====================================================================
                       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, 2003

[ ]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:

 Title of Each Class                  Name of Each Exchange on Which Registered
  ------------------                  -----------------------------------------
Common Stock, $.001 par value                  American Stock Exchange

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 closing sale of the Registrant's Common Stock as June
30, 2003 the aggregate market value of the voting stock held by non-affiliates
of the Registrant was approximately $12,800,000. As of March, 2004 the number
of outstanding shares (net of treasury shares) of the Registrant's Common Stock
was 3,610,155.

Documents incorporated by reference:

2004 definitive proxy statement on Schedule 14A (to be filed pursuant to
Regulation 14A) involving the election of directors: Part III of this Form 10-K.

         ====================================================================
                               Page 1 of 43 pages
                    Exhibit Index Appears on Page 39 hereof.


<PAGE>


<TABLE>
<CAPTION>
                   RIVIERA HOLDINGS CORPORATION AND SUBSIDIARY
                    ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
                          YEAR ENDED DECEMBER 31, 2003

                                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...............................................20

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

Item 5.   Market for the Registrant's Common Equity and Related Stockholders
             Matters and Issuer Purchases of Equity Securities............22

Item 6.   Selected Financial Data.........................................23

Item 7.   Management's Discussion and Analysis of Financial Condition
             and Results of Operations....................................23
             Results of Operations........................................24
             2003 Compared to 2002........................................24
             2002 Compared to 2001........................................25
             Liquidity and Capital Resources..............................27
             Critical Accounting Policies.................................28
             Accounting pronouncements....................................29

Item 7A. Qualitative and Quantitative Disclosure About Market Risk........32

Item 8.   Financial Statements and Supplementary Data.....................33

Item 9.   Changes in and Disagreements with Accountants on Accounting
             and Financial Disclosure.....................................33

Item 9A.  Controls and Procedures.........................................33

Item 10.  Directors and Executive Officers of the Registrant..............33

Item 11.  Executive Compensation..........................................34

Item 12.  Security Ownership of Certain Beneficial Owners and Management
             and Related Stockholder Matters .............................34

Item 13.  Certain Relationships and Related Transactions .................34

Item 14.  Principle Accounting Fees and Services..........................34

Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.35
</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.

           The Company, 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.

           The Company determines segments based upon geographic gaming markets
and also reviews corporate expenses separately. The Company has two segments:
the Las Vegas, Nevada market and the Black Hawk, Colorado market. The segment
information can be found in Note 15 of the Notes to the Consolidated Financial
Statements included in this document.

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 1,400 slot machines and 31 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 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. We are currently installing a new slot monitoring
system that will help us expand our marketing capabilities and allow us to
accelerate our commitment to provide our customers with the benefits that are
now available with ticket-in/ticket-out technology.

           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, 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 5% in 2003. Also, in 2003, revenues from slots and tables were approximately
79% and 19% of total gaming revenue, respectively, as compared to 60% and 34%,
respectively, in 1993.

           During 2003, we continued a number of initiatives at Riviera Las
Vegas to increase slot play, including the replacement of older slot machines
with new machines utilizing the ticket-in/ticket-out technology to improve
service and convenience to our customers, entered into an agreement with Bally
Gaming for the installation of its ACSC player tracking system, and maintenance
of 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
(1) our ongoing slot upgrade program, (2) implementation of the ACSC Player
Tracking System, (3) addition of new signage, (4) promotion of the Riviera Las
Vegas Player's Club, (5) sponsorship of slot tournaments, (6) creation of
promotional programs, (7) marketing of the "Slot Frenzy" and "$40 for $20(R)"
slot promotions, and (8) "Nickel Town(R)". Nickel Town is comprised primarily of
penny and nickel slot machines, the fastest growing segment of the Las Vegas
slot market.

                                                3
<PAGE>
Hotel

           Riviera Las Vegas' hotel is comprised of five 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 suites, 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, the Company believes Riviera Las Vegas has attained
room occupancy rates that are among the highest on the Las Vegas Strip. From
1994 to 2000, the occupancy rate ranged from 95.2% to 98.2%, and was 91.5% for
2001, 89.6% for 2002 and 92.2% for 2003 (based on available rooms). The average
occupancy rate citywide was 86.0% in 2003 according to the Las Vegas Convention
and Visitors Authority ("LVCVA").

Restaurants

           The quality, value and variety of food services are critical to
attracting Las Vegas visitors. Riviera Las Vegas offers five bars and four
restaurants and serves an average of approximately 5,102 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>
Name                               Type                        Seating Capacity
<S>                                <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). Riviera Las
Vegas has contracted with a third party for the remodel, ownership and operation
of a fifth restaurant at Riviera Las Vegas. This third party will lease the
former Chinese restaurant and will serve trendy appetizers, feature wine sales
and have an ala carte menu with a French flair. This restaurant will feature
French Cuisine and is scheduled to open in the first half of 2004.

Convention Center

           Riviera Las Vegas features 160,000 square feet of convention, meeting
and banquet space. The convention center is one of the larger 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 298 conventions in 2003. The hotel
currently has over 622,000 convention related advance bookings of rooms through
2007 consisting of approximately 428,000 definite bookings and approximately
194,000 tentative bookings. In 2003 approximately 30.0% of the rooms were
occupied for conventions, and management estimates that 30% of its rooms will be
occupied for conventions in 2004.

           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 12 skyboxes. The additional
convention space at the Las Vegas and Mandalay convention centers has enabled
Las Vegas to attract and book new conventions that may have had date and exhibit
space conflicts in the past. Our flexibility of meeting space and proximity to
the Las Vegas convention center continues to position us to increase our mix of
both small meetings and conventions and new multi-hotel conventions booked into
the Las Vegas convention center.


                                                4
<PAGE>

Entertainment

           Riviera Las Vegas has one of the most extensive entertainment
programs in Las Vegas, offering up to eight 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), and featured comedians at
the Riviera Comedy Club and up to four different regularly scheduled shows in
our LeBistro Theater. 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 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 have recently entered into an agreement with a third
party to present a weekly country music themed show during the Splash off night
every Friday night in the Splash showroom. This show will feature a different
country music performer each week.

           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 Expansion Possibilities

           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 specialty themed entertainment that will appeal to
the Riviera Las Vegas' main target audience, adults aged 45 to 65. The exit from
the complex would deliver patrons to the casino.

           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 the indenture governing our $215 million Senior
Secured Notes, 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,
telemarketing and via e-mail.

                                                5
<PAGE>

           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
loyal customer base which emphasizes (1) providing a high level of service to
our customers to ensure an enjoyable experience while at the Riviera Las Vegas,
(2) responding to customer surveys and (3) focusing marketing efforts and
promotional programs on customers with positive gaming profiles. We believe the
implementation of the ACSC player tracking system will help us retain customers.
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 up to eight 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 80% of the 2003 show patrons
came from outside the hotel and approximately 75% of these individuals gambled
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 (1) the development and promotion of Nickel Town, (2)
providing a variety of quality, value-priced entertainment and dining options,
and (3) promoting "Slot Frenzy", our daily slot tournament, 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: (1) those trade organizations and
groups that hold their events in the banquet and meeting space provided by a
single hotel and (2) 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


                                                6
<PAGE>

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 2003
we derived 30% 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
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 18.1% of the available 2,070 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 45 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 974 slot machines
and 9 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 help
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 400 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, 2003, 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 1,100 gaming machines and 1,000 covered parking spaces, has been
the market leader in terms of win per gaming device.

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, have tailored 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.


                                                7
<PAGE>

           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.

           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 231,000 of these slot players have been identified as
of December 31, 2003. 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 LVCVA  Authority,  the number of visitors who
traveled to Las Vegas during the 17-year period from 1986 through 2003 increased
at a steady and  significant  rate from 15.2  million in 1986 to 35.5 million in
2003,  representing a 134.0% increase  during that 17-year period.  Just over 35
million  people  visited Las Vegas in 2001, a 2.3%  decline  from 2000.  Visitor
volume dropped  drastically  following the September 11, 2001 terrorist attacks.
In 2002  visitor  volume  increased  0.2% to slightly  over 35 million.  Visitor
volume increased 0.2% to slightly over 35.5 million in 2003. 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, were flat at $7.6 billion in 2002, and increased
2.6% to $7.8 billion in 2003.  The terrorist  attacks of September 11, 2001, the
Iraq war and SARS outbreak have had, and may continue to have, an adverse effect
on the number of visitors traveling to Las Vegas.  Additional  terrorist attacks
could also 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. Significant percentages of visitors originate from Latin America and
Pacific Rim countries such as Japan, Taiwan, Hong Kong and Singapore. The events
of September 11, 2001, the Iraq war and the SARS outbreak have had, and may
continue to have, an adverse impact on the number of international visitors
coming to Las Vegas.

           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 95% from approximately 67,000 at the end of 1989 to 130,482 at the end of
2003, 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
2003. During the calendar year 2003 3,695 new hotel rooms opened in Las Vegas.

           We believe that the growth in the Las Vegas market has been enhanced
as a result of: (1) 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, (2) the increased capacity of McCarran Airport and (3) 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 5.7 million in 2003 with an economic
impact in excess of $6.5 billion.

           During the past ten 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 36.2 million
in 2003. Construction has recently been completed on numerous roadway
enhancements to improve access to the airport. McCarran Airport is ranked among
the 12th and 7th busiest airports in the world and North America, respectively,
based on passenger activity.


                                                8
<PAGE>


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 $5.00. Black Hawk and Central City are contiguous cities located
approximately 45 miles west of Denver and about 10 miles north of Interstate
Highway 70, the main east-west artery from Denver. Historically, these two gold
mining communities were popular tourist towns. However, since the inception of
casino gaming in October 1991, gaming establishments have displaced many of the
former tourist-related businesses.

           The first casino in the Black Hawk/Central City market 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, 2003.

           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 2.7 million people
reside within this 100-mile radius of the City 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 $55,000 per annum in 2003.

           Since 1992, the number of gaming devices in the Black Hawk/Central
City market has grown approximately 53% from 7,252 devices in 1992 to 11,112
devices in 2003. Gaming revenues in the Black Hawk/Central City market declined
by 3.7% in 2003 over 2002. The City of Black Hawk itself experienced a 3.5%
decline in gaming revenue in 2003.

           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.

Management Activities and New Venue Prospects

           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 offers
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.

     Our  diversification   efforts  are  proceeding  with  our  endorsement  by
Jefferson  County,  Missouri  for a  casino/hotel  development  project  located
approximately  22 miles  south of  downtown  St.  Louis.  We  filed  our  formal
application  with the  Missouri  Gaming  Commission  on October 9, 2002 and look
forward to  presenting  our project to the State of Missouri.  We expect to make
our formal  presentation  before the Missouri  Gaming  Commission  in the second
quarter of 2004. Assuming we were to receive approval from the state regulators,
construction  work  should  start  soon  thereafter  with a  completion  date in
approximately  two years.  However,  there is no  guarantee we will be granted a
license by the Missouri regulators.  In February 2004, St. Louis County endorsed
another gaming operator for a casino/hotel development project. St. Louis County
is located  directly to the north of Jefferson  County.  It is unlikely that the
Missouri  regulators  will  grant  licenses  to both the St.  Louis  County  and
Jefferson County projects.

           We filed an application with the New Mexico Racing Commission in
March of 2002 for a "racino" in Hobbs, New Mexico. We and three other
prospective licensees made presentations to the Commission in November of 2003.
The Commission awarded the racino license to one of the other applicants.


                                                9
<PAGE>

           In spite of the New Mexico setback, the significant contribution of
our Black Hawk property to our shareholder value reinforces our effort to
diversify into new venues. We are regularly reviewing opportunities to expand
and become a larger multi-jurisdictional casino company with greater capital
resources to enable us to compete more effectively. The jurisdictions include
California, Mississippi, Pennsylvania, Missouri, New Mexico, Iowa and Mexico. We
may also choose to 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.

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, 2003, the LVCVA 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 21st  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 2003, 3,695 new hotel rooms opened, and as of December 31,
2003, there were approximately 6,500 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 2003, available room nights in the Las Vegas market increased
from 46.2 million to 46.8 million or 1.3%, while total room nights occupied
increased from 38.6 million to an estimated 38.8 million, or 0.6%. The ending
room inventory at December 31, 2003 was 130,482 compared to 126,787 at December
31, 2002, an increase of 3,695 rooms or 2.9%. This has had the effect of
intensifying competition. At Riviera Las Vegas, room occupancy increased from
89.6% in 2002 to 92.2% in 2003 (still much higher than the Las Vegas hotel
average of 89.6%). Room rates increased by $0.47, or 1%, from $59.93 in 2002 to
$60.40 in 2003. Revenue per available room (Rev/Par) increased $1.96, or 3.67%,
from $53.70 in 2002 to $55.66 in 2003.

           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, including customers 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. Possible
utility rate increases in California could also adversely affect our financial
results. The events of September 11, 2001, the Iraq war and SARS have had the
most serious effect, and could continue to have an adverse effect on our
financial results. Additional terrorist attacks could also 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


                                                10
<PAGE>

larger gaming facilities, particularly those with considerable on-site or nearby
parking and established reputations in the local market. As of December 31, 2003
there were 25 gaming facilities in the Black Hawk market with 11 casinos each
offering more than 400 gaming positions. Additional projects have also been
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 765 slot machines, 9 gaming tables and
approximately 700 valet parking spaces. The Isle of Capri Casino, the most
successful casino in Colorado is located directly across the street from our
casino and features approximately 1,100 slot machines, 14 table games, 1,000
parking spaces, and 237 hotel rooms. Isle of Capri recently acquired Colorado
Central Station. Isle of Capri is currently renovating Colorado Central Station
by adding a 1,400 space parking garage, a 165 room hotel and a restaurant on
land immediately across Main Street from Colorado Central Station and diagonally
across from our casino. We believe that these renovations will increase the
probability that more customers will frequent the immediate area serviced by
Isle of Capri, Colorado Central Station and our casino. The renovations are not
expected to be complete until some time in 2005.

           The number of hotel rooms currently in the Black Hawk/Central City
market is approximately 400, 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 237 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. There is currently a road under construction that will link Central City
directly with Interstate 70 that will allow customers to reach Central City
without driving through Black Hawk. Although this road will allow customers to
directly access Central City, we believe that most customers will continue to
frequent Black Hawk casinos because of the superior amenities Black Hawk casinos
offer. The new road will provide additional access to the Black Hawk/Central
City market, which is especially important on weekends when the current road
system is over burdened. We believe the new access road is important for the
continued growth of the market.

           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. The voters of the State of Colorado recently voted down a
proposal which would have authorized video lottery terminals in five race tracks
in Colorado. There is no guarantee that such or a similar proposal will not be
approved in the future.

