  million  during 2000 due to
higher  cover  counts and  modestly  increased  prices.  Entertainment  revenues
increased by approximately $3.5 million, or 16.7, from $21.0 million during 1999
to $24.5 million during 2000 due primarily to the increase in Splash revenues as
a result of the showroom  renovation and the new show which opened in late 1999.
Other revenues  decreased by  approximately  $0.7 million,  or 6.7%,  from $10.6
million  during 1999 to $9.9  million  during 2000 due  primarily  to  decreased
management fees from Riviera Gaming Management-Elsinore's contract which expired
December 30,  1999.  Promotional  allowances  decreased  by  approximately  $0.6
million,  or 4.4%,  from $13.6 million  during 1999 to $13.0 million during 2000
primarily due to decreases in comps related to lower table games activity.


                                                26
<PAGE>

Income from Operations

           Income from operations  increased $4.2 million,  or 40.1%, from $10.6
million in 1999 to $14.9 million in 2000 due to the increased revenues.


EBITDA

           Riviera Las Vegas EBITDA, as defined, increased by approximately $4.6
million,  or 18.7%,  from $24.6 million in 1999 to $29.2 million in 2000. During
the same periods, EBITDA margin increased from 15.7 % to 17.5% of net revenues.

Riviera Black Hawk

Revenues

           Riviera Black Hawk opened on February 4, 2000. It had net revenues of
approximately  $35.3 million for the  approximate  eleven-month  period in 2000.
Casino revenues were $33.6 million,  including $31.9 million in slot revenue and
$1.7 million in table games revenue.

           Food and beverage revenues were approximately $4.0 million,  of which
$2.8 million were  complimentary  (promotional  allowance).  Other revenues were
approximately $0.4 million primarily from ATM transaction fees.

EBITDA

           Riviera Black Hawk EBITDA, as defined, was $6.6 million, or 18.7%, of
net revenues.

Consolidated Operations

Other Income (Expense)

           Interest  expense on the $175 million 10% First Mortgage Notes issued
by the  Company of $17.5  million  plus  related  amortization  of loan fees and
equipment and other financing costs totaled  approximately $20.1 million in 2000
and 1999. Interest expense on the $45 million 13% First Mortgage Notes issued by
Riviera Black Hawk in June 1999  combined with its interest from capital  leases
totaled $7.7 million in 2000.  Capitalized  interest was $616,000 in 2000, which
was primarily from the Black Hawk,  Colorado  project,  decreased  approximately
$2.4 million from 1999.

           In 2000,  Other expenses,  net include an insurance  reimbursement of
Paulson litigation costs of $1.2 million which were incurred in 1999.

Net Loss

           The consolidated net loss increased  approximately  $1.3 million from
$2.9  million in 1999 to $4.2  million  in 2000 due  primarily  to higher  total
interest expense offset by lower  capitalized  interest in 2000.  Federal income
tax  benefits  as a percent of losses  were lower in 2000  because  the  Company
reflected the results of an audit by the Internal  Revenue  Service in 1999. The
audit  resulted in the release of reserves of $2.2 million for taxes on employee
meals and other items, which were settled favorably to the Company.

EBITDA

           Consolidated  EBITDA,  as defined,  increased by approximately  $10.2
million,  or 39.9%,  from $25.7 million in 1999 to $35.9 million in 2000. During
the same periods, EBITDA margin increased from 16.3% to 17.8% of net revenues.

Liquidity and Capital Resources

         The Company had cash and  short-term  investments  of $46.6  million at
December  31,  2001,  which was a decrease  of $5.6  million  from  2000,  which
represents  approximately  the net  reduction of long-term  debt.  Cash balances
include amounts that may be required to fund the Chairman's  pension  obligation
in a rabbi trust with 5 days notice.  (See Note 7 to the  financial  statements,
Other Long-Term  Liabilities.) Although there is no current intention to require
this funding, under certain  circumstances,  approximately $6.8 million could be
disbursed in a short  period.  In addition,  the Las Vegas  operations  are self
insured for workmen's  compensation  claims.  The State of Nevada  requires that
Riviera  Holdings  Corporation  maintain a $2.5 million  tangible net worth,  as
defined in the statute.  If tangible net worth were to fall below $2.5  million,


                                                27
<PAGE>

the  Company  would  have to fund a $2.5  million  bond with the State or obtain
workmen's  compensation  insurance at a significantly higher rate. The aggregate
potential cash usage for these two items could approach $10 million, which would
reduce the amounts available for other corporate purposes.

         For 2001,  the Company's net cash provided by operating  activities was
$12.5 million  compared to $19.4  million in 2000.  Cash flows used in investing
activities were $10.2 million in 2001 compared to $4.2 million in 2000. Net cash
used in financing  was $7.9 million in 2001 and $5.8 million in 2000,  primarily
due to the  repurchase of treasury  stock and Black Hawk First  Mortgage  Notes.
EBITDA,  as  defined,  for 2001 and 2000 was $34.2  million  and $35.9  million,
respectively.  Management believes that cash flow from operations, combined with
the $46.6 million cash and short-term  investments,  will be sufficient to cover
the  Company's   debt  service  and  enable   investment  in  budgeted   capital
expenditures of $9 million for the next twelve months.

         Cash flow from  operations is not expected to be sufficient to pay 100%
of the  principal  of the $175  million 10% Notes at maturity on August 15, 2004
and the $45  million  13% Notes at  maturity  on May 1, 2005.  Accordingly,  the
ability of the Company and its subsidiary to repay the Notes at maturity will be
dependent upon its ability to refinance  those notes.  There can be no assurance
that the Company and its  subsidiary  will be able to  refinance  the  principal
amount of the Notes at maturity.  The 10% Notes were redeemable at the option of
the Company  beginning  August 15,  2001,  at premiums  beginning  at 105.0% and
declining  each  subsequent  year to par in 2003.  Riviera Black Hawk,  Inc. 13%
Notes are redeemable  beginning May 1, 2002 at premiums  beginning at 106.5% and
declining each subsequent year to par in 2004.

         The 10% and 13% Note Indentures provide that, in certain circumstances,
the  Company  and its  subsidiary  must offer to  repurchase  the Notes upon the
occurrence of a change of control or certain other events.  In the event of such
mandatory  redemption  or  repurchase  prior to  maturity,  the  Company and its
subsidiary  would be unable to pay the  principal  amount of the Notes without a
refinancing.

         The 10% Note  Indenture  contains  certain  covenants,  which limit the
ability of the Company and its  restricted  subsidiaries  (and its  unrestricted
subsidiary  Riviera Black Hawk, Inc. under the 13% Notes Indenture),  subject to
certain exceptions, to: (i) incur additional indebtedness; (ii) pay dividends or
other  distributions,  repurchase  capital  stock or other  equity  interests or
subordinated   indebtedness;   (iii)  enter  into  certain   transactions   with
affiliates;  (iv) create certain liens; sell certain assets;  and (v) enter into
certain  mergers  and  consolidations.  As a result of these  restrictions,  the
ability of the Company and its subsidiaries to incur additional  indebtedness to
fund operations or to make capital  expenditures  is limited.  In the event that
cash flow from  operations  is  insufficient  to cover  cash  requirements,  the
Company and its  subsidiaries  would be required to curtail or defer  certain of
their capital expenditure programs under these  circumstances,  which could have
an adverse effect on operations. At December 31, 2001, the Company believes that
it is in compliance with the covenants.  In March 2002, the assets of Black Hawk
became secondary collateral for the 10% Notes.

Contractual Obligations

The following table summarizes our contractual obligations and commitments as of
December 31, 2001:
<TABLE>
<CAPTION>

                                                                 Payments Due by Period
                                                 -------------------------------------------------------------------
                                                    Total         2002        2003          2004      2005 and Thereafter
                                                 -------------------------------------------------------------------
Contractual obligations
<S>                                                 <C>              <C>         <C>          <C>           <C>
              Long-term debt                      $ 220,439        3,151       3,125        178,168       35,995
              Operating leases                           52           52
              Other long-term obligations               230          150          22             19           38
                                                 -------------------------------------------------------------------
              Total contractual cash obligations  $ 220,721      $ 3,353     $ 3,147      $ 178,187     $ 36,033
</TABLE>




                                                28
<PAGE>

Other long-term  obligations consist primarily of maintenance  contracts,  which
extend for more than one year on equipment such as signage, elevators,  copiers,
etc.

Critical Accounting Policies

The preparation of the Company's  consolidated financial statements requires the
Company's  management  to adopt  accounting  policies and to make  estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue and
expenses.   Management  periodically  evaluates  its  policies,   estimates  and
assumptions  related  to,  these  policies.  The  Company  operates  in a highly
regulated  industry.  For both our Las Vegas,  Nevada and Black  Hawk,  Colorado
operations we are subject to  regulations  that describe and regulate  operating
and internal  control  procedures.  The majority of our casino revenue is in the
form of cash, personal checks or gaming chips and tokens,  which by their nature
do not require complex estimations. We estimate certain liabilities with payment
periods  that extend for longer than  several  months.  Such  estimates  include
customer  loyalty  liabilities,  self-insured  medical and workers  compensation
costs and litigation costs. We believe that these estimates are reasonable based
upon our past  experience  with the  business  and  based  upon our  assumptions
related to possible  outcomes in the future.  Future actual  results will likely
differ from these estimates.

The Company has determined  that the following  accounting  policies and related
estimates  are  critical  to  the  preparation  of  the  Company's  consolidated
financial statements:

Long-lived Assets:

The Company has a significant  investment in long-lived  property and equipment.
The Company estimates that the undiscounted future cash flows expected to result
from the use of these assets exceeds the current carrying value of these assets.
Any adverse change to the estimate of these undiscounted future cash flows could
necessitate an impairment charge that would adversely affect operating  results.
The  Company   estimates  useful  lives  for  its  assets  based  on  historical
experience,  estimates  of  assets'  commercial  lives,  and the  likelihood  of
technological  obsolescence.  Should the actual useful life of a class of assets
differ from the  estimated  useful life,  the Company would record an impairment
charge. The Company reviews useful lives, obsolescence,  and assesses commercial
viability of these assets periodically.

We utilize estimates related to cash flow projections related to the application
of SFAS 109 for the realization of deferred tax assets.  Our estimates are based
upon recent operating  results and budgets for future operating  results.  These
estimates are made using assumptions  about the economic,  social and regulatory
environments in which we operate.  These estimates could be negatively  impacted
by numerous unforeseen events including changes to regulations  affecting how we
operate our business,  changes in the labor market or economic  downturns in the
areas where we operate.

Provision for Credit Losses

The  Company  maintains  a  provision  for  estimated  credit  losses  based  on
historical  experience and specific customer  collection  issues. Any unforeseen
change in customer  liquidity or financial  condition could adversely affect the
collectibility of that account and the Company's operating results.

Recently Adopted Accounting Standards

           The Financial  Accounting  Standards Board ("FASB") issued  Statement
of Financial  Accounting Standards ("SFAS") No. 133, Accounting for Derivatives,
which is effective for fiscal years beginning  after June 15, 2000. SFAS No. 133
defines  derivatives and requires qualitative  disclosure  of certain financial
and descriptive information about a company's derivatives.  The Company adopted
SFAS No.  133 in the  quarter  ending March 31,  2001.  The adoption of SFAS No.
133  had  no  impact on  the  Company  or the  Company's consolidated  financial
statements.


                                                29
<PAGE>

           The Emerging Issues Task Force of the American Institute of Certified
Public Accountants  ("EITF") issued EITF No. 00-22,  Accounting for `Points' and
Certain Other Timed-Based  Sales Incentive Offers,  and Offers for Free Products
or  Services to Be  Delivered  in the Future,  on January 18,  2001.  EITF 00-22
concluded  that  when a  company  or vendor  offers  to a  customer  (a) free or
discounted  products or services that will be delivered (either by the vendor or
by  another  unrelated  entity)  at a future  date  (1) as a result  of a single
revenue  transaction  with the customer or (2) only if the customer  completes a
specified  cumulative level of revenue transactions with the vendor or remains a
customer of the vendor for a specified time period and (b) a rebate or refund of
a determinable cash amount only if the customer completes a specified cumulative
level of revenue  transactions  with the  vendor or  remains a  customer  of the
vendor for a  specified  time  period,  such  rebates  should be  reported  as a
reduction  of  revenues.  EITF 00-22 was  required  to be adopted by the Company
during the first  quarter  of 2001.  As a result of  adopting  EITF  00-22,  the
Company  reclassified  approximately  $3.4  million  and  $905,000 of such sales
incentive  "Points" from Casino operating expense to net against Casino revenues
for the twelve months ending December 31, 2000 and 1999, respectively.

           The  EITF  issued  EITF  No.  00-14,  Accounting  for  Certain  Sales
Incentives, on April 18, 2001. The Company offers such sales incentives as "Cash
Vouchers."  EITF No. 00-14  concluded  that when a company or vendor  offers its
customers sales  incentives  including  discounts,  coupons,  rebates,  and free
products or services, such sales incentives should be reported as a reduction of
revenues.  EITF No.  00-14 is required  to be adopted by the Company  during the
first  quarter of 2002 and early  adoption is  permitted.  The Company  chose to
adopt EITF No. 00-14 in the first  quarter of 2001. As a result of adopting EITF
No. 00-14, the Company  reclassified  approximately  $1.9 million and $0 of such
sales  incentive "Cash  Vouchers" from Casino  operating  expense to net against
Casino  revenues  for the  twelve  months  ending  December  31,  2000 and 1999,
respectively.

Recently Issued Accounting Standards

           In July  2001, the FASB issued SFAS No. 141,  Business  Combinations.
SFAS No.141 requires the purchase method of accounting for business combinations
initiated after June 30, 2001 and  eliminates the  pooling-of-interests  method.
The  Company  does  not  believe  that the adoption of SFAS No. 141 will have a
significant impact on its financial statements.

In July 2001,  the FASB  issued  SFAS No.  142,  Goodwill  and Other  Intangible
Assets,  which is effective January 1, 2002. SFAS No. 142 requires,  among other
things, the discontinuance of goodwill amortization.  In addition,  SFAS No. 142
includes  provisions for the  reclassification  of certain  existing  recognized
intangibles as goodwill, reassessment of the useful lives of existing recognized
intangibles,  reclassification of certain intangibles out of previously reported
goodwill and the  identification  of  reporting  units for purposes of assessing
potential future impairments of goodwill. SFAS No. 142 also requires the Company
to complete a transitional  goodwill impairment test six months from the date of
adoption.  The Company is currently  assessing  but has not yet  determined  the
impact of SFAS No. 142 on its financial position and results of operations.

           In June 2001,  the FASB  issued SFAS No.  143,  Accounting  for Asset
Retirement  Obligations.   SFAS  No.  143  addresses  financial  accounting  and
reporting for obligations  associated with the retirement of tangible long-lived
assets and the associated  asset retirement  costs.  SFAS No. 143 applies to all
entities.  It applies to legal  obligations  associated  with the  retirement of
long-lived  assets that result from the acquisition,  construction,  development
and  (or) the  normal  operation  of a  long-lived  asset,  except  for  certain
obligations  of lessees.  SFAS No. 143 is  effective  for  financial  statements
issued for fiscal years  beginning after June 15, 2002. The Company is currently
assessing,  but  has not yet  determined  the  impact  of  SFAS  No.  143 on its
financial position and results of operations.

           In August  2001,  the FASB issued SFAS No.  144,  Accounting  for the
Impairment or Disposal of Long-Lived  Assets.  SFAS No. 144 addresses  financial
accounting and reporting for the impairment or disposal of long-lived assets and
supersedes  FASB Statement No. 121,  Accounting for the Impairment of Long-Lived
Assets and for  Long-Lived  Assets to Be  Disposed  Of, and the  accounting  and
reporting provisions of Accounting Principles Bulletin Opinion No. 30, Reporting
the  Results of  Operations-Reporting  the Effects of Disposal of a Segment of a
Business,  and  Extraordinary,  Unusual and  Infrequently  Occurring  Events and
Transactions, for the disposal of a segment of a business (as previously defined
in that Opinion).  SFAS No. 144 also amends Accounting Research Bulletin No. 51,
Consolidated  Financial Statements,  to eliminate the exception to consolidation
for a subsidiary for which control is likely to be temporary.  The provisions of
SFAS No. 144 are  effective  for  financial  statements  issued for fiscal years
beginning  after  December 15,  2001,  and interim  periods  within those fiscal
years. The Company is currently assessing, but has not yet determined the impact
of SFAS No. 144 on its financial position and results of operations.




                                                30
<PAGE>

Item 7A Disclosure

Market risks relating to our operations  result  primarily from changes interest
rates.  We invest  our cash and cash  equivalents  in U.S.  Treasury  Bills with
maturities  of 90  days  or  less.  Our  equipment  loans,  leases  and  Special
Improvement  District debt is not subject to significant  valuations  adjustment
due to interest  rate  changes.  Although  the  Company's  13% and 10% Notes are
publicly traded, it is not known how  significantly  these bonds react to market
interest rate changes.


<TABLE>
<CAPTION>
Interest Rate Sensitivity
Principal (Notational Amount by Expected Maturity)
Average Interest Rate

(Amounts in Thousands)                                                                                          Fair Value
                                  2002       2003       2004       2005       2006     Thereafter      Total    At 12/31/01
<S>                               <C>        <C>        <C>         <C>        <C>        <C>           <C>        <C>
Long Term Debt
Including Current Portion

Equipment loans and
 capital leases-Las Vegas          $1,198     $1,326       $988        $11                               $3,523     $3,523
Average interest rate                7.8%       7.8%       8.4%       8.4%


10% First Mortgage Note                                $174,193                                        $174,193   $140,000
Average interest rate                                     10.0%

Equipment loans,
 Black Hawk, Colorado                  $8                                                                    $8         $8
Average interest rate               11.2%

Capital leases,
 Black Hawk, Colorado              $1,848     $2,045     $2,263       $658                               $6,814     $6,814
Average interest rate               10.8%      10.8%      10.8%      10.8%

Special Improvement
 District Bonds-Black Hawk,
 Colorado casino project              $97       $103       $109       $116       $124          $411        $960       $960
Average interest rate                5.5%       5.5%       5.5%       5.5%       5.5%          5.5%

13% First Mortgage Note,
 Black Hawk, Colorado casino
 project                                                           $34,941                              $34,941    $34,941
Average interest rate                                                13.0%
</TABLE>

Forward Looking Statements

         The Private  Securities  Litigation Reform Act of 1998 provides a "safe
harbor" for certain  forward-looking  statements.  Certain matters  discussed in
this  filing  could  be  characterized  as  forward-looking  statements  such as
statements  relating  to plans for future  expansion,  as well as other  capital
spending,  financing  sources and effects of regulation  and  competition.  Such
forward-looking  statements involve important risks and uncertainties that could
cause  actual  results  to  differ  materially  from  those  expressed  in  such
forward-looking statements.


