====================================================================
                       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, 2000.

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

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

                        Commission file number 000-21430

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

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

2901 Las Vegas Boulevard South

Las Vegas, Nevada                                                89109
(Address of principal executive offices)                       (Zip Code)

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


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

Securities registered pursuant to Section 12(g) of the Act:

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

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

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

           Based on the average bid price for the  Registrant's  Common Stock as
of March 8,  2001,  the  aggregate  market  value of the  voting  stock  held by
non-affiliates of the Registrant was approximately  $24,026,238.  As of March 8,
2001  the  number  of  outstanding  shares  (net  of  treasury  shares)  of  the
Registrant's Common Stock was 3,668,128.

Documents incorporated by reference:



    ====================================================================
                               Page 1 of 39 Pages
                      Exhibit Index Appears on Page 34 hereof.
                                        1

<PAGE>


                   RIVIERA HOLDINGS CORPORATION AND SUBSIDIARIES
                    ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
                          YEAR ENDED DECEMBER 31, 2000

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

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

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

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

Item 4.   Submission of Matters to a Vote of Security Holders............................................22

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

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

Item 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations..........24
             Results of Operations.......................................................................24
             2000 Compared to 1999.......................................................................25
             1999 Compared to 1998.......................................................................27
             Liquidity and Capital Resources.............................................................28

Item 7A.  Qualitative and Quantitative Disclosure About Market Risk......................................30
             Forward Looking Statements..................................................................31

Item 8.   Financial Statements and Supplementary Data....................................................31

Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...........31

Item 10.  Directors and Executive Officers of the Registrant.............................................31

Item 11.  Executive Compensation.........................................................................31

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

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

Item 14.  Exhibits and Reports on Form 8K................................................................32
</TABLE>
                                        2
<PAGE>
          PART I

Item 1.    Business

General

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

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

Riviera Las Vegas

General

           Riviera Las Vegas is located on the corner of Las Vegas Boulevard and
Riviera Boulevard, 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 1,502 slot machines and 46 gaming tables,  including
blackjack,  craps,  roulette,  pai gow poker,  Caribbean  Stud(R) poker,  Let It
Ride(R) and poker.  The casino  also  includes a keno lounge and a 200-seat race
and sports book.

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

           Our  current  management  team  redirected  our  business  away  from
high-stakes  wagerers in favor of the less volatile  mid-level gaming customers.
In order to effectively pursue this strategy,  we made several strategic changes
including  reconfiguring the casino space, installing new slot machines and bill
acceptors,  reducing the number of gaming tables and  eliminating  baccarat.  In
addition,  we implemented stricter credit policies.  As a result, the percentage
of  table  game  dollar  volume   represented   by  credit  play  declined  from
approximately  24% in 1993 to 6.7% in 2000.  Also, in 2000,  revenues from slots
and tables were approximately 78% and 19% of total gaming revenue respectively,
as compared to 60% and 34%, respectively, in 1993.

           During  2000,  we  continued a number of  initiatives  at Riviera Las
Vegas to increase slot play,  including the  replacement  of older slot machines
and maintaining our slot host program. Slot hosts are our employees who interact
with patrons as goodwill  ambassadors  to generate  loyalty.  Our strategy is to
continue  to  increase   slot  play   through   marketing   programs  and  other
improvements,  including (i) our ongoing slot upgrade program,  (ii) addition of
new  signage,  (iii)  promotion  of the Riviera Las Vegas  Player's  Club,  (iv)
sponsorship  of slot  tournaments,  (v) creation of promotional  programs,  (vi)
marketing of the "Slot Frenzy" and "$40 for $20(R)" slot  promotions,  and (vii)
"Nickel Town(R)". At the end of 1997, we opened Nickel Town on the corner of Las
Vegas  Boulevard and Riviera  Boulevard at the crosswalk  from Circus Circus and
the local Las Vegas  Boulevard bus stop.  Nickel Town is comprised  primarily of
nickel slot machines, the fastest growing segment of the Las Vegas slot market.
                                        3
<PAGE>
Hotel

           Riviera  Las Vegas'  hotel is  comprised  of five hotel  towers  with
approximately 2,100 guest rooms,  including 169 suites. Built in 1955 as part of
the original casino/hotel,  the nine-story North Tower features 391 rooms and 11
suites.  In 1967,  the  12-story  South  Tower was  built  with 147 rooms and 31
suites. Another 220 rooms and 72 suites,  including penthouse suites, were added
to the property  through the  construction  of the 17-story Monte Carlo Tower in
1974.  In 1977,  the  six-story San Remo Tower added 243 rooms and six suites to
the south side of the  resort.  The most  recent  phase of hotel  expansion  was
completed in 1988 upon the opening of the 930 room,  49 suite,  24-story  Monaco
Tower. By the end of 2000 we completed refurbishment of all of our approximately
2,100 hotel rooms  except  for  8 suites  which  are in  the  process  of  being
remodeled  and  will be  completed by the end of 2001.  Despite  the significant
increase  in rooms on the Las Vegas Strip  since  1997,  we believe  Riviera Las
Vegas has attained  room  occupancy  rates that are among the highest on the Las
Vegas Strip with 97.5% for 1994, 97.0% for 1995, 98.2% for 1996, 95.7% for 1997,
95.2% for 1998, 97.5 % in 1999 and 96.6% in 2000 (based on available rooms). The
average  occupancy  rate  citywide was 89.1% in 2000  according to the Las Vegas
Convention and Visitors Authority.

Restaurants

           The  quality,  value and  variety of food  services  are  critical to
attracting  Las Vegas  visitors.  Riviera Las  Vegas  offers  five bars and four
restaurants  and  serves  an  average  of  approximately  5,900  meals  per day,
including  banquets and room service.  The following  table  outlines,  for each
restaurant, the type of service provided and total seating capacity:

<TABLE>
<CAPTION>
                                                                 Seating
     Name                                Type                   Capacity
<S>  <C>                                 <C>                        <C>
     Kady's                            Coffee Shop                  290
     Kristofer's                       Steak and Seafood            162
     Ristorante Italiano               Italian                      126
     World's Fare Buffet               All-you-can-eat              432
                                                                  1,010
</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.

Convention Center

           Riviera Las Vegas features 160,000 square feet of convention, meeting
and banquet space. The convention  center is one of the largest in Las Vegas and
is  an  important  feature  that  attracts   customers.   The  facility  can  be
reconfigured for multiple  meetings of small groups or large gatherings of up to
5,000 people.  Riviera Las Vegas hosts  approximately  300 conventions per year.
The hotel  currently has over 716,000  convention  related  advance  bookings of
rooms through 2004 consisting of  approximately  475,000  definite  bookings and
approximately 241,000 tentative bookings. In 2000 approximately 27% of the rooms
were occupied for  conventions  and  management  estimates that 32% of its rooms
will be occupied for conventions in 2001.

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

Entertainment

           Riviera  Las  Vegas  has  one of  the  most  extensive  entertainment
programs in Las Vegas,  offering four different  regularly  scheduled  shows and
special   appearances   by  headline   entertainers   in  concert.   We  believe
entertainment  provides an attractive marketing tool to attract customers to the
Riviera.  Riviera Las Vegas'  entertainment  program includes such well received
shows as  Splash(R)  (a  variety  show),  An  Evening  at La  Cage(R)  (a female
impersonation  show),  Crazy  Girls(R)  (an  adult  revue)  as well as  featured
                                        4
<PAGE>
comedians  at the  Riviera  Comedy  Club.  We update  our shows  continually  in
response to customer  surveys and to keep them fresh.  Tickets for the shows are
offered  at  reasonable  prices  in  keeping  with  our  emphasis  on  mid-level
customers.  The readers of the Las Vegas Review Journal voted the Riviera Comedy
Club the number one comedy club in Las Vegas in the most recently released "Best
of Las Vegas" readers' survey.

           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 Revenue                             375
      Comedy Club              Comedy                                    350

                                                                       2,175
</TABLE>
           Other  entertainment  includes the  200-seat Le Bistro  entertainment
lounge located in the casino,  which offers live  performances  every night.  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,  and Damon Wayans and D.L.  Hughley.  The addition of the Royale Pavilion
has enabled us to increase  attendance at special events since, in the past, the
then existing facilities could not accommodate the demand for tickets.

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

Future Expansions

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

           We are  exploring  a number of  options  for the  development  of our
existing 26 acre site. These options include a joint venture for the development
of a  time-share  condominium  tower or an  additional  hotel  tower and parking
garage. Under the terms of our $175 million Bond Indenture,  we could contribute
up to 6 acres of land to such  projects and if we decide to develop a time share
tower a third  party  would  construct  and sell  time-share  units and  arrange
financing. We believe that additional rooms adjacent to the Las Vegas Convention
Center would be particularly  attractive to business customers and would provide
a base for additional casino  customers.  The development  of a time-share tower
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's
restaurants,  hotel accommodations and entertainment and by focusing on customer
service.  We have  adopted a selective  approach to the  extension  of credit to
these customers in order to reduce volatility of operating  results.  We use our
research data to tailor  promotional  offers to the specific  tastes of targeted
customers.  All slot and table  players are  encouraged  to join the Riviera Las
Vegas  Player's  Club and to fill out  surveys  that  provide  us with  personal
information  and  preferences  and tracks  their  level of play.  Members of the
Riviera  Las Vegas  Player's  Club earn bonus  points  based upon their level of
play,  redeemable  for  free  gifts,  complimentary  services  or cash  rebates.
Promotional  offers are made to  qualifying  customers  through  direct mail and
telemarketing.

           Riviera Las Vegas will continue to emphasize  marketing programs that
appeal to slot and  mid-level  table  game  customers  with a focus on  creating
repeat customers and increasing  walk-in traffic.  In addition,  a key marketing
focus is expanding  Riviera Las Vegas's 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.
                                        5
<PAGE>
           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  (i) providing a high level of service to
our customers to ensure an enjoyable  experience while at the Riviera Las Vegas,
(ii)  responding to customer  surveys and (iii) focusing  marketing  efforts and
promotional  programs on customers  with positive  gaming  profiles.  We use our
research data to tailor  promotional  offers to the specific  tastes of targeted
customers.  All slot and table  players are  encouraged  to join the Riviera Las
Vegas  Player's  Club which tracks their level of play,  and to fill out surveys
that provide the Riviera Las Vegas with personal  information  and  preferences.
Members of the  Riviera Las Vegas  Player's  Club earn bonus  points  based upon
their level of play, redeemable for free gifts,  complimentary  services or cash
rebates. Promotional offers are made to qualifying customers through direct mail
and  telemarketing.  We design  promotional offers targeted at certain mid-level
gaming  patrons that are  expected to provide  significant  revenues  based upon
their  historical  gaming  patterns.   We  contact  these  customers  through  a
combination of direct mail and telemarketing by an in-house  marketing staff and
independent  representatives  located in major cities.  Riviera Las Vegas uses a
proprietary  database  which is linked  to our  player  tracking  system to help
identify customers'  requirements and preferences;  thereby allowing Riviera Las
Vegas to customize  promotions to attract repeat  visitors.  We offer  customers
personalized   service,   credit   availability  and  access  to  a  variety  of
complimentary or reduced-rate  room, dinner and entertainment  reservations.  We
use a specialized  multi-tiered  marketing approach to attract customers in each
of our major  markets.  Slot and table game  tournaments  and special events are
designed for specific  levels of play.  Utilizing our  proprietary  database our
marketing department then targets and invites the customers most appropriate for
the  customized  events.  In  addition,  we host an  array  of  special  events,
including  slot and table  tournaments,  designed  to attract  customers  for an
extended  stay. We have found that this  individualized  marketing  approach has
provided significant revenues and profitable repeat business.

           Provide Extensive Entertainment Options

           We  also  focus  on  attracting   our  guests   through  a  range  of
entertainment  opportunities.  Riviera  Las Vegas has one of the most  extensive
entertainment  programs  in Las Vegas with four  different  regularly  scheduled
shows and special appearances by headline entertainers. In addition to providing
a positive  impact on our  profitability,  the shows attract  additional  gaming
revenue.  Surveys indicate that  approximately 75% of the show patrons come from
outside the hotel and approximately  71% of these individuals  gamble at Riviera
Las Vegas before or after the shows.

           Attract Walk-In Traffic

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

           Focus on Convention Customers

           This market consists of two groups: (i) those trade organizations and
groups that hold their  events in the banquet  and meeting  space  provided by a
single hotel and (ii) those attending city-wide events,  usually held at the Las
Vegas Convention Center.  Riviera Las Vegas targets convention  business because
it typically  provides  patrons willing to pay higher room rates and we are able
to provide  certain advance  planning  benefits,  since  conventions are usually
booked two years in advance of the event date. We focus our marketing efforts on
conventions  whose  participants  have the most active gaming profile and higher
room rate, banquet and function spending habits. Riviera Las Vegas also benefits
from our proximity to the Las Vegas Convention  Center which makes us attractive
to city-wide conventioneers looking to avoid the congestion that occurs during a
major convention,  particularly at the south end of the Las Vegas Strip. In 2000
we derived  approximately 26.8% 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's convention  facility in February
1999,  from 100,000 to 160,000  square feet will  accommodate  the growth in the
size  and  number  of  groups  that  presently  use the  facility,  attract  new
convention   groups  and  increase   the   percentage   of  rooms   occupied  by
conventioneers.
                                        6
<PAGE>
           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 500 of the available 2,100 room  bookings  per night.  We make  an
effort to convert many tour and travel  customers  who meet our target  customer
gaming profile into repeat slot customers.

Riviera Black Hawk

Business

           Our wholly-owned  subsidiary,  Riviera Black Hawk, opened on February
4, 2000. Located in Black Hawk, Colorado, approximately 40 miles west of Denver,
our casino is one of the first three  encountered  when traveling from Denver to
the adjacent  gaming cities of Black Hawk and Central City. Our casino  features
the third largest number of gaming devices in the market with  approximately 960
slot machines and 12 blackjack tables.  In Colorado,  each slot machine and each
table game is considered one gaming device.

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

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

o        a 265-seat casual buffet styled restaurant;

o        two themed bars; and

o        an entertainment center with seating for approximately 500 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,  2000,  there were 26 casinos in the Black
Hawk/Central  City  market,  with  10  casinos  each  offering  more  than  400
gaming  devices.  Isle of Capri,  located across the street from our casino with
approximately  1,145 gaming machines and 1,000 covered parking spaces,  has been
the market leader in terms of win per gaming device.

Marketing strategy

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

           We benefit from strong "walk-in"  traffic due to the proximity of our
casino to the Colorado Central Station and the Isle of Capri Casino. We have and
continue  to develop  specific  marketing  programs  designed  to attract  these
"walk-in"  customers.  We emphasize  quality food and  beverage  amenities  with
customer  friendly  service  as  a  marketing  tool.  In  addition,  we  provide
                                        7
<PAGE>
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 105,000 of these slot players have been identified as
of December  31,  2000.  In addition,  we promote our casino by  advertising  in
newspapers, on billboards and on the radio in the local areas.

Geographical Markets

The Las Vegas Market

           Las Vegas is one of the  largest and  fastest  growing  entertainment
markets in the  country.  According  to the Las Vegas  Convention  and  Visitors
Authority,  the number of visitors  traveling  to Las Vegas has  increased  at a
steady and  significant  rate  for the last  fourteen years from 15.2 million in
1986 to an estimated  35.8 million  in 2000,  a compound  annual  growth rate of
6.3%. Clark County gaming has 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 $7.7 billion in 2000.

           Gaming  and  tourism  are  the  major   attractions   of  Las  Vegas,
complemented   by  warm  weather  and  the   availability   of  many  year-round
recreational  activities.  Although Las Vegas' principal markets are the western
region of the United States, most significantly Southern California and Arizona,
Las Vegas also serves as a  destination  resort for  visitors  from all over the
world.  A significant  percentage of visitors  originate  from Latin America and
Pacific Rim countries such as Japan, Taiwan, Hong Kong and Singapore.

           Historically, Las Vegas has had one of the strongest hotel markets in
the country.  The number of hotel and motel rooms in Las Vegas has  increased by
over 85% from  approximately  67,000 at the end of 1989 to 124,270 at the end of
2000,  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 85% for each of the years from 1993 through
2000. During the calendar year 2000 approximately  4,200 new hotel rooms opened,
and as of  December  31, 2000 there were  approximately  3,470 hotel rooms under
construction. The new rooms are primarily being designed to attract the high-end
gaming and convention  customers,  and based on  construction  costs,  should be
priced at rates  well  above  those  which  have been or need to be  charged  by
Riviera Las Vegas based on the investment in our facility.

           We believe that the growth in the Las Vegas market has been  enhanced
as a result of (i) a dedicated  program by the Las Vegas Convention and Visitors
Authority  and major Las Vegas  casino/hotels  to  promote  Las Vegas as a major
convention  site, (ii) the increased  capacity of McCarran Airport and (iii) the
introduction  of large themed "must see"  destination  resorts in Las Vegas.  In
1988,  approximately 1.7 million delegates attended conventions in Las Vegas and
generated  approximately $1.3 billion of economic impact. In 2000, the number of
convention  delegates  had increased to 3.8 million with in excess of $4 billion
of economic impact.

           During  the  past  seven  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 36.8 million
in  2000.   Construction   has  recently  been  completed  on  numerous  roadway
enhancements to improve access to the Airport.  McCarran Airport is ranked among
the 10 busiest airports in the world based on passenger activity.

The Black Hawk/Central City Market

           Gaming was first introduced to the Black  Hawk/Central City market in
October 1991 following a state-wide  referendum  where Colorado  voters approved
limited stakes gaming for three historic mining towns - Black Hawk, Central City
and Cripple  Creek.  Limited stakes gaming is defined as a maximum single bet of
$5. Black Hawk and Central City are contiguous  cities located  approximately 40
miles west of Denver and about ten 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, many of the former tourist-related  businesses have been
displaced by gaming establishments.
                                        8
<PAGE>
           The first casino in the Black  Hawk/Central City market was opened in
October 1991 with 14 casinos open by the end of that year. The pace of expansion
increased further in 1992 with the number of casinos in the market peaking at 42
casinos.  However,  due to a  trend  of  consolidation  in the  market  and  the
displacement  of small  casinos  by the  entry  of  larger,  better  capitalized
operators, the number of casinos has declined to 26 as of December 31, 2000.

           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 2.3 million people
reside within this 100-mile  radius of Black Hawk. In addition,  we believe that
residents  within a 100 mile  radius of the City of Black Hawk had an  estimated
average  household income in excess of $50,000 per annum in 2000 based upon data
contained in the Bear Sterns Global Gaming Almanac.

           Since 1992,  the number of gaming  devices in the Black  Hawk/Central
City market has grown  approximately  44.4% from 7,252 devices in 1992 to 10,469
devices in 2000.  The total number of slot  machines has  increased  45.7% since
1992 to 10,323  in 2000  while the  total  number  of tables in the  market  has
decreased  with 146  tables  in the  market at the end of 2000.  Win per  gaming
device per day has  continued  to grow  despite  the  increase  in the number of
gaming  devices.  The City of Black Hawk  experienced a 22.2% increase in gaming
revenue in 2000.

           The City of Black Hawk has  experienced  more  significant  growth in
gaming  revenues than Central City since 1992.  The  popularity of Black Hawk in
comparison to Central City is due primarily to Black Hawk's  superior  access to
major highways,  as patrons must first pass through Black Hawk to access Central
City from Denver.  Due to this superior  location,  larger casino operators have
focused on  building in the City of Black  Hawk.  As a result,  casinos in Black
Hawk now generally  feature a larger average number of gaming  devices,  a wider
variety of amenities and convenient free parking for patrons. These factors have
contributed to growth in Black Hawk gaming revenues at a compound annual rate of
29.1% since 1992 compared to a negative growth for Central City of 1.5% over the
same  period.  The number of slot  machines and tables in the City of Black Hawk
have increased  119.5% and 41.0%,  respectively  since 1992, while the number of
slot  machines  and  tables in  Central  City  have  declined  39.5% and  57.1%,
respectively over the same period.