           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, 2003 Riviera Las Vegas had approximately 1,330
full-time equivalent employees and had collective bargaining contracts with
eight unions covering approximately 735 of such employees including food and
beverage employees, rooms department employees, carpenters, engineers,


                                                11
<PAGE>

stagehands, musicians, electricians, painters and teamsters. Riviera Las Vegas'
agreements with the Southern Nevada Culinary and Bartenders Union covering the
majority of its unionized employees were renegotiated in 2002 and expire in
2007. The collective bargaining agreement with the Stagehands Union expires in
2007, the agreements with the Carpenters and Painters Union expire in 2005,
while the agreement with the Teamsters Union expires in 2008. The Operating
Engineers and Electrician agreements expire in March and July of 2004,
respectively. Negotiations with the Operating Engineers are scheduled to begin
in March, 2004. The Collective Bargaining Agreement with the Musicians Union
expired in 1999. Riviera Las Vegas is currently in negotiations with the
Musicians Union. On June 17, 2002, the Teamsters Union filed a petition with the
National Labor Relations Board to represent the clerks in the marketing
department. On July 26, 2002, the marketing clerks voted in favor of
representation by the Teamsters Union by a vote of 5 to 1. On February 23, 2004,
at the request of the affected employees, the Teamsters Union withdrew its
interest in the representation of the marketing clerks. Although unions have
been active in Las Vegas, Riviera Las Vegas considers its employee relations to
be satisfactory. There can be no assurance, however, that new agreements will be
reached without union action or on terms satisfactory to Riviera Las Vegas.

Riviera Black Hawk

           Riviera Black Hawk opened on February 4, 2000 with approximately 450
employees. As of December 31, 2003, the total number of full-time equivalent
employees was 309. 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: (1) The Nevada Gaming Control Act and the regulations promulgated
thereunder (collectively, the "Nevada Act") and (2) 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 "Nevada Board"), and the Clark County Business
Department (collectively, the "Clark County Board", and together with the
Nevada Commission and the Nevada Board, 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: (1) the prevention of unsavory or unsuitable persons
from having a direct or indirect involvement with gaming at any time and in any
capacity; (2) the establishment and maintenance of responsible accounting
practices and procedures; (3) 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; (4) the prevention of cheating and
fraudulent practices; and (5) 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 operations.

           Riviera Operating Corporation is required to be and is licensed by
the Nevada Gaming Authorities (a "Corporate Licensee"). 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.
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, Riviera Operating
Corporation without first obtaining licenses and approvals from the Nevada
Gaming Authorities. We and Riviera Operating Corporation have 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.


                                                12
<PAGE>

           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, we 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 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 its 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 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 that has obtained a waiver may, in certain circumstances,
hold up to 19% of our voting securities and maintain its waiver for a limited
period of time. 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 consistent with holding our voting securities
for investment purposes only include: (1) voting on all matters voted on by
stockholders; (2) 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 (3) 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 business entity 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.


                                                13
<PAGE>


     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 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 (1) pay that person
any dividend or interest  upon voting our  securities,  (2) allow that person to
exercise,  directly or indirectly, any voting right conferred through securities
held by that  person,  (3)  pay  remuneration  in any  form to that  person  for
services  rendered  or  otherwise,  or (4) 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 securities to file applications, be investigated and be found
suitable to own such securities, 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 (1) pay to
the unsuitable person any dividend, interest, or any distribution whatsoever,
(2) recognize any voting right by such unsuitable person in connection with such
securities, (3) pay the unsuitable person remuneration in any form; or (4) 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, (1) 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; (2) 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
(3) restrictions upon the transfer of an equity security issued by a Corporate
Licensee and agreements not to encumber such securities (collectively, "Stock
Restrictions") are ineffective without the prior approval of the Nevada
Commission.

           Changes in control of a registered 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 meet a variety of stringent standards
of the Nevada Board and Nevada Commission prior to assuming such control. 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
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: (1) assure the
financial stability of corporate gaming licensees and their affiliates; (2)
preserve the beneficial aspects of conducting business in the corporate form;
and (3) 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


                                                14
<PAGE>

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 Riviera Operating Corporation's operations are conducted.
Depending upon the particular fee or tax involved, these fees and taxes are
payable monthly, quarterly or annually and are based upon either: (1) a
percentage of the gross revenues received; (2) the number of gaming devices
operated; or (3) the number of table games operated. A live entertainment tax is
also paid by casino operations where entertainment is furnished in connection
with admission charges, the serving or selling of food, refreshments or the
selling of 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, or
required to be registered, or a person who is under common control with any of
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.










                                                15
<PAGE>
Colorado Gaming and Liquor Regulation

Summary

           In general, Riviera Black Hawk, its principal executive officers and
those of Riviera Holdings, and any Riviera Black Hawk employees who are involved
in Colorado gaming operations are required to be found suitable for licensure by
the Colorado Gaming Commission. Colorado also requires that owners 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 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.

           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 the Colorado Act 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,

                                                16
<PAGE>

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.

           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



                                                17
<PAGE>

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.

           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   0.25% 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
$750.00 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
generally constitutes a class 1 misdemeanor, except as may be specifically
otherwise provided within the Colorado Gaming Act, 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.


                                                18
<PAGE>

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
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 five 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


                                                19
<PAGE>

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.

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, 2,070 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 approximately 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 Riviera Las Vegas and Riviera Black Hawk properties are
encumbered by deeds of trust securing the 11% Notes and the Company's five-year
senior secured credit facility.

           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 400 people.

           The Riviera Las Vegas and Riviera Black Hawk properties are
encumbered by deeds of trust securing the 11% Notes and the Company's five-year
senior secured credit facility.

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

Item 3.    Legal Proceedings

           On April 15, 2003, a class action complaint was filed in the Clark
County, Nevada District Court (Case No. A466204) in the name of Brian Placzek,
on behalf of himself and all others similarly situated, against the Company and
Company directors William L. Westerman, Robert R. Barengo, Jeffery A. Silver and
Paul A. Harvey (the "Placzek Action"). The complaint was served on the Company
on April 28, 2003. The named plaintiff was a shareholder of the Company. In the
complaint, the plaintiff sought an order requiring the individual defendants to



                                                20
<PAGE>

take the following actions, among others: cooperate with any individual who
makes a bona fide offer to acquire the Company, take steps that are calculated
to result in a buy-out or takeover of the Company at the highest price, comply
with their fiduciary duties, and reimburse the plaintiff's class for damages,
costs and disbursements related to the lawsuit. The complaint also sought to
have all of the Company's public shareholders, excluding the defendants,
certified as a class for purposes of the class action suit and sought plaintiff
to be the representative of the class. On July 10, 2003, the defendants filed a
motion to dismiss the Placzek Action on the grounds that the Placzek Action was
filed without the authorization of the plaintiff. Prior to this motion to
dismiss being heard, the plaintiff agreed to dismiss the lawsuit with prejudice
and on August 28, 2003, a Stipulation and Order for Dismissal was entered
dismissing the Placzek Action with prejudice.

           On May 2, 2003, a class action complaint was filed in the Clark
County, Nevada District Court (Case No. A467159) in the name of Paul Rosa
against the Company and Company directors William L. Westerman, Robert R.
Barengo, Jeffrey A. Silver, Paul A. Harvey and Vincent L. DiVito (the "Rosa
Action"). The named plaintiff in this action was a shareholder of the Company
and sought to have all of the Company's public shareholders, excluding
defendants and related shareholders, certified as a class for purposes of the
class action suit. The complaint also sought substantially the same relief
sought in the Placzek Action. On July 21, 2003, the defendants filed a motion to
dismiss the Rosa Action on the grounds that the complaint failed to state a
claim upon which relief may be granted. Prior to this motion to dismiss being
heard, the plaintiff agreed to dismiss the lawsuit with prejudice and on October
10, 2003, a Stipulation and Order for Dismissal was entered dismissing the Rosa
action with prejudice.

           We are a party to several routine lawsuits, either as plaintiff or as
defendant, arising from the normal operations of a hotel or casino. We do not
believe that the outcome of such litigation, in the aggregate, will have a
material adverse effect on our 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 Equity and Related Stockholder
Matters and Issuer Purchases of Equity Securities

     a) The Company's  common stock began trading on the American Stock Exchange
("AMEX") on May 13, 1996 and was reported on the Over-the-Counter Bulletin Board
prior to that date. As of March 5, 2004, based upon information  available to it
from its stock transfer agent and non-objecting  beneficial  ownership list, the
Company  believes that there were  approximately  425 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 its  subsidiaries
which  currently  include the  operations of Riviera Las Vegas and Riviera Black
Hawk. In addition,  the Note  Indenture and the Company's  senior secured credit
facility  materially  restruct  the  Company's  ability to pay  dividends on its
common stock.

     The  Company  was  informed  that  it did not  meet  certain  AMEX  listing
requirements  (due to among other  things,  the  Company's  negative  equity and
losses) and that,  consequently,  AMEX  intended  to  initiate  steps that could
ultimately result in the delisting of the Company's common stock. Pursuant to an
AMEX request,  the Company  produced and provided a plan to AMEX designed to put
the Company in compliance with the AMEX listing requirements by the AMEX imposed
deadline of September,  2004 ("the Compliance Plan"). Although the Company's has
attempted to fulfill the  criteria as set forth in the  Compliance  Plan,  it is
doubtful that the Company will be able to fulfill the  Compliance  Plan criteria
(primarily the net worth  requirement).  Despite the likelihood that the Company
will not fulfill those  criteria,  recent informal  discussions  with AMEX staff
indicate  that the Company may meet the  standards of AMEX policy Sec.  1003(a).
According to that policy, AMEX will not normally consider suspending dealings in
or  delisting  the  securities  of a company  which is below the earnings or net
worth standards if the Company is in compliance with the following:

(1)  Total value of market  capitalization of at least  $50,000,000;  or total
     assets and revenue of $50,000,000 each in its last fiscal year, or in two
     of its last three fiscal years; and

(2)  The company has at least 1,100,000 shares publicly held, a market value of
     publicly held shares of at least $15,000,000 and at least 400 round lot
     shareholders.

     The table below sets forth the sales  prices by quarter for the years ended
December 31, 2003 and 2002,  based on AMEX reported  prices brokers who have had
transactions in the Company's common stock during the year:
<TABLE>
<CAPTION>

             First        Second      Third        Fourth
             Quarter      Quarter     Quarter      Quarter
2003
<S>            <C>          <C>         <C>          <C>
HIGH          $4.99        $6.30       $5.65        $5.70
LOW            3.65         3.95        5.07         5.35

2002
HIGH          $5.20        $7.75       $7.09        $5.76
LOW            4.15         5.20        5.90         4.32
</TABLE>

        On Friday March 12, 2004, (the most recent trade date of the Company's
common stock), 15,400 shares were traded on AMEX, with a reported closing price
of $7.04 per share.

(b)      Not Applicable
(c)      Not Applicable

Equity Compensation Plan Information
<TABLE>
<CAPTION>
---------------------- ------------------------- -------------------- -------------------------
<S>                       <C>                        <C>                   <C>
Plan category          Number of securities      Weighted-average     Number of securities
                       to be issued upon         exercise price of    remaining available for
                       exercise of outstanding   outstanding options, future issuance under
                       options, warrants and     warrants and rights  equity compensation plans
                       rights                                         (excluding securities
                                                                      reflected in column (a))
                       (a)                       (b)                  (c)
---------------------- ------------------------- -------------------- -------------------------
Equity compensation
plans approved by        633,000                     $6.62                   16,000
security holders
---------------------- ------------------------- -------------------- -------------------------
Equity compensation
plans not approved by       -0-                       -0-                     -0-
security holders
---------------------- ------------------------- -------------------- -------------------------
Total                    633,000                     $6.62                   16,000
---------------------- ------------------------- -------------------- -------------------------
</TABLE>



                                                22
<PAGE>

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 Loss
Per Diluted Common Share):
<TABLE>
<CAPTION>

 ----------------------- ---------- ---------- --------- ---------- ---------
                            2003       2002       2001      2000      1999
 ----------------------- ---------- ---------- --------- ---------- ---------
   <S>                      <C>        <C>       <C>        <C>       <C>
 Net Operating Revenue    $190,159   $188,292  $202,031   $201,531  $157,268
 Net Loss                 (14,453)   (24,722)   (6,407)    (4,215)   (2,869)
 Net Loss Per Diluted
    Common Share           ($4.16)    ($7.17)   ($1.79)    ($1.05)   ($0.58)
 Total Assets              221,538    235,896   267,818    283,710   288,990
 Long-Term Debt            219,625    220,124   220,439    226,043   229,052
 ----------------------- ---------- ---------- --------- ---------- ---------
</TABLE>
The net loss for 2003 was impacted by $2.4 million or ($0.68) per share for
development and project costs.  The net loss for 2002 was affected by the loss
on extinguishment of debt and defeasance interest totaling $13.9 million or
($4.03) per share.

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

Overall Outlook

We own and operate the Riviera Hotel and Casino on the Strip in Las Vegas,
Nevada and Riviera Black Hawk Casino in Colorado.

Our capital expenditures for Las Vegas are geared to maintain the hotel rooms
and amenities in sufficient condition to compete for our customers in the
convention market and the mature adult customer. Room rates and slot revenues
are the primary factors driving our operating margins. We use technology to
maintain labor costs at a reasonable level, including kiosks for hotel check-in
and slot club redemptions. In addition, we are in the process of updating our
gaming monitoring computer systems, including the capability for
"ticket-in/ticket-out" ("TITO") on our slot machines. At December 31, 2003
approximately 200 of our slot machines were on the temporary EZ Pay TITO System.
During the first half of 2004, we will be converting those machines and
approximately 200 additional slot machines to our new system. By the end of 2004
we anticipate that we will have 500 slot machines or approximately 35% of our
slot machines in Las Vegas on TITO. Depending upon the success of these
conversions, we may accelerate the conversion of the remaining machines or we
may convert them based on normal replacement schedules. If we accelerate the
process, we would have to finance the additional slot machine purchases by using
our revolving credit facility or separate financing arrangements for $5 to $10
million.

In Black  Hawk,  the $5 maximum bet  restricts  table games to a minimum and the
area is basically a "locals" slot customer market.  Our capital  expenditures in
Black Hawk are geared to  maintain  competitive  slot  machines  compared to the
market. The gaming authorities  approved TITO systems in Colorado for Riviera on
December  16,  2003 and we had 35 of our slot  machines on the TITO system as of
December  31,  2003.  By the  end of  2004  we  anticipate  that  we  will  have
approximately  450 slot  machines  or 45% of our slot  machines in Black Hawk on
TITO. Again, depending upon the success of these conversions,  we may accelerate
the conversion of the remaining  machines or we may convert them based on normal
replacement  schedules.  If we accelerate the process,  we would have to finance
the additional slot machine  purchases by using our revolving credit facility or
separate financing arrangements for approximately $3 million.