                                                31
<PAGE>

Item 8.    Financial Statements and Supplementary Data

           See Financial Statements included in Item 14(a).


Item 9.    Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosure

           None.


                                    PART III


Item 10.   Directors and Executive Officers of the Registrant.

           Information  regarding this item is  incorporated by reference in the
Company's Proxy Statement to be filed on or about April 9, 2002, relating to the
Annual  Meeting of  Stockholders  to be held on May 14,  2002 and is made a part
hereof.

Item 11.   Executive Compensation

           Information  regarding this item is  incorporated by reference in the
Company's Proxy Statement to be filed on or about April 9, 2002, relating to the
Annual  Meeting of  Stockholders  to be held on May 14,  2002 and is made a part
hereof.

Item 12.   Principal Shareholders

           Information  regarding this item is  incorporated by reference in the
Company's Proxy Statement to be filed on or about April 9, 2002, relating to the
Annual  Meeting of  Stockholders  to be held on May 14,  2002 and is made a part
hereof.

Item 13.   Certain Relationships and Related Transactions

           Information  regarding this item is  incorporated by reference in the
Company's Proxy Statement to be filed on or about April 9, 2002, relating to the
Annual  Meeting of  Stockholders  to be held on May 14,  2002 and is made a part
hereof.






                                                32
<PAGE>

                                     PART IV

Item 14.   Exhibits, Financial Statement Schedules and Reports on Form 8-K

           (a)(1)   List of Financial Statements

           The  following  Independent  Auditors'  Report  and the  consolidated
Financial Statements of the Company are incorporated by reference into this Item
14 of Form 10-K by Item 8 hereof:

          -   Independent Auditor's Report.
          -   Consolidated Balance Sheets as of December 31, 2001 and 2000.
          -   Consolidated Statements of Operations for the Years Ended December
              31, 2001, 2000 and 1999.
          -   Consolidated Statements of Stockholders' Equity for the Years
              Ended December 31, 2001, 2000 and 1999.
          -   Consolidated Statements of Cash Flows for the Years Ended December
              31, 2001, 2000 and 1999.
          -   Notes to Consolidated Financial Statements.

           (a)(2)   List of Financial Statement Schedules

           No financial  statement schedules have been filed herewith since they
are either not required,  are not  applicable,  or the required  information  is
shown in the consolidated financial statements or related notes.

           (a)(3)   List of Exhibits

           Exhibits  required  by Item 601 of  Regulation  S-K are listed in the
Exhibit Index herein, which information is incorporated by reference.

(b)      Reports on Form 8-K

           The Company filed the following current reports on Form 8-K:

           -  Form 8-K filed October 6, 2000,  announcing  that Robert  Vannucci
              was  appointed  President  and  Chief  Operating  Officer  of  the
              Company's wholly owned subsidiary, Riviera Operating Corporation.






                                                33
<PAGE>


                                   SIGNATURES

           Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                      RIVIERA HOLDINGS CORPORATION


                                      By:/s/   WILLIAM L. WESTERMAN
                                      ------------------------------
                                      William L. Westerman
                                      Chief Executive Officer and President
                                      (Principal Executive Officer)

                                      March 19, 2002


           Pursuant to the requirements of the Securities  Exchange Act of 1934,
this  Amendment has been signed below by the following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.

Signature                              Title                          Date


/s/ WILLIAM L. WESTERMAN     Chairman of the Board, Chief        March 19, 2002
------------------------     Executive Officer and President
William L. Westerman

/s/ DUANE R. KROHN           Treasurer (Principal Financial      March 19, 2002
------------------------     and Accounting Officer)
Duane R. Krohn

/s/ ROBERT R. BARENGO        Director                            March 19, 2002
------------------------
Robert R. Barengo

/s/ JAMES N. LAND, JR.       Director                            March 19, 2002
------------------------
James N. Land, Jr.

/s/ JEFFREY A. SILVER        Director                            March 19, 2002
------------------------
Jeffrey A. Silver

/s/ PAUL A. HARVEY           Director                            March 19, 2002
------------------------
Paul A. Harvey





                                                34
<PAGE>


                                  EXHIBIT INDEX

Exhibit                                Description
Number
2.1*                                   Agreement and Plan of Merger,  dated
                                       September 15, 1997, by and among R&E
                                       Gaming Corp.,  Riviera  Acquisitions Sub,
                                       Inc., and Riviera Holdings  Corporation
                                       (see Exhibit  10.1 to  Current  Report
                                       on Form  8-K  filed  with the  Commission
                                       on September 29, 1997, Commission File
                                       No. 0-21430)

3.1*                                   Second Restated Articles of Incorporation
                                       of  the  Company   (see  Exhibit  3.1  to
                                       Registration  Statement on Form S-4 filed
                                       with  the  Commission  on  September  10,
                                       1997, Commission File No. 0-21430)

3.2*                                   Bylaws of the Company (see Exhibit 3.2 to
                                       Registration  Statement on Form S-4 filed
                                       with  the  Commission  on  September  10,
                                       1997, Commission File No. 0-21430)

3.3*                                   Articles  of   Incorporation  of  Riviera
                                       Operating Corporation (see Exhibit 3.3 to
                                       Registration  Statement on Form S-4 filed
                                       with  the  Commission  on  September  10,
                                       1997, Commission File No. 0-21430)

3.4*                                   Bylaws of Riviera  Operating  Corporation
                                       (see  Exhibit  3.4 to  Registration
                                       Statement  on Form  S-4  filed  with  the
                                       Commission  on  September  10,  1997,
                                       Commission File No. 0-21430)

3.5*                                   Articles of  Incorporation of Riviera
                                       Gaming  Management, Inc. (see Exhibit 3.5
                                       to  Registration  Statement on Form S-4
                                       filed with the  Commission  on September
                                       10, 1997, Commission File No. 0-21430)

3.6*                                   Bylaws of Riviera Gaming Management, Inc.
                                       (see  Exhibit 3.6 to  Registration
                                       Statement  on Form  S-4  filed  with  the
                                       Commission  on  September  10,  1997,
                                       Commission File No. 0-21430)

3.7*                                   Articles of  Incorporation  of Riviera
                                       Gaming  Management-Elsinore,  Inc.  (see
                                       Exhibit 3.7 to  Registration  Statement
                                       on Form S-4 filed with the Commission on
                                       September 10, 1997, Commission File
                                       No. 0-21430)

3.8*                                   Bylaws of Riviera  Gaming  Management  -
                                       Elsinore,  Inc.  (see  Exhibit  3.8 to
                                       Registration  Statement on Form S-4 filed
                                       with the  Commission  on September 10,
                                       1997, Commission File No. 0-21430)

3.9*                                   Articles of  Incorporation of Riviera
                                       Gaming  Management of Colorado,  Inc.(see
                                       Exhibit 3.9 to Amendment No. 1 to
                                       Registration  Statement on Form S-4 filed
                                       with the Commission on December 9, 1997,
                                       Commission File No. 0-21430)



                                                35
<PAGE>


3.10*                                  Bylaws of Riviera  Gaming  Management  of
                                       Colorado,  Inc.  (see Exhibit 3.10 to
                                       Amendment No. 1 to Registration Statement
                                       on Form S-4 filed with the Commission
                                       on December 9, 1997, Commission File
                                       No. 0-21430)

4.1*                                   Indenture  dated as of August 13, 1997
                                       between  the  Company  and Norwest  Bank
                                       Minnesota, N.A., as trustee, the
                                       Guarantors party thereto, Jefferies &
                                       Company, Inc. and  Ladenburg  Thalmann &
                                       Co. Inc.  (see Exhibit 4.2 to Current
                                       Report on Form 8-K filed with the
                                       Commission  on August  18,  1997,
                                       Commission  File No.0-21430)

4.2*                                   Form of the Company's 10% Senior Notes
                                       due 2004 (included in Exhibit 4.1)

5.1*                                   Opinion of Dechert  Price & Rhoads re:
                                       legality  (see  Exhibit 5.1 to Amendment
                                       No. 1 to  Registration  Statement  on
                                       Form S-4  filed with  the  Commission  on
                                       December 9, 1997, Commission File
                                       No. 0-21430)

10.1*                                  Registration  Rights  Agreement  dated as
                                       of  August  13,  1997 by and among the
                                       Company, the Guarantors party thereto,
                                       Jefferies & Company,  Inc. and Ladenburg
                                       Thalmann & Co. Inc.  (see  Exhibit 4.1 to
                                       Current  Report on Form 8-K filed with
                                       the Commission on August 18, 1997,
                                       Commission File No. 0-21430)

10.2*                                  Purchase Agreement dated August 8, 1997
                                       among the Company,  the Guarantors party
                                       thereto,  Jefferies & Company,  Inc. and
                                       Ladenburg  Thalmann & Co.,  Inc.  (see
                                       Exhibit 1.1 to Current  Report on Form
                                       8-K filed with the  Commission  on August
                                       18, 1997, Commission File No. 0-21430)

10.3*                                  Lease  Agreement  between  Riviera,  Inc.
                                       and Mardi Gras Food Court,  Inc. dated
                                       April 1, 1990 (see Exhibit 10.1 to Form
                                       10, Commission File No. 0-21430)

10.4*                                  Amendment to Lease Agreement  between
                                       Riviera,  Inc. and Mardi Gras Food Court,
                                       Inc.  dated April 1, 1990 (see  Exhibit
                                       10.2 to  Registration  Statement on Form
                                       S-1 filed with the Commission on August
                                       11, 1993, File No. 33-67206)

10.5*                                  Lease Agreement  between  Riviera,  Inc.
                                       and Leroy's Horse and Sports Place (see
                                       Exhibit 10.3 to Form 10, Commission File
                                       No. 0-21430)

10.6*                                  Indemnity Agreement, dated June 30, 1993,
                                       from Riviera, Inc. and Meshulam Riklis in
                                       favor of the Company and Riviera
                                       Operating  Corporation  (see Exhibit 10.7
                                       to Registration  Statement Form S-1 filed
                                       with the Commission on August 11, 1993,
                                       Commission File No. 33-67206)

10.7*                                  Indemnity Agreement, dated June 30, 1993,
                                       from the  Company in favor of IBJ
                                       Schroder Bank & Trust Company (see
                                       Exhibit 10.8 to  Registration  Statement
                                       Form S-1 filed with the Commission on
                                       August 11, 1993, Commission File
                                       No. 33-67206)

                                                36
<PAGE>


10.8*                                  Equity   Registration   Rights  Agreement
                                       dated June 30,  1993,  among the  Company
                                       and the  Holders of  Registerable  Shares
                                       (see   Exhibit   10.9   to   Registration
                                       Statement  on Form  S-1  filed  with  the
                                       Commission on August 11, 1993, Commission
                                       File No. 33-67206)

10.9*                                  Operating Agreement dated June 30,  1993,
                                       between  the  Company  and  Riviera
                                       Operating  Corporation (see Exhibit 10.15
                                       to Registration  Statement on Form S-1
                                       filed with the Commission on August 11,
                                       1993, Commission File No. 33-67206)

10.10*                                 Adoption  Agreement  regarding  Profit
                                       Sharing and 401(k)  Plans of the Company
                                       (see  Exhibit  10.16  to  Registration
                                       Statement  on Form  S-1  filed  with the
                                       Commission on August 11, 1993, Commission
                                       File No. 33-67206)

10.11*                                 Howard Johnson & Company Regional Defined
                                       Contribution  Plan dated March 16, 1990
                                       (adopted  by the  Company pursuant to the
                                       Adoption Agreement filed as Exhibit 10.17
                                       to Registration  Statement on Form S-1
                                       filed with the  Commission on August 11,
                                       1993, Commission File No. 33-67206)

10.12*                                 Employment  Agreement  between  Riviera,
                                       Inc. and William L.  Westerman,  dated
                                       January 6, 1993 (see Exhibit 10.18 to
                                       Form 10, Commission File No. 0-21430)

10.13*                                 Form of Agreement  between the Company
                                       and Directors  (see Exhibit 10.19 to Form
                                       10, Commission File No. 0-21430)

10.14*                                 Form of  Termination  Fee Agreement  (see
                                       Exhibit  10.20 to Form 10,  Commission
                                       File No. 0-21430)

10.15*                                 Restricted  Account  Agreement dated June
                                       30,   1993,   among   Riviera   Operating
                                       Corporation,  IBJ  Schroder  Bank & Trust
                                       Company  and Bank of America  Nevada (see
                                       Exhibit 10.22 to  Registration  Statement
                                       on Form S-1 filed with the  Commission on
                                       August  11,  1993,  Commission  File  No.
                                       33-67206)

10.16*                                 Disbursement  Agreement  dated  June  30,
                                       1993,   between   the   Company  and  IBJ
                                       Schroder   Bank  &  Trust   Company  (see
                                       Exhibit 10.23 to  Registration  Statement
                                       on Form S-1 filed with the  Commission on
                                       August 11, 1993, Commission File No.
                                       33-67206)

10.17*                                 Tax Sharing Agreement between the Company
                                       and Riviera  Operating  Corporation dated
                                       June 30,  1993 (see  Exhibit  10.24 to
                                       Amendment  No. 1 to  Registration
                                       Statement on Form S-1 filed with the
                                       Commission on August 19, 1993, Commission
                                       File No. 33-67206)

10.18*                                 The  Registrant's  1993 Stock Option Plan
                                       (see Exhibit  10.25 to Amendment No. 1 to
                                       Registration  Statement on Form S-1 filed
                                       with the  Commission on August 19,  1993,
                                       Commission File No. 33-67206)

10.19*                                 Form of Stay Bonus Agreement (see Exhibit
                                       10.27 to Form 10-Q filed with the
                                       Commission on November 9, 1994,
                                       Commission File No. 0-21430)

                                                37
<PAGE>

10.20*                                 Amendment dated February 19, 1995 to
                                       Lease Agreement  between Riviera,  Inc.
                                       and Mardi Gras Food Court, Inc. (filed
                                       with Exhibits 10.3 and 10.4)

10.21*                                 Amendment dated  September 30, 1994, to
                                       Employment  Agreement  between  Riviera,
                                       Inc. and William L. Westerman (filed with
                                       Exhibit 10.12)

10.22*                                 Management Agreement by and between
                                       Elsinore Corporation,  Four Queens, Inc.
                                       and Riviera  Gaming  Management  Corp.-
                                       Elsinore  (see Exhibit 10.30 to Form 10-K
                                       for the fiscal year ended December 31,
                                       1996, Commission File No. 0-21430)

10.23*                                 Employment Agreement dated as of November
                                       21, 1996 by and between the Company,
                                       Riviera  Operating  Corporation  and
                                       William L.  Westerman (see Exhibit 10.31
                                       to Form 10-K for the fiscal  year ended
                                       December  31, 1996,  Commission  File No.
                                       0-21430)

10.24*                                 Revolving  Line of Credit Loan  Agreement
                                       dated  February  28,  1997 by and between
                                       the    Company,     Riviera     Operating
                                       Corporation  and U.S. Bank of Nevada (see
                                       Exhibit 10.32 to Form 10-K for the fiscal
                                       year ended December 31, 1996,  Commission
                                       File No. 0-21430)

10.25*                                 Letter of Intent dated March 4, 1997
                                       between the Company and Eagle Gaming,
                                       L.P.(see  Exhibit  10.33 to Form 10-K for
                                       the fiscal year ended  December 31, 1996,
                                       Commission File No. 0-21430)

10.26*                                 Deed  of  Trust,   Assignment  of  Rents,
                                       Leases,   Fixture   Filing  and  Security
                                       Agreement dated August 13, 1997, executed
                                       by Riviera  Holdings  Corporation for the
                                       benefit   of  Norwest   Bank   Minnesota,
                                       National Association (see Exhibit 10.1 to
                                       Form   8-K   filed   August   18,   1997,
                                       Commission File No. 0-21430)

10.27*                                 Security Agreement dated August 13, 1997,
                                       by and  among  Riviera  Holdings
                                       Corporation, Riviera Operating
                                       Corporation,  Riviera Gaming Management,
                                       Inc.,  Riviera  Gaming  Management  of
                                       Colorado,  Inc.,  Riviera  Gaming
                                       Management - Elsinore,  Inc. and Norwest
                                       Bank Minnesota,  National  Association
                                       (see Exhibit 10.2 to Form 8-K filed
                                       August 18, 1997, Commission File No.
                                       0-21430)

10.28*                                 Stock Pledge and Security Agreement dated
                                       August 13, 1997,  executed by Riviera
                                       Holdings Corporation (see Exhibit 10.3 to
                                       Form 8-K filed  August  18,  1997,
                                       Commission File No. 0-21430)

10.29*                                 Stock Pledge and Security Agreement dated
                                       August 13, 1997,  executed by Riviera
                                       Operating  Corporation  (see  Exhibit
                                       10.4 to Form 8-K filed  August 18,  1997,
                                       Commission File No. 0-21430)


                                                38
<PAGE>


10.30*                                 Stock Pledge and Security Agreement dated
                                       August 13, 1997,  executed by Riviera
                                       Gaming  Management,  Inc.  (see  Exhibit
                                       10.5 to Form 8-K filed August 18, 1997,
                                       Commission File No. 0-21430)

10.31*                                 Restricted Account Agreement dated August
                                       13,  1997,  by and among  Riviera
                                       Holdings  Corporation,  Norwest Bank
                                       Minnesota, National  Association and U.S.
                                       Bank of Nevada (see Exhibit  10.6 to Form
                                       8-K filed August 18, 1997,  Commission
                                       File No. 0-21430)

10.32*                                 First Amendment to Revolving Line of
                                       Credit Loan  Agreement  dated August 12,
                                       1997, between Riviera Holdings
                                       Corporation,  Riviera Operating
                                       Corporation and U.S. Bank (see Exhibit
                                       10.7 to Form 8-K filed August 18, 1997,
                                       Commission  File No. 0-21430)

10.33*                                 Escrow   Agreement  dated  September  15,
                                       1997,  by and  among  R&E  Gaming  Corp.,
                                       Riviera Holdings  Corporation,  and State
                                       Street   Bank  and   Trust   Company   of
                                       California  (see Exhibit 10.2 to Form 8-K
                                       filed September 29, 1997, Commission File
                                       No. 0-21430)

10.34*                                 Employment  Agreement between the Company
                                       and Ronald P. Johnson  effective July 1,
                                       1998 (see Exhibit 10.34 to Form 10-Q
                                       filed November 6, 1998)

10.35*                                 Employment Agreement  between the Company
                                       and Duane R. Krohn effective July 1, 1998
                                       (see Exhibit 10.35 to Form 10-Q filed
                                       November 6, 1998)

10.36*                                 Employment  Agreement between the Company
                                       and Robert A. Vannucci  effective July 1,
                                       1998 (see Exhibit 10.36 to Form 10-Q
                                       filed November 6, 1998)

10.37*                                 Employment  Agreement between the Company
                                       and Jerome P. Grippe effective July 1,
                                       1998 (see Exhibit 10.37 to Form 10-Q
                                       filed November 6, 1998)

10.38*                                 Consulting  Agreement  between  Riviera
                                       Gaming  Management,  Inc. and Peninsula
                                       Gaming  Partners,  LLC,  dated January 1,
                                       2000 (see Exhibit  10.38 to Form 10-K
                                       filed March 20, 2000)

10.39*                                 Amendment to Employment Agreement between
                                       the Company and Robert A.  Vannucci
                                       effective October 1, 2000 (see Exhibit
                                       10.39 to Form 10-K filed March 23,2001)

10.40*                                 Amendment to Employment Agreement between
                                       the Company and William L. Westerman
                                       effective January 1, 2001 (see Exhibit
                                       10.40 to Form 10-K filed March 23, 2001)

10.41*                                 Deferred Compensation Plan dated November
                                       1, 2000,  adopted by the Company on
                                       October  2,  2000  (see  Registration
                                       Statement  on Form  S-8  filed  with  the
                                       Commission on February 14, 2001)

                                                39
<PAGE>

10.42*                                 Restricted  Stock Plan dated January 2,
                                       2001,  adopted by the Company on October
                                       2, 2000 (see  Registration  Statement on
                                       Form S-8 filed with the  Commission  on
                                       February 14, 2001)

21.1*                                  Subsidiaries  of the Company (see Exhibit
                                       21.1 to  Registration  Statement  on Form
                                       S-4   filed   with  the   Commission   on
                                       September 10, 1997, Commission File No.
                                       0-21430)

99.1*                                  Letter dated March 20, 1998, from R&E
                                       Gaming Corp. to the Company regarding the
                                       Company's Agreement and Plan of Merger

* The exhibits thus designated are incorporated  herein by reference as exhibits
hereto. Following the description of such exhibits is a reference to the copy of
the exhibit  heretofore  filed with the Commission,  to which there have been no
amendments or changes.