Management Activities

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

Four Queens Management Agreement

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

Other Management Opportunities

           We are  continuously  reviewing  opportunities to expand and become a
multi-jurisdictional  casino company with greater capital resources to enable us
to compete more effectively.  The jurisdictions include, but are not limited to,
California,  Mississippi,  Pennsylvania and Iowa. We may also become involved in
financially  distressed  casino  properties  where we  believe we may be able to
effect a  turn-around  (similar  to that which we achieved at Riviera Las Vegas)
and can obtain a significant equity stake. On September 29, 1999, Riviera Gaming
Management  entered  into an  agreement  with  Peninsula  Gaming  LLC to provide
consulting  services to Diamond Jo's  Riverboat  Casino in Dubuque,  Iowa.  This
agreement terminated on September 30, 2000.
                                        9
<PAGE>
Competition

Las Vegas, Nevada

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

           At December 31, 2000, the Las Vegas Convention and Visitors Authority
indicated that there were 25 casinos on the Las Vegas Strip which had over 1,000
available hotel rooms. Riviera Las Vegas is ranked as the 20th largest Las Vegas
Strip hotel/casino, based upon number of available hotel rooms.

           Las Vegas gaming square  footage and room capacity are  continuing to
grow and are  expected to continue  to  increase  significantly  during the next
several years.  During calendar year 2000 approximately  4,200  new  hotel rooms
opened, and as of December 31, 2000 there were  approximately  3,470 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 2000,  available room nights in the Las Vegas market increased
from 43.9  million to 44.7  million or 1.8%,  while total room  nights  occupied
increased  from 37.4 million to an estimated  39.8 million,  or 6.4%. The ending
room inventory at December 31, 2000 was 124,270  compared to 120,294 at December
31,  1999,  an  increase  of 3,976  rooms or 3.3%.  This has had the  effect  of
intensifying  competition.  At  Riviera  Las  Vegas,  room  occupancy  decreased
slightly  from 97.5% in 1999 to 96.7% in 2000  (still  much  higher than the Las
Vegas Strip  average).  However,  room rates  increased by $5.79,  or 11.3% from
$51.07 in 1999 to $56.86 in 2000.

           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
potential expansion of gaming into California poses a more serious threat to the
continued growth of Las Vegas.

           Our  current  business  is highly  dependent  on gaming in Las Vegas.
Riviera  Las  Vegas  derives  a  substantial  percentage  of its  business  from
tourists,  principally  from Southern  California  and the  southwestern  United
States.  Weakness  in the economy of Southern  California  has in the past,  and
could in the future, adversely affect our  financial results.  Recent electrical
energy shortages, and possible rate increases in California could also adversely
affect 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, types and pricing of non-gaming amenities,  name recognition and overall
atmosphere. Our main competitors are the larger gaming facilities,  particularly
those with considerable on-site or nearby parking and established reputations in
the local market. As of December 31, 2000 there were 19 gaming facilities in the
Black  Hawk  market  with  nine  casinos  each  offering  more  than 400  gaming
positions.  Construction has also begun on the "Hyatt Casino" casino due to open
in the fourth  quarter,  2001,  which is  expected  to  feature  over 1,000 slot
machines  and a hotel.  Other  projects  have  also  been  announced,  proposed,
discussed or rumored for the Black Hawk/Central City market.
                                        10
<PAGE>
           The gaming  facilities near the intersection of Main and Mill Streets
provide significant  competition to Riviera Black Hawk Casino.  Colorado Central
Station, which has been one  of the  most  successful  casinos in  Colorado,  is
located  across  the  street from  our  casino  and  has  approximately 700 slot
machines, 20 gaming tables and approximately 700 valet parking spaces.  The Isle
of Capri Casino,  the  most successful  casino in  Colorado,  operated by Casino
America,  which  opened  in  December  1998,  is  located  directly  across  the
street  from our casino  and  features  approximately  1,145 slot  machines,  14
table  games,  1,000  parking spaces, and opened 235 hotel rooms in 2000.

           The number of hotel rooms  currently in the Black  Hawk/Central  City
market is approximately  405, 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 which opened 235 rooms in 2000 Casinos  offering  hotel
accommodations  for  overnight  stay may have a competitive  advantage  over our
casino. However, we believe that self-parking is a more effective utilization of
our  available  space  and that  providing  hotel  accommodations  will not be a
significant factor, but instead will contribute to growth in the overall market.

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

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

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

           Pursuant to a license agreement Riviera Las Vegas licenses the use at
Riviera Black Hawk  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, 2000, Riviera Las Vegas had  approximately  1,930
full time  equivalent  employees and had  collective  bargaining  contracts with
eight unions covering approximately  1,210 of such employees, including food and
beverage employees,  rooms department employees,  carpenters,  engineers,  stage
hands, musicians, electricians,  painters and teamsters. Our agreements with the
Southern Nevada Culinary and Bartenders Union and Stage Hands Union, which cover
the majority of our unionized employees, were renegotiated in 1998 and expire in
the year 2002. Collective Bargaining Agreements with the Operating Engineers and
Musicians expired in 1999. The Operating Engineers approved a new agreement that
expires in the year 2004.  We are currently in  negotiations  with the Musicians
Union.  The Agreements  with the Carpenters and Painters  expired in 2000. A new
agreement which expires in 2005 was negotiated with the Painters in 2000, and we
are  currently  in  negotiations  with  the  Carpenters.   New  agreements  were
negotiated  with the  Teamsters in 1998 and  Electricians  in 1999 and expire in
2003 and 2004 respectively.  On June 15, 1999, the hard count workers (employees
who collect and count the coins and tokens from slot machines) voted to join the
Teamsters  Union.  This group  totaled seven at the time of the vote. On October
11, 2000,  following fifteen  months  of  unsuccessful negotiations,  and after
our hard count employees  filed a decertifying  petition with the National Labor
                                        11
<PAGE>
Relations  Board  ("NLRB"),  the Teamsters  filed a disclaimer and  discontinued
steps to unionize the hard count  workers.  On November 27, 2000,  the Transport
Workers Union filed a petition with the NLRB to represent  the  Blackjack,  Dice
and Poker  Dealers (or,  the  Dealers).  On February 8 and 9, 2001,  the Dealers
voted  against  representation  by this union by a vote of 107 to 61. This group
totaled  190 at the time of the vote.  Although  unions  have been active in Las
Vegas, we consider our employee  relations to be  satisfactory.  There can be no
assurance,  however, that new agreements will be reached without union action or
will be on terms satisfactory to us.

Riviera Black Hawk

           Riviera Black Hawk opened on February 4, 2000 with  approximately 450
employees.  As of December 31, 2000,  the total number of employees was 399. The
Black  Hawk/Central  City labor market is very  competitive.  Riviera Black Hawk
believes that it will be able to maintain its current employee level.  There can
be no assurance,  however, that new and existing casinos will not affect Riviera
Black Hawk's ability to maintain its current employee level.

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

Regulation and Licensing

Nevada

Nevada Gaming Authority

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

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

           Riviera  Operating  Corporation  is  required  to be  licensed by the
Nevada  Gaming  Authorities.  The  gaming  license  held  by  Riviera  Operating
Corporation  requires  the  periodic  payment  of  fees  and  taxes  and  is not
transferable.  Riviera Operating  Corporation is also licensed as a manufacturer
and  distributor  of gaming  devices.  Such  licenses  also require the periodic
payment  of fees  and are not  transferable.  We are  registered  by the  Nevada
Commission as a publicly  traded  corporation (a "Registered  Corporation")  and
have been  found  suitable  to own the stock of Riviera  Operating  Corporation.
As a Registered Corporation,  we are required periodically  to  submit  detailed
financial  and  operating  reports to the Nevada  Commission  and to furnish any
other information which the Nevada Commission may require.  No person may become
a  stockholder  of, or receive  any  percentage  of profits  from,  a  Corporate
Licensee  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,  the companies  involved
would have to sever all relationships with such person. In addition,  the Nevada
Commission  may require us or Riviera  Operating  Corporation  to terminate  the
employment  of  any  person  who  refuses  to  file  appropriate   applications.
Determinations  of suitability  or of questions  pertaining to licensing are not
subject to judicial review in Nevada.

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

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

           Any  beneficial  holder of our voting  securities,  regardless of the
number of shares owned, may be required to file an application, be investigated,
and have his or her 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 a  Registered  Corporation's  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 a  Registered  Corporation's
voting  securities  may  apply to the  Nevada  Commission  for a waiver  of such
finding  of  suitability  if  such  institutional   investor  holds  the  voting
securities for investment purposes only. An institutional  investor shall not be
deemed to hold  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
                                        13
<PAGE>
indirectly,  the election of a majority of the members of the board of directors
of the  Registered  Corporation,  any change in the corporate  charter,  bylaws,
management,  policies or operations of the Registered Corporation, or any of its
gaming  affiliates,  or any other action which the Nevada Commission finds to be
inconsistent  with holding the Registered  Corporation's  voting  securities for
investment  purposes  only.  Activities  which are deemed to be consistent  with
holding voting  securities for investment  purposes only include:  (i) voting on
all matters voted on by stockholders;  (ii) making financial and other inquiries
of management of the type normally made by securities analysts for informational
purposes and not to cause a change in its  management,  policies or  operations;
and (iii) such other  activities  as the Nevada  Commission  may determine to be
consistent  with such  investment  intent.  If the  beneficial  holder of voting
securities who must be found suitable is a corporation, partnership or trust, it
must submit  detailed  business and  financial  information  including a list of
beneficial owners. The applicant is required to pay all costs of investigation.

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

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

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

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

           Changes in control of Riviera  Holdings  Corporation  through merger,
consolidation, stock or asset acquisitions, management or consulting agreements,
or any act or conduct by a person  whereby  he  obtains  control,  may not occur
without the prior approval of the Nevada Commission. Entities seeking to acquire
control of a  Registered  Corporation  must  satisfy the Nevada Board and Nevada
Commission in a variety of stringent standards prior to assuming control of such
Registered  Corporation.  The Nevada  Commission  may also  require  controlling
stockholders,   officers,   directors  and  other  persons   having  a  material
                                        14
<PAGE>
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: (i) assure the
financial  stability of corporate  gaming Licensees and their  affiliates;  (ii)
preserve the beneficial  aspects of conducting  business in the corporate  form;
and (iii) promote a neutral  environment for the orderly governance of corporate
affairs.  Approvals  are,  in certain  circumstances,  required  from the Nevada
Commission before the Registered Corporation can make exceptional repurchases of
voting  securities above the current market price thereof and before a corporate
acquisition  opposed  by  management  can be  consummated.  The  Nevada Act also
requires prior approval of a plan of recapitalization proposed by the Registered
Corporation's  Board of Directors in response to a tender offer made directly to
the Registered Corporation's  stockholders for the purposes of acquiring control
of the Registered Corporation.

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

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

Other Nevada Regulation

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

Colorado

Colorado Gaming and Liquor Regulation

Summary

         In general we, Riviera Black Hawk, our principal executive officers and
those of Riviera  Holdings,  and any of our  employees  who are  involved in our
gaming  operations,  are  required to be found  suitable  for  licensure  by the
Colorado Gaming Commission. Colorado also requires that significant stockholders
of 5% or more of our stock be certified as suitable for licensure. Riviera Black
Hawk's  original  retail  gaming  license was  approved by the  Colorado  Gaming
Commission on November 18, 1999,  and was  successfully  renewed on November 18,
2000.
                                        15
<PAGE>
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  Amendment  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 on July 1 annually.

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

Regulatory Structure

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

Gaming licenses

The Colorado Commission may issue:

o        slot machine manufacturer or distributor,

o        operator,

o        retail gaming,

o        support and

o        key employee gaming licenses.
                                        16
<PAGE>
           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
extensive  playing  procedures  and rules of play for poker,  blackjack and slot
machines.  Retail gaming  licensees  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
                                        17
<PAGE>
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. Effective July 1 of each year, the Colorado Commission
establishes  the gaming tax for the following 12 months.  Currently,  the gaming
tax is:

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

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

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

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

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

o        20% on amounts over $15 million.

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

           The  municipality of Black Hawk assesses an annual device fee of $750
per device.  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 $89.04 per device  and a
transportation  authority  device fee of  $154.08  per  device  also  may  apply
depending upon the location of the licensed  premises in Black Hawk.

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

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

Requirements for publicly traded corporations

           The  Colorado   Commission   has  enacted  Rule  4.5,  which  imposes
requirements on publicly traded corporations holding gaming licenses in Colorado
and on gaming  licenses  owned  directly  or  indirectly  by a  publicly  traded
corporation,  whether  through a subsidiary or  intermediary  company.  The term
"publicly traded corporation"  includes  corporations,  firms, limited liability
companies, trusts, partnerships and other forms of business organizations.  Such
requirements  automatically  apply to any ownership  interest held by a publicly
traded corporation,  holding company or intermediary company thereof,  where the
ownership  interest  directly or indirectly  is, or will be upon approval of the
Colorado  Commission,  5% or more of the entire  licensee.  In any event, if the
Colorado  Commission  determines  that  a  publicly  traded  corporation,  or  a
                                        18
<PAGE>
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 5 days after their  distribution.  Licensees to
whom Rule 4.5 applies must include in their charter  documents  provisions that:
restrict the rights of the  licensees to issue  voting  interests or  securities
except in accordance with the Colorado Gaming Act and the Colorado  Regulations;
limit the  rights of persons to  transfer  voting  interests  or  securities  of
licensees  except in  accordance  with the Colorado  Gaming Act and the Colorado
Regulations;  and provide that  holders of voting  interests  or  securities  of
licensees  found  unsuitable by the Colorado  Commission  may, within 60 days of
such finding of unsuitability, be required to sell their interests or securities
back  to the  issuer  at the  lesser  of the  cash  equivalent  of the  holders'
investment  or the market price as of the date of the finding of  unsuitability.
Alternatively,   the  holders   may,   within  60  days  after  the  finding  of
unsuitability, transfer the voting interests or securities to a suitable person,
as  determined  by the  Colorado  Commission.  Until  the  voting  interests  or
securities  are held by suitable  persons,  the issuer may not pay  dividends or
interest,  the  securities  may not be voted,  they may not be  included  in the
voting or securities of the issuer,  and the issuer may not pay any remuneration
in any form to the holders of the securities.

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

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

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

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

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

           Pursuant  to Rule  4.5,  persons  found  unsuitable  by the  Colorado
Commission  must be  removed  from any  position  as an  officer,  director,  or
employee  of a  licensee,  or  from a  holding  or  intermediary  company.  Such
unsuitable  persons also are  prohibited  from any  beneficial  ownership of the
voting  securities of any such entities.  Licensees,  or affiliated  entities of
licensees,  are subject to sanctions for paying  dividends or  distributions  to
persons found unsuitable by the Colorado  Commission,  or for recognizing voting
rights of, or paying a salary or any  remuneration  for services to,  unsuitable
persons.  Licensees or their  affiliated  entities  also may be  sanctioned  for
failing to pursue  efforts to require  unsuitable  persons to  relinquish  their
interest.  The Colorado  Commission  may  determine  that anyone with a material
relationship  to, or material  involvement  with,  a licensee  or an  affiliated
company must apply for a finding of suitability or must apply for a key employee
license.
                                        19
<PAGE>
Alcoholic Beverage Licenses

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

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

Federal Registration

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

Item 2.    Properties

           Riviera Hotel and Casino

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

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

           The entire Riviera Las Vegas complex is encumbered by a first deed of
trust  securing  the  Notes.  See,  "Management's  Discussion  And  Analysis  of
Financial Condition And Results of Operations."

           Riviera Black Hawk

           Riviera  Black Hawk owns the Black  Hawk land,  which is located on a
71,000 square foot parcel of real property in Black Hawk, Colorado and comprises
of   approximately   32,000   square  feet  of  gaming  space  and  parking  for
approximately 520 vehicles  (substantially all of which are covered), a 265 seat
buffet, two bars and an entertainment  center with seating for approximately 430
people.

Item 3.    Legal Proceedings

           Paulson, et al. v. Jefferies,  Riviera Holdings Corporation,  et al.,
United States  District  Court for the Central  District of  California,  No. CV
98-2644 (ABC) (the  "California  Action").  We and the plaintiffs to this action
entered into a Settlement  Agreement  dated as of July 2, 1999.  The  Settlement
Agreement was conditioned  upon the United States District court for the Central
District of California  (the "Court")  entering a Settlement Bar Order and Final
Judgment and provided that upon the entering of such an Order:  (i) we would pay
plaintiff Allen E. Paulson (and his heirs or successors)  ("Paulson") $3,477,412
($7.50 per share) for the 463,655 shares of Riviera Holdings  Corporation common
stock owned by Paulson,  (ii) Paulson would receive $1,522,587.50 from the funds
being  held  in  escrow  for  the   benefit  of  holders  of  Riviera   Holdings
Corporation's  Contingent  Value  Rights  ("CVRs"),  (iii) the  remainder of the
escrow of  approximately  $4,340,000  would be distributed to the holders of the
CVRs,  and  (iv)  Paulson  would  file an  amended  complaint  which  eliminated
allegations of wrongdoing against us.
                                        20
<PAGE>
           On October  7, 1999,  the Court  entered a  Settlement  Bar Order and
Final  Judgment  which  dismissed  the  California  Action  as  against  us with
prejudice,  and  barred  the  other  defendants  to  the  lawsuit  from  seeking
indemnification  against us for claims arising under the federal securities laws
or  for  state  law  claims  arising  out  of the  transactions  underlying  the
plaintiffs' federal security law claims.

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

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

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

           On January 31, 2000, Morgens, Waterfall served an Amended Summons and
a  First  Amended  Verified  Complaint  on  Riviera  Holdings  Corporation  with
subsequent  service on directors.  The Amended Complaint asserts four claims for
relief. In the first claim for relief, Morgens,  Waterfall asserts that there is
a dispute as to the  meaning of the  amended  complaint  filed by Paulson in the
California Action pursuant to the Settlement Agreement. Morgens, Waterfall seeks
an  affirmation  injunction  requiring  Riviera  Holdings  Corporation  to  seek
clarification from Paulson as to the meaning of this amended  complaint.  In its
second claim for relief,  Morgens,  Waterfall seeks indemnification from Riviera
Holdings Corporation for all damages and costs incurred in the California Action
by  reason  of any  misconduct  alleged  by  Paulson  against  Riviera  Holdings
Corporation.  In its third  claim for  relief,  Morgens,  Waterfall  claims that
Riviera Holdings  corporation and  the director  defendants  breached  fiduciary
duties to Morgens,  Waterfall when it consummated  the Settlement  Agreement and
secured the settlement Bar Order because it left Morgens,  Waterfall unprotected
from claims based on Riviera Holdings  Corporation's  alleged misconduct and, in
addition,  harmed  Morgens,   Waterfall  because  Riviera  Holdings  Corporation
allegedly  paid too much for  Paulson's  stock.  Morgens,  Waterfall  styles its
fourth claim for relief as a "derivative  claim" and asserts it only against the
director  defendants.  Morgens,  Waterfall  claims that the director  defendants
violated their  fiduciary  duties by entering into the Settlement  Agreement and
securing the Settlement Bar Order.