                                                23
<PAGE>

Results of Operations

2003 Compared to 2002

           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 cash rebates
and promotional allowances. Operating income from properties is presented as
shown on the Consolidated Statement of Operations.
<TABLE>
<CAPTION>

                                Year Ended December 31,    $ Change   % Change
(In Thousands)                   2003          2002       Incr/(Decr)Incr/(Decr)

Net revenues:
<S>                            <C>          <C>            <C>          <C>
  Riviera Las Vegas            $ 140,963    $ 139,159      $ 1,804      1.2 %
  Riviera Black Hawk              49,196       49,133           63      0.1 %
                                 -------      -------        -----      -----
       Total Net revenues      $ 190,159    $ 188,292      $ 1,867      1.0 %
                                 =======      =======        =====      =====
Operating income:
  Riviera Las Vegas             $ 12,373     $ 12,265        $ 108      0.9 %
  Riviera Black Hawk               7,377        7,350           27      0.4 %
  Development and Project Costs   (2,365)                   (2,365)
  Corporate Expenses              (4,485)      (3,762)        (723)   (19.2)%
                                  -------     --------       ------   ------
       Total Operating income   $ 12,900     $ 15,853     $ (2,953)   (18.6)%
                                  =======     ========       ======   ======
</TABLE>


Riviera Las Vegas

Revenues

     Riviera Las Vegas net revenues increased by approximately $1.8 million,  or
1.3%,  from $139.2  million in 2002 to $141.0  million in 2003  primarily due to
increased  hotel  occupancy  and  increased  average  daily rate.  Room revenues
increased $2.0 million,  as the average room rate  increased  $0.47 or 0.8% from
$59.93 to $60.40 and hotel occupancy increased from 89.6% to 92.2%.  Revenue per
available  room (Rev Par)  increased  $1.96 form  $53.70 to $55.66 or 3.6%.  The
increase is due to a 3.4% increase in Convention room revenue, which made up 41%
of total  room  revenue  and 30% of  occupied  rooms.  A report by the Las Vegas
Convention and Visitors Authority  indicates that visitor volume for 2003 was up
1.3% from 2002 levels. Casino revenues decreased approximately $658,000 or 1.1%,
from $59.6 million during 2002 to $59.0 million during 2003.  Slot revenues were
up 1.3%,  while table games  revenues were down 7.9%.  The hold  percentage  was
comparable for slot machines in 2003 and 2002.  Table games hold  percentage was
down 1.2% from 2002 to 2003.  Entertainment  revenues increased by approximately
$827,000,  or 4.7%,  from $17.6 million during 2002 to $18.4 million during 2003
as attendance  increased 3.8%,  which was partially offset by a 1.7% decrease in
ticket price.

Operating Income

         Operating income increased $108,000 or 0.9% from $12.3 million in 2002
to $12.4 million in 2003 due to the increased revenues, which were offset by
increased general and administrative expenses due to a change in the structure
of the CEO's compensation and additional professional fees associated with
corporate governance.

Riviera Black Hawk

Revenues

         Riviera Black Hawk recorded similar net revenues in 2003 as it had in
2002, from $49.1 million in 2002 to $49.2 million in 2003 as the operation held
on to market share in the face of increased competition. Casino revenues,
primarily from slot machines, increased slightly by approximately $272,000, or
0.6%, from $46.5 million in 2002 to $46.7 million in 2003. Average slot machine
win per unit increased from $142 per day in 2002 to $149 in 2003. Food and
beverage revenues decreased by approximately $1.0 million, or 15.1%, from $6.6
million in 2002 to $5.6 million in the 2003.




                                                24
<PAGE>

Operating Income

Operating income remained the same at $7.4 million in 2002 and 2003. General and
administrative  costs increased $836,000.  General and administrative costs were
22.7%  of  revenues  in the  current  year  compared  with  22.1% in 2002 due to
$419,000 in costs  relating to our portion of the  campaign to defeat  Amendment
33, which would have  authorized  slot  machines at  racetracks  in the state of
Colorado.


Consolidated Operations

Other Income (Expense)

     Interest expense for 2003 was $27.4 million, of which $25.3 million related
to interest  and  amortized  loan fees on the $215  million  11% Senior  Secured
Notes.  On June 26, 2002,  the Company  issued 11% Senior  Secured  Notes with a
principal  amount  of  $215  million,  substantially  all of  which  were  later
exchanged for the Company's  Senior Secured Notes that were registered under the
Securities  Act of 1933,  as  amended,  and had  substantially  the  same  terms
(collectively, the "Notes"). Interest expense on the Notes of $12.2 million plus
related  amortization  of loan fees  totaled  approximately  $13.0  million.  In
addition,  the interest  expense on the retired 10% First  Mortgage  Notes,  the
retired Black Hawk 13% First Mortgage  Notes,  and equipment and other financing
costs  totaled  approximately  $13.8  million  in 2002 for a  combined  total of
interest expense of $26.8 million. Fiscal 2002 results were affected by the loss
on  extinguishment  of debt totaling $11.2 million or $3.25 per share. The costs
included the call premium on the Company's  refinanced  10% First Mortgage Notes
and Riviera Black Hawk's  refinanced 13% First Mortgage Notes,  the write off of
unamortized  deferred loan costs  associated  with the refinanced  bonds and the
balance  of the  original  issue  discount  on the  10%  First  Mortgage  Notes.
Furthermore,  the results were affected by  approximately  $2.7 million or $0.78
per  share of  additional  interest  expense,  net  incurred  as a result of the
defeasance/retirement of the debt.

Net Loss

     The consolidated net loss decreased  approximately $10.2 million from $24.7
million  in  2002  to  $14.5   million  in  2003  mainly  due  to  the  cost  of
extinguishment of debt of $11.2 million and defeasance  interest of $2.7 million
in 2002 as explained  above.  Results for 2003 were impacted by development  and
projects  costs  totaling $2.4  million.  We filed an  application  with the New
Mexico Racing  Commission in March of 2002 for a racino in Hobbs,  New Mexico.
We and three other prospective licensees made presentations to the Commission in
November of 2003. The Commission  awarded the racino license to one of the other
applicants and we wrote off $1.3 million of costs associated with the project. .
In spite of the New Mexico setback,  the  significant  contribution of our Black
Hawk property to our shareholder  value  reinforces our effort to diversify into
new venues.  We are  regularly  reviewing  opportunities  to expand and become a
larger  multi-jurisdictional  casino company with greater  capital  resources to
enable  us  to  compete  more  effectively.   Our  diversification  efforts  are
proceeding with our endorsement by Jefferson County, Missouri for a casino/hotel
development project located  approximately 22 miles south of downtown St. Louis.
We filed our formal  application with the Missouri Gaming  Commission on October
9, 2002 and look forward to presenting our project to the State of Missouri.  We
expect to make our formal  presentation  before the Missouri  Gaming  Commission
sometime  in  2004.  Assuming  we  were  to  receive  approval  from  the  state
regulators,  construction  work should start soon  thereafter  with a completion
date in  approximately  two years.  However,  there is no  guarantee  we will be
granted a license by the Missouri regulators. In February 2004, St. Louis County
endorsed  another gaming operator for a casino/hotel  development  project.  St.
Louis  County is  located  directly  to the  north of  Jefferson  County.  It is
unlikely that the Missouri  regulators will grant licenses to both the St. Louis
County and Jefferson County projects.  During 2003 we wrote of development and
project costs associated with the Missouri project totaling $1.1 million.

Results of Operations

2002 Compared to 2001

           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.
<TABLE>
<CAPTION>

                               Year Ended December 31,   $ Change    % Change
(In Thousands)                     2002        2001     Incr/(Decr)  Incr/(Decr)

Net revenues:
<S>                              <C>        <C>        <C>           <C>
  Riviera Las Vegas              $ 139,159  $ 152,985  $ (13,826)    (9.0)%
  Riviera Black Hawk                49,133     49,046         87      0.2 %
                                   -------    -------     ------     ------
           Total Net revenues    $ 188,292  $ 202,031  $ (13,739)    (6.8)%
                                  ========    =======     ======     ======
Operating income (loss):
  Riviera Las Vegas               $ 12,265   $ 13,512   $ (1,247)    (9.2)%
  Riviera Black Hawk                 7,350      7,622       (272)    (3.6)%
  Corporate Expenses                (3,762)    (4,163)       401     (9.6)%
                                   --------   --------    -------    ------
           Total Operating income $ 15,853   $ 16,971   $ (1,118)    (6.6)%
                                   =======    ========    =======    ======
</TABLE>

                                                25
<PAGE>

Riviera Las Vegas

Revenues

         Riviera Las Vegas net revenues decreased by approximately $13.8
million, or 9.0%, from $153.0 million in 2001 to $139.2 million in 2002
primarily due to the effects of the recession and the September 11 terrorist
attacks. Casino revenues decreased approximately $7.7 million or 11.5%, from
$67.4 million during 2001 to $59.6 million during 2002. Slot revenues were down
11.9%, while table games revenues were down 8.5%. The hold percentages were
comparable for both table games and slot machines in 2002 and 2001. Room
revenues decreased $1.9 million, as the average room rate decreased $2.53 or
4.1% from $62.46 to $59.93 and hotel occupancy decreased from 91.6% to 89.6%.
The Las Vegas market continues to recover from the impacts of September 11th,
2001, however the recovery has been slowed by the soft national economy and
declining consumer confidence in anticipation of a military action in Iraq. A
Las Vegas Convention and Visitors Authority report indicates that visitor
volumes for the first eleven months of 2002 were equal to 2001 levels. 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 $2.8 million, or 13.9%, from
$20.4 million during 2001 to $17.6 million during 2002 as attendance decreased
24.5%, which was partially offset by a 2.4% increase in ticket price. Room sales
to vacationers were down approximately 5.7% in 2002, which is an important
producer of show ticket sales and slot revenues. Other revenues decreased by
approximately $1.0 million, or 12.6%, from $8.5 million during 2001 to $7.5
million during 2002 due primarily to lower telephone revenues.

Operating Income

         Operating income decreased $1.2 million or 9.2% from $13.5 million in
2001 to $12.3 million in 2002 due to the decreased revenues, which were
partially offset by lower entertainment contract expenses, which are tied to
revenues, reduced casino expense due to lower volumes and reduced executive
incentives and Employee Stock Ownership Plan expense.

Riviera Black Hawk

Revenues

         Riviera Black Hawk recorded similar net revenues in 2002 as it had in
2001, from $49.0 million in 2001 to $49.1 million in 2002 as the operation held
on to market share in the face of increased competition which had increased the
number of gaming machines by 7.8%. Casino revenues, primarily from slot
machines, decreased slightly by approximately $174,000, or 0.4%, from $46.7
million in 2001 to $46.5 million in 2002. Average slot machine win per unit
decreased from $148 per day in 2001 to $142 in 2002. Food and beverage revenues
increased by approximately $1.0 million, or 18.1%, from $5.6 million in 2000 to
$6.6 million in 2001.

Operating Income

         Operating income decreased $272,000 or 3.6% from $7.6 million in 2001
to $7.4 million in 2002 due to the increased competition and a slower economy in
the Denver area. General and administrative costs decreased $1.2 million.
General and administrative costs were 21.1% of revenues in 2002 compared with
23.5% in 2001 due to decreased health insurance costs. Depreciation increased
$874,000 or 23.3% in 2002 compared with 2001 due to a change to accelerated
depreciation on slot machines.

Consolidated Operations

Other Income (Expense)

     On June 26, 2002,  the Company  issued the original  Notes with a principal
amount of $215 million,  substantially all of which were later exchanged for the
Company's  Senior Secured Notes that were registered under the Securities Act of
1933,  as  amended,  and had  substantially  the same terms  (collectively,  the
"Notes").   Interest  expense  on  the  Notes  of  $12.2  million  plus  related
amortization of loan fees totaled approximately $13.0 million. In addition,  the
interest expense on the retired 10% First Mortgage Notes, the retired Black Hawk
13%  First  Mortgage  Notes and  equipment  and other  financing  costs  totaled
approximately  $13.8 million in 2002 for a combined total of interest expense of
$26.8  million.  This compares  with $26.9 million in interest  expense in 2001.
Fiscal 2002 results were affected by the loss on extinguishment of debt totaling
$11.2  million or $3.25 per share.  The costs  included  the call premium on the
Company's   refinanced  10%  First  Mortgage  Notes  and  Riviera  Black  Hawk's
refinanced 13% First Mortgage Notes, the write off of unamortized  deferred loan
costs associated with the refinanced bonds and the balance of the original issue
discount on the 10% First Mortgage Notes. Furthermore, the results were affected
by approximately $2.7 million or $0.78 per share of additional interest expense,
net incurred as a result of the defeasance/retirement of the debt.


                                                26
<PAGE>

Net Loss

         The consolidated net loss increased approximately $18.3 million from
$6.4 million in 2001 to $24.7 million in 2002 mainly due to the cost of
extinguishment of debt of $11.2 million and defeasance interest of $2.7 million
explained above, and a tax benefit recorded by the Company of $2.2 million in
2001, with no tax benefits recorded in 2002.

Liquidity and Capital Resources

         The Company had cash and cash equivalents of $19.3 million at December
31, 2003, which was a decrease of $876,000 from 2002. 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 $6.2 million could be
disbursed in a short period.

         For 2003, the Company's net cash provided by operating activities was
$6.2 million compared to $3.1 million in 2002 due primarily to the payment of
interest to defease the old notes in 2002. Cash flows used in investing
activities were $8.3 million in 2003 compared to $5.7 million in 2002 due to the
increase in capital expenditures. Net cash provided by financing was $1.2
million in 2003 compared to cash used in financing activities of $23.7 million
in 2002. Management believes that cash flow from operations, combined with the
$19.3 million cash and the $28 million remaining on our senior secured credit
facility discussed below, will be sufficient to cover the Company's debt service
and enable investment in budgeted capital expenditures of $8.9 million for the
next twelve months.

     On June 26, 2002, the Company  secured new debt in the principal  amount of
$215  million in the form of the Notes with a  maturity  date of June 15,  2010.
Interest  on the Notes is at the annual  rate of 11% paid  semiannually  on each
June 15 and December 15,  beginning  December 15, 2002.  The net proceeds of the
Notes,  along  with cash on hand,  were used to defease  Riviera  Las Vegas' 10%
First  Mortgage  Notes due 2004 and to defease  Riviera  Black  Hawk's 13% First
Mortgage Notes with  contingent  interest due 2005. Cash flow from operations is
not  expected  to be  sufficient  to pay 100% of the  principal  of the Notes at
maturity.  Accordingly, the ability of the Company and its subsidiaries to repay
the Notes at maturity  will be dependent  upon thier  ability to  refinance  the
Notes.  There can be no assurance that the Company and its subsidiaries  will be
able to refinance  the  principal  amount of the Notes at maturity.  On or after
June 15,  2006,  the  Company  may  redeem  the Notes from time to time at a
premium beginning at 105.5% and declining each subsequent year to par in 2009.

     The indenture governing the Notes (the "Note Indenture")  provides that, in
certain circumstances, the Company and its subsidiaries 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 subsidiaries  would be unable to pay the principal amount of the
Notes without a refinancing.

         The Note Indenture contains certain covenants, which limit the ability
of the Company and its restricted subsidiaries, subject to certain exceptions,
to: (1) incur additional indebtedness; (2) pay dividends or other distributions,
repurchase capital stock or other equity interests or subordinated indebtedness;
(3) enter into certain transactions with affiliates; (4) create certain liens;
sell certain assets; and (5) 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,
2003, the Company believes that it is in compliance with the covenants.