(19094)












                                                40
<PAGE>

<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION

TABLE OF CONTENTS
-------------------------------------------------------------------------------------------------------


                                                                                                   Page

<S>                                                                                                <C>
INDEPENDENT AUDITORS' REPORT                                                                        F-1


CONSOLIDATED FINANCIAL STATEMENTS:

   Balance Sheets as of December 31, 2001 and 2000                                                  F-2

   Statements of Operations for the Years Ended December 31, 2001, 2000, and 1999                   F-3

   Statements of Stockholders' Equity for the Years Ended December 31, 2001, 2000, and 1999         F-4

   Statements of Cash Flows for the Years Ended December 31, 2001, 2000, and 1999                   F-5

   Notes to Consolidated Financial Statements                                                       F-7

   Unaudited Quarterly Financial Data                                                              F-38



</TABLE>


<PAGE>
















INDEPENDENT AUDITORS' REPORT


Riviera Holdings Corporation
Las Vegas, Nevada

We have audited the accompanying consolidated balance sheets of Riviera Holdings
Corporation and  subsidiaries  (the "Company") as of December 31, 2001 and 2000,
and the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the three years in the period  ended  December  31, 2001.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits to obtain  reasonable  assurance  about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2001
and 2000,  and the results of its  operations and its cash flows for each of the
three years in the period ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States of America.





Deloitte & Touche llp
Las Vegas, Nevada
February 12, 2002








                                                F-1
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2001 AND 2000 (In Thousands, Except Share Amounts)
------------------------------------------------------------------------------------------------------------------------


ASSETS                                                                                 2001           2000

CURRENT ASSETS:
<S>                                                                                    <C>            <C>
  Cash and cash equivalents                                                            $ 46,606       $ 52,174
  Accounts receivable, net                                                                3,528          5,548
  Inventories                                                                             2,253          3,342
  Prepaid expenses and other assets                                                       3,083          4,599
                                                                                        -------         ------
           Total current assets                                                          55,470         65,663

PROPERTY AND EQUIPMENT, Net                                                             200,531        207,030

OTHER ASSETS, Net                                                                         6,728          8,128

DEFERRED INCOME TAXES, Net                                                                5,089          2,889
                                                                                        -------        -------
TOTAL                                                                                 $ 267,818      $ 283,710
                                                                                      =========      =========
LIABILITIES AND STOCKHOLDERS EQUITY

CURRENT LIABILITIES:
  Current portion of long-term debt                                                     $ 3,151        $ 2,871
  Accounts payable                                                                        8,200          9,731
  Accrued interest                                                                        8,084          7,727
  Accrued expenses                                                                       14,740         16,731
                                                                                        -------        -------
           Total current liabilities                                                     34,175         37,060
                                                                                        -------        -------
OTHER LONG-TERM LIABILITIES                                                               7,391          6,533
                                                                                        -------        -------
LONG-TERM DEBT, Net of current portion                                                  217,288        223,172
                                                                                        -------        -------
COMMITMENTS AND CONTINGENCIES (Note 12)

STOCKHOLDERS EQUITY:
  Common stock ($.001 par value; 20,000,000 shares authorized;
    5,106,776 shares issued at December 31, 2001 and 2000, respectively)                      5              5
  Additional paid-in capital                                                             13,485         13,446
  Treasury stock (1,674,144 and 1,431,648 shares at December 31, 2001 and 2000,
    respectively)                                                                       (11,246)        (9,633)
  Retained earnings                                                                       6,720         13,127
                                                                                        -------        -------
           Total stockholders equity                                                      8,964         16,945
                                                                                        -------        -------
TOTAL                                                                                 $ 267,818      $ 283,710
                                                                                      =========      =========
See notes to consolidated financial statements.
</TABLE>

                                                F-2
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
(In Thousands, Except Per Share Amounts)
------------------------------------------------------------------------------------------------------------------


                                                                2001          2000          1999
REVENUES:
<S>                                                             <C>           <C>            <C>
  Casino                                                     $ 114,039     $ 107,693      $ 73,181
  Rooms                                                         44,255        43,819        39,899
  Food and beverage                                             31,256        30,756        25,117
  Entertainment                                                 20,692        24,526        20,994
  Other                                                          9,119        10,538        11,713
                                                               -------       -------       -------
          Total revenues                                       219,361       217,332       170,904
  Less promotional allowances                                   17,330        15,801        13,636
                                                               -------       -------       -------
          Net revenues                                         202,031       201,531       157,268
                                                               -------       -------       -------
COSTS AND EXPENSES:
  Direct costs and expenses of operating departments:
    Casino                                                      62,845        57,450        42,306
    Rooms                                                       23,339        23,364        21,909
    Food and beverage                                           21,426        21,372        18,307
    Entertainment                                               14,900        18,959        16,271
    Other                                                        3,068         3,146         3,228
  Other operating expenses:
    General and administrative                                  42,239        41,312        29,568
    Preopening expenses - Black Hawk, Colorado project                         1,222           595
    Depreciation and amortization                               17,243        17,827        13,991
                                                               -------       -------       -------
         Total costs and expenses                              185,060       184,652       146,175
                                                               -------       -------       -------
INCOME FROM OPERATIONS                                          16,971        16,879        11,093
                                                               -------       -------       -------
OTHER (EXPENSE) INCOME:
  Interest expense                                             (26,864)      (27,805)      (23,448)
  Interest income                                                1,274         2,429         2,255
  Interest capitalized                                                           616         4,733
  Other, net                                                       (28)        1,171        (1,963)
                                                                -------       -------       -------
          Total other expense                                  (25,618)      (23,589)      (18,423)
                                                                -------       -------       -------
LOSS BEFORE BENEFIT FOR INCOME TAXES                            (8,647)       (6,710)       (7,330)

BENEFIT FOR INCOME TAXES                                        (2,240)       (2,495)       (4,461)
                                                                -------       -------       -------
NET LOSS                                                      $ (6,407)     $ (4,215)     $ (2,869)
                                                                =======       =======       =======
EARNINGS PER SHARE DATA:
  Loss per share
    Basic and diluted                                          $ (1.79)      $ (1.05)      $ (0.58)
                                                                =======       =======       =======
  Weighted-average common and common equivalent shares           3,573         4,013         4,978
                                                                =======       =======       =======
See notes to consolidated financial statements.
</TABLE>
                                                F-3
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999 (Dollars In Thousands, Except Share Amounts)
------------------------------------------------------------------------------------------------------------------------------

                                                                                                                 Notes
                                                                                                               Receivable
                                   Common Stock       Additional                     Treasury Stock               from
                              -----------------------  Paid-in     Retained    ---------------------------      Employee
                                Shares      Amount     Capital     Earnings        Shares        Amount       Shareholders   Total

<S>                               <C>         <C>       <C>          <C>             <C>           <C>          <C>         <C>
BALANCE, JANUARY 1, 1999       5,107,676     $ 5      $ 13,457     $ 20,211        (34,300)      $ (167)      $ (3)       $ 33,503

  Refunds on employee stock
  purchases                         (900)                  (11)                                                  3              (8)

  Purchase of treasury stock                                                      (549,455)      (2,948)                    (2,948)

  Net loss                                                           (2,869)                                                (2,869)
                               ---------     ----      -------       -------      ---------      -------        ----       --------
BALANCE, DECEMBER 31, 1999     5,106,776       5        13,446       17,342       (583,755)      (3,115)                    27,678

  Purchase of treasury stock                                                      (847,893)      (6,518)                    (6,518)

  Net loss                                                           (4,215)                                                (4,215)
                               ---------     ----      -------       -------      ---------      -------        ----       --------
BALANCE, DECEMBER 31, 2000     5,106,776       5        13,446       13,127     (1,431,648)      (9,633)                    16,945

  Purchase of treasury stock,
  general                                                                         (158,437)        (993)                      (993)

  Purchase of treasury stock,
  deferred compensation trust                                                     (118,091)        (786)                      (786)

  Issuance of restricted stock                              39                      34,032          166                        205

  Net loss                                                           (6,407)                                                (6,407)
                               ---------     ----      -------       -------      ---------      -------        ----       --------

BALANCE, DECEMBER 31, 2001     5,106,776     $ 5      $ 13,485      $ 6,720     (1,674,144)   $ (11,246)     $             $ 8,964
                               =========     ====      =======       =======      =========      =======        ====       ========

See notes to consolidated financial statements.
</TABLE>
                                                F-4
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999 (In Thousands)
---------------------------------------------------------------------------------------------------------------------


                                                                                        2001       2000        1999

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                     <C>         <C>        <C>
   Net loss                                                                          $ (6,407)   $ (4,215)  $ (2,869)
  Adjustments to reconcile net loss to net cash provided by operating activities:
    Gain on sale of equipment                                                                                    (55)
    Depreciation and amortization                                                      17,243      17,827     13,991
    Provision for bad debts                                                               225         326        297
    Provision for gaming discounts                                                        (70)         45
    Interest expense                                                                   26,864      27,805     23,448
    Interest paid                                                                     (23,490)    (24,410)   (20,132)
    Interest capitalized on construction projects                                                    (616)    (4,733)
    Changes in operating assets and liabilities:
      Decrease (increase) in accounts receivable, net                                   1,865        (877)        50
      Decrease (increase) in inventories                                                1,089          90       (705)
      Decrease (increase) in prepaid expenses and other assets                          1,516        (607)        39
      Increase (decrease) in accounts payable                                          (1,748)     (2,071)      (884)
      Increase (decrease) in accrued expenses                                          (2,420)      7,348      1,896
      Increase (decrease) in deferred compensation plan obligation                        579
      Increase(decrease) in deferred tax asset                                         (2,200)     (2,534)    (3,478)
      Increase (decrease) in slot annuities payable                                                    (3)       (55)
      Increase (decrease) in non-qualified pension plan obligation to CEO upon
      retirement                                                                         (500)      1,247        (61)
                                                                                       -------    -------     -------
           Net cash provided by operating activities                                   12,546      19,355       6,749

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures for property and equipment, Las Vegas                           (7,622)     (7,465)    (11,735)
  Capital expenditures for property and equipment, Black Hawk                          (2,640)    (16,969)    (27,291)
  Interest capitalized on construction projects                                                       616       4,733
  Decrease (increase) in short-term investments                                                     5,258      (5,258)
  Decrease (increase) in restricted funds                                                          15,060     (15,060)
  Sale of equipment                                                                                               174
  Decrease (increase) in other assets                                                      85        (661)     (3,558)
                                                                                      -------      -------     -------
           Net cash used in investing activities                                      (10,177)     (4,161)    (57,995)
                                                                                      -------      -------     -------
See notes to consolidated financial statements.
                                                                                                 (Continued)
</TABLE>
                                                F-5
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999 (In Thousands)
------------------------------------------------------------------------------------------------------------


                                                                                      2001        2000        1999

CASH FLOWS FROM FINANCING ACTIVITIES:
<S>                                                                                   <C>         <C>          <C>
  Proceeds from long-term borrowings                                              $   -        $ 9,552     $ 48,764
  Payments on long-term borrowings                                                 (2,865)      (2,299)        (641)
  Purchase of treasury stock, general                                                (993)      (6,518)      (2,948)
  Purchase of treasury stock, deferred compensation trust                            (786)
  Purchase of 13% Mortgage Notes - Black Hawk                                      (3,500)      (6,559)
  Issuance of restricted stock                                                        166
  Net cancellations of employee stock purchase plan, and exercise of
    employee stock options                                                             41                       (8)
                                                                                   -------      -------     -------
           Net cash (used in) provided by financing activities                     (7,937)      (5,824)     45,167
                                                                                   -------      -------     -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                   (5,568)       9,370      (6,079)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                       52,174       42,804      48,883
                                                                                   -------      -------     -------
CASH AND CASH EQUIVALENTS, END OF YEAR                                            $46,606      $52,174    $ 42,804
                                                                                  ========     =======     =======

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
  Income taxes (refunded) paid, State of Colorado                                 $  (110)       $ 110
                                                                                  ========     =======
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
  Property acquired with accounts payable, Las Vegas, Nevada                      $   132
                                                                                  ========
  Property acquired with debt, Black Hawk, Colorado                               $   454                    $ 126
                                                                                  ========                   =====
  Property acquired with accounts payable, Black Hawk, Colorado                   $    90        $ 304     $ 2,566
                                                                                  ========     =======      ======
  Property acquired with debt, Las Vegas, Nevada                                                           $ 1,614
                                                                                                            ======

See notes to consolidated financial statements.
                                                                                                 (Concluded)
</TABLE>
                                                F-6
<PAGE>


RIVIERA HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Basis  of  Presentation  and  Nature  of  Operations  -  Riviera  Holdings
      Corporation and its wholly owned subsidiary, Riviera Operating Corporation
      ("ROC") (together, the "Company"),  were incorporated on January 27, 1993,
      in  order  to  acquire  all  assets  and  liabilities  of  Riviera,   Inc.
      Casino-Hotel   Division  on  June  30,   1993,   pursuant  to  a  plan  of
      reorganization.

      In August 1995,  Riviera Gaming Management,  Inc. ("RGM")  incorporated in
      the State of Nevada as a wholly owned subsidiary of ROC for the purpose of
      obtaining management contracts in Nevada and other jurisdictions.

      The  primary  line of  business  of the  Company is the  operation  of the
      Riviera  Hotel & Casino  (the  "Riviera  Las  Vegas")  on the Strip in Las
      Vegas, Nevada. The Company, through its gaming management subsidiary, also
      managed the Four Queens Hotel and Casino  (owned by Elsinore  Corporation)
      in  downtown  Las Vegas  through  December  1999  (see Note 13).  RGM also
      provided  services to Peninsula Gaming Partners LLC through September 2000
      with  respect  to that  company's  riverboat,  Diamond  Jo,  operating  in
      Dubuque, Iowa.

      In February 2000,  the Company opened its casino in Black Hawk,  Colorado,
      which is owned through  Riviera Black Hawk, Inc.  ("RBH"),  a wholly owned
      subsidiary of ROC. Riviera Gaming Management of Colorado, Inc. is a wholly
      owned subsidiary of RGM, and manages the Black Hawk casino.

      Casino  operations  are subject to extensive  regulation  in the states of
      Nevada and Colorado by the  respective  Gaming  Control Boards and various
      other state and local regulatory  agencies.  Management  believes that the
      Company's procedures comply, in all material respects, with the applicable
      regulations for supervising casino operations,  recording casino and other
      revenues, and granting credit.

      Principles  of  Consolidation  -  The  consolidated  financial  statements
      include the accounts of the Company,  its wholly owned  subsidiaries,  ROC
      and RGM, and their related subsidiary entities.  All material intercompany
      accounts and transactions have been eliminated.

      Cash and Cash Equivalents - All highly liquid investment securities with a
      maturity of three months or less when  acquired are  considered to be cash
      equivalents.  The Company accounts for investment securities in accordance
      with  Statement  of  Financial  Accounting  Standards  ("SFAS")  No.  115,
      "Accounting for Certain Investments in Debt and Equity Securities."

      The  Company's  investment  securities,  along with  certain cash and cash
      equivalents that are not deemed securities under SFAS No. 115, are carried
      on the  consolidated  balance  sheets  in the cash  and  cash  equivalents
      category.  SFAS  No.  115  addresses  the  accounting  and  reporting  for
      investments  in equity  securities  that have  readily  determinable  fair
      values and for all  investments  in debt  securities,  and  requires  such
      securities  to be  classified  as either  held to  maturity,  trading,  or
      available for sale.