           On April 17,  2000,  the Company and its  directors  moved to dismiss
Morgens, Waterfall's Amended Complaint.  In response, Morgens, Waterfall opposed
the  directors'  motion but  "conceded"  its claim  against  the  Company.  As a
consequence, Morgens, Waterfall no longer asserts any claim against the Company,
but it has opposed dismissing the Company from the action on the ground that the
Company is a "nominal  defendant" with respect to the derivative claims asserted
by Morgens, Waterfall against the directors. The directors'  motion  to  dismiss
has not yet been decided by the Court.  We believe all these claims are  without
merit and intend to vigorously defend against them.

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

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

           Not applicable.

           PART II

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

           The  Company's  Common  Stock  began  trading on the  American  Stock
Exchange on May 13, 1996 and was reported on the NASDAQ  Bulletin Board prior to
that date.  As of March 8, 2001,  based upon  information  available  to it, the
Company  believes that there were  approximately  600 beneficial  holders of the
Company's Common Stock.
                                        21
<PAGE>
           The Company has never paid any dividends on its Common Stock and does
not  currently  expect to pay any  dividends  (cash or  otherwise) on its Common
Stock for the  foreseeable  future.  The  Company's  ability to pay dividends is
primarily  dependent  upon receipt of dividends and  distributions  from Riviera
Operating  Corporation.  In addition, the indenture for the First Mortgage Notes
restricts the Company's ability to pay dividends on its Common Stock.

           The table  below sets forth the high and low sales  prices by quarter
for the years ended  December  31,  2000,  1999 and 1998,  based on  information
provided by certain brokers who have had  transactions  in the Company's  Common
Stock during the year:
<TABLE>
<CAPTION>

                  First                 Second                  Third                 Fourth
                 Quarter                Quarter                Quarter                Quarter
         2000
<S>               <C>                    <C>                    <C>                    <C>
         HIGH     $7.88                  $8.13                  $8.13                  $7.63
          LOW      5.88                   6.75                   6.75                   6.50

         1999
         HIGH     $7.25                  $6.38                  $6.13                  $6.63
          LOW      4.00                   3.94                   4.00                   3.94


</TABLE>


Item 6.  Selected Financial Data

                  The following table sets forth a summary of selected financial
data for the Company for the years ended  December 31, in thousands  (except Net
Income (Loss) per Common Share):
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
                                             2000       1999       1998        1997       1996
-----------------------------------------------------------------------------------------------
<S>                                        <C>        <C>        <C>         <C>        <C>
Net Operating  Revenue                   $206,787   $158,173   $159,955    $153,793   $164,409
--------------------------------------
Net Income (Loss)                         (4,215)    (2,869)    (4,057)       2,088      8,440
--------------------------------------
Net Income (Loss) Per Diluted Common      ($1.05)    ($0.58)    ($0.81)       $0.40      $1.63
Share
--------------------------------------
Total Assets                              283,710    288,990    244,909     347,866    167,665
--------------------------------------
Long-Term Debt                            229,705    229,052    179,439     175,512    109,088
-----------------------------------------------------------------------------------------------
</TABLE>

                                        22
<PAGE>
Item 7.  Management's Discussion and Analysis of Financial Condition and Results
 of Operations

     Results of Operations

              The following table sets forth the Company's income statement data
     as a percentage of net revenues  (unless  otherwise  noted) for the Company
     for the periods indicated:
<TABLE>
<CAPTION>
    ------------------------------------------------------------------------------------------------------------
                                                                       2000           1999            1998
    ------------------------------------------------------------------------------------------------------------
    Revenues:
<S>                                                                    <C>            <C>             <C>
    Casino                                                             54.6%          46.8%           48.6%
    Rooms                                                              21.2%          25.2%           24.8%
    Food and Beverage....                                              14.9%          15.9%           15.0%
    Entertainment                                                      11.9%          13.3%           13.5%
    Other                                                               5.1%           7.4%            7.0%
    Less promotional  allowances                                       (7.6%)         (8.6%)          (8.7%)
      Net revenues                                                    100.0%         100.0%          100.0%
    Costs and Expenses:
     Casino(1)                                                         55.7%          58.3%           58.3%
     Rooms(1)                                                          53.3%          54.9%           52.7%
     Food and Beverage(1).                                             69.7%          72.9%           73.3%
     Entertainment(1)                                                  77.3%          77.5%           78.3%
     Other(1)                                                          29.9%          27.6%           29.7%
     General and administrative                                        19.9%          18.7%           16.9%
     Corporate expenses,  Severance Pay                                 0.0%           0.0%            0.3%
     Preopening expense - Black Hawk, Colorado project                  0.6%           0.4%            0.0%
     Depreciation and amortization                                      8.6%           8.8%            7.6%
    Total Costs and Expenses                                           91.8%          93.0%           89.8%
    Income from operations                                              8.2%           7.0%           10.2%
    Interest expense on $100 million notes                              0.0%           0.0%           (2.9%)
    Interest income on Treasury Bills to retire $100 million notes      0.0%           0.0%            1.5%
    Interest expense, other                                           (13.5%)        (14.8%)         (12.2%)
    Interest income, other                                              1.2%           1.4%            1.5%
    Interest, capitalized                                               0.3%           3.0%            1.7%
    Income (expense), net                                               0.6%          (1.2%)          (0.8%)
    Loss before provision for income taxes                             (3.2%)         (4.6%)          (1.0%)
    Benefit for income  taxes                                          (1.3%)         (2.8%)          (0.3%)
     Net Loss before extraordinary item                                (2.0%)         (1.8%)          (0.7%)

    Extraordinary item, net of income taxes of $1.6 million             0.0%           0.0%           (1.9%)

    Net Loss                                                           (2.0%)         (1.8%)          (2.5%)

     EBITDA (2) margin                                                 17.4%          16.2%           18.2%
----------------------------------------------------------------------------------------------------------------
(1) Shown as a percentage of corresponding departmental revenue.
</TABLE>
                                        23
<PAGE>
(2)       EBITDA  consists of earnings before   interest,   income   taxes,
          depreciation  and  amortization  (excluding  corporate  expenses,
          preopening expense - Black Hawk, Colorado project,  severance pay
          and Paulson  Merger/litigation  costs  included  in Other,  net.)
          While  EBITDA  should  not  be  construed  as  a  substitute  for
          operating  income or a better  indicator of  liquidity  than cash
          flow  from   operating   activities,   which  are  determined  in
          accordance   with  generally   accepted   accounting   principles
          ("GAAP"), it is included herein to provide additional information
          with  respect to the  ability  of the  Company to meet its future
          debt   service,   capital   expenditure   and   working   capital
          requirements. Although EBITDA is not necessarily a measure of the
          Company's  ability to fund its cash  needs,  management  believes
          that  certain  investors  find  EBITDA  to be a  useful  tool for
          measuring  the ability of the  Company to service  its debt.  The
          Company's  computation  of EBITDA may not be  comparable to other
          similarly titled measures of other companies

2000 Compared to 1999

Special Factors Effecting Comparability of Results of Operations

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

The following table sets forth,  for the periods  indicated,  certain  operating
data for Riviera Las Vegas and Riviera Black Hawk.  EBITDA from  properties  for
the purposes of this table excludes corporate expense,  pre-opening  expense and
inter-company  management fees. Operating income from properties is presented as
shown on the Consolidated Statement of Operations.
<TABLE>
<CAPTION>
(In thousands)                                                            2000             1999

-------------------------------------------------------------
Net revenues:
<S>                                                                   <C>              <C>
   Riviera Las Vegas                                                  $166,841         $157,109
   Riviera Black Hawk                                                   39,713                0
   Riviera Gaming Management                                               233            1,064
       Total Net Revenues                                             $206,787         $158,173

-------------------------------------------------------------
EBITDA:

   Riviera Las Vegas                                                   $29,249          $24,631
   Riviera Black Hawk                                                    6,597                1
   Riviera Gaming Management                                                88            1,047
       Total EBITDA                                                    $35,928          $25,679

-------------------------------------------------------------
EBITDA Margin(3):
   Riviera Las Vegas                                                     17.5%            15.7%
   Riviera Black Hawk (preopening expense in 1999)                       16.6%
   Riviera Gaming Management                                             37.8%            98.4%
       Total EBITDA                                                      17.4%            16.2%

Income (loss) from Operations

   Riviera Las Vegas                                                   $14,910          $10,641
   Riviera Black Hawk                                                    1,881            (595)
   Riviera Gaming Management                                                88            1,047
       Total Income from Operations                                    $16,879          $11,093

-------------------------------------------------------------
(3)      Shown as a percentage of  net revenue.
</TABLE>
                                        24
<PAGE>
Riviera Las Vegas

Revenues

                  Net revenues increased by approximately $9.7 million, or 6.2%,
from $157.1 million in 1999 to $166.8 million in 2000 due primarily to increased
room and entertainment revenues as described below. Casino revenues increased by
approximately  $0.8 million,  or 1.1%,  from $74.1 million  during 1999 to $74.9
million  during 2000 due to an increase in slot machine  revenue.  Room revenues
increased by  approximately  $3.9 million,  or 9.8%  from  $39.9 million 1999 to
$43.8  million  during 2000 as a result of an  increase in average  room rate of
$5.16, or 10%, which was offset by a slight  decrease  in hotel  occupancy  from
97.5% to 96.6%. Food and beverage revenues increased approximately $1.7 million,
or 6.4%,  from $25.1  million  1999 to $26.8  million  during 2000 due to higher
cover counts and modestly increased prices.  Entertainment revenues increased by
approximately  $3.5 million,  or 16.7%,  from $21.0 million during 1999 to $24.5
million during 2000 due primarily to the increase in Splash revenues as a result
of the  showroom renovation and the new show which opened  in late  1999.  Other
revenues  decreased by approximately  $0.7 million,  or 6.7%, from $10.6 million
during 1999 to $9.9 million during 2000 due  primarily to  decreased  management
fees from Riviera Gaming Management Elsinore's contract which  expired  December
30, 1999. Promotional  allowances  decreased by approximately  $0.6 million,  or
4.4%, from $13.6 million  during 1999 to $13.0 million during 2000 primarily due
to decreases in comps related to lower table games activity.

Direct Costs and Expenses of Operating Departments

                  Total  direct  costs and  expenses  of  operating  departments
increased by approximately $3.2 million, or 3.1%, from $102.9 million in 1999 to
$106.1 million in 2000. Casino expense decreased by approximately  $2.2 million,
or 5.1%,  from $43.2 million  during 1999 to $41.0 million  during 2000.  Casino
expenses as a percent of casino revenue  declined from 58.3% in 1999 to 54.7% in
2000 due to decreased casino  marketing costs and bad debts expense.  Room costs
increased  $1.5 million,  or 6.9% from $21.9 million in 1999 to $23.4 million in
2000, due to increased  payroll under union contracts and additional  convention
sales. Food and beverage costs increased by approximately $1.5 million, or 8.2%,
from $18.3 million during 1999 to $19.8 million during the 2000 period. Food and
beverage  costs as a percentage  of food and beverage  revenues  increased  from
72.9% during 1999 to 73.5% during 2000 because payroll and other costs increased
modestly. Entertainment costs increased by approximately $2.7 million, or 16.6%,
from $16.3 million during 1999 to $19.0 million during 2000 as arrangements with
producers  allowed us to maintain  our profit  margins at  approximately  23% of
gross  entertainment   revenues.   Other  expenses  decreased  by  approximately
$84,000,  or 2.6%,  from $3.2 million to $3.1  million due to reduced  costs of
long distance telephone service.

Other Operating Expenses

                   General   and    administrative    expenses    increased   by
approximately  $1.9  million,  or 6.2%,  from  $29.6  million  for 1999 to $31.5
million in 2000 due  primarily  to  increased  labor costs and health  insurance
claim costs.  General and administrative  expenses were approximately 19% of net
revenues  in both 2000 and 1999.  Depreciation  and  amortization  increased  by
approximately  $0.9 million,  or 6.4%, from $14.0 million during the 1999 period
to $14.9  million  during the 2000 period due to the added  depreciation  of the
expanded Convention Center and recent property remodels.

EBITDA

                Riviera Las Vegas EBITDA, as defined, increased by approximately
$4.6  million,  or 18.7%,  from $24.6  million in 1999 to $29.2 million in 2000.
During the same  periods,  EBITDA margin  increased  from 15.7 % to 17.5% of net
revenues.
                                        25
<PAGE>
Riviera Black Hawk

Revenues

                  Riviera Black Hawk opened on February 4, 2000.   It  had   net
revenues of approximately $39.7 million for the appoximate  eleven  month period
in 2000.  Casino revenues were $38.1 million,  including  $36.3 million  in slot
revenue and $1.7 million in table games revenue.

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

Direct Costs and Expenses of Operating Departments

                  Total direct costs and expenses of operating  departments were
approximately  $23.6 million,  in 2000. Casino expense were approximately  $21.9
million,  57.5% of casino revenues.  Food and beverage costs were  approximately
$1.7 million,  or 133% of net food and beverage  revenues as the buffet in Black
Hawk is used as a marketing amenity.

Other Operating Expenses

                  General and  administrative  expenses were  approximately $9.5
million,  or 23.9% of net revenues for 2000.  Depreciation and amortization were
approximately $2.9 million, or 7.3% of net revenues.

EBITDA

                Riviera  Black Hawk EBITDA,  as defined,  was $6.6  million,  or
16.6% of net revenues.

CONSOLIDATED OPERATIONS

Other Income (Expense)

                  Interest  expense on the $175 million 10% First Mortgage Notes
issued by the company of $17.5  million plus related  amortization  of loan fees
and equipment and other financing  costs  totaled  approximately  $20 million in
2000 and 1999.  Interest  expense on the $45 million  13% First  Mortgage  Notes
issued by  Riviera  Black  Hawk in June 1999  combined  with its  interest  from
capital leases totaled $7.7 million in 2000.  Capitalized  interest was $616,000
in 2000, which was primarily from the Black Hawk,  Colorado  project,  decreased
approximately $2.4 million from 1999.

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

         Net Loss

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

EBITDA

                Consolidated  EBITDA,  as defined,  increased  by  approximately
$10.2  million,  or 39.7%,  from $25.7 million in 1999 to $35.9 million in 2000.
During the same  periods,  EBITDA  margin  increased  from 16.3% to 17.4% of net
revenues.
                                        26
<PAGE>
1999 Compared to 1998

Revenues

         Net revenues  decreased by  approximately  $1.8 million,  or 1.1%, from
$159.9 million in 1998 to $158.2 million in 1999.  Casino revenues  decreased by
approximately  $3.6 million,  or 4.6%,  from $77.7 million  during 1998 to $74.1
million during 1999 due primarily to a 2.4% fall in table games hold  percentage
from 1998, which decreased win by approximately  $2.1 million.  Table games drop
was $6.6 million  down from 1998,  resulting in a loss of $1.2 million in tables
games revenue. Slot coin-in,  however,  increased $10.6 million from 1998, which
contributed an additional  $700,000 in slot revenue.  Room revenues increased by
approximately  $300,000,  or 0.7%,  from $39.6  million in 1998 to $39.9 million
during 1999 as a result of an increase  in hotel  occupancy  from 95.2% to 97.5%
(based on available  rooms) offset by a slight  decrease in average room rate of
$1.04, or 1.9%. Food and beverage revenues increased approximately $1.2 million,
or 4.9%,  from $23.9 million in 1998 to $25.1 million  during 1999 due primarily
to the expansion of the convention  center banquet  facilities in February 1999.
Entertainment revenues decreased by approximately  $550,000, or 2.6%, from $21.5
million during 1998 to $21.0 million during 1999 due primarily to the closing of
Splash in early  November  1999 until  December 25, 1999 for  renovation.  Other
revenues increased by approximately $550,000, or 5.0%, from $11.2 million during
1998 to $11.7 million during 1999 due primarily to increased  telephone and gift
shop revenues.  Promotional  allowances decreased by approximately  $300,000, or
2.4%,  from $14.0 million  during 1998 to $13.7 million  during 1999  consistent
with the decrease in table games play.

Direct Costs and Expenses of Operating Departments

           Total direct costs and expenses of operating departments decreased by
approximately  $1.0  million,  or 0.9%,  from  $103.8  million in 1998 to $102.9
million in 1999.  Casino expense  decreased by  approximately  $2.1 million,  or
4.6%,  from $45.3 million  during 1998 to $43.2  million  during 1999 and casino
expenses as a percent of casino revenue  remained  constant at 58.3% in 1998 and
1999,  due to  decreased  casino  marketing  costs.  Room costs  increased  $1.1
million,  or 5.0% from $20.8 million in 1998 to $21.9 million in 1999,  and room
costs as a percentage of room revenues increased from 52.7% during 1998 to 54.9%
during 1999 due to  additions to hotel  operations  staff in an effort to better
accommodate  our guests.  Food and beverage  costs  increased  by  approximately
$800,000,  or 4.4%,  from $17.5 million  during 1998 to $18.3 million during the
1999  period  resulting  from a  corresponding  increase in  revenues.  Food and
beverage  costs as a percentage  of food and beverage  revenues  decreased  from
73.3%  during  1998 to 72.9%  during  1999  because  food and  beverage  revenue
increased   while  payroll  and  other  costs  remained   relatively   constant.
Entertainment  costs decreased by  approximately  $600,000,  or 3.5%, from $16.9
million during 1998 to $16.3 million during 1999 and entertainment  expense as a
percentage of entertainment  revenues  decreased from 78.3% during 1998 to 77.5%
in 1999 due to the  increase in  revenues  in special  events and the box office
operation.  Other expenses  decreased by approximately  $100,000,  or 2.4%, from
$3.3 million to $3.2  million due to reduced  costs of long  distance  telephone
service.

Other Operating Expenses

           General and  administrative  expenses increased by approximately $2.5
million,  or 9.4%,  from  $27.0  million  for 1998 to $29.5  million in 1999 due
primarily to increased  incentive and employee  retention plan costs required to
retain personnel in the competitive gaming environment. As a percentage of total
net revenues,  general and  administrative  expenses increased from 16.9% during
the 1998 period to 18.7% during the 1999  period.  Additionally,  utility  costs
have increased  approximately $600,000 from 1998 to 1999 due to the expansion of
the convention center.  Depreciation and amortization increased by approximately
$1.9  million,  or 15.3%,  from $12.1  million  during the 1998  period to $14.0
million  during the 1999 period due to a  significant  increase  in  depreciable
capital  expenditures  for operating  assets in the twelve months ended December
31, 1999 totaling approximately $31.1 million.
                                        27
<PAGE>
Other Income (Expense)

         Interest  expense  on the  $100  million  notes of $4.6  million,  less
interest  income on U.S.  Treasury  Bills of $2.3  million was  recorded in 1998
until the notes were redeemed on June 1, 1998. Interest expense, other increased
by $3.9 million due to the 13% First Mortgage Notes issued by Riviera Black Hawk
in June 1999. Interest income,  other decreased $200,000 because of the decrease
in investment  balances for the period as the proceeds of the $175 million notes
were utilized in the Convention  Center Pavillion in early 1999 and the proceeds
of the $45 million  notes were utilized in the Black Hawk,  Colorado  project in
the second half of 1999.  Capitalized  interest increased $2.1 million primarily
on the Black Hawk,  Colorado project but also on the Convention Center Pavillion
and Pavillion Sky Box projects.

         Other expenses,  net include Paulson litigation and settlement costs of
$1.9 million in 1999. Of this amount $1.2 million  represents  the spread on the
repurchase  of Mr.  Paulson's  shares in connection  with the  settlement of the
litigation.  Riviera  agreed to pay $7.50 per share in July 1999 when the market
price was $5.00 per share.