     On July 26, 2002, the Company entered into a $30 million,  five-year senior
secured credit  facility.  The credit facility is secured by  substantially  the
same collateral that secures the Notes. The lien on the collateral  securing the
credit facility is senior to the lien on the collateral  securing the Notes. The
credit  facility  contains   customary   conditions  to  borrowing  and  certain
representations and warranties  customary in gaming related finance.  The credit
facility also contains  financial  covenants and restrictions  regarding,  among
other  things,  indebtedness,  distributions  and changes in control.  Under the
credit  facility,  the Company can obtain  extensions  of credit in the forms of
cash and  letters of credit.  The  Company is  required  to pay  interest on all
outstanding  cash  advances at the rate of interest  announced by Wells Fargo at
its  principal  office in San  Francisco  at its prime rate plus 0.75% or at the
rate at which  major  international  banks  in  London  charge  each  other  for
borrowings in U.S.  dollars plus 3.00%.  However,  the minimum  interest rate we
will be charged on  outstanding  cash  advances is 4.50%.  At December 31, 2002,
there was $2 million outstanding under the secured credit facility.
                                                27
<PAGE>

Contractual Obligations

           The following table summarizes our contractual obligations and
commitments as of December 31, 2003:
<TABLE>
<CAPTION>

Principal (Notational Amount by Expected Maturity)

(Amounts in Thousands)                                                                Fair Value
                              2004   2005    2006   2007   2008  Thereafter   Total   At 12/31/03

Long Term Debt
Including Current Portion
Equipment loans and
<S>                          <C>      <C>     <C>    <C>    <C>       <C>       <C>      <C>
 capital leases-Las Vegas    $1,377   $740    $645   $685   $109               $3,556   $3,556


11% First Mortgage Note                                            $215,000  $215,000 $219,300
Less unamortized discount                                           (2,613)   (2,613)  (2,613)

Capital leases
 Black Hawk, Colorado        $2,263   $658                                     $2,921   $2,921

Special Improvement
 District Bonds-Black Hawk,
   Colorado casino project     $110   $116    $124   $129   $137       $145      $761     $761
                               ----   ----    ----   ----   ----       ----      ----     ----

Total of all Long-Term Debt
Including Current Portion    $3,750 $1,514    $769   $814   $246   $212,532 $ 219,625 $223,925
                             ====== ======    ====   ====   ====   ======== ========= ========

Other Long - Term Liabilities
 including Current Portion
CEO pension plan obligation  $1,000 $1,000  $1,000  $1,000 $1,000     $1,171    $6,171  $6,171
Credit Facility               2,000                                                      2,000
Expected Interest Payments   26,924 26,699  26,499  26,926 25,824               37,017 169,889
</TABLE>

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, expenses and provision for income taxes. 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. However, actual future 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 non-discounted future cash flows
expected to result from the use of these assets exceed the current carrying


                                                28
<PAGE>

value  of  these   assets.   Any  adverse   change  to  the  estimate  of  these
non-discounted  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.

Deferred Tax Assets

         We utilize estimates related to cash flow projections for the
application of Statement of Financial Accounting Standards ("SFAS") No. 109 to
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.

Litigation Reserves

     The Company  assesses its exposures to loss  contingencies  including legal
matters  and  provides  for an  exposure  if it is  judged  to be  probable  and
estimable.  If the actual  loss from a  contingency  differs  from  management's
estimate, operating results could be impacted.

Self-insurance Reserves

     The  Company is  self-insured  for  various  levels of  general  liability,
workers'  compensation,  and  non-union  employee  medical  insurance  coverage.
Insurance  claims and reserves  include  accruals of estimated  settlements  for
known claims,  as well as accrued estimates of incurred but not reported claims.
In  estimating  these  costs,  the  Company   considers  its  historical  claims
experience  and make  judgments  about the  expected  levels of costs per claim.
Changes in health care costs,  accident frequency and severity and other factors
can materially affect the estimate for these liabilities.

Loyalty Club Program

     We offer to our guests the  opportunity to earn points  redeemable for cash
and complimentary rooms and food and beverage based on their level of gaming and
non-gaming activities while at our properties.  An accrual is recorded as points
are  earned  based  upon  expected   redemption   rates  and,  in  the  case  of
complimentaries, the estimated cost of the complimentary to be provided.

Recently Issued Accounting Standards

     In June 2001, the Financial Accounting Standards Board ("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  adoption of SFAS No. 143 did not have a material  impact on the
Company's financial position or results of operations.

        In June 2002, FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. SFAS No. 146 addresses financial accounting
and reporting for costs associated with exit or disposal activities and
nullifies Emerging Issues Task Force Issue No. 94-3, Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring). SFAS No. 146 requires
that a liability for a cost associated with an exit or disposal activity be
recognized when the liability is incurred. A fundamental conclusion reached by
the FASB in SFAS No. 146 is that an entity's commitment to a plan, by itself,
does not create a present obligation to others that meets the definition of a
liability. SFAS No. 146 also establishes that fair value is the objective for
initial measurement of the liability. The provisions of SFAS No. 146 are
effective for exit or disposal activities that are initiated after December 31,
2002, with early application encouraged. The adoption of SFAS No. 146 did not
have a material impact on the Company's financial position or results of
operations.

        In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"),
Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN 45 addresses financial
accounting for, and disclosure of, guarantees. FIN 45 requires certain
guarantees to be recorded at fair value, as opposed to the existing standard of
recording a liability only when a loss is probable and reasonably estimable
according to SFAS No. 5, Accounting for Contingencies. The adoption of FIN 45
did not have a material impact on the Company's financial position or results of
operations.

     In  December  2003,  the FASB  issued  Interpretaion  No.  46  ("FIN  46"),
Consolidation of Variable Interest Entities (revised December 2003)," clarifying
FIN 46 and exempting certain entities from the provisions of FIN 46R. Generally,
application  of Fin 46R is required in financial  statements of public  entities
that have  interests  in  structures  commonly  referred  to as  special-purpose
entities for the periods  ending after December 15, 2003, and for other types of
varible  interest  entities for periods  ending  after March 15,  2004.  FIN 46R
addresses  the  consolidation  be  business  enterprises  of  variable  interest
entities that either: (1) do not have sufficient equity investment at risk to
permit the entity to finance its activities without additional subordinated
financial support, or (2) the company will hold a significant variable interest
in, or have significant involment with, an existing variable interest entity.
The adoption of FIN 46R for provisions effective during 2003 did not have a
material impact on our financial position or results of operations.


                                                29
<PAGE>

     In December 2002, the FASB issued SFAS No. 148,  Accounting for Stock-Based
Compensation--Transition and Disclosure--an amendment of FASB Statement No. 123.
SFAS No. 148 amends  SFAS No.  123,  Accounting  for  Stock-Based  Compensation.
Although  it does  not  require  use of fair  value  method  of  accounting  for
stock-based  employee  compensation,  it does  provide  alternative  methods  of
transition.  It also amends the  disclosure  provisions  of SFAS No. 123 and APB
Opinion  No. 28,  Interim  Financial  Reporting,  to require  disclosure  in the
summary  of  significant  accounting  policies  of the  effects  of an  entity's
accounting policy with respect to stock-based employee  compensation on reported
net income and  earnings per share in annual and interim  financial  statements.
SFAS No. 148's  amendment of the transition and annual  disclosure  requirements
are effective for fiscal years ending after  December 15, 2002. The amendment of
disclosure  requirements of APB Opinion No. 28 are effective for interim periods
beginning  after  December 15, 2002. The adoption of SFAS No. 148 did not have a
material impact on the Company's  consolidated  financial position or results of
operations.

           In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity. SFAS
No. 150 establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). SFAS No. 150 is effective
for financial instruments entered into or modified after May 31, 2003, and
otherwise is effective at the beginning of the first interim period beginning
after June 15, 2003. The Company adopted SFAS No. 150 for the third quarter
beginning on July 1, 2003 and it had no effect on its financial position or
results of operations.

Forward-Looking Statements

         Throughout this report we make "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Forward-looking statements include the words "may," "will," "would," "could,"
"likely," "estimate," "intend," "plan," "continue," "believe," "expect" or
"anticipate" and other similar words and include all discussions about our
acquisition and development plans. We do not guarantee that the transactions and
events described in this report will happen as described or that any positive
trends noted in this report will continue. These forward-looking statements
generally relate to our plans, objectives and expectations for future operations
and are based upon management's reasonable estimates of future results or
trends. Although we believe that our plans and objectives reflected in or
suggested by such forward-looking statements are reasonable at the present time,
we may not achieve or we may modify such plans or objectives. You should read
this report completely and with the understanding that actual future results may
be materially different from what we expect. We do not plan to update
forward-looking statements even though our situation or plans may change in the
future.

         Specific factors that might cause actual results to differ from our
expectations, might cause us to modify our plans or objectives, might affect our
ability to pay timely amounts due under our debt instruments include, but are
not limited to:

          *       the availability and adequacy of our cash flow to meet our
                  requirements, including payment of amounts due under our debt
                  instruments;

           *      our substantial indebtedness, debt service requirements and
                  liquidity constraints;

           *      risks related to our debt instruments and to high-yield
                  securities and gaming securities generally;

           *      the availability of additional capital to support capital
                  improvements and development;

          *       competition in the gaming industry, including the availability
                  and success of alternative gaming venues and other
                  entertainment attractions;

          *       economic, competitive, demographic, business and other
                  conditions in our local and regional markets;

          *       changes or developments in laws, regulations or taxes in the
                  gaming industry;

          *       actions taken or omitted to be taken by third parties,
                  including our customers, suppliers, competitors and members as
                  well as legislative, regulatory, judicial and other
                  governmental authorities;

          *       a decline in the public acceptance of gaming;

          *       changes in personnel or compensation, including federal
                  minimum wage requirements;

          *       our failure to obtain, delays in obtaining, or the loss of,
                  any licenses, permits or approvals, including gaming and
                  liquor licenses, or the limitation, conditioning, suspension
                  or revocation of any such licenses, permits or approvals, or
                  our failure to obtain an unconditional renewal of any such
                  licenses, permits or approvals on a timely basis;

           *      the loss of any of our casino facilities due to terrorist
                  acts, casualty, weather, mechanical failure or any extended or
                  extraordinary maintenance or inspection that may be required;


                                                30
<PAGE>

           *      other adverse conditions, such as adverse economic conditions,
                  changes in general customer confidence or spending, increased
                  transportation costs, travel concerns or weather-related
                  factors, that may adversely affect the economy in general or
                  the casino industry in particular;

           *      changes in our business strategy, capital improvements or
                  development plans;

           *      factors relating to the current state of world affairs and any
                  further acts of terrorism or any other destabilizing events in
                  the United States or elsewhere; and


                                                        31
<PAGE>

           *      other risk factors discussed elsewhere in this report.


         All future written and oral forward-looking statements attributable to
us or any person acting on our behalf are expressly qualified in their entirety
by the cautionary statements contained or referred to in this section. In light
of these and other risks, uncertainties and assumptions, the forward-looking
events discussed in this report might not occur.


Item 7A.      Quantitative and Qualitative Disclosures About Market Risk

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 30 days or less. Such investments are generally not affected by
changes in interest rates.

As of December 31, 2003, we had $219.6 million in borrowings. The borrowings
include $215 million in notes maturing in 2010 and capital leases maturing at
various dates through 2005. Interest under the $215 million notes is based on a
fixed rate of 11%. The equipment loans and capital leases have interest rates
ranging from 5.2% to 13.5%. The borrowings also include $761,000 in a special
improvement district bond offering ("SID Bonds") with the City of Black Hawk.
The Company's share of the debt on the SID Bonds of $1.2 million is payable over
10 years beginning in 2000. The SID Bondsbear interest at 5.5%.
<TABLE>
<CAPTION>

Interest Rate Sensitivity
Principal (Notational Amount by Expected Maturity)
Average Interest Rate

(Amounts in Thousands)                                                                Fair Value
                              2004   2005    2006   2007   2008  Thereafter   Total   At 12/31/03

Long Term Debt
Including Current Portion
Equipment loans and
<S>                          <C>      <C>     <C>    <C>    <C>       <C>       <C>      <C>
 capital leases-Las Vegas    $1,377   $740    $645   $685   $109               $3,556   $3,556


11% First Mortgage Note                                            $215,000  $215,000 $219,300
Less unamortized discount                                           (2,613)   (2,613)  (2,613)

Capital leases
 Black Hawk, Colorado        $2,263   $658                                     $2,921   $2,921

Special Improvement
 District Bonds-Black Hawk,
   Colorado casino project     $110   $116    $124   $129   $137       $145      $761     $761
                               ----   ----    ----   ----   ----       ----      ----     ----

Total of all Long-Term Debt
Including Current Portion    $3,750 $1,514    $769   $814   $246   $212,532 $ 219,625 $223,925
                             ====== ======    ====   ====   ====   ======== ========= ========

Other Long - Term Liabilities
 including Current Portion
CEO pension plan obligation  $1,000 $1,000  $1,000  $1,000 $1,000     $1,171    $6,171  $6,171
Credit Facility               2,000                                              2,000   2,000
Average Interest Rate         4.75%
Expected Interest Payments   26,924 26,699  26,499  26,926 25,824               37,017 169,889

</TABLE>



                                                32
<PAGE>


Item 8.    Financial Statements and Supplementary Data

           See Financial Statements included in Item 15(a).

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

           None.

Item 9A.   Controls and Procedures

We maintain  disclosure controls and procedures that are designed to ensure that
information  required to be  disclosed  in our Exchange Act reports is recorded,
processed,  summarized  and reported  within the time periods  specified in, the
rules  and  form of the  Securities  and  Exchange  Commission,  and  that  such
information is accumulated and  communicated  to our  management,  including our
chief executive officer and chief financial  officer,  as appropriate,  to allow
timely decisions regarding required disclosure.  In designing and evaluating the
disclosure controls and procedures,  management recognized that any controls and
procedures,  no  matter  how  well  designed  and  operated,  can  provide  only
reasonable assurance of achieving the desired control objectives, and management
necessarily  was required to apply its judgment in evaluating  the  cost-benefit
relationship of possible controls and procedures.

Within 90 days prior to the date of this report,  we carried out an  evaluation,
under the supervision and with the  participation  of our management,  including
our chief executive officer and chief financial officer, of the effectiveness of
the design and operation of our disclosure controls and procedures. Based on the
foregoing,  our chief executive  officer and chief financial  officer  concluded
that the Company's disclosure controls and procedures were effective.

Subsequent to that  evaluation,  there have not been any significant  changes in
the Company's  internal  controls or in other  factors that could  significantly
affect  these  controls.  There were no  significant  deficiencies  or  material
weaknesses noted; therefore, no corrective actions were taken.








                                                33
<PAGE>


         PART III

Item 10.   Directors and Executive Officers of the Registrant

           Information regarding this item is incorporated herein by reference
to the Company's Proxy Statement to be filed on or about April 28, 2004,
relating to the Annual Meeting of Stockholders to be held on June 9, 2004 and is
made a part hereof.

Item 11.   Executive Compensation

           Information regarding this item is incorporated herein by reference
to the Company's Proxy Statement to be filed on or about April 29, 2004,
relating to the Annual Meeting of Stockholders to be held on June 9, 2004 and is
made a part hereof.

Item 12.   Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters

           Information regarding this item is incorporated herein by reference
to the Company's Proxy Statement to be filed on or about April 29, 2004,
relating to the Annual Meeting of Stockholders to be held on June 9, 2004 and is
made a part hereof.

Item 13.   Certain Relationships and Related Transactions

           Information regarding this item is incorporated herein by reference
to the Company's Proxy Statement to be filed on or about April 29, 2004,
relating to the Annual Meeting of Stockholders to be held on June 9, 2004 and is
made a part hereof.

Item 14.   Principal Accounting Fees and Services

           Information regarding this item is incorporated herein by reference
to the Company's Proxy Statement to be filed on or about April 29, 2004,
relating to the Annual Meeting of Stockholders to be held on June 9, 2004 and is
made a part hereof.