                                                F-7
<PAGE>

      Management  determines the  appropriate  classification  of its investment
      securities  at the time of purchase,  including  the  determination  as to
      restricted   versus   nonrestricted    assets,   and   re-evaluates   such
      determination at each balance sheet date.  Held-to-maturity securities are

      required to be carried at amortized  cost.  At December 31, 2001 and 2000,
      securities classified as held to maturity comprised debt securities issued
      by the U.S. Treasury and other U.S. government  corporations and agencies,
      and  repurchase  agreements,  with an amortized  cost of  $27,449,767  and
      $34,754,983, respectively, maturing in three months or less.

      Inventories - Inventories consist primarily of food, beverage,  gift shop,
      and  promotional  inventories,  and  are  stated  at  the  lower  of  cost
      (determined on a first-in, first-out basis) or market.

      Property and Equipment - Property and  equipment  are stated at cost,  and
      capitalized lease assets are stated at the present value of future minimum
      lease payments at the date of lease  inception.  Interest  incurred during
      construction  of new  facilities  or  major  additions  to  facilities  is
      capitalized  and  amortized  over the life of the asset.  Depreciation  is
      computed by the  straight-line  method  over the shorter of the  estimated
      useful lives or lease terms, if applicable,  of the related assets,  which
      range from 5 years for certain gaming equipment to 40 years for buildings.
      The costs of normal  maintenance  and  repairs  are  charged to expense as
      incurred. Gains or losses on disposals are recognized as incurred.

      The Company  periodically  assesses  the  recoverability  of property  and
      equipment  and evaluates  such assets for  impairment  whenever  events or
      circumstances  indicate  that the  carrying  amount of an asset may not be
      recoverable.  Asset  impairment is determined to exist if estimated future
      cash flows,  undiscounted and without interest charges,  are less than the
      carrying amount.

      Other Assets - Other assets include bond offering  costs and  commissions,
      which are amortized over the life of the debt.  Such  amortized  costs are
      included in interest expense.

      Restricted  Cash and  Short-Term  Investments  -  Amounts  related  to the
      Riviera Black Hawk Casino project in Black Hawk, Colorado,  are restricted
      in use to that  project  or for  the  related  13%  First  Mortgage  Notes
      interest payments.

      Stock-Based  Compensation  - The  effect of stock  options  in the  income
      statement  is reported in  accordance  with  Accounting  Principles  Board
      Statement No. 25,  "Accounting for Stock Issued to Employees." The Company
      has adopted the  disclosures-only  provision of SFAS No. 123,  "Accounting
      for Stock-Based Compensation."  Accordingly, no compensation cost has been
      recognized  for unissued  stock options in the stock option plan (see Note
      15).

      Fair Value Disclosures

         Cash and Cash Equivalents,  Accounts Receivable,  Accounts Payable, and
         Accrued  Expenses - The  carrying  value of these items is a reasonable
         estimate of their fair value.

         Long-Term  Debt - The fair  value of the  Company's  long-term  debt is
         estimated  based on the  quoted  market  prices for the same or similar
         issues or on the current  rates  offered to the Company for debt of the
         same  remaining  maturities.  Based on the  borrowing  rates  currently
         available  to the  Company  for debt with  similar  terms  and  average
         maturities,  the estimated fair value of long-term debt  outstanding is
         approximately   $186,246,000   and   $202,628,000  in  2001  and  2000,
         respectively.


                                                F-8
<PAGE>

      Revenue Recognition:

         Casino Revenue - The Company recognizes,  as gross revenue, the net win
         from gaming activities, which is the difference between gaming wins and
         losses.

         Room Revenue,  Food and Beverage Revenue,  Entertainment  Revenue,  and
         Other  Revenue  - The  Company  recognizes  room,  food  and  beverage,
         entertainment  revenue,  and other  revenue  at the time that  goods or
         services are provided

      Preopening Costs - The Company recognizes preopening costs when incurred.

      Promotional  Allowances - Revenues  include the estimated  retail value of
      rooms,  food and beverage,  and  entertainment  provided to customers on a
      complimentary  basis.  Such  amounts  are  then  deducted  as  promotional
      allowance. The estimated cost of providing these promotional allowances is
      charged to the casino department in the following amounts:
<TABLE>
<CAPTION>

                                                                Year Ended December 31
                                                          ----------------------------------
                                                           2001           2000         1999

           <S>                                             <C>            <C>           <C>
        Food and beverage                                $ 9,560        $ 9,007       $6,266
        Rooms                                              1,195          1,297        1,676
        Entertainment                                      1,950          1,319        1,312
                                                         -------        --------     -------
        Total costs allocated to casino departments      $12,705        $11,623       $9,254
                                                         =======        ========      ======

</TABLE>


      Federal  Income  Taxes  -  The  Company  and  its   subsidiaries   file  a
      consolidated  federal tax return. The Company accounts for income taxes in
      accordance with SFAS No. 109,  "Accounting for Income Taxes." SFAS No. 109
      requires  recognition  of  deferred  tax  assets and  liabilities  for the
      expected future tax  consequences of events that have been included in the
      financial statements or tax returns. Deferred income taxes reflect the net
      tax effects of: (i) temporary  differences between the carrying amounts of
      assets and  liabilities for financial  reporting  purposes and the amounts
      used for  income  tax  purposes;  and (ii)  operating  loss and tax credit
      carryforwards.

      Estimates and  Assumptions - The  preparation  of financial  statements in
      conformity with  accounting  principles  generally  accepted in the United
      States of America  requires  management to make estimates and  assumptions
      that affect the reported amounts of assets and liabilities,  disclosure of
      contingent assets and liabilities at the date of the financial statements,
      and the reported  amounts of revenues and  expenses  during the  reporting
      period. Significant estimates used by the Company include estimated useful
      lives for depreciable and amortizable assets, certain accrued liabilities,
      realizability  of deferred tax assets and  liabilities,  and the estimated
      allowances for receivables. Actual results may differ from estimates.

      Recently Adopted Accounting Standards - The Financial Accounting Standards
      Board ("FASB") issued SFAS No. 133,  Accounting for Derivatives,  which is
      effective for fiscal years  beginning  after June 15, 2000. This statement
      defines  derivatives  and  requires  qualitative   disclosure  of  certain
      financial and descriptive  information about a company's derivatives.  The
      Company  adopted SFAS No. 133 in the quarter  ending  March 31, 2001.  The
      adoption  of SFAS No. 133 had no impact on the  Company  or the  Company's
      consolidated financial statements.


                                                F-9
<PAGE>

      The  Emerging  Issues Task Force  ("EITF") of the  American  Institute  of
      Certified  Public  Accountants  issued  EITF  No.  00-22,  Accounting  for
      `Points' and Certain Other Timed-Based Sales Incentive Offers,  and Offers
      for Free  Products or Services to Be Delivered  in the Future,  on January
      18, 2001. EITF No. 00-22 concluded that when a company or vendor offers to
      a  customer  (a) free or  discounted  products  or  services  that will be
      delivered  (either  by the  vendor or by  another  unrelated  entity) at a
      future  date (1) as a  result  of a single  revenue  transaction  with the
      customer or (2) only if the  customer  completes  a  specified  cumulative
      level of revenue transactions with the vendor or remains a customer of the
      vendor  for a  specified  time  period  and (b) a rebate  or  refund  of a

      determinable  cash  amount  only if the  customer  completes  a  specified
      cumulative  level of  revenue  transactions  with the  vendor or remains a
      customer of the vendor for a specified time period, such rebates should be
      reported as a reduction of  revenues.  This EITF No. 00-22 was required to
      be adopted by the Company during the first quarter of 2001. As a result of
      adopting  EITF No.  00-22,  the Company  reclassified  approximately  $3.4
      million  and  $905,000 of such  "Points"  from  casino  operating  expense
      reducing  casino  revenues for the years ended December 31, 2000 and 1999,
      respectively.

      The EITF of the American  Institute of Certified Public Accountants issued
      EITF No.  00-14,  Accounting  for Certain Sales  Incentives,  on April 18,
      2001.  EITF No. 00-14  concluded  that when a company or vendor offers its
      customers sales incentives including discounts,  coupons, rebates and free
      products  or  services,  such sales  incentives  should be  reported  as a
      reduction of revenues.  EITF No.  00-14  concluded  that when a company or
      vendor offers its customers sales incentives including discounts, coupons,
      rebates,  and free products or services,  such sales incentives  should be
      reported  as a reduction  of  revenues.  EITF No.  00-14 is required to be
      adopted by the Company during the first quarter of 2002. Early adoption is
      permitted.  The Company chose to adopt EITF No. 00-14 in the first quarter
      of 2001. As a result of adopting EITF No. 00-14, the Company  reclassified
      approximately  $1.9 million and $0 of such sales incentive "Cash Vouchers"
      from casino operating expense to net against casino revenues for the years
      ended December 31, 2000 and 1999, respectively.

      Recently Issued Accounting Standards - In July 2001, the FASB issued SFAS
      No. 141, Business Combinations.  SFAS No. 141 requires the purchase method
      of accounting for business combinations initiated after June 30, 2001 and
      eliminates the pooling-of-interests method.  The Company does not believe
      that the adoption of SFAS No. 141 will have a significant impact on its
      financial statements.

      In July 2001, the FASB issued SFAS No. 142,  Goodwill and Other Intangible
      Assets,  which is effective January 1, 2002. SFAS No. 142 requires,  among
      other things,  the discontinuance of goodwill  amortization.  In addition,
      the  standard  includes  provisions  for the  reclassification  of certain
      existing  recognized  intangibles as goodwill,  reassessment of the useful
      lives of  existing  recognized  intangibles,  reclassification  of certain
      intangibles out of previously  reported goodwill and the identification of
      reporting units for purposes of assessing  potential future impairments of
      goodwill.   SFAS  No.  142  also   requires  the  Company  to  complete  a
      transitional  goodwill  impairment  test  six  months  from  the  date  of
      adoption.  The Company has  determined  that the  adoption of SFAS No. 142
      will not have a material  effect on its financial  position and results of
      operations.


                                                F-10
<PAGE>

      In June  2001,  the  FASB  issued  SFAS  No.  143,  Accounting  for  Asset
      Retirement  Obligations.  SFAS No. 143 addresses financial  accounting and
      reporting  for  obligations  associated  with the  retirement  of tangible
      long-lived  assets and the associated asset retirement costs. SFAS No. 143
      applies to all entities.  It applies to legal obligations  associated with
      the  retirement  of  long-lived  assets that result from the  acquisition,
      construction,  development  and (or) the normal  operation  of  long-lived
      asset,  except  for  certain  obligations  of  lessees.  SFAS  No.  143 is
      effective for financial statements issued for fiscal years beginning after
      June  15,  2002.  The  Company  is  currently  assessing,  but has not yet
      determined  the  impact  of SFAS No.  143 on its  financial  position  and
      results of operations.

      In  August of 2001,  the FASB  issued  SFAS No.  144,  Accounting  for the
      Impairment  or  Disposal  of  Long-Lived  Assets.  SFAS No. 144  addresses
      financial  accounting  and  reporting  for the  impairment  or disposal of
      long-lived  assets and supersedes  FASB Statement 121,  Accounting for the
      Impairment of Long-Lived  Assets and for Long-Lived  Assets to Be Disposed
      Of and the  accounting and reporting  provisions of Accounting  Principles
      Board    ("APB")    Opinion   No.   30,    Reporting    the   Results   of
      Operations-Reporting  the  Effects of Disposal of a Segment of a Business,
      and   Extraordinary,   Unusual  and  Infrequently   Occurring  Events  and
      Transactions,  for the disposal of a segment of a business (as  previously

      defined  in  that  Opinion).   SFAS  No.  144  also  amends  APB  No.  51,
      Consolidated   Financial   Statements,   to  eliminate  the  exception  to
      consolidation  for  a  subsidiary  for  which  control  is  likely  to  be
      temporary.  The  provisions  of SFAS No. 144 are  effective  for financial
      statements  issued for fiscal years beginning after December 15, 2001, and
      interim  period  within  those  fiscal  years.  The  Company is  currently
      assessing,  but has not yet  determined  the impact of SFAS No. 144 on its
      financial position and results of operations.

2.    ACCOUNTS RECEIVABLE

      Accounts   receivable   consist  of  the  following  at  December  31  (in
thousands):

<TABLE>
<CAPTION>
                                                            2001          2000

<S>                                                          <C>           <C>
        Casino                                            $ 1,761       $ 2,066
        Hotel                                               3,252         4,812
                                                          -------       -------
        Total                                               5,013         6,878
        Allowance for bad debts and discounts              (1,485)       (1,330)
                                                          -------       -------
        Ending balance                                    $ 3,528       $ 5,548
                                                          =======       =======
</TABLE>

      Changes in the casino and hotel  allowance for bad debts and discounts for
      the years ended December 31, 2001, 2000, and 1999 consist of the following
      (in thousands):
<TABLE>
<CAPTION>
                                                              2001         2000         1999
<S>                                                            <C>          <C>          <C>
        Beginning balance                                    $1,330       $1,611       $1,314
        Write-offs                                             (122)        (220)        (872)
        Recoveries                                               45           29          107
        Provision for bad debts and gaming discounts            232          (90)       1,062
                                                            -------      -------      -------
        Ending balance                                       $1,485       $1,330       $1,611
                                                            =======      =======      =======
</TABLE>

                                                F-11
<PAGE>

3.    PREPAID EXPENSES AND OTHER ASSETS

      Prepaid  expenses and other assets consist of the following at December 31
(in thousands):
<TABLE>
<CAPTION>

                                                  2001         2000

<S>                                                <C>         <C>
       Prepaid gaming taxes                      $ 939       $ 1,440
       Prepaid insurance                           413           749
       Other prepaid expenses                    1,731         2,410
                                                ------        ------
       Total                                    $3,083       $ 4,599
                                                ======        ======
</TABLE>

4.    PROPERTY AND EQUIPMENT

      Property  and  equipment  consist  of the  following  at  December  31 (in
thousands):
<TABLE>
<CAPTION>

                                                       2001            2000

<S>                                                     <C>             <C>
        Land and improvements                        $ 38,130        $ 37,718
        Buildings and improvements                    143,414         142,115
        Equipment, furniture, and fixtures            113,366         104,361
                                                      -------         -------
        Total property and equipment                  294,910         284,194
        Accumulated depreciation                      (94,379)        (77,164)
                                                      -------         -------
        Net property and equipment                   $200,531        $207,030
                                                      =======         =======
</TABLE>


      Approximately   $0,   $616,000  and  $4,733,000  in  interest  costs  were
      capitalized   on   construction   projects  in  2001,   2000,   and  1999,
      respectively. Substantially all of the Company's property and equipment is
      pledged as collateral to secure debt (see Note 8). Repairs and maintenance
      that do not significantly improve the life of fixed assets are expensed as
      incurred. Costs for significant improvements that extend the expected life
      of fixed assets more than one year are capitalized  and  depreciated  over
      the remaining extended life, using a straight-line method of depreciation.

      Property under capital leases totaled  $11,242,000  and  $11,242,000  with
      accumulated amortization of $4,507,000 and $2,258,000 at December 31, 2001
      and 2000, respectively.

5.    OTHER ASSETS

      Other assets consist of the following at December 31 (in thousands):
<TABLE>
<CAPTION>

                                                                      2001         2000

<S>                                                                  <C>          <C>
       Deposits                                                      $ 177        $ 152
       Bond offering costs and commissions, net of accumulated
        amortization of $6,756 and $5,187, respectively              4,916        6,585
       Other                                                         1,635        1,391
                                                                    ------        -----
       Total                                                        $6,728       $8,128
                                                                    ======        =====
</TABLE>


                                                F-12
<PAGE>


6.    ACCOUNTS PAYABLE AND ACCRUED EXPENSES

      Accounts payable consist of the following at December 31 (in thousands):
<TABLE>
<CAPTION>

                                                              2001         2000

<S>                                                            <C>          <C>
       Outstanding chip and token liability                  $  597       $  563
       Slot club liabilities                                  1,283        1,115
       Progressive liabilities                                  312          419
       Casino account deposits and miscellaneous gaming         139          146
                                                              -----        -----
       Total liabilities related to gaming activities         2,331        2,263

       Accounts payable to vendors                            4,406        5,196
       Hotel deposits                                         1,032        1,189
       Construction payables                                                 304
       Other                                                    431          779
                                                              -----        -----
       Total                                                 $8,200       $9,731
                                                              =====        =====
</TABLE>


      Accrued expenses consist of the following at December 31 (in thousands):

<TABLE>
<CAPTION>
                                                                  2001        2000

<S>                                                                <C>         <C>
       Payroll, related payroll taxes, and employee benefits    $ 7,907     $ 7,999
       Incentive, retention, and ESOP                             2,639       4,831
       Other                                                      4,194       3,901
                                                                 ------      ------
       Total                                                    $14,740     $16,731
                                                                 ======      ======
</TABLE>


7.    OTHER LONG-TERM LIABILITIES

      Other  long-term  liabilities  consist of the  nonqualified  pension  plan
      obligation  to the CEO of the  Company,  payable  upon  expiration  of his
      employment contract or with a change of control including accrued interest
      and deferred compensation plan liabilities for eligible employees.