Extraordinary Item, Net of Taxes in 1998

           The $100 million  notes,  for which  retirement  monies were put into
trust in August  1997,  were  retired on June 1, 1998.  The call premium of $4.3
million and unamortized deferred financing costs totaling $300,000 were recorded
net of the 35% income tax effect of $1.6 million  resulting in an  extraordinary
loss of $3.0 million.

Net Income, (Loss)

                  Net loss decreased  approximately  $1.2 million from a loss of
$4.1  million  in 1998 to a loss of $2.9  million in 1999 due  primarily  to the
extraordinary  item in 1998.  Federal  income tax benefits  exceed the normal 35
percent  because the Company  settled an Internal  Revenue Service audit through
1996. The audit resulted in the release of reserves of $2.2 million for taxes on
employee meals and other items, which were settled favorably to the Company.

EBITDA

                  EBITDA, as defined,  decreased by approximately  $3.4 million,
or 11.7%,  from $29.1 million in 1998 to $25.7 million in 1999.  During the same
periods, EBITDA margin decreased from 18.2% to 16.2% of net revenues.

Liquidity and Capital Resources

         The Company  had cash and short term  investments  of $52.2  million at
December  31,  2000,  which was an increase of $9.4 million from the balances at
December 31, 1999.

         For 2000,  the Company's net cash provided by operating  activities was
$19  million  compared  to $6.7  million in 1999.  Cash flows used in  investing
activities  were $4.2 million in 2000.  Cash flows used in investing  activities
were $57.9 million in 1999.  Net cash used in financing was $5.8 million in 2000
primarily due to the  repurchase of treasury stock and Black Hawk First Mortgage
Notes.  Net cash  provided by financing was $45.2  million in 1999.  EBITDA,  as
defined,  for 2000 and 1999 was $35.9 million and $25.7  million,  respectively.
Management  believes  that cash flow from  operations,  combined  with the $52.2
million  cash and  short  term  investments,  will be  sufficient  to cover  the
Company's debt service and enable  investment in budgeted  capital  expenditures
for the next twelve months.

         Cash flow from  operations is not expected to be sufficient to pay 100%
of the  principal  of the $175  million 10% Notes at maturity on August 15, 2004
and the $45  million  13% Notes at  maturity  on May 1, 2005.  Accordingly,  the
ability of the Company and its subsidiary to repay the Notes at maturity will be
                                        28
<PAGE>
dependent upon its ability to refinance  those notes.  There can be no assurance
that the Company and its  subsidiary  will be able to  refinance  the  principal
amount of the Notes at maturity.  The 10% Notes are not redeemable at the option
of the Company until August 15, 2001,  and thereafter are redeemable at premiums
beginning at 105.0% and declining each subsequent year to par in 2003.  Although
Riviera Black Hawk, Inc. can, at any time prior to May 1, 2001, redeem up to 35%
of the aggregate  principal amount of the 13% notes at 113% with the proceeds of
a qualified public offering, the subsidiary may not redeem 100% of the 13% Notes
until May 1, 2002, at premiums beginning at 106.5% and declining each subsequent
year to par in 2004.

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

         The 10% Note  Indenture  contains  certain  covenants,  which limit the
ability of the Company and its  restricted  subsidiaries  (and its  unrestricted
subsidiary  Riviera Black Hawk, Inc. under the 13% Notes Indenture),  subject to
certain exceptions,  to : (i) incur additional indebtedness;  (ii) pay dividends
or other  distributions,  repurchase  capital stock or other equity interests or
subordinated   indebtedness;   (iii)  enter  into  certain   transactions   with
affiliates;  (iv) create certain liens; sell certain assets;  and (v) enter into
certain  mergers  and  consolidations.  As a result of these  restrictions,  the
ability of the Company and its subsidiaries to incur additional  indebtedness to
fund operations or to make capital  expenditures  is limited.  In the event that
cash flow from  operations  is  insufficient  to cover  cash  requirements,  the
Company and its  subsidiaries  would be required to curtail or defer  certain of
their capital expenditure programs under these  circumstances,  which could have
an adverse effect on operations. At December 31, 2000, the Company believes that
it is in compliance with the covenants.













                                        29
<PAGE>
<TABLE>
<CAPTION>
Item 7A Disclosure

Interest Rate Sensitivity

Principal (Notational Amount by Expected Maturity)
Average Interest Rate

(Amounts in Thousands)                                                                                          Fair Value
<S>                               <C>        <C>        <C>        <C>        <C>        <C>            <C>        <C>
                                  2001       2002       2003       2004       2005     Thereafter      Total        At
                                                                                                                 12/31/00

Long Term Debt
Including Current Portion

Equipment loans and
 Capital leases-Las Vegas          $1,103     $1,201     $1,285     $1,005        $17                    $4,611     $4,611

Average interest rate                8.0%       7.8%       7.8%       8.4%       8.4%

 10% First Mortgage Note                                          $173,885                             $173,885   $150,500

Average interest rate                                                10.0%

Equipment loans
Black Hawk, Colorado                  $10         $8                                                        $18        $18

Average interest rate               11.2%       11.2%

Capital leases
Black Hawk, Colorado               $1,672     $1,848     $2,044     $2,263       $658                    $8,485     $8,485

Average interest rate              10.8%       10.8%     10.8%       10.8%      10.8%

Special Improvement
District Bonds-Black Hawk,

 Colorado casino project              $86        $68        $71        $76        $81          $221        $603       $603

Average interest rate                5.5%       5.5%       5.5%       5.5%       5.5%          5.5%


 13% First Mortgage Note
Black Hawk, Colorado casino
project                                                                       $38,441                   $38,441    $38,441

Average interest rate                                                           13.0%
</TABLE>
                                        30
<PAGE>
Forward Looking Statements

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

Item 8.    Financial Statements and Supplementary Data

           See financial Statements included in Item 14(a).

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

           None.

                                    PART III

Item 10.   Directors and Executive Officers of the Registrant.

           Information  regarding this item is  incorporated by reference to the
Company's  Proxy  Statement to be filed on or about April 10, 2001,  relating to
the Annual Meeting of Stockholders to be held on May 15, 2001 and is made a part
hereof.

Item 11.   Executive Compensation

           Information  regarding this item is  incorporated by reference to the
Company's  Proxy  Statement to be filed on or about April 10, 2001,  relating to
the Annual Meeting of Stockholders to be held on May 15, 2001 and is made a part
hereof.

Item 12.   Principal Shareholders

           Information  regarding this item is  incorporated by reference to the
Company's  Proxy  Statement to be filed on or about April 10, 2001,  relating to
the Annual Meeting of Stockholders to be held on May 15, 2001 and is made a part
hereof.

Item 13.   Certain Relationships and Related Transactions

           Information  regarding this item is  incorporated by reference to the
Company's  Proxy  Statement to be filed on or about April 10, 2001,  relating to
the Annual Meeting of Stockholders to be held on May 15, 2001 and is made a part
hereof.
                                        31
<PAGE>
                                     PART IV

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

           (a)(1)   List of Financial Statements

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

-        Independent  Auditor's Report dated February 14, 2001. - Consolidated
         Balance Sheets as of December 31, 2000 and 1999.
-        Consolidated Statements of Operations for the Years Ended December 31,
         2000, 1999 and 1998.
-        Consolidated Statements of Stockholders' Equity for the Years Ended
         December 31, 2000, 1999 and 1998.
-        Consolidated Statements of Cash Flows for the Years Ended December 31,
         2000, 1999 and 1998.
-        Notes to Consolidated Financial Statements.

           (a)(2)   List of Financial Statement Schedules

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

           (a)(3)   List of Exhibits

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

           (b)      Reports on Form 8-K

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

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

           -  8-K field  October  27,  2000,  announcing  that the  Company  had
              released its third quarter, 2000, financial results and announcing
              the Company had purchased 50,000 shares of its outstanding stock
              in a private transaction.




                                        32
<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 20, 2001


           Pursuant to the requirements of the Securities  Exchange Act of 1934,
this  report 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 20, 2001
William L. Westerman        Executive Officer and President

/s/ DUANE R. KROHN          Treasurer (Principal Financial        March 20, 2001
Duane R. Krohn              and Accounting Officer)

/s/ ROBERT R. BARENGO       Director                              March 20, 2001
Robert R. Barengo

/s/ JAMES N. LAND, JR.      Director                              March 20, 2001
James N. Land, Jr.

/s/ JEFFREY A. SILVER       Director                              March 20, 2001
Jeffrey A. Silver




                                        33
<PAGE>
                                  EXHIBIT INDEX

Exhibit                                Description
Number

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

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

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

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

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

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

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

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

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

3.9*                                   Articles of Incorporation of Riviera
                                       Gaming  Management of Colorado, Inc. (see
                                       Exhibit 3.9 to Amendment No. 1 to
                                       Registration  Statement on Form S-4 filed
                                       with the Commission on December 9, 1997,
                                       Commission File No. 0-21430)
                                        34
<PAGE>
3.10*                                  Bylaws of Riviera  Gaming  Management  of
                                       Colorado,  Inc.  (see Exhibit 3.10 to
                                       Amendment No. 1 to Registration Statement
                                       on Form S-4 filed with the Commission
                                       on December 9, 1997, Commission File
                                       No. 0-21430)

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

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

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

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

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

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

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

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

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

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

                                        35
<PAGE>
10.8*                                  Equity   Registration  Rights  Agreement,
                                       dated June 30,  1993,  among the  Company
                                       and the  Holders of  Registerable  Shares
                                       (see   Exhibit   10.9   to   Registration
                                       Statement   Form  S-1   filed   with  the
                                       Commission on August 11, 1993, File No.
                                       33-67206)

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

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

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

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

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

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

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

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

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

10.18*                                 The  Registrant's  1993 Stock Option Plan
                                       (see Exhibit  10.25 to Amendment No. 1
                                       to  Registration Statement Form S-1 filed
                                       with the  Commission  on August 19,
                                       1993, File No. 33-67206)
                                        36
<PAGE>

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

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

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

10.22*                                 Management Agreement by and between
                                       Elsinore Corporation,  Four Queens, Inc.
                                       and Riviera Gaming  Management  Corp. -
                                       Elsinore (see Exhibit 10.30 to Form 10-K
                                       for the fiscal year ended December 31,
                                       1996, Commission File No. 000-21430)

10.23*                                 Employment Agreement dated as of November
                                       21, 1996 by and between the Company,
                                       Riviera Operating Corporation and William
                                       L.  Westerman (see Exhibit 10.31 to Form
                                       10-K for the fiscal  year ended  December
                                       31,  1996, Commission File No.000-21430)

10.24*                                 Revolving Line of Credit Loan  Agreement
                                       dated February 28, 1997 by and between
                                       the Company,Riviera Operating Corporation
                                       and U.S. Bank of Nevada (see Exhibit
                                       10.32 to Form 10-K for the  fiscal  year
                                       ended  December  31,  1996,  Commission
                                       File No. 000-21430)

10.25*                                 Letter of Intent dated March 4, 1997
                                       between the Company and Eagle Gaming,L.P.
                                       (see  Exhibit  10.33 to Form 10-K for the
                                       fiscal year ended  December  31, 1996,
                                       Commission File No. 000-21430)

10.26*                                 Deed  of  Trust,   Assignment  of  Rents,
                                       Leases,   Fixture   Filing  and  Security
                                       Agreement,   dated   August   13,   1997,
                                       executed by Riviera Holdings  Corporation
                                       for   the   benefit   of   Norwest   Bank
                                       Minnesota,   National   Association  (see
                                       Exhibit 10.1 to Form 8-K filed August 18,
                                       1997, Commission File No. 000-21430)

10.27*                                 Security  Agreement,  dated  August  13,
                                       1997,  by and among  Riviera  Holdings
                                       Corporation, Riviera Operating
                                       Corporation,  Riviera Gaming Management,
                                       Inc., Riviera  Gaming  Management  of
                                       Colorado,  Inc.,  Riviera  Gaming
                                       Management - Elsinore,  Inc. and Norwest
                                       Bank Minnesota,  National  Association
                                       (see Exhibit 10.2 to Form 8-K filed
                                       August 18, 1997, Commission File No.
                                       000-21430)

10.28*                                 Stock Pledge and Security Agreement,dated
                                       August 13, 1997, executed by Riviera
                                       Holdings Corporation (see Exhibit 10.3 to
                                       Form 8-K filed  August  18,  1997,
                                       Commission File No. 000-21430)
                                        37
<PAGE>
10.29*                                 Stock Pledge and Security Agreement,
                                       dated August 13, 1997,executed by Riviera
                                       Operating Corporation (see Exhibit  10.4
                                       to Form 8-K filed  August 18,  1997,
                                       Commission File No. 000-21430)

10.30*                                 Stock Pledge and Security Agreement,
                                       dated August 13, 1997,executed by Riviera
                                       Gaming  Management,  Inc.  (see  Exhibit
                                       10.5 to Form 8-K filed August 18, 1997,
                                       Commission File No. 000-21430)

10.31*                                 Restricted  Account  Agreement,  dated
                                       August 13,  1997,  by and among  Riviera
                                       Holdings  Corporation,  Norwest Bank
                                       Minnesota, National  Association and U.S.
                                       Bank of Nevada (see Exhibit  10.6 to Form
                                       8-K filed August 18, 1997,  Commission
                                       File No. 000-21430)

10.32*                                 First Amendment to Revolving Line of
                                       Credit Loan  Agreement,  dated August 12,
                                       1997, between Riviera Holdings
                                       Corporation,Riviera Operating Corporation
                                       and U.S. Bank (see Exhibit 10.7 to Form
                                       8-K filed August 18, 1997, Commission
                                       File No. 000-21430)

10.33*                                 Escrow  Agreement,  dated  September  15,
                                       1997,  by and among R&E Gaming  Corp.,
                                       Riviera Holdings Corporation,  and State
                                       Street  Bank and Trust  Company  of
                                       California  (see Exhibit 10.2 to Form 8-K
                                       filed  September 29, 1997,  Commission
                                       File No. 000-21430)

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

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

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

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

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

10.39                                  Amendment to Employment agreement between
                                       the Company and Robert A.  Vannucci
                                       effective October 1, 2000.

10.40                                  Amendment to Employment agreement between
                                       the Company and William L. Westerman
                                       effective January 1, 2001.
                                        38
<PAGE>
10.41                                  Deferred Compensation Plan dated November
                                       1, 2000,  adopted by the Company on
                                       October 2, 2000 (Registration  Statement
                                       Form S - 8 filed with the Commission on
                                       February 14, 2001).

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

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

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

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

                                        39
<PAGE>

Exhibit 10.39
                                          AMENDMENT

                                             TO

                                    EMPLOYMENT AGREEMENT

         This  AMENDMENT  ("AMENDMENT"),  dated as of October 1, 2000, is made a
part of that certain EMPLOYMENT AGREEMENT ("AGREEMENT"),  dated July 1, 1998, by
and  between  RIVIERA  HOLDINGS   CORPORATION   ("RHC"),  and  its  wholly-owned
subsidiary,  RIVIERA OPERATING CORPORATION ("ROC") (collectively the "COMPANY"),
and ROBERT VANNUCCI ("EXECUTIVE").

         The parties hereto agree to amend that certain AGREEMENT as follows:

         1.     EFFECTIVE DATE:

                  This AMENDMENT shall be in effect as of October 1, 2000.

         2.     EMPLOYMENT:

                  During the Term of Employment (as defined below),  the COMPANY
agrees to employ  EXECUTIVE as President and Chief Operating  Officer of RIVIERA
OPERATING  CORPORATION  upon the terms and conditions  and for the  compensation
provided in both this AMENDMENT and the AGREEMENT, and EXECUTIVE agrees to be so
employed and to render the services  specified  in both this  AMENDMENT  and the
AGREEMENT.

          3.     TERM:

                  The Term of Employment of EXECUTIVE is hereby  extended  until
December 31, 2001,  subject to earlier  termination as provided in Section 10 of
the AGREEMENT.  The AMENDMENT and AGREEMENT  (collectively  the "AGREEMENT II"),
shall automatically renew on an annual basis unless either party gives the other
party  one-hundred  twenty (120) days written  notice of intention not to renew.
The initial term and any extension thereof shall  collectively be referred to as
the "TERM".

          4.    COMPENSATION:
                 (1)  Cash Salary:     Commencing October 1, 2000,
                                       $300,000 per year paid bi-weekly

                 (2)  Restricted Stock:  (i) Commencing January 1, 2001, and
                                             continuing for each quarter during
                                             the Term of Agreement II, Executive
                                             shall receive $25,000 of RHC
                                             Restricted Stock per quarter from
                                             treasury stock at the closing price
                                             on the first day of each quarter,
                                             or next business day as applicable
                                             ; and

                                        (ii) Commencing for calendar year 2001,
                                             EXECUTIVE shall  receive RHC
                                             Restricted Stock from treasury
                                             stock at the closing price on March
                                             15, of each applicable year,or next
                                             business day as applicable, in an
                                             amount equal to the EXECUTIVE level
                                             incentive earned (e.g., at one-
                                             hundred percent (100%), EXECUTIVE
                                        1
<PAGE>
                                             awarded an additional $100,000 in
                                             Restricted Stock at market price
                                             from treasury stock).

                  (3)  Cash Incentive:       Amount earned at EXECUTIVE level
                                             (e.g.,at one-hundred percent(100%),
                                             EXECUTIVE awarded $100,000)

           5.     NON-RENEWAL:

                  In the event the COMPANY exercises its option not to renew the
AGREEMENT  II during  any TERM for any  reason  except  CAUSE as  defined in the
AGREEMENT, EXECUTIVE shall receive the following during the non-renewal calendar
year subject to mitigation (collectively "SEVERANCE"):

                  (1)      Cash salary in the amount of Four Hundred Thousand
                           Dollars ($400,000.00) paid bi-weekly;

                  (2)      Cash  incentive  bonus  in an  amount  equal  to  two
                           hundred  percent  (200%) of the  executive  incentive
                           cash bonus awarded  during  EXECUTIVE's  last renewed
                           calendar year (e.g., if one hundred percent (100%) of
                           executive  bonus level is achieved  which  represents
                           One Hundred Thousand Dollars ($100,000.00), EXECUTIVE
                           awarded Two Hundred Thousand  Dollars  ($200,000.00).
                           EXECUTIVE shall not receive restricted stock pursuant
                           to paragraph 4(b)(ii);

                  (3)      Full insurance benefits and use of a COMPANY vehicle;

                  (4)      EXECUTIVE shall not receive restricted stock pursuant
                           to paragraph 4(b)(i); and

                  (5)      The foregoing SEVERANCE is in lieu of any payments to
                           which EXECUTIVE would have been entitled  pursuant to
                           any Termination Agreement then in effect.

          6.     DEATH OR DISABILITY:

                  If during the TERM of this AGREEMENT II EXECUTIVE's employment
is terminated  due to death or disability of EXECUTIVE,  EXECUTIVE or his estate
shall receive the following:

                  (1)       Four Hundred Thousand Dollars ($400,000.00) payable
                            bi-weekly in twenty-six (26 equal installments
                            commencing upon such termination; and

                  (2)       On or before March 15th of the calendar year
                            immediately following such termination, a prorated
                            share of the SEVERANCE cash bonus to which EXECUTIVE
                            would have been entitled had the COMPANY exercised
                            its option not to renew the AGREEMENT II. For
                            example, if such termination occurs on June 30th and
                            the EXECUTIVE level bonus is at one-hundred percent
                            (100%),the cash incentive due on the following March
                            15th is One Hundred Thousand Dollars  ($100,000.00)
                            (6/12 x  $200,000.00;  cash is  substituted  for
                            restricted stock).