                                                34
<PAGE>


         PART IV

Item 15.   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
15 by Item 8 hereof:

-  Independent Auditors' Report.
-  Consolidated Balance Sheets as of December 31, 2003 and 2002.
-  Consolidated Statements of Operations for the Years Ended December 31,
      2003, 2002 and 2001.
-  Consolidated Statements of Stockholders' Deficiency for the Years Ended
      December 31, 2003, 2002, and 2001.
-  Consolidated Statements of Cash Flows for the Years Ended December 31, 2003,
      2002 and 2001.
-  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, and such
exhibits are filed herewith.

(b) Reports on Form 8-K

During the fourth quarter of 2003, the Company filed the following reports on
Form 8-K:

1. October 21, 2003 (filed October 22, 2003) - Reporting under Item 7
    (Financial  Statements,  Pro Forma  Financial Information and Exhibits).
    Iten 9 (Regulation FD Disclosure) and Item 12 (Results of Operations and
    Financial Condition). Summary financial information (unaudited) as of, and
    for the interim period ending on, September 30, 2002 was included in the
    Form 8-K.
2. November 19, 2003 (filed November 21, 2003) - Reporting under Item 5 (Other
    Events)and Item 7 (Financial Statements, Pro Forma Financial Information
    and Exhibits.
       (c) The exhibits required by Item 601 of Regulation S-K are filed as
           exhibits to this Form 10-K













                                                35
<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 15, 2004


           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 15, 2004
------------------------     Executive Officer and President
William L. Westerman

/s/ DUANE R. KROHN           Treasurer (Principal Financial      March 15, 2004
------------------------     and Accounting Officer)
Duane R. Krohn

/s/ ROBERT R. BARENGO        Director                            March 15, 2004
------------------------
Robert R. Barengo

/s/ JEFFREY A. SILVER        Director                            March 15, 2004
------------------------
Jeffrey A. Silver

/s/ PAUL A. HARVEY           Director                            March 15, 2004
------------------------
Paul A. Harvey

/s/ VINCENT L. DIVITO        Director                            March 15, 2004
------------------------
Vincent L. DiVito







                                                36
<PAGE>


                                  EXHIBIT INDEX

Exhibit            Description
Number

3.1*       Articles of Incorporation of the Company (see Exhibit 3 to Quarterly
           Report on Form 10-Q filed with the Commission on November 10, 2003,
           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  Amendment to the Articles of  Incorporation  of Riviera
           Black Hawk, Inc. (see Exhibit 3.01 to Amendment No. 1 to Registration
           Statement on Form S-4 filed by Riviera Black Hawk, Inc. with the
           Commission on August 31, 1999, Commission File No. 333-81613)

3.10*      Articles of  Incorporation of Riviera Black Hawk, Inc. (see Exhibit
           3.02 to Amendment  No. 1 to Registration  Statement on Form S-4 filed
           by  Riviera Black Hawk,  Inc. with the Commission on August 31, 1999,
           Commission  File No. 333-81613)

3.11*      Bylaws of Riviera Black Hawk,  Inc. (see Exhibit 3.03 to Amendment
           No. 1 to Registration  Statement on Form S-4 filed by Riviera Black
           Hawk,  Inc. with the Commission on August 31, 1999, Commission File
           No. 333-81613)

4.1*       Indenture dated as of June 26, 2002 among the Company, the Guarantors
           party thereto and The Bank of New York, as trustee (see Exhibit 4.1
           to Registration Statement on Form S-4 filed with the Commission on
           August 9, 2002, Commission File No. 333-97907).

4.2*       Form of the Company's 11% Senior Secured Notes due 2010 (included in
           Exhibit 4.1 to Registration Statement on Form S-4 filed with the
           Commission on August 9, 2002, Commission File No. 333-97907)


                                                37
<PAGE>


10.1*      Registration Rights Agreement dated as of June 26, 2002 by and among
           the Company, the Guarantors party thereto, and Jefferies & Company,
           Inc. (see Exhibit 10.1 to Registration Statement on Form S-4 filed
           with the Commission on August 9, 2002, Commission File No. 333-97907)

10.2*      Purchase Agreement dated June 19, 2002 among the Company, the
           Guarantors party thereto, and Jefferies & Company, Inc. (see Exhibit
           10.2 to Registration Statement on Form S-4 filed with the Commission
           on August 9, 2002, Commission File No. 333-97907)

10.3*      Amended and Restated Lease Agreement between Riviera Operating
           Corporation and Mardi Gras Food Court, Inc. dated March 15, 1998 (see
           Exhibit 10.3 to Registration Statement on Form S-4 filed with the
           Commission on August 9, 2002, Commission File No. 333-97907)

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

10.5*      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 on  Form S-1
           filed with the Commission on August 11, 1993, Commission File No.
           33-67206)

10.6*      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)

10.7*      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)

10.8*(A)   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)

10.9*(A)   Merrill Lynch Special Prototype Defined Contribution Plan Adoption
           Agreement dated June 29, 1993, as amended through November 15, 1996
           (see Exhibit 10.9 to Registration Statement on Form S-4 filed with
           the Commission on August 9, 2002, Commission File No. 333-97907)

10.10*(A)  Form of Termination Agreement with the Company dated June 11,
           2002 (see Exhibit 10.10 to Registration Statement on Form S-4
           filed with the Commission on August 9, 2002, Commission File
           No. 333-97907)

10.11*     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)

10.12*     Tax Sharing Agreement between the Company and Riviera Black Hawk,Inc.
           dated  March 31, 1999 (see Exhibit 10.12 to Registration Statement on
           Form S-4 filed with the Commission on August 9, 2002, Commission File
           No. 333-97907)

10.13*(A)  1993 Employee 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)


                                                38
<PAGE>
10.14*(A)  1996 Non-Qualified Stock Option Plan (see
           Exhibit 10.14 to Registration Statement on Form S-4 filed with
           the Commission on August 9, 2002, Commission File No.
           333-97907)

10.15*(A)  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)

10.16*(A)  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)

10.17*(A)  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)

10.18*(A)  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)

10.19*(A)  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)

10.20*(A)  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)

10.21*     Deed of Trust, Assignment of Rents, Leases, Fixture Filing and
           Security Agreement dated June 26, 2002, executed by the
           Company for the benefit of The Bank of New York (see Exhibit
           10.21 to Registration Statement on Form S-4 filed with the
           Commission on August 9, 2002, Commission File No. 333-97907)

10.22*     Deed of Trust to Public Trustee, Security Agreement, Fixture
           Filing and Assignment of Rents, Leases and Leasehold Interests
           dated as of June 26, 2002, by Riviera Black Hawk, Inc. for the
           benefit of The Bank of New York (see Exhibit 10.22 to
           Registration Statement on Form S-4 filed with the Commission
           on August 9, 2002, Commission File No. 333-97907)

10.23*     Security Agreement dated June 26, 2002 by and among the
           Company, Riviera Operating Corporation, Riviera Gaming
           Management, Inc., Riviera Gaming Management of Colorado, Inc.,
           Riviera Black Hawk, Inc, and The Bank of New York (see Exhibit
           10.23 to Registration Statement on Form S-4 filed with the
           Commission on August 9, 2002, Commission File No. 333-97907)

10.24*     Assignment of Rents, Leases and Leasehold Interests dated as of June
           26, 2002 by Riviera Black Hawk, Inc. for the benefit of The Bank of
           New York (see Exhibit 10.24 to Registration Statement on Form S-4
           filed with the Commission on August 9, 2002, Commission File No.
           333-97907)

10.25*     Stock Pledge and Security Agreement dated June 26, 2002,
           executed by the Company (see Exhibit 10.25 to Registration
           Statement on Form S-4 filed with the Commission on August 9,
           2002, Commission File No.
           333-97907)

10.26*     Stock Pledge and Security Agreement dated June 26, 2002,
           executed by Riviera Operating Corporation (see Exhibit 10.26
           to Registration Statement on Form S-4 filed with the
           Commission on August 9, 2002, Commission File No. 333-97907)

10.27*     Stock Pledge and Security Agreement dated June 26, 2002,
           executed by Riviera Gaming Management, Inc. (see Exhibit 10.27
           to Registration Statement on Form S-4 filed with the
           Commission on August 9, 2002, Commission File No. 333-97907)

                                                39
<PAGE>

10.28*     Environmental Indemnity dated as of June 26, 2002 by and among
           the Company and Riviera Black Hawk, Inc., as indemnitors, and
           The Bank of New York, as trustee.(see Exhibit 10.28 to
           Registration Statement on Form S-4 filed with the Commission
           on August 9, 2002, Commission File No. 333-97907)

10.29*     Environmental Indemnity dated as of June 26, 2002 by and between the
           Company, as indemnitor, and The Bank of New York, as trustee (see
           Exhibit 10.29 to Registration Statement on Form S-4 filed with the
           Commission on August 9, 2002, Commission File No. 333-97907)

10.30*     Loan and Security Agreement dated as of July 26, 2002 by and among
           the Company and the other Borrower parties thereto, the Guarantors
           parties thereto and Foothill Capital Corporation (see Exhibit 10.30
           to Registration Statement on Form S-4 filed with the Commission on
           August 9, 2002, Commission File No. 333-97907)

10.31*     Intercreditor Agreement dated as of July 26, 2002 by and between The
           Bank of New York, as trustee, and Foothill Capital Corporation (see
           Exhibit 10.31 to Registration Statement on Form S-4 filed with the
           Commission on August 9, 2002, Commission File No. 333-97907)

10.32*     Fee Letter, dated July 26, 2002, issued by the Company,
           Riviera Black Hawk, Inc. and Riviera Operating Corporation to
           Foothill Capital Corporation (see Exhibit 10.32 to
           Registration Statement on Form S-4 filed with the Commission
           on August 9, 2002, Commission File No. 333-97907)

10.33*     Intellectual Property Security Agreement dated as of July 26,
           2002 by and between the Company and the other Debtors parties
           thereto, and Foothill Capital Corporation (see Exhibit 10.33
           to Registration Statement on Form S-4 filed with the
           Commission on August 9, 2002, Commission File No. 333-97907)

10.34*     Deed of Trust, Assignment of Rents, Leases, Fixture Filing and
           Security Agreement dated July 26, 2002, executed by the
           Company for the benefit of Foothill Capital Corporation (see
           Exhibit 10.34 to Registration Statement on Form S-4 filed with
           the Commission on August 9, 2002, Commission File No.
           333-97907)

10.35*     Environmental Indemnity dated July 26, 2002 from the Company in favor
           of Foothill Capital Corporation (see Exhibit 10.35 to Registration
           Statement on Form S-4 filed with the Commission on August 9, 2002,
           Commission File No. 333-97907)

10.36*     Continuing Guaranty dated July 26, 2002 by and among the
           Company, the other Borrowers parties thereto and the
           Guarantors parties thereto in favor of Foothill Capital
           Corporation (see Exhibit 10.36 to Registration Statement on
           Form S-4 filed with the Commission on August 9, 2002,
           Commission File No. 333-97907)

10.37*     Subordination Agreement dated July 26, 2002 by and among the
           Company and the other Creditors parties thereto in favor of
           Foothill Capital Corporation (see Exhibit 10.37 to
           Registration Statement on Form S-4 filed with the Commission
           on August 9, 2002, Commission File No. 333-97907)

10.38*     Stock Pledge and Security Agreement dated July 26, 2002,
           executed by the Company (see Exhibit 10.38 to Registration
           Statement on Form S-4 filed with the Commission on August 9,
           2002, Commission File No.
           333-97907)

10.39*     Stock Pledge and Security Agreement dated July 26, 2002,
           executed by Riviera Operating Corporation (see Exhibit 10.39
           to Registration Statement on Form S-4 filed with the
           Commission on August 9, 2002, Commission File No. 333-97907)


                                                40
<PAGE>

10.40*     Stock Pledge and Security Agreement dated July 26, 2002,
           executed by Riviera Gaming Management, Inc. (see Exhibit 10.40
           to Registration Statement on Form S-4 filed with the
           Commission on August 9, 2002, Commission File No. 333-97907)

10.41*     Deed of Trust to Public Trustee, Security Agreement, Fixture
           Filing and Assignment of Rents, Leases and Leasehold Interests
           dated July 26, 2002, executed by Riviera Black Hawk, Inc. for
           the benefit of Foothill Capital Corporation (see Exhibit 10.41
           to Registration Statement on Form S-4 filed with the
           Commission on August 9, 2002, Commission File No. 333-97907)

10.42*     Environmental Indemnity dated July 26, 2002 from the Company
           and Riviera Black Hawk, Inc. in favor of Foothill Capital
           Corporation (see Exhibit 10.42 to Registration Statement on
           Form S-4 filed with the Commission on August 9, 2002,
           Commission File No. 333-97907)

10.43*(A)  Stock Compensation Plan (see Exhibit 10.43 to
           Registration Statement on Form S-4 filed with the Commission
           on August 9, 2002, Commission File No. 333-97907)

10.44*(A)  Second Amendment to Employment Agreement between the Company and
           Robert Vannucci effective July 1, 2002 (see Exhibit 10.44 to Form
           10-K filed with the Commission of March 17, 2003), Commission File
           No. 0-21430

10.45*(A)  Third Amendment to Employment Agreement between the Company and
           Robert Vannucci effective March 3, 2003 (see Exhibit 10.45 to Form
           10-K filed filed with the Commission March 17, 2003), Commission File
           No. 0-21430

10.46(A)   Second Amendment to Employment Agreement between the Company and
           William L. Westerman effective July 15, 2003.

21.1*      Subsidiaries of the Company. (see Exhibit 21.1 to Registration
           Statement on Form S-4 filed with the Commission on August 9, 2002,
           Commission File No. 333-97907)

31.1       Certification of the Principal Executive Officer of the Registrant
           pursuant to Exchange Act Rule 13a-14(a).

31.2       Certification of the Principal Financial Officer of the Registrant
           pursuant to Exchange Act Rule 13a-14(a).

32.1       Certification of the Principal Executive Officer of the Registrant
           pursuant to Exchange Act Rule 13a-14(b)and 18 U.S.C. 1350.

32.2       Certification of the Principal Financial Officer of the Registrant
           pursuant to Exchange Act Rule 13a-14 (b)and 18 U.S.C. 1350.


* These are incorporated herein by reference as exhibits hereto. Following the
description of each such exhibit is a reference to it as it appeared in a
specified document previously filed with the Commission, to which there have
been no amendments or changes.

(A) Management contract or compensatory plan or arrangement



                                                41







       Riviera Holdings Corporation

       Consolidated Financial Statements for the Years Ended December 31, 2003,
       2002 and 2001 and Independent Auditors' Report and Supplemental
       Consolidating Schedules as of and for the Year Ended December 31, 2003








<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, 2003 and 2002                  F-2

   Statements of Operations for the Years Ended December 31,
     2003, 2002 and 2001                                            F-3

   Statements of Stockholders' Deficiency for the Years Ended
     December 31, 2003, 2002 and 2001                               F-4

   Statements of Cash Flows for the Years Ended December 31,
     2003, 2002 and 2001                                         F-5 F-6

   Notes to Consolidated Financial Statements                    F-7 F-27

   Unaudited Quarterly Financial Data                              F-28

</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, 2003 and 2002
and the related consolidated statements of operations, stockholders' deficiency,
and cash flows for each of the three years in the period ended December 31,
2003. 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, 2003
and 2002 and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 2003 in conformity with
accounting principles generally accepted in the United States of America.