      See Note 14 for a description of these plans.
<TABLE>
<CAPTION>

                                                              2001        2000

<S>                                                           <C>         <C>
       Non qualified pension obligation, CEO, unfunded      $ 4,163     $ 4,663
       Accrued interest on pension, CEO, unfunded             2,649       1,870
       Deferred compensation, funded                            579
                                                            -------     -------
       Total                                                $ 7,391     $ 6,533
                                                            =======     =======
</TABLE>


                                                F-13
<PAGE>


8.    LONG-TERM DEBT

      Long-term debt consists of the following at December 31 (in thousands):
<TABLE>
<CAPTION>

                                                                         2001            2000

<S>                                                                       <C>             <C>
10% First Mortgage Notes maturing on August 15, 2004, bearing
  interest, payable semiannually on February 15 and August 15 of
  each year, redeemable beginning August 1, 2001 at 105%; 2002
  at 102.5%; and 2003 and thereafter at 100%. These notes are
  collateralized by the land and physical structures comprising the
  Riviera Hotel and Casino and secondarily the assets of
  Riviera Black Hawk beginning in March 2002                            $174,193        $173,885

13% First Mortgage Notes maturing on June 3, 2005, bearing
   interest, payable semiannually on November 3 and June 3
  of each year; redeemable beginning May 1, 2002 at 106.5%;
  2003 at 103.25%; and after 2004 at 100%.  These notes are
  collateralized by the land and physical structures comprising the
  Riviera Black Hawk Casino                                               34,941          38,441

5.6% to 9% Notes collateralized by equipment and vehicles, payable
  monthly, including interest, maturing through October 2004               2,424           3,227

Capitalized lease obligations (see Note 10)                                7,921           9,887

5.5% Special Improvement District Bonds - issued by the City of
  Black Hawk, Black Hawk, Colorado, interest and principal
  payable monthly over 10 years beginning in 2000                            960             603
                                                                         -------         -------
Total long-term debt                                                     220,439         226,043
Current maturities by terms of debt                                       (3,151)         (2,871)
                                                                        --------        --------
Total                                                                   $217,288        $223,172
                                                                        ========        ========
</TABLE>


      Maturities  of  long-term  debt for the years  ending  December  31 are as
follows (in thousands):
<TABLE>
<CAPTION>

<S>     <C>                                                                              <C>
        2002                                                                             $ 3,151
        2003                                                                               3,474
        2004                                                                             177,553
        2005                                                                              35,726
        2006                                                                                 124
        Thereafter                                                                           411
                                                                                        --------
        Total                                                                          $ 220,439
                                                                                        ========
</TABLE>

      In February  1997,  the Company  entered into a $15.0  million,  five-year
      reducing  revolving  line of credit (the  "Credit  Facility").  The Credit
      Facility bears interest at prime plus 0.5% or the London Interbank Offered
      Rate ("LIBOR") plus 2.9%. The Company has not utilized this line of credit
      because it does not meet the requirements under the ratio of the allowable
      funded  debt  to  earnings  before  interest,   taxes,  depreciation,  and
      amortization ("EBITDA") of 4.75 to one.  The Credit Facility  is  callable
      upon a change in control  and  expired in February 2002.


                                                F-14
<PAGE>


      On August 13, 1997, the Company  issued 10% Notes with a principal  amount
      of $175  million  dollars.  The 10% Notes were issued at a discount in the
      amount of $2.2  million.  The discount is being  accreted over the life of
      the notes on a  straight-line  basis,  which  approximates  the  effective
      interest method.  The 10% Note Indenture  contains certain  covenants that
      limit the ability of the Company and its restricted subsidiaries,  subject
      to certain  exceptions,  to: (i) incur additional  indebtedness;  (ii) pay
      dividends or other  distributions  and  repurchase  capital stock or other
      equity  interests or subordinated  indebtedness;  (iii) enter into certain
      transactions with affiliates;  (iv) create certain liens; (v) sell certain
      assets;  and (vi) enter  into  certain  mergers  and  consolidations.  The
      Company has registered  securities  identical to the 10% Notes,  under the
      Securities  Act of 1933,  as  amended.  On January 8,  1998,  the  Company
      completed an exchange  offer for such  registered  securities  for the 10%
      Notes effective January 1, 1998.

      The 10% Notes are  unconditionally  guaranteed  by all existing and future
      restricted  subsidiaries of the Company,  which did not initially  include
      RBH.  RBH  became  collateral  for the 10% Notes  upon the filing of their
      financial  statements with the Securities and Exchange  Commission because
      certain consolidated operating ratios as defined in the 10% Notes were met
      as  of  December  31,  2001  which  causes  RBH  to  become  a  restricted
      subsidiary.

      On June 3, 1999,  RBH  completed a $45 million  private  placement  of 13%
      First Mortgage Notes.  The net proceeds of the placement were used to fund
      the  completion of RBH's casino project in Black Hawk,  Colorado.  Riviera
      Holdings Corporation has not guaranteed the $45 million RBH notes, but has
      agreed to a "Keep Well  Agreement" of $5 million per year (or an aggregate
      limited to $10  million)  for the first three years of RBH  operations  to
      cover if (i) the $5.85  million  interest on such notes is not paid by RBH
      and (ii) the amount by which RBH cash flow is less than $9.0  million  per
      year. RBH has registered  securities  identical to the 13% Notes under the
      Securities  Act of 1933, as amended.  On January 4, 2000, RBH completed an
      exchange offer for such registered securities.

      The 13% First  Mortgage  Notes were issued at a cost in the amount of $3.5
      million.  The deferred  financing cost is being amortized over the life of
      the notes on a  straight-line  basis,  which  approximates  the  effective
      interest method.

      The  13%  First  Mortgage  Note   Indenture   provides  that,  in  certain
      circumstances,  RBH  must  offer  to  repurchase  the 13%  Notes  upon the
      occurrence of a change of control or certain other events. In the event of
      such mandatory  redemption or repurchase  prior to maturity,  RBH would be
      unable to pay the principal amount of the 13% Notes without a refinancing.

      The 13% First Mortgage Note Indenture  contains certain  covenants,  which
      limit the  ability  of RBH and its  restricted  subsidiaries,  subject  to
      certain  exceptions,  to:  (i)  incur  additional  indebtedness;  (ii) pay
      dividends or other  distributions  and  repurchase  capital stock or other
      equity  interests or subordinated  indebtedness;  (iii) enter into certain
      transactions  with affiliates;  (iv) create certain liens and sell certain
      assets; and (v) enter into certain mergers and consolidations. As a result
      of these  restrictions,  the  ability of the  Company to incur  additional
      indebtedness  to  fund  operations  or to  make  capital  expenditures  is
      limited.  In the event that cash flow from  operations is  insufficient to
      cover cash requirements, the Company would be required to curtail or defer
      certain of their capital expenditure  programs under these  circumstances,
      which could have an adverse  effect on RBH's  operations.  At December 31,
      2001, RBH believes that it is in compliance with the covenants.

      The  Company  has a credit  facility  totaling  $1,500,000  for letters of
      credit   issued   periodically   to  foreign   vendors  for  purchases  of
      merchandise.  The letters  require  payment upon  presentation  of a valid
      voucher.


                                                F-15
<PAGE>

      The 5.5%  Special  Improvement  District  Bonds were issued by the City of
      Black Hawk, Colorado, in July 1998 for $2,940,000.  The proceeds were used
      for road  improvements and other  infrastructure  projects  benefiting the
      Riviera  Black Hawk Casino and another  nearby  casino.  The projects were
      substantially  completed  in  2000  at a  cost  of  $2,240,000,  including
      interest and reserves.  During 2001,  another phase was  completed.  RBH's
      share of the final  phase was  $454,000.  The  excess  proceeds  have been
      returned to the  bondholders by the City of Black Hawk,  Colorado.  RBH is
      responsible  for 50 percent of the debt payable over 10 years beginning in
      2000.

9.    GUARANTOR INFORMATION

      The Company's  10.0% First Mortgage Notes (see Note 8) are guaranteed by a
      majority of the Company's wholly owned existing significant  subsidiaries.
      These  guaranties  are full,  unconditional,  and joint and  several.  The
      following  consolidating  schedules present separate  condensed  financial
      statement  information on a combined basis for the parent only, as well as
      the Company's guarantor subsidiaries and non-guarantor subsidiaries, as of
      and for the years ended  December  31, 2001 and 2000.  As of December  31,
      1999,  RBH had no  operations  as  defined  in the  notes to  consolidated
      financial  statements.  At  December  31,  1999,  RBH had total  assets of
      approximately  $72.8  million,   which  represented   primarily  cash  and
      restricted cash and  investments,  other assets,  the cost of the land for
      the Black Hawk Casino project,  and  construction in progress.  Therefore,
      the  Company  has not  included  separate  financial  information  for the
      guarantors as of December 31, 1999.

      The  management  fee  to  Riviera  Holdings  Corporation  from  guarantors
      represents cost to the Company of depreciation and interest expense on the
      10% First Mortgage Notes.














                                                F-16
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION

CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
DECEMBER 31, 2001
------------------------------------------------------------------------------------------------------------

                                                                       Combined
                                                 Parent     Combined     Non-      Elimination    Combined
ASSETS                                            Only     Guarantors Guarantors     Entries       Totals

CURRENT ASSETS:
<S>                                                  <C>        <C>        <C>         <C>           <C>
  Cash and cash equivalents                       $ 10,237   $ 24,910   $ 11,459   $               $ 46,606
  Current assets                                                8,102        762                      8,864
                                                   -------     ------     ------     -------        -------
           Total current assets                     10,237     33,012     12,221                     55,470

PROPERTY AND EQUIPMENT, Net                        130,938      2,044     67,549                    200,531

OTHER ASSETS, NET                                    2,269      2,485      1,974                      6,728

INVESTMENT IN SUBSIDIARIES                          51,189     24,946              $ (76,135) (1)         -

DEFERRED INCOME TAXES                                           3,356      1,733                      5,089
                                                   -------     ------     ------     -------        -------
TOTAL                                            $ 194,633   $ 65,843   $ 83,477   $ (76,135)     $ 267,818
                                                   =======     ======     ======     =======        =======
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Current portion of long-term debt                     $    $ 1,198    $ 1,953           $        $ 3,151
   Due to parent company                                       24,716      3,335     (28,051) (1)         -
   Accounts payable                                             3,876      4,324                      8,200
   Accrued interest                                  6,563          1      1,520                      8,084
   Accrued expenses                                            13,092      1,648                     14,740
                                                    -------     ------     ------     -------       -------
           Total current liabilities                 6,563     42,883     12,780     (28,051) (1)    34,175
                                                    -------     ------     ------     -------       -------
OTHER LONG-TERM LIABILITIES                                     7,391                                 7,391
                                                    -------    ------     ------      -------       -------
Long-term debt, Net of current portion             174,116      2,402     40,770                    217,288
                                                    -------    ------     ------      -------       -------
STOCKHOLDERS EQUITY:
  Common stock                                           5                                                5
  Additional paid-in capital                        11,283     17,528     32,758     (48,084) (1)    13,485
  Treasury stock                                   (10,460)      (786)                              (11,246)
  Retained earnings                                 13,126     (3,575)    (2,831)                     6,720
                                                   -------      ------    ------      -------       -------
           Total stockholders equity                13,954     13,167     29,927     (48,084)         8,964
                                                   -------     ------     ------     -------        -------
TOTAL                                            $ 194,633   $ 65,843   $ 83,477   $ (76,135)     $ 267,818
                                                   =======     ======     ======     ========       =======
Elimination entries -
(1) To eliminate investment in and advances to subsidiaries
</TABLE>


                                                F-17
<PAGE>
<TABLE>
<CAPTION>

RIVIERA HOLDINGS CORPORATION

CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
DECEMBER 31, 2000
-------------------------------------------------------------------------------------------------------------


                                                                       Combined
                                                 Parent    Combined      Non-      Elimination    Combined
ASSETS                                            Only    Guarantors  Guarantors     Entries       Totals

CURRENT ASSETS:
<S>                                                  <C>         <C>         <C>        <C>            <C>
  Cash and cash equivalents                       $ 11,957    $ 32,473    $ 7,744                   $ 52,174
  Current assets                                                12,489      1,000                     13,489
                                                    -------     ------     ------     -------        -------
           Total current assets                     11,957      44,962      8,744                     65,663

PROPERTY AND EQUIPMENT, Net                        135,542       2,983     68,505                    207,030

OTHER ASSETS, Net                                    3,156       2,887      2,510      $ (425) (1)     8,128

INVESTMENT IN SUBSIDIARIES                          46,737      32,869                (79,606) (1)

DEFERRED INCOME TAXES                                              764      2,125                      2,889
                                                    -------     ------     ------     -------        -------
TOTAL                                            $ 197,392    $ 84,465   $ 81,884   $ (80,031)     $ 283,710
                                                   ========     ======     ======     =======        =======
LIABILITIES AND STOCKHOLDERS EQUITY

CURRENT LIABILITIES:
   Current portion of long-term debt                           $ 1,101    $ 1,770                    $ 2,871
   Due to parent company                                        29,713              $ (29,713) (1)
   Accounts payable                                              6,565      3,591        (425) (1)     9,731
   Accrued interest                                $ 6,563           2      1,162                      7,727
   Accrued expenses                                             13,440      3,291                     16,731
                                                    -------     ------     ------     -------        -------
           Total current liabilities                 6,563      50,821      9,814     (30,138) (1)    37,060
                                                    -------     ------     ------     -------        -------
OTHER LONG-TERM LIABILITIES                                      6,533                                 6,533
                                                    -------     ------     ------     -------        -------
LONG-TERM DEBT, Net of current portion             173,885       3,510     45,777                    223,172
                                                    -------     ------     ------     -------        -------
STOCKHOLDERS EQUITY:
  Common stock                                           5                                                 5
  Additional paid-in capital                        13,447      20,179     29,713     (49,893) (1)    13,446
  Treasury stock                                    (9,633)                                           (9,633)
  Retained earnings                                 13,125       3,422     (3,420)                    13,127
                                                    -------     ------     ------     -------        -------
           Total stockholders equity                16,944      23,601     26,293     (49,893)        16,945
                                                    -------     ------     ------     -------        -------
TOTAL                                            $ 197,392    $ 84,465   $ 81,884   $ (80,031)     $ 283,710
                                                   ========     ======     ======     =======        =======
Elimination entries -
(1) To eliminate investment in and advances to subsidiaries.
</TABLE>


                                                F-18
<PAGE>
<TABLE>
<CAPTION>

RIVIERA HOLDINGS CORPORATION

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS INFORMATION
YEAR ENDED DECEMBER 31, 2001
-------------------------------------------------------------------------------------------------------------------------
                                                                            Combined
                                                 Parent       Combined       Non-       Elimination          Combined
                                                  Only      Guarantors    Guarantors      Entries             Totals

REVENUES:
<S>                                                <C>              <C>           <C>         <C>                 <C>
  Casino                                                        $ 67,389      $ 46,650                         $ 114,039
  Rooms                                                           44,255                                          44,255
  Food and beverage                                               25,696         5,560                            31,256
  Entertainment                                                   20,418           274                            20,692
  Other                                                            8,547           572                             9,119
  Management fee                                 $ 30,113                                   $(30,113)(1)              -
                                                   -------        ------        ------       -------             -------
           Total revenues                          30,113        166,305        53,056       (30,113)            219,361
  Less promotional allowances                                     13,320         4,010                            17,330
                                                   -------        ------        ------       -------             -------
           Net revenues                            30,113        152,985        49,046       (30,113)            202,031

COSTS AND EXPENSES:
  Direct costs and expenses of
    operating departments:
    Casino                                                        40,197        22,648                            62,845
    Rooms                                                         23,339                                          23,339
    Food and beverage                                             19,333         2,093                            21,426
    Entertainment                                                 14,823            77                            14,900
    Other                                                          3,068                                           3,068
  Other operating expenses:
    General and administrative                                    30,733        11,506                            42,239
    Management fees                                               28,759         1,354       (30,113)  (1)             -
    Depreciation and amortization                  11,431          2,066         3,746                            17,243
                                                  -------         ------        ------       -------             -------
           Total costs and expenses                11,431        162,318        41,424       (30,113)            185,060
                                                  -------         ------        ------       -------             -------
INCOME (LOSS) FROM OPERATIONS                      18,682         (9,333)        7,622                            16,971
                                                  -------         ------        ------       -------             -------
OTHER (EXPENSE) INCOME:
  Interest expense                                (18,938)        (1,186)       (6,740)                          (26,864)
  Interest income                                     256            919            99                             1,274
  Other, net                                                         (28)                                            (28)
                                                  -------         ------        ------       -------             -------
           Total other expense                    (18,682)          (295)       (6,641)                          (25,618)
                                                  -------         ------        ------       -------             -------
LOSS BEFORE INCOME TAX BENEFIT                                    (9,628)          981                            (8,647)
BENEFIT FOR INCOME TAXES                                          (2,632)          392                            (2,240)

                                                  -------         ------        ------       -------             -------
NET LOSS                                          $             $ (6,996)        $ 589       $                  $ (6,407)
                                                  =======         ======        ======       =======             =======
Elimination entries -
(1)  To eliminate intercompany revenue and expense.

</TABLE>


                                                F-19
<PAGE>
<TABLE>
<CAPTION>

RIVIERA HOLDINGS CORPORATION

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
YEAR ENDED DECEMBER 31, 2000

                                                                           Combined
                                                 Parent       Combined       Non-       Elimination             Combined
                                                  Only      Guarantors    Guarantors      Entries                Totals

REVENUES:
<S>                                                  <C>           <C>          <C>           <C>                    <C>
  Casino                                                        $ 74,057      $ 33,636                            $ 107,693
  Rooms                                                           43,819                                             43,819
  Food and beverage                                               26,738         4,018                               30,756
  Entertainment                                                   24,526                                             24,526
  Other                                                            9,607           374          $ 557                10,538
  Management fee                                  $ 31,140           557                      (31,697)(1)
                                                    ------       -------        ------        -------               -------
  Total revenues                                    31,140       179,304        38,028        (31,140)              217,332
  Less promotional allowances                                     13,034         2,767                               15,801
                                                    ------       -------        ------        -------               -------
           Net revenues                             31,140       166,270        35,261        (31,140)              201,531
                                                    ------       -------        ------        -------               -------
COSTS AND EXPENSES:
  Direct costs and expenses of
    operating departments:
    Casino                                                        40,174        17,286                               57,450
    Rooms                                                         23,364                                             23,364
    Food and beverage                                             19,773         1,599                               21,372
    Entertainment                                                 18,954             5                               18,959
    Other                                                          3,144             2                                3,146
  Other operating expenses:
    General and administrative                                    31,540         9,772                               41,312
    Management fees                                               30,583           557        (31,140)     (1)
    Preopening expenses Black Hawk,
      Colorado                                                                   1,222                                1,222
    Depreciation and amortization                   13,090         1,800         2,937                               17,827
                                                    ------       -------        ------        -------               -------
           Total costs and expenses                 13,090       169,332        33,380        (31,140)              184,652
                                                    ------       -------        ------        -------               -------
INCOME FROM OPERATIONS                              18,050        (3,052)        1,881                               16,879
                                                    ------       -------        ------        -------               -------
OTHER (EXPENSE) INCOME:
  Interest expense                                 (18,550)       (1,568)       (7,687)                             (27,805)
  Interest income                                      500         1,611           318                                2,429
  Interest capitalized                                                39           577                                  616
  Other, net                                                       1,171                                              1,171
                                                    ------       -------        ------        -------               -------
           Total other (expense) income            (18,050)        1,253        (6,792)                             (23,589)
                                                    ------       -------        ------        -------                -------
LOSS BEFORE BENEFIT FOR                                           (1,799)       (4,911)                              (6,710)
  INCOME TAXES

BENEFIT FOR INCOME TAXES                                            (530)       (1,965)                              (2,495)
                                                    ------       --------       -------       -------                -------
NET LOSS                                           $   -        $ (1,269)     $ (2,946)       $   -                $ (4,215)
                                                    ======       ========       =======       =======                =======
Elimination entries -
(1)  To eliminate intercompany revenue and expense.