            7.   RENEGOTIATION:

                  This  AMENDMENT and  AGREEMENT II is subject to  renegotiation
for the calendar year 2002.
                                        2
<PAGE>
            8.   CONFLICT OF TERMS:

                  In the event there is a conflict  between this  AMENDMENT  and
the AGREEMENT, the terms of this AMENDMENT shall control.

            9.   REMAINING PROVISIONS:

                  Except as changed by this  AMENDMENT,  all other terms and
conditions of the AGREEMENT shall remain in full force and effect.

           10.   CHOICE OF LAW:

                  This AGREEMENT II shall be interpreted in accordance  with the
laws of the State of Nevada. The only proper venue for any legal action shall be
Clark County, Nevada.

         IN WITNESS WHEREOF, the parties hereto have agreed to this AMENDMENT TO
EMPLOYMENT AGREEMENT as of the day and year first written above.

COMPANY:                                                EXECUTIVE:
RIVIERA HOLDINGS CORPORATION                            ROBERT VANNUCCI
and its wholly-owned subsidiary
RIVIERA OPERATION CORPORATION



By:______________________________                    __________________________
     WILLIAM L. WESTERMAN                               ROBERT VANNUCCI
     Chief Executive Officer





                                        3

<PAGE>

Exhibit 10.40


                                 FIRST AMENDMENT

                             TO EMPLOYMENT AGREEMENT

                                     BETWEEN

                               WILLIAM L. WESTERMAN
                                       AND

                        RIVIERA HOLDINGS CORPORATION AND

                          RIVIERA OPERATING CORPORATION

         This AMENDMENT dated January 1, 2001, to the Employment Agreement dated
as of  November  21,  1996  (the  "AGREEMENT"),  by and among  RIVIERA  HOLDINGS
CORPORATION  ("RHC"),  and  its  wholly-owned   subsidiary,   RIVIERA  OPERATING
CORPORATION  ("ROC")  (collectively  the  "COMPANY"),  and WILLIAM L.  WESTERMAN
("EXECUTIVE").

         WHEREAS,  This  Amendment has been  approved by the COMPANY's  Board of
Directors on December 6, 2000.

         NOW, THEREFORE,  in consideration of the mutual agreements  hereinafter
set forth, the parties hereto agree as follows:

11.              There shall be no further COMPANY contribution to the principal
                 of EXECUTIVE's retirement account following the January 1, 2001
                 COMPANY contribution.  Interest will continue to accrue.

12.              To the  extent  that  EXECUTIVE's  year 2001  incentive  bonus
                 exceeds  Four Hundred  Thousand  Dollars  ($400,000.00),  such
                 excess amount shall be applied to reduce the principal balance
                 of EXECUTIVE's  retirement account in the exact amount of such
                 excess at the time the incentive is paid (approximately  March
                 15, 2002).

13.              In the event that EXECUTIVE's Rabbi Trust has not been funded,
                 the  balance of  principal  and  interest  of such Rabbi Trust
                 shall  be  paid  to  EXECUTIVE  upon  EXECUTIVE's  retirement,
                 termination  (unless  for a cause) or upon a change in control
                 of the Company.

14.              Except as otherwise specifically provided herein, the terms and
                 conditions of the AGREEMENT shall remain in full force and
                 effect.

                                        1
<PAGE>


         IN WITNESS WHEREOF, the parties have duly executed this AGREEMENT as of
the day and year first written above.

RIVIERA HOLDINGS CORPORATION                     RIVIERA OPERATING CORPORATION



By:_____________________________               By:_____________________________
     DUANE KROHN, Treasurer                         DUANE KROHN, Treasurer


EXECUTIVE

-------------------------------------------------------------------------------
WILLIAM L. WESTERMAN












                                        2
<PAGE>




                                  Exhibit 10.41

                          RIVIERA HOLDINGS CORPORATION

                           DEFERRED COMPENSATION PLAN

                          (Effective November 1, 2000)
















                                        1
<PAGE>



                               CERTIFICATE OF ADOPTION



         RIVIERA HOLDINGS CORPORATION, acting through the Compensation Committee
of its Board of  Directors,  hereby  adopts  the  RIVIERA  HOLDINGS  CORPORATION
DEFERRED  COMPENSATION PLAN in the form attached hereto,  effective  November 1,
2000.

                            RIVIERA HOLDINGS CORPORATION

                            By_________________________________
                            On behalf of the Compensation Committee

ATTEST:

------------------------

















                                        2

<PAGE>

                                TABLE OF CONTENTS

                                                                         PAGE
SECTION 1.................................................................
         Purpose..........................................................4
                  1.1      Purpose........................................4
                  1.2      Employer.......................................4
                  1.3      Effective Date.................................4
                  1.4      Administration of Plan.........................4
                  1.5      Notices........................................4

SECTION 2.................................................................
         Eligibility and Participation....................................5
                  2.1      Eligibility....................................5
                  2.2      Participation..................................5
                  2.3      Cessation of Participation.....................5

SECTION 3.................................................................
         Enrollment and Deferral Elections................................6
                  3.1      Salary Deferral Elections......................6
                  3.2      Bonus Deferral Elections.......................6
                  3.3      Effective Period for Deferral Election.........6
                  3.4      Distribution Elections.........................6
                  3.5      Deferral Account...............................8
                  3.6      Investment of Deferral Account.................8
                  3.7      Adjustment of Participants' Deferral Account...9
                  3.8      Statement of Account...........................9
                  3.9      Additional Limitation on Deferral Elections....9

SECTION 4.................................................................
         Employer Contributions...........................................10
                  4.1      Amount of Employer Contribution................10
                  4.2      Accounting for Employer Contributions..........10
                  4.3      Vesting of Employer Contributions..............10

SECTION 5.................................................................
         Distribution of Deferral Accounts................................11
                  5.1      Distributions Upon Separation From Service.....11
                  5.2      Form of Distributions..........................11
                                        3
<PAGE>
                  5.3      Designation of Beneficiary.....................11
                  5.4      Withholding of Employment Taxes................11

SECTION 6.................................................................
         Miscellaneous....................................................12
                  6.1      No Right to Company Assets.....................12
                  6.2      No Employment Rights...........................12
                  6.3      Facility of Payment............................12
                  6.4      Nonassignability...............................12
                  6.5      Effect on Other Benefits.......................12
                  6.6      Independence of Plan...........................12
                  6.7      Responsibility For Legal Effect................13
                  6.8      Action by the Company..........................13
                  6.9      Successors, Acquisitions,Mergers,Consolidations13
                  6.10     Gender and Number..............................13
                  6.11     Governing Law..................................13
                  6.12     Claims Procedure...............................13

SECTION 7.................................................................14
         The Compensation Committee.......................................14
                  7.1      Compensation Committee's General Powers, Rights,
                           and Duties.....................................14
                  7.2      Interested Compensation Committee Member.......15
                  7.3      Compensation Committee Expenses................15
                  7.4      Information Required by Compensation Committee.15
                  7.5      Uniform Rules..................................15
                  7.6      Review of Benefit Determinations...............15
                  7.7      Compensation Committee's Decision Final,
                           Mistakes.......................................15
                  7.8      Indemnification................................15

SECTION 8.................................................................16
         Amendment and Termination........................................16








                                        4

<PAGE>

                          RIVIERA HOLDINGS CORPORATION

                           DEFERRED COMPENSATION PLAN

                            (Effective July 1, 2000)

                                    SECTION 1
                                    Purpose

1.1 Purpose

RIVIERA HOLDINGS  CORPORATION  DEFERRED  COMPENSATION PLAN (the "Plan") has been
established by RIVIERA HOLDINGS CORPORATION (the "Company") to enable designated
employees of the Company and RIVIERA  OPERATING  CORPORATION  ("ROC") to defer a
portion of their salaries and bonuses,  and also to provide those employees with
an  opportunity to receive  monetary  payments based on the increase in value of
the Common Stock of the Company  ("Company Stock") or other investment funds. By
allowing  key  management  employees  to  participate  in the Plan,  the Company
expects the Plan to benefit it in  attracting  and  retaining  the most  capable
individuals to fill its executive positions. The Plan is intended to be unfunded
for tax purposes and for purposes of Title I of the Employee  Retirement  Income
Security  Act of 1974,  as  amended  from  time to time;  however,  the  Company
reserves the right to fund the Plan at any time.

1.2 Employer

The Plan as set forth below shall apply to eligible  employees  of the  Company,
ROC, and any other  subsidiary or affiliate of the Company which adopts the Plan
with the consent of the  Compensation  Committee of the Board of Directors  (the
"Compensation  Committee").  The Company and each  subsidiary or affiliate  that
adopts the Plan with the Compensation Committee's consent will be referred to as
an "Employer" and may be referred to collectively as the "Employers."

1.3 Effective Date

The  "Effective  Date" of the Plan as set forth below is  November 1, 2000.  The
Plan will be administered  on the basis of a 12-month  period  beginning on each
January 1 (the "Plan Year").

1.4 Administration of Plan

The Plan will be  administered  by the  Compensation  Committee,  as provided in
Section 7.

1.5 Notices

Any  notice  or  document  relating  to the Plan  which is to be filed  with the
Company may be delivered,  or mailed by registered  or certified  mail,  postage
prepaid,  to the Compensation  Committee in care of the Company at the Company's
headquarters.

                                        5
<PAGE>





                                    SECTION 2
                          Eligibility and Participation

2.1 Eligibility

Before  the  beginning  of each  Plan  Year,  the  Compensation  Committee  will
designate the  employees  eligible to  participate  in the Plan during such Plan
Year.  In general,  employees  eligible for the Plan will be limited to a select
group of management or highly compensated  employees,  which means all employees
whose  Compensation  was $100,000 or more in the year prior to the year in which
the Participant  makes a salary deferral election pursuant to subsection 3.1. An
employee's  eligibility  to make a  deferral  to the Plan in any given Plan Year
does not guarantee  that employee the right to make a deferral in any subsequent
Plan Year.

2.2 Participation

An employee  designated as eligible to participate in the Plan for any Plan Year
may make a deferral election on a timely basis as described in Section 3, and if
the  employee  makes  such a  deferral  election  he shall be  referred  to as a
"Participant"  until he has  received  a  distribution  of his  entire  Deferral
Account (as defined in subsection 3.7).

2.3 Cessation of Participation

A Participant  in the Plan who  separates  from service with the Company and all
its  subsidiaries  and  affiliates  for any reason  will cease to be eligible to
defer compensation under this plan, and will become entitled to distributions as
described in Section 5.








                                        6
<PAGE>





                                    SECTION 3
                         Enrollment and Deferral Elections

3.1 Salary Deferral Elections

Except as provided in Section 3.9, an employee designated as a Participant for a
Plan  Year may  elect to defer  not less than 1% nor more than 100% (in whole 1%
increments)   of  his   Compensation   (as  defined  below)  for  that  year.  A
Participant's  "Compensation"  means  the  total  cash  compensation  paid  to a
Participant for services  rendered to the Company as an employee (as reported on
Form W-2).  For all Plan  Years,  a  Participant  must make his salary  deferral
election in advance by signing a salary  deferral  agreement  and filing it with
the Compensation  Committee no later than the December 1 which precedes the Plan
Year to which the election relates.  For any Plan Year, the amount deferred by a
Participant  under  this  subsection,   together  with  amounts  deferred  under
subsection  3.2,  shall  not be  more  than  the  maximum  deferral  amount  (or
percentage of  compensation)  communicated  to the employee by the  Compensation
Committee for that Plan Year.

3.2 Bonus Deferral Elections

An employee  designated as a Participant  for a Plan Year may elect to defer not
less than 1% nor more than 100  percent  (in whole 1%  increments)  of any bonus
received  or any amount  paid to him under a stay bonus  agreement  in that Plan
Year (collectively,  a "bonus"). For all Plan Years, a Participant must make his
bonus deferral election in advance by signing a deferral agreement and filing it
with the Compensation  Committee no later than the December 1 which precedes the
Plan Year to which the election relates. Bonus deferral elections, together with
salary and  Incentive  Payment  deferral  elections,  are  subject to the annual
minimum and maximum deferral limits described in subsection 3.1.

3.3 Effective Period for Deferral Election

                  (a)      A  Participant's  salary or bonus deferral  elections
                           shall  remain  in  effect  only  for  the  Plan  Year
                           specified  in the  deferral  agreement.  An  eligible
                           employee  must  file  a  separate   salary  or  bonus
                           deferral election on or before December 1 in order to
                           make  deferrals  for  the  following  Plan  Year.  An
                           employee's  eligibility  to make a  salary  or  bonus
                           deferral  to the Plan in any given Plan Year does not
                           guarantee  that employee the right to make a deferral
                           in any subsequent Plan Year.  Subject to subparagraph
                           (c) below, a  Participant's  salary or bonus deferral
                           election  filed with the  Compensation  Committee  is
                           irrevocable  on and after the deadline for filing the
                           election.

                  (b)      In  the  event  of  an  unforeseeable   emergency,  a
                           Participant  may  request in writing  that  salary or
                           bonus  deferral  elections  elected by him  hereunder
                           cease for the then current Plan Year.  Such emergency
                           must inflict  hardship upon the  Participant and must
                           arise from causes beyond the  Participant's  control.
                           The  Compensation  Committee shall, in its reasonable
                           judgment, determine whether such an emergency exists.
                           If the Compensation Committee determines that such an
                           emergency  exists,  the  Participant's  deferrals for
                           such Plan Year shall cease, and the Participant shall
                           not be eligible  to resume  deferrals  hereunder  (if
                           otherwise   eligible)  until  the  second  Plan  Year
                           following  the  Plan  Year in  which  such  cessation
                           occurred.

3.4 Distribution Elections

           Participants are permitted to make distribution elections with regard
to their Deferral Accounts (as described in subsection 3.5), as follows:

                  (a)      Scheduled Salary and Bonus Distributions. Each
                           deferral election made by a Participant under
                           subsections 3.1 and 3.2 shall include an election of
                                        7
<PAGE>
                           the date on which the amount of such deferral
                           (together with any investment gains thereon) will be
                           distributed. Such date shall be referred to as the
                           "Distribution Date" and shall not be later than the
                           third year after the Plan Year to which the deferral
                           election relates. The Distribution Date, once elected
                           by the Participant, shall be irrevocable,subject only
                           to:(i)subsection 5.1, which provides for distribution
                           provisions upon separation from service in certain
                           cases; (ii) a subsequent election by the Participant
                           to postpone the Distribution Date,such election to be
                           made no later the January 1 preceding the Plan Year
                           in which the Distribution Date was to occur.  If a
                           Participant makes a second such subsequent election,
                           it will be of no effect unless approved by the
                           Compensation Committee.  No more than two subsequent
                           elections are permitted under the Plan.

                  (b)      Unscheduled In-Service Withdrawal Election Subject to
                           Penalty.  At any time during his employment  with the
                           Employers,  a Participant  may, by writing filed with
                           the  Compensation  Committee,  elect  to  withdraw  a
                           portion  of  the  balance  in his  Deferral  Account,
                           subject to the following penalties:

                           (i)      ten percent (10%) of the amount of the
                                    Participant's withdrawal request will be
                                    permanently forfeited, and the remaining
                                    balance will be payable to the Participant;
                                    and

                           (ii)     no deferrals or other  contributions  of any
                                    kind will be withheld from  compensation and
                                    credited to the  Participant  under the Plan
                                    prior to the  beginning  of the second  Plan
                                    Year following the Plan Year of withdrawal.

                  (c)      Hardship Withdrawal. If a Participant incurs a
                           hardship of the type described below, he may request
                           a withdrawal of a portion of his Deferral Account,
                           provided that the withdrawal is necessary in light of
                           immediate and heavy financial needs of the
                           Participant.  Such a withdrawal shall not exceed the
                           amount required to meet the immediate financial need
                           and not reasonably available from other resources of
                           the Participant(including all other distributions and
                           non-taxable loans currently available under any
                           qualified retirement plan of an Employer). Each such
                           withdrawal election shall be made at such time and in
                           such manner as the Compensation Committee shall
                                        8
<PAGE>
                           determine, and shall be effective in accordance with
                           such rules as the Compensation Committee shall
                           establish and publish from time to time.  Immediate
                           and heavy financial needs are limited to amounts
                           necessary for:

                           (i)      Unreimbursed medical or accident expenses
                                    incurred by the Participant, his spouse, or
                                    his dependents.

                           (ii)     Casualty loss pertaining to a principal
                                    residence of the Participant, or other
                                    property lost by the Participant.

                           (iii)    Preventing foreclosure on or eviction from
                                    the Participant's principal residence.

                           If  a  Participant  makes  a  withdrawal  under  this
                           subparagraph,   he  must   discontinue  all  deferral
                           elections  under the Plan from the date of withdrawal
                           through the remainder of that Plan Year.

3.5 Deferral Account

The  Compensation  Committee  shall  maintain in the name of each  Participant a
bookkeeping account known as the Participant's  "Deferral Account" for deferrals
made in  accordance  with  subsections  3.1 and 3.2.  A  Participant's  Deferral
Account shall include a subaccount for each deferral made under the Plan and any
employer  contributions  made to the  Participant  under  the  Plan.  Each  such
subaccount  shall reflect:  (a) the amount  deferred or contributed  during that
Plan Year, (b) any amounts  distributed during that Plan Year, and (c) the total
investment gains on the Deferral Account  described in subsection 3.6.  Deferred
amounts shall be credited to subaccounts  as soon as  practicable  following the
date bonuses and salary would  otherwise have been paid to the  Participant  but
for his deferral election.

3.6 Investment of Deferral Account

A Participant shall direct the investment of his Deferral Account. A Participant
shall  have  the  right  to elect to have  his  Deferral  Account  deemed  to be
invested, in percentages elected by the Participant,  in hypothetical funds, the
value of which shall track either the stock of the Company and or the investment
funds  available  under the Riviera Hotel & Casino  Employee 401(k) Savings Plan
(the "Measurement  Funds").  Participants may change their investment  elections
quarterly  on such date and in such  manner as  determined  by the  Compensation
Committee in its sole  discretion.  A  Participant's  Deferral  Account shall be
credited or debited each payroll  period (or,  with respect to that portion of a
Participant's  Deferral Account  attributable to bonus deferral elections,  each
time a bonus  is  deferred  into the  Plan)  based  on the  performance  of each
Measurement  Fund  selected  by the  Participant,  as though  (i)  Participant's
Deferral  Account  balance as of the first day of a payroll period were invested
in  the  Measurement  Fund(s)  selected  by  Participant,   in  the  percentages
applicable  to such  payroll  period,  as of the close of  business on the first
business day of such payroll period, at the closing price on such date; and (ii)
any  distributions  made to  Participant  that decrease  Participant's  Deferral
Account  balance  ceased being  invested in the  Measurement  Fund(s) and in the
percentages  applicable to such payroll period,  no earlier than the last day of
the payroll period preceding the date of  distribution,  at the closing price on
such date. Thereafter, the Measurement Funds that the Participant elects will be
revalued each payroll period,  based on the price of the stock of the Company on
that  date,  the value of the  investment  funds of the  Riviera  Hotel & Casino
Employee  401(k)  Savings Plan on that date,  and the  percentages  in which the
Participant is invested in each of the Measurement  Funds.  Notwithstanding  any
other  provision of this Agreement that may be interpreted to the contrary,  the
Measurement  Fund(s)  are to be used  for  measurement  purposes  only,  and the
allocation of Participant's  Deferral Account to such Measurement  Fund(s),  the
calculation  of  additional  amounts  and  the  crediting  or  debiting  of such
additional amounts to Participant's  Deferral Account shall not be considered or
construed  in any  manner  as an actual  investment  of  Participant's  Deferral
                                        9
<PAGE>
Account in any such Measurement  Fund(s).  Notwithstanding any provision of this
subsection  to the  contrary,  to the  extent  a  Participant's  Account  is not
entirely distributed within three years from the date the Participant  separates
from service with the Company for any reason,  the  Participant's  entire vested
Deferral  Account  shall  thereafter  be deemed to be invested in a money market
fund designated by the  Compensation  Committee  until such Deferral  Account is
fully distributed to the Participant.