Deloitte & Touche LLP
Las Vegas, Nevada
March 12, 2004








                                        F-1
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2003 AND 2002
(In Thousands, Except Share Amounts)
-----------------------------------------------------------------------------


ASSETS                                                     2003         2002

CURRENT ASSETS:
<S>                                                        <C>          <C>
  Cash and cash equivalents                             $ 19,344     $ 20,220
  Accounts receivable net                                  2,990        4,010
  Inventories                                              2,026        1,824
  Prepaid expenses and other assets                        3,001        3,968
                                                          ------       ------
           Total current assets                           27,361       30,022

PROPERTY AND EQUIPMENT- Net                               180,293      188,233

OTHER ASSETS- Net                                          11,438       14,677

DEFERRED INCOME TAXES- Net                                  2,446        2,964
                                                         -------     --------
TOTAL                                                  $ 221,538    $ 235,896
                                                        ========   ==========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES:
  Current portion of long-term debt                     $ 3,750       $ 3,430
  Accounts payable                                        8,072         8,338
  Line of Credit                                          2,000
  Accrued interest                                        1,096         1,065
  Accrued expenses                                       14,870        15,576
                                                         ------        ------
           Total current liabilities                     29,788        28,409
                                                         ------        ------
OTHER LONG-TERM LIABILITIES                               5,912         6,465
                                                         ------        ------
LONG-TERM DEBT Net of current portion                   215,875       216,694
                                                        -------       -------
COMMITMENTS AND CONTINGENCIES (Note 11)

STOCKHOLDERS' DEFICIENCY:
  Common stock, $.001 par value 20,000,000 shares
    authorized; 5,166,208 and 5,135,773 shares
    issued at December 31, 2003 and 2002, respectively        5             5
  Additional paid-in capital                             13,733        13,638
  Treasury stock, 1,687,957 and 1,686,254 shares at
    December 31, 2003 and 2002, respectively            (11,320)     (11,313)
  Accumulated deficit                                   (32,455)     (18,002)
                                                      ----------     --------
           Total stockholders' deficiency               (30,037)     (15,672)
                                                      ----------     --------
TOTAL                                                 $ 221,538     $ 235,896
                                                       =========    =========

See notes to consolidated financial statements.
</TABLE>



                                                F-2

<PAGE>

<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(In Thousands, Except Per Share Amounts)
------------------------------------------------------------------------------


                                                 2003       2002       2001

REVENUES:
<S>                                              <C>        <C>        <C>
  Casino                                      $ 105,736  $ 106,122  $ 114,039
  Rooms                                          44,312     42,343     44,255
  Food and beverage                              32,584     32,367     31,256
  Entertainment                                  18,641     17,918     20,692
  Other                                           7,872      7,945      9,119
                                                -------    -------     ------
          Total revenues                        209,145    206,695    219,361
  Less promotional allowances                    18,986     18,403     17,330
                                                -------    -------     ------
          Net revenues                          190,159    188,292    202,031
                                               --------   --------    -------
COSTS AND EXPENSES:
  Direct costs and expenses of operating
   departments:
    Casino                                       56,273     58,061     62,845
    Rooms                                        24,704     23,127     23,339
    Food and beverage                            22,220     21,207     21,426
    Entertainment                                12,160     12,324     14,900
    Other                                         2,761      2,771      3,068
  Other operating expenses:
    General and administrative                   40,565     37,213     42,239
    Development and project costs                 2,365
    Depreciation and amortization                16,211     17,736     17,243
                                                -------    -------    -------
         Total costs and expenses               177,259    172,439    185,060
                                                -------    -------    -------
INCOME FROM OPERATIONS                           12,900     15,853     16,971

OTHER (EXPENSE) INCOME:
  Interest expense                              (27,380)   (26,842)  (26,864)
  Interest expense net bonds held for
    retirement                                              (2,692)
  Loss on extinguishment of debt                           (11,211)
  Interest income                                    27        200      1,274
  Other-net                                                    (30)      (28)
                                                 -------    -------   -------
          Total other expense                   (27,353)   (40,575)  (25,618)
                                                 -------    -------   -------
LOSS BEFORE BENEFIT FOR INCOME TAXES            (14,453)   (24,722)   (8,647)

BENEFIT FOR INCOME TAXES                                              (2,240)
                                                 -------    -------   -------
NET LOSS                                      $ (14,453) $ (24,722) $ (6,407)
                                                 =======   ========   =======
EARNINGS PER SHARE DATA Loss per share,
   basic and diluted                           $ (4.16)   $ (7.17)   $ (1.79)
                                                 =======    =======   =======
  Weighted-average common and common
   equivalent shares                              3,474      3,450      3,573
                                                 =======    =======   =======

See notes to consolidated financial statements.
</TABLE>
                                                F-3



<PAGE>

<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(Dollars In Thousands, Except Share Amounts)
---------------------------------------------------------------------------------------------------------------


                                                          Additional  Retained
                                        Common Stock       Paid-In    Earnings     Treasury Stock
                                      -------------------  Capital  (Accumulated ---------------------
                                      Shares      Amount               Deficit)  Shares      Amount    Total

<S>                                     <C>         <C>   <C>         <C>      <C>            <C>       <C>
BALANCE January 1, 2001               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

  Purchase of treasury stock deferred
    compensation trust                                                           (12,110)       (67)      (67)

  Issuance of restricted stock            28,997     -       153                                           153

  Net loss                                                           (24,722)                         (24,722)
                                       ---------   ---    ------      -------  ----------   --------   -------
BALANCE December 31, 2002              5,135,773     5    13,638     (18,002) (1,686,254)   (11,313)  (15,672)

  Stock issued under executive option
    plan                                  25,000     -        70                                            70

  Purchase of treasury stock deferred
   compensation trust                                                              (1,703)       (7)        (7)

  Issuance of restricted stock             5,435     -        25                                            25

  Net loss                                                           (14,453)                         (14,453)
                                       ----------  ---    ------      -------  ----------   --------   -------
BALANCE December 31, 2003              5,166,208    $5   $13,733    $(32,455) $(1,687,957) $(11,320) $(30,037)
                                       ==========  ===   =======     ========  ==========  =========  ========

See notes to consolidated financial statements.
</TABLE>
                                                F-4

<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(In Thousands)
-------------------------------------------------------------------------------


                                                   2003       2002        2001

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                 <C>         <C>        <C>
 Net loss                                       $(14,453)   $(24,722)  $ (6,407)
 Adjustments to reconcile net loss to net
    cash provided by operating activities:
  Depreciation and amortization                   16,211      17,736     17,243
  Write off of project and development costs      1,667
  Provision for bad debts                            434         518        225
  Provision for gaming discounts                       7                    (70)
  Interest expense                                27,380      26,842     26,864
  Interest paid                                  (24,629)    (31,075)   (23,490)
  Interest expense, net, bonds held for
     retirement                                                2,692
  Loss on extinguishment of debt                              11,211
  Changes in operating assets and liabilities:
   Decrease (increase) in accounts receivable net    579        (999)     1,865
   Decrease (increase) in inventories               (202)        429      1,089
   Decrease (increase) in prepaid expenses
     and other assets                                967        (885)     1,516
   Decrease (increase) in deferred tax asset         517       2,125     (2,200)
   Increase (decrease) in accounts payable          (266)        139     (1,748)
   Increase (decrease) in accrued expenses          (706)        836     (2,420)
   Increase in other long-term liabilities
     deferred compensation plan obligation            29         134        579
   Decrease in other long-term liabilities
     non-qualified pension plan obligation to
     CEO upon retirement                          (1,340)     (1,900)      (500)
                                                   ------      -----     ------
      Net cash provided by operating activities    6,195       3,081     12,546
                                                   ------      -----     -------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Capital expenditures for property and equipment
     Las Vegas                                    (6,531)     (3,869)    (7,622)
 Capital expenditures for property and equipment
     Black Hawk                                   (1,712)     (1,565)    (2,640)
 Decrease (increase) in other assets                 (12)       (310)        85
                                                  ------       ------    -------
     Net cash used in investing activities        (8,255)     (5,744)   (10,177)
                                                  -------      ------    -------

                                                                    (Continued)
</TABLE>
                                                F-5
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(In Thousands)
-------------------------------------------------------------------------------
                                                    2003        2002      2001

CASH FLOWS FROM FINANCING ACTIVITIES:
<S>                                               <C>         <C>          <C>
  Proceeds from long-term borrowings              $ 2,786   $ 211,781
  Increase in deferred loan fees                              (13,291)
  Draw on Foothill line of credit                   2,000
  Payments on long-term borrowings                 (3,690)   (222,299)  $(2,865)
  Purchase of treasury stock, general                  (7)                 (993)
  Purchase of treasury stock, deferred
    compensation trust                                            (67)     (786)
  Purchase of 13% mortgage notes Black Hawk                              (3,500)
  Issuance of restricted stock                         95         153       166
  Exercise of employee stock options                                         41
                                                    -----     --------   -------
           Net cash provided by (used in)
              financing activities                  1,184     (23,723)   (7,937)
                                                    -----     --------   -------
DECREASE IN CASH AND CASH EQUIVALENTS                (876)    (26,386)   (5,568)
                                                    -----     --------   -------
CASH AND CASH EQUIVALENTS Beginning of year        20,220      46,606    52,174
                                                  -------     --------   -------
CASH AND CASH EQUIVALENTS End of year            $ 19,344    $ 20,220   $46,606
                                                  =======    =========   =======

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Income taxes refunded, State of Colorado                               $ (110)
                                                                           =====
SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING
  ACTIVITIES:
  Property acquired with accounts payable
     Las Vegas, Nevada                             $ 191        $ 94     $ 132
                                                    ====        ====     ======
  Property acquired with debt Las Vegas, Nevada  $ 2,786
                                                   =====
  Property acquired with debt Black Hawk, Colorado                       $ 454
                                                                           ===
  Property acquired with accounts payable Black
     Hawk, Colorado                                $ 197                  $ 90
                                                    ====                  ====

See notes to consolidated financial statements.                   (Concluded)
</TABLE>

                                                F-6



<PAGE>

RIVIERA HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
-------------------------------------------------------------------------------


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. The Company operates the Riviera Hotel & Casino
      (the"Riviera Las Vegas") on the Strip in Las Vegas, Nevada.

      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.

      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.

      On March 15, 2002, Riviera Gaming Management of New Mexico, Inc. was
      incorporated in the State of New Mexico. On June 5, 2002, Riviera Gaming
      Management of Missouri, Inc. was incorporated in the State of Missouri.
      Each of these is a wholly owned subsidiary of RHC.

      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.

      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, 2003 and 2002,



                                                F-7
<PAGE>

      securities classified as held to maturity comprised debt securities issued
      by the U.S. Treasury and other U.S. government corporations and agencies
      or mutual funds invested in these securities and repurchase agreements,
      with an amortized cost of $4,599,471 and $4,086,785, 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 three years for certain 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 deferred bond offering costs and
      commissions, which are amortized over the life of the debt. Such amortized
      costs are included in interest expense.

      Stock-Based Compensation--As of December 31, 2003, the Company has three
      stock-based employee compensation plans, which are more fully discussed in
      Note 13. The effect of stock options in the income statement is reported
      in accordance with Accounting Principles Board ("APB") Opinion No. 25,
      Accounting for Stock Issued to Employees, and related interpretations. The
      Company has adopted the disclosure-only provisions of SFAS No. 123,
      Accounting for Stock-Based Compensation as amended by SFAS No. 148,
      Accounting for Stock-Based Compensation--Transition and Disclosure.
      Accordingly, no compensation cost has been recognized for stock options
      granted in the stock option plan, as all options granted had an exercise
      price equal to the market value of the underlying common stock on the date
      of grant.


                                                F-8
<PAGE>


      No compensation cost has been recognized for unexercised options remaining
      in the stock option plans. Had compensation cost for the Company's stock
      option plans been determined based on the fair value at the date of grant
      for awards consistent with the provisions of SFAS No. 123 (using an
      intrinsic value method), 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>
                                                 2003        2002       2001

<S>                                           <C>          <C>        <C>
Net loss-as reported                          $(14,453)    $(24,722)  $(6,407)
Deduct:  Total stock-based employee
  compensation expense determined under
  fair value-based methods for awards net
  of related tax effects                          (234)       (295)      (143)
Net loss-pro forma                             (14,687)    (25,017)    (6,550)
Basic loss per common share-as reported          (4.16)      (7.17)     (1.79)
Basic loss per common share-pro forma            (4.22)      (7.25)     (1.83)
Diluted loss per common and common
  share equivalent-as reported                   (4.16)      (7.17)     (1.79)
Diluted loss per common and common share
  equivalent-pro forma                           (4.22)      (7.25)     (1.83)
</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 2003, 2002 and 2001,
      respectively: dividend yield of 0% for all years; expected volatility of
      34%, 52% and 44%; risk-free interest rates of 2.27%, 4.49% and 5.00%; and
      expected lives of 10 years for all years. The weighted fair value of
      options granted in 2003, 2002 and 2001 was $5.27, $4.96 and $2.34,
      respectively.

      Because 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.

      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
      $223,925,000 and $198,926,000 in 2003 and 2002, respectively.

      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.
      Net win is also adjusted for the effects of slot club cash points and cash
      vouchers and other related customer cash incentives.


                                                F-9
<PAGE>

      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. Revenue is recognized when prices are fixed or determinable,
      pervasive evidence of an arrangement exists and collection is reasonably
      assured.

      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
                                             ------------------------------
(in thousands)                                 2003       2002      2001

<S>                                            <C>       <C>         <C>
Food and beverage                             $ 8,398   $ 9,037  $ 9,560
Rooms                                           1,231     1,174    1,195
Entertainment                                   1,641     1,670    1,950
                                              -------- --------- ---------
Total costs allocated to casino departments   $11,270   $11,881  $12,705
                                              ======== ========= =========
</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: (1) temporary differences between the carrying amounts of
      assets and liabilities for financial reporting purposes and the amounts
      used for income tax purposes and (2) 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 recoverability
      of and 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--In June 2001, the Financial
      Accounting Standards Board ("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 operations 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 adoption of SFAS No. 143 did not have a material impact on the
      Company's financial position or results of operations.


                                                F-10
<PAGE>


      In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
      Associated with Exit of Disposal Activities. SFAS No. 146 addresses
      financial accounting and reporting for costs associated with exit or
      disposal activities and nullifies Emerging Issues Task Force Issue No.
      94-3, Liability Recognition for Certain Employee Termination Benefits and
      Other Costs to Exit an Activity (including Certain Costs Incurred in a
      Restructuring). SFAS No. 146 requires that a liability for a cost
      associated with an exit or disposal activity be recognized when the
      liability is incurred. A fundamental conclusion reached by the FASB in
      SFAS No. 146 is that an entity's commitment to a plan, by itself, does not
      create a present obligation to others that meets the definition of a
      liability. SFAS No. 146 also establishes that fair value is the objective
      for initial measurement of the liability. The provisions of this statement
      are effective for exit or disposal activities that are initiated after
      December 31, 2002, with early application encouraged. The adoption of SFAS
      No. 146 did not have a material impact on the Company's financial position
      or results of operations.