</TABLE>


                                                F-20
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2001

                                                                                           Combined
                                                                Parent       Combined         Non-      Elimination    Combined
                                                                 Only       Guarantors     Guarantors     Entries        Total

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                              <C>           <C>             <C>          <C>           <C>
  Net loss                                                                  $ (6,996)         $ 589       $           $ (6,407)
  Adjustments to reconcile net loss to net cash
    provided by operating activities:
    Depreciation and amortization                             $ 11,431         2,066          3,746                     17,243
    Provision for bad debts                                                       89            136                        225
    Provision for gaming discounts                                               (70)                                      (70)
    Interest expense                                            18,938         1,186          6,740                     26,864
    Interest paid                                              (17,500)         (170)        (5,820)                   (23,490)
    Changes in operating assets and liabilities:
      Decrease (increase) in accounts receivable, net                          2,005           (140)                     1,865
      Decrease (increase) in inventories                                       1,003             86                      1,089
      Decrease (increase) in prepaid expenses
        and other assets                                                       1,360            156                      1,516
      Increase (decrease) in accounts payable                                 (1,738)           (10)                    (1,748)
      Increase (decrease) in accrued expenses                                 (2,888)           468                     (2,420)
      Increase (decrease) in deferred compensation
       plan obligation                                                           579                                       579
      Increase (decrease) in deferred tax asset                               (2,592)           392                     (2,200)
      Increase (decrease) in other long term liabilities                        (500)                                     (500)
                                                              -------         -------         ------       ------       -------
          Net cash provided by (used in) operating activities  12,869         (6,666)         6,343                     12,546
                                                              -------         -------         ------       ------       -------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures for property and equipment                             (7,622)        (2,640)                   (10,262)
  Decrease (increase) in other assets                         (13,800)        13,911            (26)                        85
                                                              -------         -------         ------       ------       -------
           Net cash used in investing activities              (13,800)         6,289         (2,666)                   (10,177)
                                                              -------         -------         ------       ------       -------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments on long-term borrowings                                            (1,087)        (1,778)                    (2,865)
  Purchase of treasury stock, general                            (993)                                                    (993)
  Increase in paid in capital                                      41                                                       41
  Purchase of treasury stock, deferred compensation trust                       (786)                                     (786)
  Issuance of restricted stock                                    166                                                      166
  Advances to/from subsidiaries                                               (2,271)         2,271
  Purchase of 13% Mortgage Notes - Black Hawk                                                (3,500)                    (3,500)
  Contribution of capital to Black Hawk, Inc.                                 (3,045)         3,045
                                                              -------         -------         ------       ------       -------
           Net cash (used in) provided by financing activities   (786)        (7,189)            38                     (7,937)
                                                              -------         -------         ------       ------       -------
(DECREASE) INCREASE IN CASH AND CASH
  EQUIVALENTS                                                  (1,717)        (7,566)         3,715                     (5,568)

CASH AND CASH EQUIVALENTS,
  BEGINNING OF YEAR                                            11,957         32,473          7,744                     52,174
                                                              -------         -------         ------       ------       -------
CASH AND CASH EQUIVALENTS, END OF
  YEAR                                                       $ 10,240       $ 24,907       $ 11,459       $           $ 46,606
                                                              =======         ======         ======       =======       ======

</TABLE>



                                                F-21
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
YEAR ENDED DECEMBER 31, 2000
------------------------------------------------------------------------------------------------------------------------------

                                                                                       Combined
                                                              Parent        Combined         Non-      Elimination    Combined
                                                               Only        Guarantors     Guarantors     Entries       Totals

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                            <C>               <C>            <C>          <C>           <C>
  Net loss                                                                   $ (1,269)      $ (2,946)     $ -         $ (4,215)
  Adjustments to reconcile net loss to net cash
    provided by operating activities:
    Depreciation and amortization                             $ 13,090          1,800          2,937                     17,827
    Provision for bad debts                                                       283             43                        326
    Provision for gaming discounts                                                 45                                        45
    Interest expense                                            18,550          1,568          7,687                     27,805
    Interest paid                                              (17,500)        (1,566)        (5,344)                   (24,410)
    Interest capitalized on construction projects                                 (39)          (577)                      (616)
    Changes in operating assets and liabilities:
      (Increase) decrease in accounts receivable, net                            (669)          (208)                      (877)
      (Increase) decrease in inventories                                          360           (270)                        90
      (Increase) decrease in prepaid expenses
        and other assets                                                       (1,226)           619                       (607)
      (Increase) decrease in accounts payable                                  (5,918)         3,847                     (2,071)
      (Increase) decrease in accrued expenses                                   6,278          1,070                      7,348
      (Increase) decrease in deferred tax asset                                  (569)        (1,965)                    (2,534)
      (Increase) decrease in slot annuities payable                                (3)                                       (3)
      (Increase) decrease in other long-term liabilities                        1,247                                     1,247
                                                               -------        -------         ------                    -------
         Net cash provided by (used in) operating activities    14,140            322          4,893                     19,355
                                                               -------        -------         ------                    -------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures for property and equipment                              (7,465)       (16,969)                   (24,434)
  Interest capitalized on construction projects                                    39            577                        616
  Decrease in short-term investments                                            2,438          2,820                      5,258
  Decrease in restricted funds                                                  7,887          7,173                     15,060
  Decrease (increase) in other assets                           1,389          (2,044)            (6)                      (661)
                                                               -------        -------         ------                    -------
         Net cash provided by (used in) investing activities    1,389             855         (6,405)                    (4,161)
                                                               -------        -------         ------                    -------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from long-term borrowings                                              34           9,518                      9,552
  Payments on long-term borrowings                                            (1,076)         (1,223)                    (2,299)
  Purchase of treasury stock                                   (6,518)                                                   (6,518)
  Advances to/from subsidiaries                                (4,772)         5,301            (529)
  Purchase of 13% Mortgage Notes - Black Hawk                                                 (6,559)                    (6,559)
  Contribution of capital to Black Hawk, Inc.                  (6,239)                         6,239
                                                               -------        -------         ------                    -------
         Net cash (used in) provided by financing activities  (17,529)         4,259           7,446                     (5,824)
                                                               -------        -------         ------                    -------
(DECREASE) INCREASE IN CASH AND
  CASH EQUIVALENTS                                             (2,000)         5,436           5,934         -            9,370

CASH AND CASH EQUIVALENTS,
  BEGINNING OF YEAR                                            13,957         27,037           1,810                     42,804
                                                               -------        -------         ------                    -------
CASH AND CASH EQUIVALENTS,
  END OF YEAR                                                $ 11,957       $ 32,473         $ 7,744       $ -         $ 52,174
                                                               =======        =======         ======      =====         =======
</TABLE>

                                                F-22
<PAGE>

10.   LEASING ACTIVITIES

      The  Company  leases  certain   equipment  under  capital  leases.   These
      agreements  have  been  capitalized  at the  present  value of the  future
      minimum lease  payments at lease  inception and are included with property
      and  equipment.  Management  estimates  that the fair market  value of the
      property  and  equipment,  subject  to the  leases,  approximates  the net
      present value of the leases.

      The  following  is a schedule by year of the minimum  rental  payments due
      under capital leases, as of December 31, 2001 (in thousands).
<TABLE>
<CAPTION>

<S>      <C>                                                          <C>
         2002                                                         $ 2,979
         2003                                                           2,979
         2004                                                           2,979
         2005                                                             677

         Total minimum lease payments                                   9,611
         Taxes, maintenance, and insurance                               (295)
         Interest portion of payments                                  (1,395)

         Present value of net minimum lease payments                  $ 7,921

</TABLE>

      Rental  expense under  operating  leases for the years ended  December 31,
      2001, 2000, and 1999 was approximately $903,555,  $1,133,983 and $453,772,
      respectively. Such leases were year to year in nature.

      In addition,  the Company  leases retail space  (primarily to retail shops
      and fast food  vendors)  to third  parties  under  terms of  noncancelable
      operating leases that expire in various years through 2004. Rental income,
      which is included in other income,  for the years ended December 31, 2001,
      2000, and 1999, was approximately  $1,800,000,  $1,584,300 and $1,803,000,
      respectively.

      At December 31, 2001,  the Company had future minimum annual rental income
      due under noncancelable operating leases as follows (in thousands):
<TABLE>
<CAPTION>

<S>     <C>                                                           <C>
        2002                                                          $ 1,356
        2003                                                            1,358
        2004                                                            1,358
        2005                                                            1,358
        2006                                                            1,358

        Total                                                         $ 6,788
</TABLE>


11.   FEDERAL INCOME TAXES

      The Company  computes  deferred  income  taxes  based upon the  difference
      between the financial  statement  and tax basis of assets and  liabilities
      using  enacted  tax rates in effect in the years in which the  differences
      are expected to reverse.


                                                F-23
<PAGE>


      The  effective  income  tax rates on  income  attributable  to  continuing
      operations differ from the statutory federal income tax rates for the year
      ended December 31 as follows (in thousands):
<TABLE>
<CAPTION>

                                           2001                      2000                      1999
                                   ------------------------  ------------------------  ------------------------
                                       Amount       Rate         Amount       Rate         Amount       Rate
<S>                                    <C>           <C>         <C>           <C>         <C>           <C>
Benefit for income taxes
  at federal statutory rate          $ (3,026)     (35.0)%     $ (2,349)    (35.0)%     $ (2,565)     (35.0)%
Taxes, state, other                       392       4.5 %
Benefit from outcome of
  IRS examination                                                                         (1,874)     (25.6)
Other                                     394       4.6 %         (146)      (2.2)           (22)      (0.2)
                                      --------    -------       -------     ------       --------     -------
Benefit for income taxes             $ (2,240)    (25.9)%     $ (2,495)     (37.2)%     $ (4,461)     (60.8)%
                                      ========    =======       =======     ======       ========     =======
</TABLE>

      Comparative analysis of the benefit for income taxes is as follows:
<TABLE>
<CAPTION>

                                            2001          2000          1999

<S>                                         <C>         <C>            <C>
        Current                            $ 157       $ 1,223        $ (984)
        Deferred                          (2,397)       (3,718)       (3,477)
                                          -------       -------       -------
        Total                            $(2,240)      $(2,495)      $(4,461)
                                          =======       =======       =======
</TABLE>

      The tax effects of the items  composing  the  Company's  net  deferred tax
      (asset) liability consist of the following at December 31 (in thousands):
<TABLE>
<CAPTION>

                                                                           2001          2000

        Deferred tax liabilities:
<S>                                                                         <C>         <C>
          Reserve differential for hospitality and gaming activities      $ 559       $ 1,393
          Difference between book and tax-depreciable property            4,845         5,217
          Other                                                             579           560
                                                                          ------       ------
        Total                                                             5,983         7,170
                                                                          ------       ------
        Deferred tax assets:
          Net operating loss carryforward                                 4,383         3,309
          Reserves not currently deductible                               2,647         2,416
          Bad debt reserves                                                 583           483
          AMT and other credits                                           3,459         3,851
                                                                          ------       ------
        Total                                                            11,072        10,059
                                                                         -------       ------
        Net deferred tax asset                                          $ 5,089       $ 2,889
                                                                        ========      =======
</TABLE>

      The Company has $3,453,000 of  alternative  minimum tax ("AMT") credit and
      $7,000 of general  business  credit  available to offset future income tax
      liabilities.  The AMT credit has no expiration  date.  The credit will not
      begin to expire until 2012.

      The Company performed an analysis of the realizability of its deferred tax
      assets at December 31, 2001.  The  realizability  of the assets related to
      Rivera Las Vegas is  dependent  upon future  earnings  and tax  strategies
      which the Company may transact in 2002 and 2003.

                                                F-24
<PAGE>

12.   COMMITMENTS AND CONTINGENCIES

      The Company is party to several  routine  lawsuits,  both as plaintiff and
      defendant,  arising from the normal operations of a hotel. Management does
      not believe that the outcome of such  litigation,  in the aggregate,  will
      have a  material  adverse  effect on the  financial  position,  results of
      operations, or cash flows of the Company.

      Allen Paulson  Merger/Litigation  - The Company and the plaintiffs to this
      action entered into a Settlement  Agreement  dated as of July 2, 1999. The
      Settlement Agreement was conditioned upon the United States District Court
      for the Central District of California (the "Court") entering a Settlement
      Bar Order and Final  Judgment and provided  that upon the entering of such
      an Order:  (i) The Company would pay  plaintiff  Allen E. Paulson (and his
      heirs or  successors)  ("Paulson")  $3,477,412  ($7.50  per share) for the
      463,655  shares of Riviera  Holdings  Corporation  common  stock  owned by
      Paulson,  (ii) Paulson  would receive  $1,522,587.50  from the funds being
      held  in  escrow  for  the   benefit   of  holders  of  Riviera   Holdings
      Corporation's Contingent Value Rights ("CVRs"), (iii) the remainder of the
      escrow of approximately  $4,340,000 would be distributed to the holders of
      the  CVRs,  and  (iv)  Paulson  would  file  an  amended  complaint  which
      eliminated allegations of wrongdoing against us.

      On October 7, 1999,  the Court  entered a  Settlement  Bar Order and Final
      Judgment which dismissed the California  Action against us with prejudice,
      and  barred   the  other   defendants   to  the   lawsuit   from   seeking
      indemnification  against the Company for claims  arising under the federal
      securities  laws or for state law claims  arising out of the  transactions
      underlying the plaintiffs' federal security law claims.

      Shortly after the entry of the Settlement Bar Order,  the Company acquired
      Paulson's  stock, and funds were disbursed from escrow as per the terms of
      the Settlement Agreement.

      Morgens,  Waterfall,  Vintiadis  Litigation  (the  "Nevada  Action") - The
      plaintiff  in this  action  ("Morgens,  Waterfall")  is a  shareholder  of
      Riviera Holdings  Corporation and a defendant to the California Action. On
      September 30, 1999,  Morgens,  Waterfall  commenced  this action in Nevada
      state court, where it sought an order enjoining the Company from obtaining
      a Settlement Bar Order in the California Action. The Company and the other
      defendants  to the Nevada  Action  removed the action to the United States
      District Court for the District of Nevada on October 1, 1999. This removal
      to federal  court  divested  the state court of  jurisdiction  to consider
      Morgens,  Waterfall's  motion for injunctive  relief.  Morgens,  Waterfall
      filed a complaint  with the court,  but it did not serve the  complaint on
      any of the defendants.

      On  November  1,  1999,  Morgens,  Waterfall  served a notice of motion to
      remand the Nevada  Action  from the  Nevada  federal  court back to Nevada
      state court. The Company and the other defendants  opposed the motion, and
      on May 24, 2000, the Court denied Morgens, Waterfall's motion.

      On January 31, 2000,  Morgens,  Waterfall  served an Amended Summons and a
      First Amended  Verified  Complaint on Riviera  Holdings  Corporation  with
      subsequent  service on  directors.  The Amended  Complaint  asserted  four
      claims for relief.

      On April 17, 2000, the Company and its directors moved to dismiss Morgens,
      Waterfall's Amended Complaint. In response, Morgens, Waterfall opposed the
      directors'  motion but  "conceded"  its claim  against the  Company.  As a
      consequence,  Morgens,  Waterfall no longer asserted any claim against the


                                                F-25
<PAGE>

      Company,  but it has opposed dismissing the Company from the action on the
      ground  that the  Company was a "nominal  defendant"  with  respect to the
      derivative  claims asserted by Morgens,  Waterfall  against the directors.

      On October 1, 2001 Morgens,   Waterfall,  the  Company  and  the directors
      entered  into  a Settlement  Agreement  dated  as of settling  the  Nevada
      Action.  That Settlement  Agreement  provides that plaintiff would release
      its claims  with prejudice against each defendant and each defendant would
      release its claims with prejudice against  plaintiff  conditioned upon Mr.
      Westerman accepting service of a subpoena to personally appear and testify
      at the trial of the California  Action and that Mr.  Westerman  appear and
      testify at the trial of the California Action.

      Employees and Labor  Relations - As of December 31, 2001,  the Riviera had
      approximately  1,782  full-time  equivalent  employees and had  collective
      bargaining contracts with eight unions covering  approximately 813 of such
      employees,   including  food  and  beverage  employees,  rooms  department
      employees,  carpenters,  engineers, stage hands, musicians,  electricians,
      painters, and teamsters. The Company's agreements with the Southern Nevada
      Culinary  and  Bartenders  Union and Stage  Hands  Union,  which cover the
      majority of the Company's unionized  employees,  were renegotiated in 1998
      and expire in the year 2002.  Collective  bargaining  agreements  with the
      operating engineers,  painters, and electricians were renegotiated in 2000
      and expire in 2004,  2005,  and 2004,  respectively.  A new  agreement was
      negotiated with the carpenters  which expires in 2005. The Company is also
      in negotiations  with the Musicians  Union. A new agreement was negotiated
      with the  Teamsters,  which  expires in 2003.  Although  unions  have been
      active in Las Vegas,  management  considers  its employee  relations to be
      satisfactory. There can be no assurance, however, that new agreements will
      be reached  without union action or will be on terms  satisfactory  to the
      Company.

      Keep-Well  Agreement  - RBH and  Riviera  Holdings  Corporation  entered a
      Keep-Well  Agreement wherein, if (1) RBH does not have the necessary funds
      to make a payment of fixed  interest  on the notes  during its first three
      years of  operations  or (2)  consolidated  cash  flow is less  than  $9.0
      million in any of the first three years of  operations,  Riviera  Holdings
      Corporation  will be obligated to contribute  cash to RBH to make up those
      amounts (up to a maximum of $5.0  million for any one  operating  year and
      $10.0  million in the  aggregate).  On  February  14,  2001,  the  Company
      advanced  approximately  $3.1 million to RBH under this  agreement.  As of
      December 31, 2001, Riviera Holdings Corporation does not owe amounts under
      the Keep-Well Agreement.

13.   MANAGEMENT AGREEMENTS

      From August 1996 until  December  1999,  RGM  operated  the Four Queens in
      downtown  Las Vegas  under a  management  agreement  for a minimum  annual
      management  fee of $1.0 million.  The Company  completed its  requirements
      under  the  agreement,  and  the  Four  Queens  Management  Agreement  was
      terminated December 30, 1999.