3.7 Adjustment of Participants' Deferral Account

As of the last  day of each  payroll  period  (each  such  date,  and any  other
accounting  date  as  determined  by the  Compensation  Committee  in  its  sole
discretion,  is referred to below as an  "Accounting  Date"),  the  Compensation
Committee shall:

                  (a)      First,  charge to the proper  Deferral  Accounts  all
                           payments  or   distributions   made  since  the  last
                           preceding Accounting Date.

                  (b)      Next, credit each Participant's Deferral Account with
                           amounts  deferred on behalf of the  Participant  made
                           since the last preceding Accounting Date; and

                  (c)      Next, credit each Participant's Deferral Account with
                           any Employer  Contributions (as defined in subsection
                           4.1) made on behalf of the Participant since the last
                           preceding Accounting Date.

3.8 Statement of Account

As soon as practicable after the end of each calendar quarter,  the Compensation
Committee  shall furnish each  Participant  with a statement of the value of the
Participant's Account.

3.9 Additional Limitation on Deferral Elections

Notwithstanding  anything  in this  Section to the  contrary,  the  Compensation
Committee  may limit a  Participant's  deferral  election if, as a result of any
election, a Participant's  compensation from the Employers would be insufficient
to cover taxes and withholding applicable to the Participant.

                                        10
<PAGE>


                                    SECTION 4
                              Employer Contributions

4.1 Amount of Employer Contribution

For each Plan Year, the Employers may cause the Compensation Committee to credit
a Participant's  Deferral  Account with an amount (the "Employer  Contribution")
determined  by the  Employer  in its  discretion.  Such  contribution  shall  be
allocated based upon such factors as the Employer determines in its discretion.

4.2 Accounting for Employer Contributions

Employer Contributions on behalf of a Participant will be recorded in a separate
subaccount maintained in the Participant's  Deferral Account as of the same date
(the  "Crediting  Date")  that  the  underlying  deferral  is  credited  to  the
Participant's Deferral Account. Such subaccount will be deemed to be invested in
Company  Stock  and will be  adjusted  from  time to time in the same  manner as
described in subsection 3.7.

4.3 Vesting of Employer Contributions

                    At all times,  a  Participant  shall be fully  vested in his
Employer Contribution.

                                        11
<PAGE>


                                    SECTION 5
                         Distribution of Deferral Accounts

5.1 Distributions Upon Separation From Service

If a Participant  separates from service with the Employers,  the vested balance
in  the  Participant's  Deferral  Account  shall  be  distributed  to him on the
Distribution  Dates  previously  elected by the Participant  under  subparagraph
3.4(a); provided, however, that:

                  (a)      if on any  Distribution  Date, the  accounting  steps
                           described in subsection 3.7 have not been  completed,
                           such   distribution   will  be   delayed   until  the
                           accounting  steps  described in  subsection  3.7 have
                           been completed.

                  (b)      the Compensation  Committee,  in its discretion,  may
                           decide to pay the Participant  the remaining  balance
                           in his  Deferral  Account  in a lump sum prior to the
                           Distribution   Dates   previously   elected   by  the
                           Participant.

5.2 Form of Distributions

Amounts  deferred under this Plan for each Plan Year (and  investment  gains and
losses  thereon) shall be distributed to the Participant in cash with respect to
the  portion  that  the  Participant  directed  to be tied to the  value  of the
investment  funds of the Riviera Hotel & Casino Employee 401(k) Savings Plan or,
at the  Participant's  election,  either in cash or in stock with respect to the
portion  that the  Participant  directed to be tied to the value of the stock of
the Company.  At the time of his deferral election,  the Participant shall elect
whether the deferred  amounts shall be distributed in a lump sum or installments
over a  period  not to  exceed  3  years.  Distribution  shall  be  made  to the
Participant or, in the event of his death, to his beneficiary.

5.3 Designation of Beneficiary

A Participant  may  designate a beneficiary  under this Plan by filing a written
notice  with  the  Compensation  Committee  in  such  form  as the  Compensation
Committee  requires.  A Participant  may from time to time change his designated
beneficiary  without the consent of such beneficiary by filing a new designation
in writing with the Compensation Committee. If no designation under this Plan is
in  effect  at the  death  of the  Participant,  the  beneficiary  shall  be the
beneficiary  designated under the Riviera Hotel & Casino Employee 401(k) Savings
Plan,  and if no  designation  was ever filed under that plan,  the  beneficiary
shall be the spouse of the Participant at the time of his death or, if no spouse
is  living  at  the  death  of  the  Participant,   the  representative  of  the
Participant's estate.

5.4 Withholding of Employment Taxes

To the extent  required by law in effect at the time  distribution  is made from
the Plan,  the  Employers  shall  withhold any taxes  required to be withheld by
Federal, state, or local governments.

                                        12
<PAGE>


                                    SECTION 6
                                  Miscellaneous

6.1 No Right to Company Assets

No  Participant or other person shall acquire by reason of the Plan any right in
or  title  to  any  assets,  funds,  or  property  of the  Employers  whatsoever
including, without limiting the generality of the foregoing, any specific funds,
assets, or other property which the Employers, in their sole discretion, may set
aside in  anticipation  of a liability  hereunder.  Any  benefits  which  become
payable hereunder shall be paid from the general assets of the Employers, unless
the  Employers  decide  to fund  the  Plan.  A  Participant  shall  have  only a
contractual right to the amounts, if any, payable hereunder to that Participant.
The  Employers'  obligations  under  this Plan are not  secured or funded in any
manner,  even though the  Employers  may elect to  establish a grantor  trust to
assist in the payment of benefits.  If the Employers do not elect to establish a
grantor  trust to assist in the payment of  benefits,  the Company  will provide
notice to Participants of such decision.

6.2 No Employment Rights

Nothing  herein  shall  constitute  a contract of  continuing  service or in any
manner  obligate  the  Company  or any  of  its  subsidiaries  to  continue  the
employment of any  Participant,  or obligate any  Participant to continue in the
employment of the Company or any of its  subsidiaries,  and nothing herein shall
be considered as fixing or regulating the compensation payable to a Participant.

6.3 Facility of Payment

When a person entitled to benefits under the Plan is under legal disability, or,
in Compensation  Committee's  opinion,  is in any way  incapacitated so as to be
unable to manage his financial  affairs,  the Compensation  Committee may direct
payment of benefits to such person's legal  representative,  or to a relative or
friend of such person for such person's benefit,  or the Compensation  Committee
may direct the application of such benefits for the benefit of such person.  Any
payment  made in  accordance  with the  preceding  sentence  shall be a full and
complete discharge of any liability for such payment under the Plan.

6.4 Nonassignability

No  Participant or other person shall have any right to commute,  sell,  assign,
pledge,  anticipate,  mortgage,  or otherwise encumber,  transfer,  or convey in
advance of actual receipt the amounts,  if any,  payable  hereunder.  No amounts
payable  hereunder  shall,  prior to actual  payment,  be  subject  to claims of
creditors,  seizure,  or sequestration for the payment of any debts,  judgments,
alimony,   domestic  relations  order,  or  separate  maintenance  owed  by  the
Participant or any other person,  or be  transferable by operation of law in the
event of the  Participant's  or any other  person's  bankruptcy  or  insolvency.
Notwithstanding the foregoing,  if an estate or trust is a beneficiary  entitled
to  distributions  from  the  Plan  upon  the  death  of  the  Participant,  the
representatives  of the estate or the trustees of the trust may assign the right
to  receive  such  payments  to the  persons,  estates,  or trusts  beneficially
entitled  thereto,  and the  Compensation  Committee may rely  conclusively  and
without any liability on the certification.

6.5 Effect on Other Benefits

Except as provided below in this subsection,  the Participant's compensation for
purposes of calculating his awards and benefits under any employee  benefit plan
or  program  maintained  by the  Company  shall not be  reduced  on  account  of
deferrals under this Plan.  However,  amounts deferred under this Plan shall not
be included when calculating a Participant's benefits or contributions under any
retirement plan sponsored by the Company which is qualified under Section 401(a)
of the Internal  Revenue Code.  Any  distributions  made from this Plan shall be
excluded from a Participant's  compensation in years distributed for purposes of
calculating  the  Participant's  awards and benefits under any employee  benefit
plan or program (other than this Plan) maintained by the Company.

                                        13
<PAGE>
6.6 Independence of Plan

Except as otherwise expressly provided herein, the Plan shall be independent of,
and in addition  to, any  employment  agreement or other plan or rights that may
exist from time to time between an Employer and a Participant in the Plan.

6.7 Responsibility For Legal Effect

No representations or warranties,  express or implied, are made by the Employers
or the  Compensation  Committee and neither the  Employers nor the  Compensation
Committee  assumes  any  responsibility  concerning  the  legal,  tax,  or other
implications or effects of the Plan.

6.8 Action by the Company

Any action required or permitted to be taken under the Plan by the Company shall
be by one or more officers designated by the Board of Directors of the Company.

6.9 Successors, Acquisitions, Mergers, Consolidations

The terms and  conditions of the Plan shall inure to the benefit of and bind the
Employers,   the   Participants,   their  successors,   assigns,   and  personal
representatives.

6.10       Gender and Number

Wherever  appropriate  herein,  the  masculine  may  mean the  feminine  and the
singular may mean the plural or vice versa.

6.11       Governing Law

This Plan shall be construed and administered according to the laws of the State
of Nevada.

6.12       Claims Procedure

The Compensation  Committee will provide notice in writing to any Participant or
beneficiary  whose  claim  for  benefits  under  the  Plan  is  denied,  and the
Compensation  Committee shall also afford such Participant or beneficiary a full
and fair review of its decision if so requested.  The Compensation Committee has
discretionary  authority  and  responsibility  to  construe  and  interpret  the
provisions of the Plan and make factual determinations thereunder, including the
power to determine the rights or  eligibility of employees or  Participants  and
any other  persons,  and the amounts of their  benefits  under the Plan,  and to
remedy ambiguities,  inconsistencies,  or omissions.  Each such determination by
the Compensation  Committee shall be binding on all parties.  Any interpretation
of the  provisions  of the Plan  and any  decisions  on any  matter  within  the
discretion of the Compensation  Committee made in good faith shall be binding on
all persons.

                                        14
<PAGE>

                                    SECTION 7
                            The Compensation Committee

7.1 Compensation Committee's General Powers, Rights, and Duties

Except as otherwise specifically provided and in addition to the powers, rights,
and duties  specifically  given to the Compensation  Committee  elsewhere in the
Plan, the Compensation Committee shall have the following  discretionary powers,
rights, and duties:

                  (a)      To construe and interpret the  provisions of the Plan
                           and make factual determinations thereunder, including
                           the power to determine the rights or  eligibility  of
                           employees or Participants and any other persons,  and
                           the amounts of their  benefits under the Plan, and to
                           remedy  ambiguities,  inconsistencies,  or omissions,
                           and  such  determinations  shall  be  binding  on all
                           parties.

                  (b)      To adopt such rules of procedure and  regulations  as
                           in its  opinion may be  necessary  for the proper and
                           efficient  administration  of  the  Plan  and  as are
                           consistent with the Plan.

                  (c)      To enforce the Plan in  accordance  with the terms of
                           the Plan and the rules and regulations adopted by the
                           Compensation Committee as above.

                  (d)      To direct any trustee as respects payments or
                           distributions in accordance with the provisions of
                           the Plan.

                  (e)      To furnish the Employers with such information as may
                           be  required  by them  for tax or other  purposes  in
                           connection with the Plan.

                  (f)      To employ agents,  attorneys,  accountants,  or other
                           persons  (who also may be employed by the  Employers)
                           and to  allocate  or  delegate  to them such  powers,
                           rights, and duties as the Compensation  Committee may
                           consider necessary or advisable to properly carry out
                           administration  of  the  Plan,   provided  that  such
                           allocation or delectation and the acceptance  thereof
                           by such  agents,  attorneys,  accountants,  or  other
                           persons, shall be in writing.

7.2 Interested Compensation Committee Member

If a member of the Compensation  Committee is also a Participant in the Plan, he
may not decide or determine any matter or question  concerning  distributions of
any kind to be made to him or the nature or mode of  settlement  of his benefits
                                        15
<PAGE>
unless such decision or determination  could be made by him under the Plan if he
were not serving on the Compensation Committee.

7.3 Compensation Committee Expenses

All  costs,  charges,  and  expenses  reasonably  incurred  by the  Compensation
Committee  will be paid by the Employers in such  proportions as the Company may
direct. No compensation will be paid to a Compensation Committee member as such.

7.4 Information Required by Compensation Committee

Each person  entitled to benefits under the Plan shall furnish the  Compensation
Committee  with  such   documents,   evidence,   data,  or  information  as  the
Compensation  Committee  considers  necessary  or  desirable  for the purpose of
administering  the Plan. The Employers shall furnish the Compensation  Committee
with such data and information as the Compensation  Committee may deem necessary
or desirable in order to administer the Plan. The records of the Employers as to
a Participant's  period of employment,  termination of employment and the reason
therefor, leave of absence, reemployment, and earnings will be conclusive on all
persons unless  determined to the  Compensation  Committee's  satisfaction to be
incorrect.

7.5 Uniform Rules

The  Compensation  Committee  shall  administer  the  Plan on a  reasonable  and
nondiscriminatory  basis and shall apply uniform rules to all persons  similarly
situated.

7.6 Review of Benefit Determinations

As provided in subsection 6.12, The  Compensation  Committee will provide notice
in writing to any Participant or beneficiary  whose claim for benefits under the
Plan is denied and the  Compensation  Committee shall afford such Participant or
beneficiary a full and fair review of its decision if so requested.

7.7 Compensation Committee's Decision Final, Mistakes

Subject to applicable law, any  interpretation of the provisions of the Plan and
any decisions on any matter within the discretion of the Compensation  Committee
made by the  Compensation  Committee  in good  faith  shall  be  binding  on all
persons.  A  misstatement  or other  mistake of fact shall be corrected  when it
becomes  known and the  Compensation  Committee  shall make such  adjustment  on
account thereof as it considers equitable and practicable.

7.8 Indemnification

To the extent  permitted by applicable  state law, the Employers shall indemnify
and save harmless the  Compensation  Committee and each member thereof,  and any
delegate of the Compensation Committee who is an employee of an Employer against
any and all expenses,  liabilities,  and claims  including  legal fees to defend
against such liabilities and claims arising out of their discharge in good faith
of  responsibilities  under or incident  to the Plan,  other than  expenses  and
liabilities  arising  out  of  willful  misconduct  or  gross  negligence.  This
indemnity shall not preclude such further  indemnities as may be available under
insurance  purchased by an Employer or provided by an Employer  under any bylaw,
agreement, or otherwise, as such indemnities are permitted under state law.

                                        16
<PAGE>

                                    SECTION 8
                            Amendment and Termination

           The Company  reserves the right,  in its sole  discretion,  to amend,
discontinue,  or  completely  terminate  the  Plan at any  time.  If the Plan is
discontinued  with respect to future deferrals,  Participants'  Deferral Account
balances shall be distributed  on the  Distribution  Dates elected in accordance
with  subsection 3.4, unless the  Compensation  Committee  designates an earlier
Distribution  Date.  As of the date  designated  by the  Compensation  Committee
following the date of complete  termination of the Plan, each Participant  shall
receive a distribution of his entire Deferral  Account balance as if his elected
Distribution  Dates had  occurred.  The Plan may be amended or  terminated  by a
written  instrument  executed by the  Company,  provided  that an  amendment  or
termination of the Plan may not reduce the balance in a  Participant's  Deferral
Account as of the date the amendment is adopted.








                                        17
<PAGE>
Exhibit 10.42
                            RIVIERA HOLDINGS CORPORATION
                                RESTRICTED STOCK PLAN

                  1.  Purpose.   The  Riviera   Holdings   Corporation   ("RHC")
Restricted Stock Plan (the "Plan") is intended to provide  incentives which will
attract and retain  highly  competent  persons as officers and key  employees of
Riviera Operating  Corporation ("ROC") (collectively the "Company") by providing
them  opportunities to receive  restricted shares of the Company's Common Stock,
par value $.001 per share ("Common Stock"),  or to receive payments based on the
increase  in  value  of the  Company's  Common  Stock,  pursuant  to the  Awards
described herein.

                  2.  Participants.  Participants  will consist of such officers
and key employees of the Company as the  Compensation  Committee of the Board of
Directors of the Company (the "Compensation  Committee")  determines in its sole
discretion to be significantly responsible for the success and future growth and
profitability of the Company. Designation of a participant in any year shall not
require the Company or the  Compensation  Committee to designate  such person to
receive an Award in any other year or, once designated, to receive the same type
or amount of Awards as granted to the  participant  or any other  participant in
any year.  The Company  shall  consider  such  factors as it deems  pertinent in
selecting  participants  and in  determining  the  amount,  type and  terms  and
conditions of their respective Awards.

                  3.  Types of Awards.  Awards  under the Plan may be granted as
either  (i)  restricted  stock  awards or (ii)  phantom  stock  awards,  each as
described below (collectively, "Awards"). Each Award shall be made pursuant to a
written  agreement  between  the  Company  and the Award  recipient  (the "Award
Agreement").

                  4. Shares  Reserved under the Plan.  There is hereby  reserved
for issuance, as Awards of restricted stock under the Plan and Awards of phantom
stock under the Plan, an aggregate of Two Hundred  Thousand  (200,000) shares of
Common Stock, which may be (or in the case of the phantom awards, may represent)
treasury or authorized  but unissued  shares,  and which  represent five percent
(5.0 %) of the issued and outstanding  shares of stock of the Company on a fully
diluted basis.  If there is a lapse,  cancellation,  expiration,  termination or
forfeiture of any Award,  or if shares are issued under an Award and  thereafter
are  reacquired by the Company  pursuant to rights  reserved by the Company upon
issuance of such  shares,  the shares  subject to such Award may  thereafter  be
subjected to new Awards under this Plan.

                  5. Restricted Stock Awards.  Awards of "Restricted Stock" will
consist of Common  Stock  transferred  to  participants  without  other  payment
therefor as additional  compensation for services  rendered or to be rendered to
the  Company.  Awards of  Restricted  Stock  shall be  subject to such terms and
conditions  as the Company  determines to be  appropriate  at the time of grant,
including, without limitation,  restrictions on the sale or other disposition of
such  shares  and   provisions   for  the  forfeiture  of  such  shares  for  no
consideration upon termination of the participant's  employment within specified
periods or under certain conditions.

                  6.  Phantom  Stock  Awards.  Awards of  "Phantom  Stock"  will
consist of Awards that will  entitle the holder to receive the  appreciation  in
the Fair  Market  Value of the shares of Common  Stock  subject  thereto up to a
specified date or dates.  Payment of such appreciation  shall be made in cash or
in shares of Common Stock, or a combination  thereof, as set forth in the Award.
Each Award of Phantom Stock shall be subject to such terms and conditions as the
Company determines to be appropriate at the time of grant.

                  7. Shareholder Rights. The recipient of an Award of Restricted
Stock or Phantom  Stock shall not be deemed for any purpose to be a  stockholder
of the Company with respect to any of the shares subject thereto,  except to the
extent  that  a  certificate  shall  have  been  issued  and  delivered  to  the
participant.