      In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"),
      Guarantor's Accounting and Disclosure Requirements for Guarantees,
      Including Indirect Guarantees of Indebtedness of Others. FIN 45 addresses
      financial accounting for, and disclosure of, guarantees. FIN 45 requires
      certain guarantees to be recorded at fair value, as opposed to the exiting
      standard of recording a liability only when a loss is probable and
      reasonably estimable according to SFAS No. 5, Accounting for
      Contingencies. The adoption of FIN 45 did not have a material impact on
      the Company's financial position or results of operations.

      In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
      Compensation--Transition and Disclosure--an amendment of FASB Statement
      No. 123. SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based
      Compensation. Although it does not require use of fair value method of
      accounting for stock-based employee compensation, it does provide
      alternative methods of transition. It also amends the disclosure
      provisions of SFAS No. 123 and APB Opinion No. 28, Interim Financial
      Reporting, to require disclosure in the summary of significant accounting
      policies of the effects of an entity's accounting policy with respect to
      stock-based employee compensation on reported net income and earnings per
      share in annual and interim financial statements. SFAS No. 148's amendment
      of the transition and annual disclosure requirements are effective for
      fiscal years ending after December 15, 2002. The amendment of disclosure
      requirements of APB Opinion No. 28 are effective for interim periods
      beginning after December 15, 2002. The adoption of SFAS No. 148 did not
      have a material impact on the Company's consolidated financial position or
      results of operations.

     In  December  2003,  the FASB  issued  Interpretaion  No.  46  ("FIN  46"),
     Consolidation of Variable Interest Entities (revised December 2003),"
     clarifying FIN 46 and exempting certain entities from the provisions of FIN
     46R. Generally, application  of Fin 46R is required in financial statements
     of public entities that have  interests  in  structures  commonly  referred
     to as  special-purpose entities for the periods  ending after December 15,
     2003, and for other types of varible  interest  entities for periods ending
     after March 15,  2004.  FIN 46R addresses  the  consolidation  be  business
     enterprises  of  variable  interest entities that either: (1) do not have
     sufficient equity investment at risk to  permit the entity to finance its
     activities without additional subordinated financial support, or (2) the
     company will hold a significant variable interest in, or have significant
     involment with, an existing variable interest entity. The adoption of FIN
     46R for provisions effective during 2003 did not have a  material impact on
     our financial position or results of operations.


                                                F-11
<PAGE>


      In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
      Financial Instruments with Characteristics of both Liabilities and Equity.
      SFAS No. 150 establishes standards for how an issuer classifies and
      measures certain financial instruments with characteristics of both
      liabilities and equity. It requires that an issuer classify a financial
      instrument that is within its scope as a liability (or an asset in some
      circumstances). SFAS No. 150 is effective for financial instruments
      entered into or modified after May 31, 2003, and otherwise is effective at
      the beginning of the first interim period beginning after June 15, 2003.
      The Company adopted SFAS No. 150 for the third quarter beginning on July
      1, 2003 and it had no effect on its financial position or results of
      operations.

2.      ACCOUNTS RECEIVABLE

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

<TABLE>
<CAPTION>
                                             2003         2002

<S>                                           <C>          <C>
Casino                                      $1,160       $1,129
Hotel                                        2,877        3,871
                                             -----        ------
Total                                        4,037        5,000
Allowance for bad debts and discounts       (1,047)        (990)
                                             -----        ------
Ending balance                              $2,990       $4,010
                                            ======       ======
</TABLE>


      Changes in the casino and hotel allowance for bad debts and discounts
      consist of the following for the years ended December 31 (in thousands):

<TABLE>
<CAPTION>
                                                 2003      2002      2001

<S>                                              <C>       <C>       <C>
Beginning balance                               $ 990     $1,485    $1,330
Write-offs                                       (405)    (1,037)     (122)
Recoveries                                         21         24        45
Provision for bad debts and gaming discounts      441        518       232
                                                -----       ----    ------
Ending balance                                 $1,047      $ 990    $1,485
                                                =====       ====    ======
</TABLE>


3.      PREPAID EXPENSES AND OTHER ASSETS

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

<TABLE>
<CAPTION>
                                               2003          2002

<S>                                           <C>           <C>
Prepaid gaming taxes                          $ 915         $ 841
Prepaid insurance                               456           934
Other prepaid expenses                        1,630         2,193
                                              -----         -----
Total                                        $3,001       $ 3,968
                                              =====        ======
</TABLE>


                                                F-12

<PAGE>


4. PROPERTY AND EQUIPMENT

      Property and equipment consist of the following at December 31 (in
thousands):

<TABLE>
<CAPTION>
                                              2003         2002

<S>                                           <C>          <C>
Land and improvements                      $ 38,130     $ 38,130
Buildings and improvements                  143,417      143,417
Equipment, furniture, and fixtures          127,043      118,800
                                           --------      -------
Total property and equipment                308,590      300,347
Accumulated depreciation                   (128,297)    (112,114)
                                           ---------    --------
Net property and equipment                 $180,293     $188,233
                                           =========    ========
</TABLE>


      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.

5.      OTHER ASSETS

      Other assets consist of the following at December 31 (in thousands):

<TABLE>
<CAPTION>
                                             2003         2002

<S>                                          <C>          <C>
Deposits                                     $ 54         $ 54
Bond offering costs and commissions,
  net of accumulated amortization
  of $2,367 and $774, respectively          9,341       10,917
Other                                       2,043        3,706
                                            -----       ------
Total                                     $11,438      $14,677
                                           ======       ======
</TABLE>


        Other includes capitalized costs associated with a venture in Missouri
        of $600,000, base stock of $1.2 million and capitalized costs
        associated with the Monorail project in Las Vegas of $250,000 as of
        December 31, 2003. During the current year the company wrote-off $1.7
        million of previously capitalized costs associated with the Missouri
        venture and a venture in New Mexico.



                                                F-13

<PAGE>

6.      ACCOUNTS PAYABLE AND ACCRUED EXPENSES

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

<TABLE>
<CAPTION>
                                              2003       2002

<S>                                           <C>        <C>
Outstanding chip and token liability          $ 831      $ 537
Slot club liabilities                         1,074        968
Progressive liabilities                         416        329
Casino account deposits and miscellaneous
   gaming                                       162        281
                                              -----      -----
Total liabilities related to gaming
   activities                                 2,483      2,115

Accounts payable to vendors                   3,966      4,291
Insurance contracts                             235        595
Hotel deposits                                  859        953
Other                                           529        384
                                              -----      -----
Total                                        $8,072     $8,338
                                              =====      =====
</TABLE>


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

<TABLE>
<CAPTION>
                                              2003        2002

Payroll, related payroll taxes
<S>                                              <C>         <C>
   and employee benefits                     $ 9,741     $ 8,513
Incentive, retention and ESOP                    544       1,396
Nonqualified pension obligation                1,000       1,000
Other                                          3,585       3,667
                                               -----       -----
Total                                        $14,870     $15,576
                                              ======      ======
</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 12 for a description of these plans. Other long-term
      liabilities consisted of the following at December 31 (in thousands):

<TABLE>
<CAPTION>
   (in thousands)                              2003        2002

<S>                                             <C>         <C>
Nonqualified pension obligation-CEO, unfunded $6,171      $6,752
Less current portion                          (1,000)     (1,000)
Deferred compensation funded                     741         713
                                                ----        ----
Total                                         $5,912      $6,465
                                               =====       =====
</TABLE>


                                                F-14

<PAGE>


8. LONG-TERM DEBT

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

<TABLE>
<CAPTION>
                                                     2003       2002

11% Senior Secured Notes maturing on
  June 15, 2010, bearing interest, payable
  semiannually on June 15 and December 15;
  redeemable beginning June 15, 2005 at 111%;
  2006 at 105.5%;  2007 at 103.7%, 2008 at
  101.8%, 2009 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
<S>                                                  <C>        <C>
  Riviera Black Hawk                                 $212,387   $211,983

5.6% to 9% Notes collateralized by equipment
  and vehicles, payable monthly, including
  interest, maturing through February 2007              3,157      1,550

Capitalized lease obligations (Note 9)                  3,320      5,728

5.5% Special Improvement District Bonds
  - issued by the City of Black Hawk,
  Colorado, interest and principal payable
  monthly over 10 years beginning in 2000                 761        863
                                                      -------    -------
Total long-term debt                                  219,625    220,124
Current maturities by terms of debt                   (3,750)    (3,430)
                                                      -------    -------
Total                                                $215,875   $216,694
                                                      =======    =======
</TABLE>


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

<TABLE>
<CAPTION>
<S>                                                             <C>
2004                                                            $ 3,750
2005                                                              1,514
2006                                                                769
2007                                                                814
2008                                                                246
Thereafter                                                      212,532
                                                                -------
Total                                                         $ 219,625
                                                                =======
</TABLE>


      On June 26, 2002, the Company secured new debt in the principal amount of
      $215 million in the form of 11% senior secured notes with a maturity date
      of June 15, 2010,substantially all of which were later exchanged for notes
      of the Company that were registered under the Securities Act of 1933,
      as amended (collectively the "Notes"). Interest on the Notes is at the
      annual rate of 11% paid semiannually on each June 15 and December 15,
      beginning December 15, 2002. The net proceeds of the Notes, along with
      cash on hand, were used to defease Riviera Las Vegas' 10% First Mortgage
      Notes due 2004 and to defease Riviera Black Hawk's 13% First Mortgage
      Notes due 2005 with contingent interest. A loss on extinguishment of debt
      of $11.2 million and interest expense due to defeasance of $2.7 million
      was recorded in 2002. Cash flow from operations is not expected to be
      sufficient to pay 100% of the principal of the Notes at maturity on June
      15, 2010. Accordingly, the ability of the Company and its subsidiaries to
      repay the Notes at maturity will be dependent upon its ability to
      refinance the Notes. There can be no assurance that the Company and its
      subsidiaries will be able to refinance the principal amount of the Notes
      at maturity. On or after June 15, 2006, the Company may redeem the Notes
      from time to time at a premium beginning at 105.5% and declining each
      subsequent year to par in 2009.


                                                F-15
<PAGE>

      The Indenture governing the Notes (the "Note Indenture") provides that, in
      certain circumstances, the Company and its subsidiaries 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 subsidiaries would be unable to pay
      the principal amount of the Notes without a refinancing.

      The Note Indenture contains certain covenants, which limit the ability of
      the Company and its restricted subsidiaries, subject to certain
      exceptions, to: (1) incur additional indebtedness; (2) pay dividends or
      other distributions, repurchase capital stock or other equity interests or
      subordinated indebtedness; (3) enter into certain transactions with
      affiliates; (4) create certain liens; sell certain assets; and (5) 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, which could have an adverse effect on operations. At December
      31, 2003, the Company believes that it is in compliance with the
      covenants.

      On July 26, 2002, the Company entered into a $30 million, five-year
      secured credit facility. The credit facility is secured by substantially
      the same collateral that secures the Notes. The lien on the collateral
      securing the credit facility is senior to the lien on the collateral
      securing the Notes. The credit facility contains customary conditions to
      borrowing and certain representations and warranties customary in gaming
      related finance. The credit facility also contains financial covenants and
      restrictions regarding, among other things, indebtedness, distributions
      and changes in control. Under the credit facility, the Company can obtain
      extensions of credit in the forms of cash and letters of credit. The
      Company is required to pay interest on all outstanding cash advances at
      the rate of interest announced by Wells Fargo at its principal office in
      San Francisco at its prime rate plus 0.75% or at the rate at which major
      international banks in London charge each other for borrowings in U.S.
      dollars plus 3.00%. However, the minimum interest rate the Company will be
      charged on outstanding cash advances is 4.50%. The Company is required to
      pay a fee on all outstanding letters of credit equal to their face value
      times an annual percentage rate of 2.50%. Additionally, in the event of a
      default, the credit facility lender may increase the interest rate and
      letter of credit fee by an additional 2.00% per year during the period of
      default. As of December 31, 2003 the Company had an outstanding balance on
      this credit facility of $2 million.

      The Company has a credit facility totaling $200,000 for letters of credit
      issued periodically to foreign vendors for purchases of merchandise. The
      letters require payment upon presentation of a valid voucher.

      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% of the debt, payable over 10 years beginning in 2000.



                                                F-16
<PAGE>

9.      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, 2003 (in thousands):

<TABLE>
<CAPTION>
<S>                                                               <C>
2004                                                            $2,964
2005                                                               674
                                                                 -----

Total minimum lease payments                                     3,638
Taxes, maintenance, and insurance                                 (93)
Interest portion of payments                                     (225)
                                                                 -----
Present value of net minimum lease payments                     $3,320
                                                                 =====
</TABLE>


      Fixed assets under capital lease as of December 31, 2003 and 2002 were
      $11.1 million with accumulated depreciation of $8.9 million and $6.9
      million, respectively.

      Rental expense under operating leases for the years ended December 31,
      2003, 2002 and 2001 was approximately $1,596,487, $1,177,382 and $903,555,
      respectively. Such leases were year to year in nature. As such, there are
      no future minimum amounts associated with increasing leases.

      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 2007. Rental income,
      which is included in other income, for the years ended December 31, 2003,
      2002 and 2001 was approximately $1,835,000, $1,810,700 and $1,806,900,
      respectively.

      At December 31, 2003, the Company had future minimum annual rental income
      due under noncancelable operating leases as follows (in thousands):

<TABLE>
<CAPTION>
<S>                                                              <C>
2004                                                           $ 1,588
2005                                                               967
2006                                                               672
2007                                                               352
2008                                                               201
                                                                  ----
Total                                                          $ 3,780
                                                                 =====
</TABLE>

10.     FEDERAL INCOME TAXES

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

                                                F-17
<PAGE>

      The effective income tax rates on income attributable to continuing
      operations differ from the statutory federal income tax rates for the
      years ended December 31 as follows (dollars in thousands):
<TABLE>
<CAPTION>
                                    2003               2002              2001
                             ---------------- ----------------- ----------------
                              Amount    Rate    Amount   Rate     Amount   Rate

Benefit for income taxes
<S>                           <C>        <C>    <C>        <C>    <C>      <C>
  at federal statutory rate $(5,054)  (35.0)% $(8,652)  (35.0)% $(3,026) (35.0)%
Taxes, state, other                                                 392    4.5
Other                          (433)   (3.0)     (439)   (1.8)      394    4.6
Valuation allowance           5,487    38.0      9,091   36.8
                              -----    -----     -----   -----     -----   -----
Benefit for income taxes       $ -      0.0 %     $ -     0.0 % $(2,240) (25.9)%
                              =====    =====     =====   =====   =======  ======
</TABLE>


      Comparative analysis of the (benefit) provision for income taxes is as
follows:

      As of December 31, 2003 we had approximately $52.5 million of net
operating loss carry forwards.  Our net operating loss carry forwards begin
expiring in 2013 and will fully expire by 2024.