      RBH has  entered  into a  management  agreement  in  principle  (the  "RBH
      Management  Agreement") with Riviera Gaming  Management of Colorado,  Inc.
      (the   "Manager"),   a  wholly  owned   subsidiary  of  Riviera   Holdings
      Corporation, which, in exchange for a fee, manages RBH. The management fee
      consists of a revenue fee and a performance  fee. The revenue fee is based
      on 1 percent of net revenues (gross revenues less  complimentaries) and is
      payable  quarterly  in  arrears.  The  performance  fee  is  based  on the

      following  percentages of EBITDA,  whose components are based on generally
      accepted accounting principles):  (1) 10 percent of EBITDA from $5 million
      to $10 million,  (2) 15 percent of EBITDA from $10 million to $15 million,
      and (3) 20 percent of EBITDA in excess of $15 million. The performance fee
      is based on the  preceding  quarterly  installments  subject  to  year-end
      adjustment.  The management fee began on February 4, 2000, the date of the



                                                F-26
<PAGE>

      opening of the Riviera  Black Hawk Casino.  If there is any default  under
      the RBH Management Agreement,  the Manager will not be entitled to receive
      management fees but will still be entitled to inter-company  service fees.
      At December  31, 2001,  RBH had accrued but not paid,  and the Manager had
      recognized   management  fees  of  $1,911,229   which  are  eliminated  in
      consolidation.

14.   EMPLOYMENT AGREEMENTS AND EMPLOYEE BENEFIT PLANS

      Chairman - William L. Westerman serves as Chairman of the Board, President
      and Chief Executive  Officer of the Company,  and as Chairman of the Board
      and Chief Executive Officer of ROC.

      Under Mr. Westerman's  existing  employment  agreement  with the Company,
      which  was  last  amended  on  December 6, 2000,  Mr. Westerman  shall  be
      employed by the Company for an indefinite  period  subject to  termination
      by  either  the  Company  or Mr. Westerman on not less than 120 days prior
      written notice.  Mr. Westerman's base compensation is $600,000.

      Under his employment  agreement,  Mr. Westerman is entitled to participate
      in the  Company's  Senior  Management  Compensation  Plan  or  such  other
      executive  bonus plan as shall be  established  by the Company's  Board of
      Directors  (collectively  the  "Plan").  If at least 80% of  targeted  net
      income, as defined by the Plan, is met, Mr. Westerman shall be entitled to
      receive a bonus under the Plan  expressed as a percentage  of his $600,000
      base salary depending on the percentage of targeted net income realized by
      the  Company  in a  particular  year,  with a maximum  bonus of  $900,000.
      Pursuant to the December 6, 2000 amendment,  to the extent Mr. Westerman's
      bonus  exceeds  $400,000  in 2001 and each  succeeding  year,  such excess
      amount  shall be deducted  from the  principal  balance of his  retirement
      account at the time the bonus is paid. Mr. Westerman received an incentive
      bonus of  $900,000  for  2001,  $500,000  of which was  deducted  from the
      principal  balance of his retirement  account  resulting in a net bonus of
      $400,000.

      The  employment  agreement  provides  that the Company  fund a  retirement
      account  for Mr.  Westerman.  Pursuant  to the  employment  agreement,  an
      aggregate of $6,812,000 had been credited to the  retirement  account from
      its inception through December 31, 2001.  Under the employment  agreement,
      each year that Mr. Westerman continues to be employed,  an amount equal to
      Mr.  Westerman's  base salary for that year was credited to the account on
      January 1 of that year. Pursuant to the December 6, 2000, amendment to Mr.
      Westerman's employment agreement, the January 1, 2001 contribution was the
      final principal contribution to the retirement account. As of December 31,
      2001, none of this account has been funded.

      The Company retains  beneficial  ownership of all monies in the retirement
      account,  which  monies are  earmarked to pay Mr.  Westerman's  retirement
      benefits.  However,  upon (i) the vote of a  majority  of the  outstanding
      shares of Common Stock approving a "Change of Control" (as defined below),
      (ii) the  occurrence  of a  Change  of  Control  without  Mr.  Westerman's
      consent,  (iii)  a  breach  by  the  Company  of a  material  term  of the
      employment  agreement or (iv) the expiration or earlier termination of the
      term of the  employment  agreement  for any reason  other than cause,  Mr.
      Westerman  has the right to  require  the  Company to  establish  a "Rabbi
      Trust" for the benefit of Mr. Westerman.  He also has the right to require
      the  Company to fund such trust with an amount of cash equal to the amount
      then  credited  to the  retirement  account,  including  any  amount to be
      credited to the retirement account upon a Change of Control.



                                                F-27
<PAGE>


      On February 5, 1998,  the  stockholders  of the Company by a majority vote
      approved the  Agreement  and the Plan of Merger with R&E Gaming Corp.  and
      its wholly-owned subsidiary Riviera Acquisition Sub, Inc. Such stockholder
      approval constituted a Change of Control. On March 5, 1998,  subsequent to
      this Change of Control,  Mr. Westerman  exercised his right to require the
      Company to establish and fund a Rabbi Trust for his benefit.  On March 20,
      1998, Mr. Westerman and the Company entered into an agreement  whereby Mr.
      Westerman  waived his right to have the  Company  fund the Rabbi  Trust in
      exchange  for the Company  agreeing  to fund such Rabbi Trust  within five
      business days after notice from Mr.  Westerman.  The merger  agreement was
      subsequently terminated and litigation ensued.

      In the event  that Mr.  Westerman  is no longer  employed  by the  Company
      (except  for  termination  for cause,  in which case Mr.  Westerman  would
      forfeit all rights to monies in the  retirement  account),  Mr.  Westerman
      will  be  entitled  to  receive  the  amount  in  the  retirement  account
      (principal and current interest) in 20 equal quarterly  installments as of
      the date he ceases to be  employed by the  Company.  In the event that Mr.
      Westerman's Rabbi Trust has not yet been funded,  the balance of principal
      and  interest  of the  retirement  account  shall be paid  directly to Mr.
      Westerman upon his  retirement,  termination  (except for cause) or upon a
      change in control of the Company.  As of December  31,  2001,  none of the
      Trust has been funded.

      Pursuant to the employment agreement,  the retirement account was credited
      quarterly with interest and shall be credited with  additional  amounts on
      the first day of each succeeding  calendar quarter equal to the product of
      (i) the Company's  average  borrowing cost for the  immediately  preceding
      fiscal year, as determined by the Company's  chief  financial  officer and
      (ii) the average  outstanding balance in the retirement account during the
      preceding calendar quarter.  This interest continues to accrue pursuant to
      the December 6, 2000  amendment.  Total  interest  earned was $779,000 for
      2001,  $647,418  for 2000 and  $487,729  for 1999.  In the event the Rabbi
      Trust has been funded,  upon Mr. Westerman's death, an amount equal to the
      applicable  federal estate tax on the retirement  account will be pre-paid
      prior to the date or dates such taxes are due.

      Mr.  Westerman's  employment  agreement  provides  (a) that the sum of Mr.
      Westerman's base salary,  bonus, and credits to his Retirement  Account in
      any one year shall not exceed that which would have been payable under his
      previous employment agreement with the Company, and (b) that Mr. Westerman
      shall  instruct the Company of any reductions in base salary,  bonus,  and
      credits  to  his  retirement   account   necessary  to  comply  with  this
      limitation.  The Company determined that for the year 1999, a reduction of
      $467,000 was necessary to comply with this provision. For 1998 the Company
      determined  a reduction  of  $194,000  was  necessary  to comply with this
      provision.  Prior to  December  31,  1999,  and  December  31,  1998,  Mr.
      Westerman instructed the Company that this be applied to reduce the amount
      to be credited to his retirement  account from $600,000 to $133,000 and to
      $406,000  respectively.  No such  reductions  under  this  provision  were
      required in 2001 or 2000.

      Incentive Plan - The Company has an incentive  compensation plan, covering
      employees of the Company who, in the opinion of the Chairman of the Board,
      either serve in key executive, administrative,  professional, or technical
      capacities  with the  Company,  or other  employees  who also  have made a
      significant contribution to the successful and profitable operation of the
      Company.  The amount of the bonus is based on  operating  earnings  before
      depreciation,  amortization, interest expense, provision for income taxes,
      extraordinary  losses and gains,  any provisions or payments made pursuant



                                                F-28
<PAGE>

      to the plan, and any provisions or payments made pursuant to the incentive
      compensation of the Chairman and Chief Executive Officer. During the years
      ended  December 31, 2001,  2000, and 1999,  the Company  recorded  accrued
      bonuses of $1,873,939, $2,258,500 and $1,871,632, respectively, based upon
      the above incentive  compensation plan and the incentive compensation plan
      established for the Chairman of the Board under his employment agreement.

      Pension Plan  Contributions  - The Company  contributes to  multi-employer
      pension  plans under  various  union  agreements to which the Company is a
      party.  Contributions,  based on wages  paid to  covered  employees,  were
      approximately $1,672,000,  $1,688,000 and $1,637,000,  for the years ended
      December 31, 2001, 2000, and 1999, respectively.  These contributions were
      for  approximately 813 employees,  including food and beverage  employees,
      room   department   employees,    carpenters,    engineers,    stagehands,
      electricians, painters, and teamsters. The Company's share of any unfunded
      liability related to multi-employer plans, if any, is not determinable.

      Profit  Sharing and 401(k) Plans - On June 30,  1993,  the Company and ROC
      assumed the combined profit sharing and 401(k) plans of Riviera, Inc. (the
      "Profit  Sharing and 401(k) Plans") and the Company and ROC have continued
      the Profit  Sharing and 401(k) Plans after June 30, 1993.  The Company and
      ROC have  amended  the  Adoption  Agreement  to provide  that all  current
      employees  of Riviera Las Vegas who were  employed  on April 1, 1992,  who
      were at  least 21 years  of age and who are not  covered  by a  collective
      bargaining agreement are immediately eligible to participate in the Profit
      Sharing and 401(k) Plans. The amendment  provides further that all current
      employees who were employed by Riviera Las Vegas after April 1, 1992,  who
      are at  least  21 years  of age and who are not  covered  by a  collective
      bargaining agreement are eligible to participate after one year of service
      at the Riviera Las Vegas.

      The Company has identical plans for its 100% indirectly owned  subsidiary,
      Riviera  Black  Hawk,  Inc.,  which  operates  its  casino in Black  Hawk,
      Colorado.  Employees  hired prior to June 30,  2000,  who were at least 21
      years of age and who were not covered by a collective bargaining agreement
      were immediately  eligible to participate in the Profit Sharing and 401(k)
      Plans. After June 30, 2000, all new employees who are at least 21 years of
      age and who are not  covered  by a  collective  bargaining  agreement  are
      eligible to participate after one year of service at Riviera Black Hawk.

      The Company may make a contribution to the 401(k) component of the Plan in
      an  amount  not to exceed  twenty-five  percent  (25%) of the first  eight
      percent (8%) of each participant's compensation, which is contributed as a
      salary deferral. The Company also paid administrative costs of the Plan of
      $24,343,  $25,000 and $21,851 for each of the three years ending  December
      31, 2001.

      The profit  sharing  component  of the  Profit  Sharing  and 401(k)  Plans
      provides  that the Company  will make a  contribution  equal to 1% of each
      eligible  employee's annual  compensation if a prescribed annual operating
      earnings  target is  attained  and an  additional  1% thereof  for each $2
      million by which  operating  earnings is  exceeded,  up to a maximum of 3%
      thereof. The Company may elect not to contribute to the Profit Sharing and
      401(k) Plans if it notifies its employees by January of the Profit Sharing
      and 401(k) Plans year.  An employee  will become  vested in the  Company's
      contributions  based on the employee's years of service.  An employee will
      receive a year of vesting service for each plan year in which the employee
      completed 1,000 hours of service.  Vesting credit will be allocated in 20%
      increments for each year of service  commencing with the attainment of two
      years  of  service.  An  employee  will  be  fully  vested  following  the
      completion of six years of service.




                                                F-29
<PAGE>

      Effective  January 1, 2000,  the Company  suspended  contributions  to the
      Profit  Sharing Plan and  substituted  contributions  to an Employee Stock
      Ownership Plan ("ESOP"),  (see "Employee Stock Ownership  Plan",  directly
      below).

      Employee Stock Ownership Plan - On October 2, 2000, the Board of Directors
      adopted  an  Employee  Stock   Ownership  Plan  ("ESOP").   The  ESOP  was
      established  effective  January 1, 2000 and  replaces  the profit  sharing
      contribution  component of the Profit Sharing and 401(k) Plans. The 401(k)
      component  remains  unchanged.  The ESOP  provides  that all  employees of
      Riviera Las Vegas and Riviera Black Hawk employed in the Plan Year who had
      completed  a minimum of one  thousand  hours of service in that Plan Year,
      were  employed  through  December  31 of that Plan Year,  were at least 21
      years of age and were not covered by a collective bargaining agreement are
      eligible to  participate  in the ESOP.  The ESOP provides that the Company
      will make a contribution  to the ESOP's  participants of its Las Vegas and
      Black  Hawk  properties  relative  to the  economic  performance  of  each
      property.  For Riviera Las Vegas,  the  Company  will make a  contribution
      equal  to  1%  of  each  eligible  employee's  annual  compensation  if  a
      prescribed annual operating  earnings target is attained and an additional
      1% thereof for each $2 million by which operating earnings is exceeded, up
      to a maximum of 4% for 2000 and 5% thereafter. For Riviera Black Hawk, the
      Company will make a contribution  equal to 1% of each eligible  employee's
      annual  compensation if a prescribed  annual operating  earnings target is
      attained  and an  additional  1%  thereof  for  each $1  million  by which
      operating  earnings  is  exceeded,  up to a maximum  of 4% for 2000 and 5%
      thereafter.  Under the ESOP, the Company contribution will be made in cash
      which will be used to buy Company common stock.

      Deferred  Compensation  Plan - On October 2, 2000,  the Board of Directors
      adopted a Deferred Compensation Plan (the "Plan"). The purpose of the Plan
      is to provide  eligible  employees of the Company with the  opportunity to
      defer the receipt of cash compensation. Participation in the non-qualified
      Plan is limited to highly compensated  employees who receive  compensation
      of at least  $100,000.  The deferred  funds are  maintained on the Company
      books as  unfunded  liabilities.  All  elections  to defer the  receipt of
      compensation  must be made no later than the  December 1st  preceding  the
      Plan  Year to which  the  election  relates  and are  irrevocable  for the
      duration  of  that  Plan  Year.  Six  Company   executives  are  currently
      participating in the Plan.

      Restricted Stock Plan - On October 2, 2000, the Board of Directors adopted
      a  Restricted  Stock Plan to provide  incentives  which will  attract  and
      retain highly competent persons as officers and key employees by providing
      them  opportunities to receive  restricted  shares of the Company's Common
      Stock. Participants will consist of such officers and key employees of the
      Company  as  the  Company's   Compensation   Committee  determines  to  be
      significantly   responsible   for  the  success  and  future   growth  and
      profitability  of the Company.  Awards of restricted  stock are subject to
      such terms and  conditions as the Company  determines to be appropriate at
      the  time of the  grant,  including  restrictions  on the  sale  or  other
      disposition  of such shares and the  provisions for the forfeiture of such
      shares  for  partial  or  no   consideration   upon   termination  of  the
      participant's   employment  within  specified  periods  or  under  certain
      conditions.  Mr. Robert  Vannucci and Mr. Jerome P. Grippe,  President and
      Executive  Vice  President,  respectively,  of the Company's  wholly-owned
      subsidiary,   Riviera  Operating  Corporation,   are  currently  the  only
      participants in the Restricted Stock Plan.



                                                F-30
<PAGE>

      Key Employee  Retention  Plan - As a result of the  scheduled  openings of
      several  new Las  Vegas  Strip  properties  in  1998,  1999 and  2000,  an
      estimated  38,000 jobs had to be filled on the Las Vegas Strip,  including
      approximately  5,000  supervisory  positions.  Because  of  the  Riviera's
      performance  and reputation,  its employees were prime  candidates to fill
      these positions.  In the third quarter of 1998,  management  instituted an
      employee   retention  plan  which  covers   approximately   85  executive,
      supervisory and technical  support positions and includes a combination of
      employment contracts,  stay put agreements,  bonus arrangements and salary
      adjustments.

      Stay  Bonus   Agreements  -  Approximately   85  executive   officers  and
      significant  employees  (excluding  Mr.  Westerman)  of ROC were  party to
      agreements  pursuant to which each such employee was entitled to receive a
      "stay bonus"  (varying  amounts) if the employee  was  discharged  without
      cause (as  defined  in the stay  bonus  agreements),  or  continued  to be
      employed  by the  Company on each of January 1, 2000,  January 1, 2001 and
      June 30, 2001. The total amount that was payable under all such agreements
      was approximately $2.2 million, of which  approximately  $610,000 was paid
      in January,  2000,  $1,068,000 was paid in January,  2001 and $462,500 was
      paid on June 30, 2001.

      Termination  Fee  Agreements -  Approximately  85  executive  officers and
      significant  employees  (excluding Mr.  Westerman) of ROC have termination
      fee agreements  effective through December 2001, pursuant to which each of
      such  employees  will be entitled to receive (1) either six months' or one
      year's base  salary if their  employment  with the Company is  terminated,
      without  cause,  within  12 or 24 months  of a change  of  control  of the
      Company or ROC; and (2) group health  insurance  for periods of either one
      or  two  years.   The  base  salary   payments  are  payable  in  biweekly
      installments  subject to the  employee's  duty to mitigate by using his or
      her best efforts to find  employment.  The estimated  total amount payable
      under all such  agreements  was  approximately  $5 million  including $1.2
      million in benefits, as of December 31, 2001.

15.   STOCK OPTION PLANS

      Stock  Compensation  Plans - At December 31,  2001,  the Company has three
      stock-based  compensation  plans,  which are described  below. The Company
      accounts for the fair value of its grants under those plans in  accordance
      with APB 25. The  compensation  cost that has been charged  against income
      for those plans was $142,977,  $250,988,  and $357,118 for 2001,  2000 and
      1999, respectively. Under the 1993 Employee Stock Option Plan, the Company
      may grant options to its employees for up to one million  shares of common
      stock.  Under the 1996  Non-Qualified  Stock Option Plan,  the Company may
      grant options to non-employee  directors for up to 50,000 shares of common
      stock.  Under the 1996 Stock  Compensation  Plan,  the  Company  may grant
      options to  Directors  serving  on the  Compensation  Committee  for up to
      50,000 shares of common stock.  Under these plans,  the exercise  price of
      each option equals the market price of the Company's  stock on the date of
      grant and an option's  maximum term is 10 years (5 years in the case of an
      incentive  option granted to a stockholder  owning more than 10 percent of
      the common  stock).  Under the 1993 plan,  options  vest 25 percent on the
      date of grant and 25 percent each subsequent  year.  Under the 1996 plans,
      options vest over 5 years.