                  8.  Adjustment  Provisions.  If the Company  shall at any time
change the number of issued shares of Common Stock without new  consideration to
the  Company  (such  as  by  stock  dividend,  stock  split,   recapitalization,
                                        18
<PAGE>
reorganization,  exchange  of shares,  or other  change in  corporate  structure
affecting  the Common  Stock),  the total  number of shares  reserved for Awards
under this Plan shall be  appropriately  adjusted.  The  Company may provide for
equitable adjustments in the terms of any Awards granted hereunder after changes
in any common  stock of the Company  resulting  from any merger,  consolidation,
sale  of  assets,   acquisition   of   property   or  stock,   recapitalization,
reorganization  or similar  occurrence upon such terms and conditions as it may,
in its sole discretion, deem equitable and appropriate;  provided, however, that
any such  adjustment  shall not cause the number of shares  reserved  for Awards
under the Plan to exceed ten percent (10%) of the issued and outstanding  shares
of the stock of the Company on a fully diluted basis.

                  9.  Nontransferability.  Each Award granted under the Plan to
a participant shall, unless otherwise set forth in the Award Agreement, not be
transferable otherwise than by will or the laws of descent and distribution.

                  10.  Other Provisions. Awards under the Plan may also be
subject to such other provisions (whether or not applicable to the Award granted
to any other participant) as the Company or the Compensation Committee
determines appropriate.

                  11. Fair Market Value.  Except as otherwise expressly provided
in an Award Agreement,  for purposes of this Plan and any Awards hereunder,  the
"Fair Market  Value" of a share of Common Stock shall mean (i) prior to the date
of the  registration of the Common Stock under the Securities Act of 1933 and of
becoming  readily  tradable  on  a  national   securities   exchange   ("Readily
Tradable"),  the amount  equal to the price of a share of the  Company's  Common
Stock as reflected  by the most  recently  preceding  valuation of the shares of
Common Stock under the Company's  Employee Stock Ownership Plan, after adjusting
for a non-marketability and minority interest discount; if applicable,  and (ii)
on or after the date that the Common  Stock is  Readily  Tradable,  the  closing
price of the Common  Stock on the  relevant  date,  as reported on the  national
securities exchange.

                  12.  Tenure.  A  participant's  right,  if any, to continue to
serve the Company as an officer,  employee, or otherwise,  shall not be enlarged
or otherwise affected by his or her designation as a participant under the Plan,
nor shall this Plan in any way interfere with the right of the Company,  subject
to the terms of any separate employment  agreement to the contrary,  at any time
to terminate such employment or to increase or decrease the  compensation of the
participant from the rate in existence at the time of the grant of an Award.

                  13.  Administration.  The  Plan  will be  administered  by the
Company,  which  shall act through its Board of  Directors  or the  Compensation
Committee.  The Board of Directors is  authorized,  subject to the provisions of
the Plan, to establish such rules and  regulations as it deems necessary for the
proper   administration  of  the  Plan  and  to  make  such  determinations  and
interpretations  and to take such action in connection with the Plan, any Awards
granted  hereunder,  or  any  related  agreements,  as  it  deems  necessary  or
advisable. All determinations and interpretations made by the Board of Directors
or  the   Compensation   Committee  shall  be  binding  and  conclusive  on  all
participants  and  their  legal  representatives.  No  member  of the  Board  of
Directors or the Compensation Committee, and no employee of the Company shall be
liable for any act or failure to act hereunder,  by any other member or employee
or by any agent to whom duties in  connection  with the  administration  of this
Plan have been  delegated or, except in  circumstances  involving his or her bad
faith,  gross  negligence or fraud, for any act or failure to act by such member
of the Board of Directors or Compensation Committee or employee.

                  14.  Amendment and Termination.  The Board of Directors may
amend the Plan from time to time or terminate the Plan at any time.  However, no
action authorized by this paragraph shall change the terms and conditions of any
existing Award without the participant's consent.

                  15.  Governing  Law. This Plan and actions taken in connection
herewith  shall be governed  and  construed in  accordance  with the laws of the
State  of  Nevada  (regardless  of the law that  might  otherwise  govern  under
applicable Nevada principles of conflict of laws).

                  16.      Approval.  The Plan was adopted by the Board of
Directors of the Company on October 2, 2000.
                                        19
<PAGE>







                             CERTIFICATE OF ADOPTION

I,  Tullio  J.  Marchionne,  Secretary  of  RIVIERA  HOLDINGS  CORPORATION  (the
"Company"),  hereby  certifies  that the Company  adopted  the RIVIERA  HOLDINGS
CORPORATION  RESTRICTED STOCK PLAN in the form attached hereto,  effective as of
October 1, 2000. Dated this ______ day of ______, 2001.

                          RIVIERA HOLDINGS CORPORATION

                                    By_________________________________
                                    Secretary

ATTEST:

---------------------------------








                                        20
<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, 2000 and 1999                                                                 F-2

   Statements of Operations for the Years Ended December 31, 2000, 1999, and 1998                                  F-3

   Statements of Stockholders' Equity for the Years Ended December 31, 2000, 1999, and 1998                        F-5

   Statements of Cash Flows for the Years Ended December 31, 2000, 1999, and 1998                                  F-6

   Notes to Consolidated Financial Statements                                                                      F-8

</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, 2000 and 1999,
and the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the three years in the period  ended  December  31, 2000.
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, 2000
and 1999,  and the results of its  operations and its cash flows for each of the
three years in the period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States of America.

Deloitte & Touche LLP
Las Vegas, Nevada
February 14, 2001












                                        F-1
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999 (In Thousands, Except Share Amounts)
------------------------------------------------------------------------------------------------------------------------


ASSETS                                                                                            2000           1999

CURRENT ASSETS:
<S>                                                                                            <C>            <C>
  Cash and cash equivalents                                                                    $ 52,174       $ 42,804
  Cash and cash equivalents, restricted                                                                          7,173
  Short-term investments                                                                                         5,258
  Short-term investments, restricted                                                                             7,887
  Accounts receivable, net                                                                        5,548          5,042
  Inventories                                                                                     3,342          3,432
  Prepaid expenses and other assets                                                               4,599          3,989

           Total current assets                                                                  65,663         75,585

PROPERTY AND EQUIPMENT, Net                                                                     207,030        202,659

OTHER ASSETS, Net                                                                                 8,128         10,391

DEFERRED INCOME TAXES, Net                                                                        2,889            355

TOTAL                                                                                         $ 283,710      $ 288,990

LIABILITIES AND STOCKHOLDERS EQUITY

CURRENT LIABILITIES:
  Current portion of long-term debt                                                             $ 2,871        $ 1,274
  Accounts payable                                                                                9,731         11,498
  Accrued interest                                                                                7,727          7,539
  Accrued expenses                                                                               16,731         11,949

           Total current liabilities                                                             37,060         32,260

OTHER LONG-TERM LIABILITIES                                                                       6,533          5,286

LONG-TERM DEBT, Net of current portion                                                          223,172        223,766

COMMITMENTS AND CONTINGENCIES (Note 12)

STOCKHOLDERS EQUITY:
  Common stock ($.001 par value; 20,000,000 shares authorized;
    5,106,776 shares issued at December 31, 2000 and 1999, respectively)                              5              5
  Additional paid-in capital                                                                     13,446         13,446
  Treasury stock (1,431,648 and 583,755 shares at December 31, 2000 and 1999,
    respectively)                                                                                (9,633)        (3,115)
  Retained earnings                                                                              13,127         17,342

           Total stockholders equity                                                             16,945         27,678

TOTAL                                                                                         $ 283,710      $ 288,990

See notes to consolidated financial statements.
</TABLE>

                                        F-2
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998 (In Thousands)
------------------------------------------------------------------------------------------------------------------
                                                                            2000          1999          1998

REVENUES:
<S>                                                                         <C>            <C>           <C>
  Casino                                                                    $ 112,949      $ 74,086      $ 77,676
  Rooms                                                                        43,819        39,899        39,607
  Food and beverage                                                            30,756        25,117        23,940
  Entertainment                                                                24,526        20,994        21,543
  Other                                                                        10,538        11,713        11,155

          Total revenues                                                      222,588       171,809       173,921
  Less promotional allowances                                                  15,801        13,636        13,966

          Net revenues                                                        206,787       158,173       159,955

COSTS AND EXPENSES:
  Direct costs and expenses of operating departments:
    Casino                                                                     62,903        43,211        45,293
    Rooms                                                                      23,364        21,909        20,859
    Food and beverage                                                          21,432        18,307        17,539
    Entertainment                                                              18,959        16,271        16,861
    Other                                                                       3,146         3,228         3,308
  Other operating expenses:
    General and administrative                                                 41,055        29,568        27,028
    Preopening expenses - Black Hawk, Colorado project                          1,222           595
    Corporate expenses - severance pay                                                                        551
    Depreciation and amortization                                              17,827        13,991        12,137

         Total costs and expenses                                             189,908       147,080       143,576

INCOME FROM OPERATIONS                                                         16,879        11,093        16,379

OTHER (EXPENSE) INCOME:
  Interest expense on $100 million notes                                                                   (4,642)
  Interest income on U.S. Treasury bills held to retire
    $100 million notes                                                                                      2,334
  Interest expense - other                                                    (27,805)      (23,448)      (19,545)
  Interest income - other                                                       2,429         2,255         2,440
  Interest capitalized                                                            616         4,733         2,679
  Other, net                                                                    1,171        (1,963)       (1,229)

          Total other expense                                                 (23,589)      (18,423)      (17,963)

LOSS BEFORE BENEFIT FOR INCOME TAXES
  AND EXTRAORDINARY ITEM                                                       (6,710)       (7,330)       (1,584)

BENEFIT FOR INCOME TAXES                                                       (2,495)       (4,461)         (533)

LOSS BEFORE EXTRAORDINARY ITEM                                                 (4,215)       (2,869)       (1,051)

EXTRAORDINARY ITEM (net of income tax of $1.6 million)                                                     (3,006)

NET LOSS                                                                     $ (4,215)     $ (2,869)     $ (4,057)

See notes to consolidated financial statements.
</TABLE>
                                        F-3
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
(In Thousands, Except Share Amounts)
------------------------------------------------------------------------------------------------------------------


                                                                                   2000         1999        1998

EARNINGS PER SHARE DATA:
  Loss per share before extraordinary item:
<S>                                                                               <C>          <C>         <C>
    Basic                                                                         $(1.05)      $(0.58)     $(0.21)

    Diluted                                                                       $(1.05)      $(0.58)     $(0.21)

  Earnings (loss) per share for extraordinary item:
    Basic                                                                           $ -          $ -       $(0.60)

    Diluted                                                                         $ -          $ -       $(0.60)

  Loss per share:
    Basic                                                                         $(1.05)      $(0.58)     $(0.81)

    Diluted                                                                       $(1.05)      $(0.58)     $(0.81)

  Weighted-average common shares outstanding                                       4,013        4,978       5,037

  Weighted-average common and common
    equivalent shares                                                              4,013        4,978       5,037


See notes to consolidated financial statements.
</TABLE>

                                        F-4
<PAGE>
<TABLE>

RIVIERA HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998 (In Thousands, Except Share Amounts)


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

<S>              <C>                                <C>           <C>      <C>      <C>        <C>      <C>    <C>            <C>
BALANCE, JANUARY 1, 1998                            4,903,680     $ 5   $ 13,711 $ 24,268                     $(207)       $ 37,777

  Stock issued under executive option plan            269,096                480                                                480

  Collections and refunds of stockholder receivables,
    net                                                                                                        (530)           (530)

  Purchase of treasury stock                                                                  (34,300) $ (167)                 (167)

  Refunds on employee stock purchases                 (65,100)              (734)                               734

  Net loss                                                                         (4,057)                                   (4,057)

BALANCE, DECEMBER 31, 1998                          5,107,676       5     13,457   20,211     (34,300)   (167)   (3)         33,503

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

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

  Net loss                                                                                             (2,869)               (2,869)

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

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

  Net loss                                                                         (4,215)                                   (4,215)

BALANCE, DECEMBER 31, 2000                          5,106,776     $ 5   $ 13,446 $ 13,127  (1,431,648)$(9,633)  $          $ 16,945


See notes to consolidated financial statements.
</TABLE>
                                        F-5
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998 (In Thousands)
----------------------------------------------------------------------------------------------------------
                                                                                  2000       1999       1998
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                <C>        <C>        <C>
   Net loss                                                                     $ (4,215)  $ (2,869)   $ (4,057)
  Adjustments to reconcile net loss to net cash provided by operating activities:
    Gain on sale of equipment                                                                   (55)
    Depreciation and amortization                                                 17,827     13,991      12,137
    Provision for bad debts                                                          326        297         782
    Provision for gaming discounts                                                    45                    (76)
    Extraordinary item, call premium to retire $100 million notes                                         4,624
    Interest income on U.S. Treasury bills to retire $100 million notes                                  (2,334)
    Interest expense, $100 million notes                                                                  4,642
    Interest paid on $100 million notes                                                                  (4,614)
    Interest expense - other                                                      27,805     23,448      19,545
    Interest paid - other                                                        (24,410)   (20,132)    (17,688)
    Interest capitalized on construction projects                                   (616)    (4,733)     (2,679)
    Changes in operating assets and liabilities:
      (Increase) decrease in accounts receivable, net                               (877)        50      (1,157)
      (Increase) decrease in inventories                                              90       (705)        782
      (Increase) decrease in prepaid expenses and other assets                      (607)        39         526
      Decrease in accounts payable                                                (2,071)      (884)       (774)
      Increase in accrued expenses                                                 7,348      1,896       1,258
      Decrease in deferred income taxes payable                                              (3,478)     (2,835)
      Increase in deferred tax asset                                              (2,534)
      Decrease in slot annuities payable                                              (3)       (55)       (153)
      Increase (decrease) in non-qualified pension plan obligation to CEO upon     1,247        (61)        600
              retirement.

           Net cash provided by operating activities                              19,355       6,749      8,529

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures for property and equipment                                (24,434)    (39,026)   (31,274)
  Interest capitalized on construction projects                                      616       4,733      2,679
  Decrease (increase) in short-term investments                                    5,258      (5,258)
  Decrease (increase) restricted funds                                            15,060     (15,060)       (27)
  Sale of equipment                                                                              174
  Increase in other assets                                                          (661)     (3,558)      (208)

           Net cash used in investing activities                                  (4,161)    (57,995)   (28,830)

See notes to consolidated financial statements.
                                                                                               (Continued)

</TABLE>
                                        F-6
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998 (In Thousands)
------------------------------------------------------------------------------------------------------------
                                                                                   2000       1999       1998

CASH FLOWS FROM FINANCING ACTIVITIES:
<S>                                                                                <C>       <C>          <C>
  Proceeds from long-term borrowings                                             $ 9,552   $ 48,764
  U.S. Treasury bills sold (purchased) to retire $100 million notes                                   $ 108,930
  Payments to retire $100 million notes with call premium                                              (104,313)
  Payments on long-term borrowings                                                (2,299)      (641)       (364)
  Purchase of treasury stock                                                      (6,518)    (2,948)       (167)
  Purchase of 13% Mortgage Notes - Black Hawk                                     (6,559)
  Net collections, cancellations of employee stock purchase plan, and exercise of
    employee stock options                                                                       (8)        (53)

           Net cash (used in) provided by financing activities                    (5,824)    45,167       4,033

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                   9,370     (6,079)    (16,268)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                      42,804     48,883      65,151

CASH AND CASH EQUIVALENTS, END OF YEAR                                          $ 52,174   $ 42,804    $ 48,883


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
  Income taxes paid, State of Colorado                                             $ 110

SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
  Property acquired with accounts payable, Las Vegas, Nevada                                              $ 984

  Property acquired with accounts payable, Black Hawk, Colorado                    $ 304    $ 2,566     $ 1,203

  Property acquired with debt, Las Vegas, Nevada                                            $ 1,614

  Property acquired with debt, Black Hawk, Colorado                                           $ 126       $ 687


See notes to consolidated financial statements.
                                                                                                 (Concluded)

</TABLE>
                                        F-7
<PAGE>
RIVIERA HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------


1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

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

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

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

                       The Company's investment  securities,  along with certain
                cash and cash equivalents  that are not deemed  securities under
                SFAS No. 115, are carried on the consolidated  balance sheets in
                the cash and cash equivalents  category.  SFAS No. 115 addresses
                the   accounting   and  reporting  for   investments  in  equity
                securities  that have readily  determinable  fair values and for
                all investments in debt securities, and requires such securities
                to be  classified  as  either  held  to  maturity,  trading,  or
                available for sale.
                                        F-8
<PAGE>
                       Management  determines the appropriate  classification of
                its investment securities at the time of purchase, including the
                determination as to restricted versus nonrestricted  assets, and
                re-evaluates  such  determination  at each  balance  sheet date.
                Held-to-maturity  securities  are  required  to  be  carried  at
                amortized  cost.  At  December  31,  2000 and  1999,  securities
                classified as held to maturity  comprised debt securities issued
                by the U.S. Treasury and other U.S. government  corporations and
                agencies, and repurchase  agreements,  with an amortized cost of
                $28,649,387  and  $26,891,000,  respectively,  maturing in three
                months or less.

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

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

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

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

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

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

                       Fair Value Disclosure as of December 31, 2000 and 1999:

                        Cash  and  Cash  Equivalents,   Short-term   Investments
               (including  restricted),  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  $202,628,000  and
               $209,061,000 in 2000 and 1999, respectively.

                                        F-9
<PAGE>
Revenue Recognition:

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

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

Preopening Costs - The Company recognizes preopening costs when incurred.

Promotional     Allowances  -  Promotional   allowances   consist  primarily  of
                accommodations,  entertainment,  and food and beverage  services
                furnished without charge to customers.  The retail value of such
                services is included in the respective  revenue  classifications
                and is then deducted as promotional allowances.

                      The estimated  costs of providing  promotional  allowances
                are  classified  as costs of the  casino  operating  departments
                through interdepartmental allocations. These allocations for the
                years ended  December  31, 2000,  1999,  and 1998 are as follows
                (amounts in thousands):
<TABLE>
<CAPTION>

                                                            2000         1999         1998

<S>                                                       <C>           <C>          <C>
       Food and beverage                                  $ 9,007       $6,266       $6,271
       Rooms                                                1,297        1,676        1,698
       Entertainment                                        1,319        1,312        1,518

       Total costs allocated to casino departments        $11,623       $9,254       $9,487
</TABLE>


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

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

                       Recently Adopted Accounting Standards - In December 1999,
                the Securities and Exchange  Commission  issued Staff Accounting
                Bulletin No. 101, "Revenue Recognition in Financial  Statements"
                ("SAB 101"). SAB 101 clarifies  existing  accounting  principles
                related to revenue  recognition  in  financial  statements.  The
                Company  was  required  to adopt  SAB 101 in its  quarter  ended
                December 31, 2000.  The adoption of SAB 101 had no impact on the
                Company's results of operations.