<TABLE>
<CAPTION>
                                      2003         2002          2001

<S>                                    <C>         <C>             <C>
Current                              $(517)      $(2,124)        $ 157
Deferred                               517         2,124        (2,397)
                                       ---         -----        -------
Total                                  $-           $ -        $(2,240)
                                       ===         =====        =======
</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>

                                                     2003        2002

Deferred tax liabilities:
<S>                                                   <C>         <C>
  Reserve differential for hospitality and
    gaming activities                                $ 760       $ 918
  Difference between book and tax-depreciable
    property                                         4,671       5,060
  Other                                                511         511
                                                     -----       -----
Total                                                5,942       6,489
                                                     =====       =====
</TABLE>
<TABLE>
<CAPTION>


Deferred tax assets:
<S>                                                <C>          <C>
  Net operating loss carryforward                   18,389       12,878
  Reserves not currently deductible                  1,853        2,619
  Bad debt reserves                                    324          364
  AMT and other credits                              2,405        2,684

Total                                               22,971       18,545
                                                    ------       ------
Valuation allowance                                (14,583)      (9,091)
                                                    ------       ------
Net deferred tax asset                             $ 2,446      $ 2,964
                                                    ======       ======
</TABLE>


                                                F-18
<PAGE>

      The Company has $2.4 million of alternative minimum tax ("AMT") credit and
      general business credit available to offset future income tax liabilities.
      The AMT credit of $1.8 million has no expiration date. The general
      business credit will not begin to expire until 2012.

      The Company performed an analysis of the realizability of its deferred tax
      assets at December 31, 2003. The realizability of the assets related to
      Rivera Las Vegas is dependent upon future earnings. In the absence of
      operating income, the Company can sell assets to realize the deferred tax
      assets.

11.     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.

      Employees and Labor Relations--As of December 31, 2003, the Company had
      approximately 1,639 full-time equivalent employees and had collective
      bargaining contracts with eight unions covering approximately 735 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 2002
      and expire in the year 2007. 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 2008. 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.

12.     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 July 15, 2003, Mr. Westerman shall be employed
      by the Company for an indefinite period, subject to termination by either
      Mr. Westerman upon at least 180 days written notice or the Company upon at
      least 90 days written notice. Mr. Westerman's base annual compensation is
      $1,000,000 and Mr. Westerman is not entitled to participate in the
      Company's Senior Management Compensation Bonus Plan or such other
      executive bonus plan as shall be established by the Company's Board of
      Directors.

      The employment agreement provides that the Company fund a retirement
      account for Mr. Westerman. Pursuant to the employment agreement, the
      Company makes no further principal contributions to the retirement account
      subsequent to January 1, 2001. The account continues to accrue interest
      pursuant to the employment agreement. The retirement account had an
      accrued balance of $6,171,020 as of December 31, 2003. Interest accrues on
      the balance at 11.8%.



                                                F-19
<PAGE>

      Pursuant to the employment agreement, the retirement account is credited
      quarterly with interest on the first day of each succeeding calendar
      quarter in an amount equal to the product of (1) the Company's average
      borrowing cost for the immediately preceding fiscal year, as determined by
      the Company's chief financial officer, and (2) the average outstanding
      balance in the retirement account during the preceding calendar quarter.
      At the recommendation of the Compensation Committee of the Company's Board
      of Directors, in order to reduce the amount that would be payable
      immediately upon Mr. Westerman's separation from the Company, it was
      requested that commencing April 1, 2003, and continuing the first day of
      each quarter thereafter, that he be paid the following in cash: (1) a
      distribution of $250,000 from the principal balance of his retirement
      account; and (2) the quarterly interest credited to his retirement account
      one quarter in arrears. Total interest paid to Mr. Westerman in 2003 was
      $589,938, while interest accrued was $840,150 for 2002 and $779,000 for
      2001.

      The agreement provides that for a period of 24 months following the
      termination of the agreement for any reason except cause, Mr. Westerman
      shall not engage in any activity which is in competition with the Company
      within a 75 mile radius from the location of any hotel and/or casino then
      operated by the Company. As consideration for not competing, the Company
      shall pay to Mr. Westerman a total of $500,000 payable in two equal annual
      installments of $250,000. The first installment is payable within five
      business days of termination of the agreement with the second installment
      payable on the first anniversary of termination.

      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
      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, 2003, 2002 and 2001, the Company recorded accrued
      bonuses of $302,216, $1,160,440 and $1,873,939, 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 $1,646,000, $1,599,000 and $1,672,000 for the years ended
      December 31, 2003, 2002 and 2001, 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.



                                                F-20
<PAGE>

      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 Profit
      Sharing and 401(k) Plans in an amount not to exceed 25% of the first eight
      percent of each participant's compensation, which is contributed as a
      salary deferral. The Company made contributions of $220,900, $226,100 and
      $243,200 for the years ended December 31, 2003, 2002 and 2001. The Company
      also paid administrative costs of the Profit Sharing and 401(k)Plans of
      $9,223, $16,888 and $21,851 for the years ended December 31, 2003, 2002
      and 2001, respectively. On July 1, 2003 the Company changed the
      administrator for the Profit Sharing and 401(k) Plans, which accounts for
      the reduction in administrative costs in 2003.

      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 plan 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.

      Effective January 1, 2000, the Company suspended profit sharing
      contributions to the Profit Sharing and 401(k) Plans 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 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 1,000 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, Company contributions
      are made in cash, which will be used to buy Company common stock. The
      Company made contributions of $348,400, $294,000 and $695,500 for the
      years ended December 31, 2003, 2002 and 2001, respectively.


                                                F-21
<PAGE>

      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. Executives deferred $29,100, $143,700 and
      $836,500 for the years ended December 31, 2003, 2002 and 2001,
      respectively.

      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. The Company issued restricted
      stock of 5,435 shares, 28,997 shares and 34,032 shares for the years ended
      December 31, 2003, 2002 and 2001, respectively.

      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 paid under all such agreements was $610,000 paid
      in January 2000, $1,068,000 paid in January 2001, and $462,500 paid on
      June 30, 2001.

      Termination Fee Agreements--Approximately 70 executive officers and
      significant employees (excluding Mr. Westerman) of ROC have termination
      fee agreements effective through December 2003, 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, 2003.

13.     STOCK OPTION PLANS

      At December 31, 2003, the Company has two stock-option plans, which are
      described below. The Company accounts for the fair value of its grants
      under those plans in accordance with APB Opinion No. 25. 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% of the common stock). Under the 1993
      plan, options vest 25% on the date of grant and 25% each subsequent year.
      Under the 1996 plans, options vest over 5 years.



                                                F-22
<PAGE>

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

      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 to, grant new options in an amount no
      less than the shares surrendered, to be issued no sooner than six 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 16 Company executives surrendered the entire balance of 403,000 of the
      $13.625 options effective January 31, 2001.


                                                F-23
<PAGE>


      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, January 1, 2002                      459,500        $ 6.04
  Grants                                          131,500        $ 7.35
  Canceled                                        (36,000)       $ 6.45
                                                  -------
Outstanding, December 31, 2002                    555,000        $ 6.32
  Grants                                          128,500        $ 5.25
  Canceled                                        (74,500)       $ 5.27
                                                  -------
Outstanding, December 31, 2003                    609,000       $ 6.64
                                                  =======
Non-Qualified Stock Option Plan

Outstanding, January 1, 2002                       16,000        $ 7.07
  Automatic grant to directors                      8,000        $ 7.21
  Canceled
                                                   ------
Outstanding, December 31, 2002                     24,000        $ 7.12
  Automatic grant to directors                      6,000        $ 5.60
  Canceled                                         (6,000)       $ 7.67
                                                   ------
Outstanding, December 31, 2003                     24,000        $ 6.22
                                                   ======
</TABLE>
<TABLE>
<CAPTION>

                             Options Outstanding         Options Exercisable
                     ----------------------------------- ---------------------

                        Number      Weighted-               Number
                      Outstanding  Average     Weighted-  Exercisable  Weighted-
                          at        Remaining   Average       at        Average
       Range of      December 31,  Contractual Exercise  December 31,   Exercise
   Exercise Prices       2003        Life        Price       2003        Price

<S>        <C>          <C>           <C>        <C>          <C>        <C>
    $4.00 to $6.00     362,000      5.6 years    $5.38        110,125   $ 4.56
    $6.55 to $9.00     271,000      6.6 years    $7.36          -          -
</TABLE>


14.     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, 2003, 2002 and 2001 were 559,000, 448,000 and 495,500, respectively.



                                                F-24
<PAGE>


      A reconciliation of net loss and shares for basic and diluted EPS is as
      follows (amounts in thousands, except per share amounts):


<TABLE>
<CAPTION>
                                                    Year Ended 2003
                                        ----------------------------------------
                                         Income          Shares        Per Share
                                       (Numerator)     (Denominator)     Amount

Basic EPS-loss available to common
<S>                                         <C>           <C>            <C>
  stockholders                              $(14,453)     3,474          $(4.16)
Effect of dilutive securities-options
                                             --------     -----          -------
Diluted EPS-loss available to common
  stockholders plus assumed conversions     $(14,453)     3,474          $(4.16)
                                             --------     -----          -------
                                                    Year Ended 2002
                                        ---------------------------------------
                                         Income          Shares        Per Share
                                       (Numerator)     (Denominator)     Amount

Basic EPS-loss available to common
  stockholders                              $(24,722)     3,450          $(7.17)
Effect of dilutive securities-options
                                             --------     -----          -------
Diluted EPS-loss available to common
  stockholders plus assumed conversions     $(24,722)     3,450          $(7.17)
                                             --------     -----          -------
                                                    Year Ended 2001
                                        ---------------------------------------
                                         Income         Shares        Per Share
                                       (Numerator)   (Denominator)     Amount

Basic EPS-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)
                                              -------     -----          -------
</TABLE>

      During 2003, 2002 and 2001, the Company purchased 1,703, 12,100 and
      276,528 shares of treasury stock on the open market for approximately
      $7,272, $67,286 and $1,779,000, respectively. Approximately 131,904 shares
      of treasury stock are held in the deferred compensation trust at December
      31, 2003.

15.     SEGMENT INFORMATION

      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.




                                                F-25
<PAGE>
<TABLE>
<CAPTION>
                                              Year ended December 31
                                    -------------------------------------------
(In thousands)                           2003            2002            2001

Net revenues:
<S>                                    <C>             <C>             <C>
   Riviera Las Vegas                   $140,963        $139,159        $152,985
   Riviera Black Hawk                    49,196          49,133          49,046
                                        -------         -------        --------
Total gaming revenues                  $190,159        $188,292        $202,031
                                        =======         =======         =======
EBITDA (1):
   Riviera Las Vegas                   $ 22,678        $ 23,951        $ 25,655
   Riviera Black Hawk                    13,283          13,400          12,722
                                        -------         -------        --------
Total property EBITDA                    35,961          37,351          38,377
                                        -------         -------        --------
Other costs and expenses:
  Corporate expense                       4,485           3,762           4,163
  Depreciation                           16,211          17,736          17,243
  Development and project costs           2,365
  Interest expense                       27,380          26,842          26,864
  Interest expense, net-bonds held
    for retirement                                        2,692
  Loss on extinguishment of debt                         11,211
  Interest income                           (27)           (200)         (1,274)
  Other-net                                                  30              28
                                        -------         -------        --------
Total other costs and expenses           50,414          62,073          47,024
                                        -------         -------        --------
Income before benefit for income
    taxes                               (14,453)        (24,722)         (8,647)
Benefit for income taxes                                                  2,240
                                        -------         -------        --------
Net loss                               $(14,453)       $(24,722)       $ (6,407)
                                        ========        ========       ========
</TABLE>
<TABLE>
<CAPTION>

                                              December 31
                                         --------------------
                                         2003            2002

Fixed assets (2):
<S>                                    <C>             <C>
   Riviera Las Vegas                   $118,593        $123,740
   Riviera Black Hawk                    61,700          64,493
                                        -------         -------
Total fixed assets                     $180,293        $188,233
                                        =======        ========
</TABLE>

(1) EBITDA consists of earnings  before  interest,  income taxes,  depreciation,
amortization and other. EBITDA is presented solely as a supplemental  disclosure
because  management  believes  that it is a widely  used  measure  of  operating
performance in the gaming industry and a principal basis for valuation of gaming
companies by certain investors.  The Company uses property-level  EBITDA (EBITDA
before corporate expense) as the primary measure of operating performance of its
properties,  including the evaluation of operating personnel.  EBITDA should not
be construed as an alternative to operating income, as an indicator of operating
performance,  or as an alternative to cash flow from operating activities,  as a
measure of  liquidity,  or as any other measure  determined  in accordance  with
accounting  principles  generally accepted in the United States of America.  The
Company has  significant  uses of cash flows,  including  capital  expenditures,
interest  payments,  income taxes and debt  principal  repayments  which are not
reflected in adjusted  EBITDA.  Also,  other gaming companies that report EBITDA
information may calculate  EBITDA in a different  manner.
(2) Assets  represent  property and  equipment  and  intangible  assets,  net of
accumulated depreciation and amortization.

                                                F-26
<PAGE>


      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% 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.

16.     RELATED PARTY TRANSACTIONS

      Robert R. Barengo, an employee of ROC and a member of the Board of
      Directors of the Company, is a former director of American Wagering, Inc.
      ("AWI") and owns 7% of the outstanding stock of AWI, which leases
      approximately 1,200 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 AWI from the
      location. AWI paid aggregate rent to ROC of approximately $86,300, $99,400
      and $141,500 in each of the years ended December 31, 2003, 2002 and 2001,
      respectively. In February 2004, AWI assumed operations of the Riviera Race
      Book pursuant to a lease with similar terms and conditions to those of the
      Sport Book lease. The Company believes that the terms of the leases with
      AWI are at least as favorable to the Company and ROC as could have been
      obtained from unaffiliated third parties and are at least as favorable as
      terms obtained by other casino hotels in Las Vegas.

      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 2002. The Company
      continues to utilize the services of Gordon & Silver and believes that the
      fee arrangement is at least as favorable to the Company as such
      arrangements would have been with a comparable law firm where a
      relationship of this nature did not exist.

                                                                ******


                                                F-27
<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, 2003:
<S>                                <C>       <C>        <C>         <C>
  Net revenues                     $47,491   $48,328    $48,973     $45,367
  Operating income                   4,709     4,432      3,641         118
  Loss before tax benefit         (2,159)    (2,436)   (3,153)      (6,705)
  Net loss                        (2,159)    (2,436)   (3,153)      (6,705)(a)
  Loss per share-basic            $ (0.62)  $ (0.70)   $ (0.91)    $ (1.93)
  Loss per share-diluted          $ (0.62)  $ (0.70)   $ (0.91)    $ (1.93)

Year ended December 31, 2002:
  Net revenues                     $46,498   $49,854    $48,612     $43,328
  Operating income                   3,687     5,711      3,510       2,945
  Loss before tax benefit          (2,834)    (1,088)  (16,895)      (3,905)
  Net loss                         (2,834)    (1,088)  (16,895)(b)   (3,905)
  Loss per share-basic            $ (0.82)  $ (0.32)   $ (4.89)    $ (1.13)
  Loss per share- diluted         $ (0.82)  $ (0.32)   $ (4.89)    $ (1.13)
</TABLE>




(a) The net loss for the fourth quarter of 2003 was impacted by $2.4 million for
development and project costs.

(b)The net loss for the third quarter of 2002 was affected by the loss on
extinguishment of debt and defeasance interest totaling approximately $13.9
million.














                                                        F-28