      Option  Surrenders  - On November  26, 1996,  414,000  stock  options were
      granted to eighteen (18) Riviera  executives at an option price of $13.625
      per  share,  320,000 of which were  granted to Mr.  Westerman.  Two (2) of
      these executives' options totaling 11,000 shares have since been cancelled
      due to those  executives  leaving the  Company,  resulting in a balance of
      403,000  options  at  $13.625  per  share  held by  sixteen  (16)  Company
      executives.  These options were vested in their entirety for these sixteen
      (16) executives.



                                                F-31
<PAGE>

      On January 16, 2001, the Board approved a Stock Option Surrender Plan (the
      "Surrender  Plan").  Pursuant to the Surrender  Plan, each executive could
      surrender  all or any portion of his/her  $13.625  options.  Further,  the
      Company may, but is not obligated,  grant new options in an amount no less
      than the shares  surrendered,  to be issued no sooner  than six (6) months
      and a day after the  surrender  of the  $13.625  options.  Any new options
      granted will be at the price of the Company's  common stock on the date of
      grant  and  are  subject  to the  vesting  requirements  of the  Company's
      Employee Stock Option Plan.

      All sixteen  (16) Company  executives  surrendered  the entire  balance of
      403,000 of the $13.625 options effective January 31, 2001.

      The activity of the Stock Option Plan and the  Non-Qualified  Stock Option
Plan is as follows:
<TABLE>
<CAPTION>

                                                                  Weighted-
                                                                    Average
                                                                   Per Share
                                                                    Exercise
       Stock Option Plan                             Shares          Price
                                               ---------------- -------------

<S>                                                   <C>             <C>
       Outstanding at January 1, 2000               619,000         $ 10.75
         Grants                                      97,000          $ 7.69
         Cancelled                                   (4,000)         $ 7.69
                                                   ---------

       Outstanding at December 31, 2000             712,000         $ 10.35
         Grants                                     170,500          $ 6.00
         Cancelled                                 (423,000)        $ 13.28
                                                   ---------
       Outstanding at December 31, 2001             459,500          $ 6.04
                                                   =========

       Non-Qualified Stock Option Plan

       Outstanding at January 1, 2000                14,000          $ 8.70
         Automatic grant to directors                 6,000          $ 7.75
         Cancelled                                   (6,000)         $ 7.67
                                                   ---------

       Outstanding at December 31, 2000              14,000          $ 9.09
         Automatic grant to directors                 6,000          $ 6.55
         Cancelled                                   (4,000)        $ 13.37
                                                   ---------
       Outstanding at December 31, 2001              16,000          $ 7.07
                                                   =========
</TABLE>
<TABLE>
<CAPTION>

                                             Options Outstanding                      Options Exercisable
                                     -----------------------------------------     ------------------------
                                        Number        Weighted-                       Number
                                      Outstanding      Average       Weighted-      Exercisable    Weighted-
                                          at            Remaining     Average           at          Average
<S>           <C>                        <C>              <C>          <C>            <C>            <C>
          Range of                   December 31,      Contractual   Exercise       December 31,   Exercise
        Exercise Prices                  2001            Life          Price           2001          Price

       $  4.00 to $ 6.00               285,500         1.4 years       $4.18          44,000         $4.32
       $  6.55 to $ 9.00               190,000         1.4 years       $7.26          44,000         $7.13
</TABLE>





                                                F-32
<PAGE>


      No compensation cost has been recognized for unexercised options remaining
      in the stock option plan. Had  compensation  cost for the Company's  stock
      option plan been  determined  based on the fair value at the date of grant
      for awards  consistent  with the provisions of SFAS No. 123, the Company's
      net loss  and pro  forma  net  loss per  common  share  and  common  share
      equivalent  would have been  increased to the pro forma amounts  indicated
      below at December 31 (in thousands, except per share amounts):

<TABLE>
<CAPTION>

                                                                  2001          2000          1999

<S>                                                               <C>            <C>           <C>
        Net loss - as reported                                $  (6,407)     $  (4,215)    $  (2,869)
        Net loss - pro forma                                  $  (6,550)     $  (4,466)    $  (3,226)
        Basic loss per common share - as reported             $   (1.79)     $   (1.05)    $   (0.58)
        Basic loss per common share - pro forma               $   (1.83)     $   (1.11)    $   (0.65)
        Diluted loss per common and common
         share equivalent - as reported                       $   (1.79)     $   (1.05)    $   (0.58)
        Diluted loss per common and common share
         equivalent - pro forma                               $   (1.83)     $   (1.11)    $   (0.65)

</TABLE>

      The fair  value of each  option  grant is  estimated  on the date of grant
      using  the   Black-Scholes   option   pricing  model  with  the  following
      weighted-average  assumptions  used for  grants in 2001,  2000,  and 1999,
      respectively:  dividend  yield  of  0  percent  for  all  years;  expected
      volatility of 44 percent, 60 percent,  and 62 percent;  risk-free interest
      rates of 5.00 percent,  5.00 percent, and 5.46 percent; and expected lives
      of five years for all years. The weighted fair value of options granted in
      2001, 2000, and 1999, was $2.34, $3.56 and $4.57, respectively.

      Due to the fact that the  Company's  stock option  programs vest over many
      years  and  additional  awards  are made  each  year,  the above pro forma
      numbers are not  indicative of the financial  impact,  had the  disclosure
      provisions of SFAS No. 123 been applicable to all years of previous option
      grants.  The above  numbers do not include  the effect of options  granted
      prior to 1995.

17.   EARNINGS PER SHARE

      Basic EPS is  computed  by  dividing  net  income by the  weighted-average
      number  of  common  shares  outstanding  for the  period.  Diluted  EPS is
      computed  by  dividing  net  income by the  weighted  number of common and
      common equivalent shares  outstanding for the period.  Options to purchase
      common stock,  whose  exercise  price was greater than the average  market
      price for the period,  have been excluded from the  computation of diluted
      EPS. Such  antidilutive  options  outstanding for the years ended December
      31, 2001, 2000, and 1999, were 495,500, 732,000 and 633,000, respectively.






                                                F-33
<PAGE>


      A  reconciliation  of income and shares  for basic and  diluted  EPS is as
follows (amounts in thousands, except per share amounts):
<TABLE>
<CAPTION>

                                                                               Year Ended 2001
                                                                   ------------------------------------------
                                                                    Income          Shares        Per Share
                                                                  (Numerator)     (Denominator)     Amount
Basic EPS -
<S>                                                                  <C>              <C>            <C>
  Loss available to common stockholders                              $(6,407)         3,573          $(1.79)
 Effect of dilutive securities -
  Options
                                                                   -----------      ---------      ---------
Diluted EPS -
  Loss available to common stockholders plus
    assumed conversions                                              $(6,407)         3,573          $(1.79)
                                                                   ===========      =========      =========

                                                                               Year Ended 2000
                                                                   ------------------------------------------
                                                                    Income          Shares        Per Share
                                                                  (Numerator)     (Denominator)     Amount
Basic EPS -
  Loss available to common stockholders                             $(4,215)         4,013          $(1.05)
Effect of dilutive securities -
  Options
                                                                  -----------      ---------      ---------
Diluted EPS -
  Loss available to common stockholders plus
    assumed conversions                                             $(4,215)         4,013          $(1.05)
                                                                  ===========     ==========      =========

                                                                               Year Ended 1999
                                                                  ------------------------------------------
                                                                    Income          Shares        Per Share
                                                                  (Numerator)     (Denominator)     Amount
Basic EPS -
  Loss available to common stockholders                             $(2,869)         4,978          $(0.58)
Effect of dilutive securities -
  Options
                                                                  -----------      ---------      ---------
Diluted EPS -
  Loss available to common stockholders plus
    assumed conversions                                             $(2,869)         4,978          $(0.58)
                                                                  ===========     ==========      =========
</TABLE>
      During 2001, 2000, and 1999, the Company  purchased  276,528,  257,893 and
      4,800  shares  of  treasury  stock on the open  market  for  approximately
      $1,779,000,  $2,093,000  and  $22,000,  respectively.  In  addition to the
      purchase  of stock from  Paulson  as  described  in Note 12,  the  Company
      purchased  81,000  of its  shares  from  SunAmerica  at $7.50 per share on
      October 18, 1999. This transaction reduced  SunAmerica's  ownership of the
      Company to under 15 percent.  On February 8, 2000, the Company completed a
      tender offer wherein  approximately 590,000 shares of stock were purchased
      for $7.50 per share.  During 2001,  the Company  completed  various tender
      offers wherein  approximately 277,000 shares of stock were purchased at an
      average  price of $6.43  per  share.  The  Company  used its cash and cash
      equivalents  to purchase  the shares.  After  giving  effect to such share
      repurchases, the Company had 3,432,632 shares of common stock outstanding.
      Approximately  118,100  shares of treasury  stock are held in the deferred
      compensation trust at December 31, 2001.




                                                F-34
<PAGE>

18.   SEGMENT DISCLOSURES

      The  Company  reviews  its  operations  by its  geographic  gaming  market
      segments:  Riviera Las Vegas and Riviera Black Hawk.  Since the management
      division  represents all other revenue, it is also shown. All intersegment
      revenues have been eliminated.
<TABLE>
<CAPTION>

 (In thousands)                                    2001            2000            1999

Net revenues:
<S>                                               <C>             <C>             <C>
   Riviera Las Vegas                              $152,985        $166,037        $156,204
   Riviera Black Hawk                               49,046          35,261
   Riviera Gaming Management                                           233           1,064
                                                  --------        --------        --------
       Total net revenues                         $202,031        $201,531        $157,268
                                                  ========        ========        ========
Income (loss) from operations:
  Riviera Las Vegas                                $ 9,350        $ 14,910        $ 10,641
  Riviera Black Hawk (Loss pertains to
    preopening expenses in 1999)                     7,622           1,881            (595)
  Riviera Gaming Management                             (1)             88           1,047
                                                   --------        --------        --------
       Total income from operations               $ 16,971        $ 16,879        $ 11,093
                                                   ========        ========        ========
EBITDA:
   Riviera Las Vegas                              $ 21,493        $ 29,243        $ 24,631
   Riviera Black Hawk                               12,722           6,597               1
   Riviera Gaming Management                            (1)             88           1,047
                                                   --------        --------        --------
       Total EBITDA                               $ 34,214        $ 35,928        $ 25,679
                                                   ========        ========        ========
EBITDA margin (1):
   Riviera Las Vegas                                14.0 %          17.5 %          15.7 %
   Riviera Black Hawk                               25.9            16.6
   Riviera Gaming Management                                        37.8            98.4
                                                   --------        --------        --------
       Total EBITDA                                 16.9 %          17.4 %          16.2 %
                                                   ========        ========        ========

                                                      December 31,
                                             --------------------------------
                                                  2001            2000

Assets (2):
   Riviera Las Vegas                              $132,982        $138,525
   Riviera Black Hawk                               67,549          68,505
   Riviera Gaming Management                             -               -
                                                  --------        --------
       Total assets                               $200,531        $207,030
                                                  ========        ========

(1)  Shown as a percentage of corresponding departmental revenue.
(2) Assets represent property and equipment and intangible assets, net of accumulated depreciation and amortization.
</TABLE>


                                                F-35
<PAGE>

      EBITDA consists of earnings before  interest,  income taxes,  depreciation
      and  amortization  (excluding  preopening  expense - Black Hawk,  Colorado
      project,  and Other, net, which includes expense and insurance  recoveries
      from  Paulson  Merger and  litigation  activity  in 1999 and 2000.)  While
      EBITDA should not be construed as a substitute  for operating  income or a
      better  indicator of liquidity than cash flows from operating  activities,
      which are  determined in accordance  with  generally  accepted  accounting
      principles   ("GAAP"),   it  is  included  herein  to  provide  additional
      information  with respect to the ability of the Company to meet its future
      debt  service,  capital  expenditure,  and working  capital  requirements.
      Although EBITDA is not  necessarily a measure of the Company's  ability to
      fund its cash needs,  management  believes  that  certain  investors  find
      EBITDA to be a useful  tool for  measuring  the  ability of the Company to
      service  its  debt.  The  Company's  computation  of  EBITDA  may  not  be
      comparable to other similarly titled measures of other companies.

      RIVIERA LAS VEGAS

      The  primary  marketing  of the  Riviera  Las  Vegas is not  aimed  toward
      residents of Las Vegas,  Nevada.  Significantly  all revenues derived from
      patrons  visiting the Riviera Las Vegas are from other parts of the United
      States and other  countries.  Revenues  for the  Riviera  Las Vegas from a
      foreign  country or region may exceed 10 percent of all  reported  segment
      revenues; however, the Riviera Las Vegas cannot identify such information,
      based upon the nature of gaming operations.

      RIVIERA BLACK HAWK

      The casino in Black Hawk,  Colorado,  primarily  serves the  residents  of
      metropolitan  Denver,   Colorado.   As  such,   management  believes  that
      significantly  all  revenues  are  derived  from  within 250 miles of that
      geographic area.

19.   RELATED PARTY TRANSACTIONS

      Robert R. Barengo, a member of the Board of Directors of the Company, is a
      former director of American  Wagering,  Inc. ("AWI") and owns 7 percent of
      the  outstanding  stock of AWI, which leases  approximately  12,000 square
      feet of the Riviera Hotel & Casino's casino floor.  AWI is the operator of
      the Riviera Hotel & Casino's sport  book operations and has operated under
      a lease arrangement since  before Mr. Barengo was appointed to  the board.
      The lease provides for rental payments based upon  the  monthly and annual
      revenues  derived by AWIfrom the location.  AWI paid aggregate rent to ROC
      of  approximately $144,500,  $188,000 and  $250,000 in  each of  the years
      ended  December  31,  2001,  2000,  and  1999,  respectively. The  Company
      believes that the  terms  of the lease with AWI are at least as  favorable
      to the  Company  and ROC as could have  been  obtained  from  unaffiliated
      third  parties and are at lease as favorable as  terms  obtained  by other
      casino hotels in Las Vegas.

      The Company entered into a letter agreement with Mr. Barengo,  a member of
      the Bar of the State of Nevada,  pursuant  to which Mr.  Barengo  has been
      assisting  the Company and its outside  counsel in enforcing the Company's
      rights under the  litigation  related to the Paulson  merger,  the Morgens
      Waterfall  litigation,   and  with  related  matters.  Under  such  letter
      agreement,  Mr.  Barengo  received  a fee of  $10,000  per  month  for his
      counseling services.  Fees paid under this agreement were $0, $120,000 and
      $120,000  for  the  years  ended  December  31,  2001,   2000,  and  1999,
      respectively.  Mr. Barengo became an employee director in January 2001. He
      and the Company mutually  terminated the agreement  effective December 31,
      2000.


                                                F-36
<PAGE>

      Jeffrey A. Silver, a member of the Board, is a shareholder in the law firm
      of  Gordon & Silver,  Ltd. ("Gordon & Silver"). Gordon & Silver  has  been
      engaged  by the Company for the defense of various personal injury matters
      since 1993 and for general corporate matters in 2001. From January 1, 2001
      through December 31, 2001, the Company paid fees to Gordon & Silver in the
      amount of $106,000  for  the defense of various personal injury claims and
      handling of corporate matters.  As Mr. Silver  was  not appointed  to  the
      Board until  February 26, 2001, the fees incurred in 2001 were pursuant to
      a  business  relationship  established  prior  to  Mr. Silver's  Board
      appointment.  Additionally,  Mr. Silver  does  not supervise the attorneys
      working  on Company matters. Although  the  Company  continues  to utilize
      the  services  of  Gordon & Silver,  the  Company  believes  that  the fee
      arrangement is at least as favorable to the Company as in  previous years.

      Peninsula Gaming Partners LLC ("PGP") engaged RGM to assist, on an interim
      basis in 2000, with transitional matters relating to the operations of the
      Diamond Jo gaming  riverboat  in Dubuque,  Iowa.  Such  services  included
      assisting  in the  selection of a new chief  operating  officer to oversee
      riverboat  casino  operations  and  other  matters.  RGM  earned  fees and
      expenses in the amount of $232,000  for the year ended  December 31, 2000.
      PGP  terminated its agreement  with RGM in September  2000. Mr.  Westerman
      served as a manager on the board of managers of Peninsula Gaming Partners,
      LLC until  his  resignation  effective  December  31,  2000.  The  Company
      believes that the fees were no less favorable than would have been paid in
      an arm's-length transaction.













                                                F-37
<PAGE>
<TABLE>
<CAPTION>

RIVIERA HOLDINGS CORPORATION

UNAUDITED QUARTERLY FINANCIAL DATA
(Amounts in thousands, except per share data)
---------------------------------------------------------------------------------------------------------------------------


                                               March 31         June 30          September 30       December 31

Year Ended December 31, 2001:
<S>                                            <C>             <C>                <C>                  <C>
  Net Revenues                                 $ 52,199        $ 54,828           $ 51,045             $ 43,959
  Operating Income                                5,445           6,282              3,013                2,233
  Loss Before Tax Benefit                          (958)           (124)            (3,319)              (4,246)
  Net Loss                                         (658)            (70)            (2,500)              (3,179)
  Loss Per Share, Basic                         $ (0.18)        $ (0.02)           $ (0.71)             $ (0.92)
  Loss Per Share, Diluted                       $ (0.18)        $ (0.02)           $ (0.71)             $ (0.92)

Year Ended December 31, 2000:
  Net Revenues                                 $ 49,699        $ 54,017           $ 51,357             $ 51,714
  Operating Income                                5,362           5,569              2,431                3,517
  Income (Loss) Before Taxes (Benefit)            1,076          (1,051)            (3,741)              (2,994)
  Net Income (Loss)                                 675            (553)            (2,358)              (1,979)
  Earnings (Loss) Per Share, Basic               $ 0.16         $ (0.14)           $ (0.61)             $ (0.53)
  Earnings (Loss) Per Share, Diluted             $ 0.15         $ (0.14)           $ (0.61)             $ (0.53)


</TABLE>














                                                F-38
(19096)