                       In March 2000, the Financial  Accounting  Standards Board
                of the AICPA  issued FASB  Interpretation  44,  "Accounting  for
                Certain  Transactions  Involving Stock Compensation" ("FIN 44"),
                which provides  clarification  on the  application of Accounting
                Principles Board Opinion No. 25, "Accounting for Stock Issued to
                Employees,"  and is  effective  for  the  Company's  year  ended
                December 31,  2000.  The adoption of FIN 44 had no impact on the
                Company's results of operations.
                                        F-10
<PAGE>
                       Recently  Issued  Accounting  Standards  - The  Financial
                Accounting  Standards Board issued SFAS No. 133, "Accounting for
                Derivatives,"  which is  effective  for fiscal  years  beginning
                after June 15, 2000.  This  statement  defines  derivatives  and
                requires   qualitative   disclosure  of  certain  financial  and
                descriptive  information  about  a  company's  derivatives.  The
                Company will adopt SFAS No. 133 in the first  fiscal  quarter of
                the year ending  December 31,  2001.  Management  finalized  its
                analysis of this SFAS and  concluded  that adoption will have no
                impact on the Company's consolidated financial statements.

2.    ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>

Accounts receivable consist of the following at December 31 (in thousands):
                                                         2000          1999
<S>                                                    <C>           <C>
Casino                                                 $ 2,066       $ 2,405
Hotel                                                    4,812         4,248

Total                                                    6,878         6,653
Allowance for bad debts and discounts                   (1,330)       (1,611)

Ending balance                                         $ 5,548       $ 5,042
</TABLE>
Changes in the casino and hotel allowance for bad debts and discounts for the
       years ended December 31, 2000, 1999, and 1998 consist of the following
       (in thousands):
<TABLE>
<CAPTION>
                                               2000         1999          1998
<S>                                          <C>           <C>            <C>
Beginning balance                            $ 1,611       $1,314         $ 546
Write-offs                                      (220)        (872)         (391)
Recoveries                                        29          107            81
Provision for bad debts                         (135)       1,062         1,154
Provision for gaming discounts                    45                        (76)

Ending balance                               $ 1,330       $1,611        $1,314
</TABLE>





                                        F-11
<PAGE>
3.    PREPAID EXPENSES AND OTHER ASSETS
<TABLE>
<CAPTION>
Prepaid expenses and other assets consist of the following at December 31 (in thousands):
                                                           2000          1999

<S>                                                     <C>             <C>
Prepaid gaming taxes                                    $ 1,440         $ 800
Prepaid insurance                                           749           560
Other prepaid expenses                                    2,410         2,629

Total                                                   $ 4,599       $ 3,989
</TABLE>

4.    PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
Property and equipment consist of the following at December 31 (in thousands):
                                                                                     2000            1999

<S>                                                                                   <C>             <C>
Land and improvements                                                                $ 37,718        $ 37,701
Buildings and improvements                                                            142,115          98,363
Equipment, furniture, and fixtures                                                    104,361          85,027
Construction in progress, primarily in Black Hawk, Colorado                                            40,931

Total property and equipment                                                          284,194         262,022
Accumulated depreciation                                                              (77,164)        (59,363)

Net property and equipment                                                           $207,030        $202,659

</TABLE>
                       In  2000,   1999  and   1998,   approximately   $616,000,
                $4,733,000 and $2,679,000,  respectively, in interest costs were
                capitalized on construction  projects.  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
<TABLE>
<CAPTION>
Other assets consist of the following at December 31 (in thousands):
                                                                                 2000          1999

<S>                                                                              <C>           <C>
Deposits                                                                         $ 152         $ 292
Bond offering costs and commissions, net of accumulated amortization
  of $5,187 and $3,017, respectively                                             6,585         8,716
Other                                                                            1,391         1,383

Total                                                                           $8,128       $10,391
</TABLE>
                                        F-12
<PAGE>


6.    ACCOUNTS PAYABLE AND ACCRUED EXPENSES
<TABLE>
<CAPTION>
Accounts payable consist of the following at December 31 (in thousands):
                                                                                   2000          1999
<S>                                                                               <C>           <C>
Outstanding chip and token liability                                              $ 563         $ 665
Slot club liabilities                                                             1,115           595
Progressive liabilities                                                             152           272
Casino account deposits                                                             124           108
Miscellaneous gaming                                                                309             8

Total liabilities related to gaming activities                                    2,263         1,648

Accounts payable to vendors                                                       5,196         5,394
Hotel deposits                                                                    1,189         1,637
Construction payables                                                               304         2,566
Other                                                                               779           253

Total                                                                            $9,731       $11,498
</TABLE>

Accrued expenses consist of the following at December 31 (in thousands):
<TABLE>
<CAPTION>
                                                                                   2000          1999

<S>                                                                              <C>           <C>
Payroll, related payroll taxes, and employee benefits                            $ 7,999       $ 6,253
Incentive, retention, and profit-sharing plans                                     4,831         3,687
Other                                                                              3,901         2,009

Total                                                                            $16,731       $11,949
</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 including accrued interest
                and totaling  $6,533,000 and $5,286,000 at December 31, 2000 and
                1999, respectively.




                                        F-13
<PAGE>
8.    LONG-TERM DEBT
<TABLE>
<CAPTION>

Long-term debt consists of the following at December 31 (in thousands):
<S>                                                                                <C>             <C>
                                                                                   2000            1999

10% First Mortgage Notes maturing on August 15, 2004, bearing
  interest, payable semiannually on February 15 and August 15 of
  each year, redeemable beginning August 1, 2001 at 105%; 2002
  at 102.5%; and 2003 and thereafter at 100%. These notes are
  collateralized by the land and physical structures comprising the
  Riviera Hotel and Casino                                                       $173,885        $173,579

13% First Mortgage Notes maturing on June 3, 2005, bearing
   interest, payable semiannually on November 3 and June 3
  of each year; redeemable beginning May 1, 2002 at 106.5%;
  2003 at 103.25%; and after 2004 at 100%.  These notes are
  collateralized by the land and physical structures comprising the
  Riviera Black Hawk Casino                                                        38,441          45,000

5.6% to 9% Notes collateralized by equipment and vehicles, payable
  monthly, including interest, maturing through October 2004                        3,227           3,962

Capitalized lease obligations (see Note 9)                                          9,887           1,715

5.5% Special Improvement District Bonds - issued by the City of
  Black Hawk, Black Hawk, Colorado, interest and principal
  payable monthly over 10 years beginning in 2000                                     603             784

Total long-term debt                                                              226,043         225,040
Current maturities by terms of debt                                                (2,871)         (1,274)

Total                                                                            $223,172        $223,766

</TABLE>
<TABLE>
<CAPTION>
Maturities of long-term debt for the years ending December 31 are as follows (in thousands):
<S>                                                             <C>
2001                                                            $ 2,871
2002                                                              3,125
2003                                                              3,400
2004                                                            177,229
2005                                                             39,197
Thereafter                                                          221

Total                                                          $226,043
</TABLE>


                       In  February  1997,  the  Company  entered  into a  $15.0
                million,  five-year  reducing  revolving  line  of  credit  (the
                "Credit Facility").  The Credit Facility bears interest at prime
                plus 0.5 percent or the London Interbank  Offered Rate ("LIBOR")
                plus 2.9  percent.  The  Company has not  utilized  this line of
                credit.  The Credit Facility was modified as a result of the 10%
                First  Mortgage  Notes  (the  "10%  Notes").  The  modifications
                included an increase in the ratio of the  allowable  funded debt
                to  earnings   before   interest,   taxes,   depreciation,   and
                amortization  ("EBITDA")  to  4.75 to one.  The  Company  is not
                currently meeting this requirement and,  therefore,  cannot draw
                down on the Credit Facility at this time. The Credit Facility is
                callable upon a change in control.

                       On August 13, 1997,  the Company  issued 10% Notes with a
                principal  amount of $175  million  dollars.  The 10% Notes were
                issued at a discount in the amount of $2.2 million. The discount
                is being amortitized over the life of the notes on a straight-
                line basis, which approximates the effective interest method.
                The 10%
                                        F-14
<PAGE>
                Note Indenture contains certain covenants that limit the ability
                of the  Company  and its  restricted  subsidiaries,  subject  to
                certain exceptions, to: (i) incur additional indebtedness;  (ii)
                pay  dividends or other  distributions  and  repurchase  capital
                stock or other equity  interests or  subordinated  indebtedness;
                (iii) enter into  certain  transactions  with  affiliates;  (iv)
                create certain liens;  (v) sell certain  assets;  and (vi) enter
                into certain mergers and  consolidations.  At December 31, 2000,
                the  Company  believes  that  it  is  in  compliance  with  such
                covenants. A portion of the proceeds from the 10% Notes totaling
                $4.5  million  was paid to a bank to  retire  certain  long-term
                debt.  As  described  in Note 10, a portion of the  proceeds was
                invested  in U.S.  Treasury  notes to pay the 11%  $100  million
                notes.  The Company has registered  securities  identical to the
                10% Notes,  under the  Securities  Act of 1933,  as amended.  On
                January 8, 1998,  the Company  completed  an exchange  offer for
                such registered  securities for the 10% Notes effective  January
                1, 1998.

                      The  10%  Notes  are  unconditionally  guaranteed  by  all
                existing  and future  restricted  subsidiaries  of the  Company,
                which will not initially include RBH. RBH will become collateral
                for the 10% Notes if certain  consolidated  operating ratios are
                met. As of December 31, 2000,  RBH  operations as defined in the
                notes to consolidated  financial statements did not trigger this
                event.

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

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

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

                       The 13% First  Mortgage Note Indenture  contains  certain
                covenants,  which  limit the  ability of RBH and its  restricted
                subsidiaries,  subject  to  certain  exceptions,  to:  (i) incur
                additional   indebtedness;   (ii)   pay   dividends   or   other
                distributions  and  repurchase  capital  stock or  other  equity
                interests or subordinated indebtedness; (iii) enter into certain
                transactions with affiliates; (iv) create certain liens and sell
                certain   assets;   and  (v)  enter  into  certain  mergers  and
                consolidations.  As a result of these restrictions,  the ability
                of  the  Company  to  incur  additional   indebtedness  to  fund
                operations or to make capital  expenditures  is limited.  In the
                event that cash flow from  operations is  insufficient  to cover
                cash  requirements,  the Company would be required to curtail or
                defer certain of their capital expenditure  programs under these
                circumstances,  which  could  have an  adverse  effect  on RBH's
                operations.  At December  31, 2000,  RBH believes  that it is in
                compliance with the covenants.

                       The Company has credit facilities totaling $1,600,000 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 completed in
                2000 at a cost of $2,240,000,  including  interest and reserves.
                The excess proceeds have been returned to the bondholders by the
                City of Black Hawk, Colorado.  RBH is responsible for 50 percent
                of the debt payable over 10 years beginning in 2000.
                                        F-15
<PAGE>
9.    GUARANTOR INFORMATION

     The Companys  10.0% First  Mortgage Notes (see Note 8) are guaranteed by a
majority of the Companys wholly owned existing significant subsidiaries.  These
guaranties  are  full,  unconditional,  and  joint and  several.  The  following
consolidating   schedules  present  separate   condensed   financial   statement
information  on a combined  basis for the parent only,  as well as the Companys
guarantor  subsidiaries and non-guarantor  subsidiaries,  as of and for the year
ended December 31, 2000. As of December 31, 1999 and 1998, RBH had no operations
as defined in the notes to consolidated  financial  statements.  At December 31,
1999,  RBH had total assets of  approximately  $72.8  million,  which  represent
primarily cash and restricted cash and  investments,  other assets,  the cost of
the land for the Black  Hawk  Casino  project,  and  construction  in  progress.
Therefore,  the Company has not included separate financial  information for the
guarantors as of December 31, 1999.

   The management fee to Riviera Holdings Corporation from guarantors represents
cost  to  the  Company  of  depreciation  and  interest expense on the 10% First
Mortgage Notes.
                                        F-16
<PAGE>

<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION AS OF DECEMBER 31, 2000
                                                                      Combined
                                             Parent Only  Combined      Non -      Elimination    Combined
                                                         Guarantors   Guarantors     entries       totals
                                             ----------------------------------------------------------------
ASSETS
CURRENT ASSETS:
<S>                                            <C>        <C>          <C>           <C>           <C>
   Cash and cash equivalents                   $ 11,957   $ 32,473     $ 7,744       $    -        $52,174
   Current Assets                                           12,489       1,000                      13,489
                                              ----------------------------------------------------------------
       Total current assets                      11,957     44,962       8,744                      65,663


PROPERTY AND EQUIPMENT, NET                     135,542      2,983      68,505                     207,030
OTHER ASSETS, NET                                            6,043       2,085                       8,128
INVESTMENT IN SUBSIDIARIES                       49,893     29,713                   (79,606) (1)
DEFERRED INCOME TAXES                                          764       2,125                       2,889
                                               ----------------------------------------------------------------

TOTAL                                           197,392     84,465      81,459       (79,606)      283,710
                                               ================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
   Current portion of long-term debt                         1,101       1,770                       2,871
   Due to parent company                                    29,713                  (29,713)(1)
   Accounts payable                                          6,565       3,166                       9,731
   Accrued interest                               6,563          2       1,162                       7,727
   Accrued expenses Other                                   13,440       3,291                      16,731
                                                ----------------------------------------------------------------
     Total current liabilities                    6,563     50,821       9,389      (29,713)(1)     37,060
                                                ----------------------------------------------------------------
OTHER LONG-TERM LIABILITIES                                  6,533                                   6,533
                                                ----------------------------------------------------------------
LONG-TERM DEBT, NET OF CURRENT PORTION          173,885      3,510      45,777                     223,172
                                                ----------------------------------------------------------------
SHAREHOLDERS' EQUITY:
Common stock                                          5          0                                       5
   Additional paid-in capital                    13,447     20,179      29,713      (49,893) (1)    13,446
   Treasury stock                                (9,633)         0                                  (9,633)
   Retained earnings                             13,125      3,422      (3,420)                     13,127
                                                ----------------------------------------------------------------
      Total stockholders' equity                 16,944     23,601      26,293      (49,893)        16,945
                                                ----------------------------------------------------------------
TOTAL                                          $197,392    $84,465     $81,459     $(79,606)      $283,710
Elimination entries                             ================================================================
(1) To eliminate investment in and advances to subsidiaries
</TABLE>
                                        F-17
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS INFORMATION AS OF DECEMBER 31, 2000

                                                                       Combined
                                                  Parent    Combined    Non -     Elimination
                                                   only    Guarantors Guarantors    Entries       Total 2000

    REVENUES:
<S>                                                 <C>      <C>          <C>         <C>              <C>
Casino                                                   $   74,861   $  38,088                   $ 112,949
Rooms                                                        43,819                                  43,819
Food and beverage                                            26,738       4,018                      30,756
Entertainment                                                24,526         -                        24,526
Other                                                         9,607         374     $   557          10,538
Management fee                                  $19,850         557                 (20,407)(1)
                                                -----------------------------------------------------------------
Total revenues                                   19,850     180,108      42,480     (19,850)        222,588
Less promotional allowances                                  13,034       2,767                      15,801
                                                -----------------------------------------------------------------
    Net revenues                                 19,850     167,074      39,713     (19,850)        206,787
                                                -----------------------------------------------------------------
    COSTS AND EXPENSES:
    Direct costs and expenses of operating departments
Casino                                                       40,968      21,935                      62,903
Rooms                                                        23,364         -                        23,364
Food and beverage                                            19,773       1,659                      21,432
Entertainment                                                18,954           5                      18,959
Other                                                         3,144           2                       3,146
    Other operating expenses:
General and administrative                                   31,540       9,515                      41,055
Management fees                                              19,293         557     (19,850)(1)
Preopening expenses Black Hawk, Colorado Project              -           1,222                       1,222
Depreciation and amortization                     1,800      13,090       2,937                      17,827
                                                 -----------------------------------------------------------------
   Total costs and expenses                       1,800     170,126      37,832     (19,850)        189,908
                                                 -----------------------------------------------------------------
INCOME FROM OPERATIONS                           18,050      (3,052)      1,881        -             16,879
                                                 -----------------------------------------------------------------
OTHER (EXPENSE) INCOME
Interest expense                                (18,550)     (1,568)     (7,687)                    (27,805)
Interest income                                     500       1,611         318                       2,429
Interest capitalized                                             39         577                         616
Other, net                                                    1,171          -                        1,171
                                                 -----------------------------------------------------------------
    Total other expense                         (18,050)      1,253      (6,792)       -            (23,589)
                                                 -----------------------------------------------------------------
LOSS BEFORE INCOME TAX BENEFIT                      -        (1,799)     (4,911)       -             (6,710)
BENEFIT FOR INCOME TAXES                                        530       1,965                       2,495
                                                 -----------------------------------------------------------------
NET LOSS                                         $  -    $   (1,269)    $(2,946)   $   -           $ (4,215)
                                                 =================================================================
Elimination Entries
(1)  To eliminate intercompany revenue and expense.
</TABLE>
                                        F-18
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS INFORMATION AS OF DECEMBER 31, 2000
                                                  Parent only   Combined       Combined Non -    Elimination
                                                               Guarantors        Guarantors        Entries    Combined total

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                    <C>         <C>                <C>            <C>             <C>
   Net loss                                              -      $ (1,269)          $  (2,946)                  $    (4,215)
  Adjustments to reconcile net loss to net
cash provided by operating activities:
    Depreciation and amortization                    1,800        11,711               4,316                        17,827
    Provision for bad debts                                          326                                               326
    Provision for gaming discounts                                    45                                                45
    Interest expense - other                        18,550         9,255                                            27,805
    Interest paid - other                          (17,500)       (6,910)                                          (24,410)
    Interest capitalized on construction
projects                                                            (616)                                             (616)
    Changes in operating assets and
liabilities:
      (Increase) in accounts
receivable, net                                                     (877)                                             (877)
      Decrease in inventories                                         90                                                90
      (Increase) decrease in prepaid expenses
and other assets                                                    (837)                230                          (607)
      Increase (Decrease) in accounts payable                     (6,122)              4,051                        (2,071)
      Increase in accrued expenses                                 6,093               1,255                         7,348
      Increase in deferred tax asset                                (569)             (1,965)                       (2,534)
      Decrease in slot annuities payable                              (3)                                               (3)
      Increase in other long term liabilities                      1,247                                             1,247
                                               -----------------------------------------------------------------------------
        Net cash provided by operating activities    2,850         11,564               4,941            -           19,355
                                               -----------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures for property and
equipment                                                          (7,465)            (16,969)                      (24,434)
  Interest capitalized on construction projects                       616                                               616
  Decrease in short-term investments                                2,438               2,820                         5,258
  Decrease in restricted funds                                      7,887               7,173                        15,060
  (Increase) decrease in other assets                1,389         (2,044)                 (6)                         (661)
                                               -----------------------------------------------------------------------------
        Net cash used in investing activities        1,389          1,432              (6,982)            -          (4,161)
                                               -----------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from long-term borrowings                                   34               9,518                         9,552
  Payments on long-term borrowings                                 (1,076)             (1,223)                       (2,299)
  Purchase of treasury stock                        (6,518)                                                          (6,518)
  Advances to/from subsidiaries                      6,518         (6,518)

  Purchase of 13% Mortgage Notes - Black Hawk                           0              (6,559)                       (6,559)

Contribution of capital to Black Hawk, Inc.         (6,239)             0               6,239
                                               -----------------------------------------------------------------------------
       Net cash (used in) provided by financing
activities                                          (6,239)        (7,560)              7,975            0           (5,824)
                                               -----------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS                                         (2,000)         5,436               5,934            -            9,370
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR        13,957         27,037               1,810                        42,804
                                               -----------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR            $ 11,957       $ 32,473            $  7,744       $             $  52,174
</TABLE>
                                        F-19
<PAGE>
10.    LEASING ACTIVITIES

                       The  Company  leases  certain   equipment  under  capital
                leases.  These  agreements have been  capitalized at the present
                value of the future  minimum lease  payments at lease  inception
                and  are  included  with  property  and  equipment.   Management
                estimates  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, 2000 (in
                thousands).

<TABLE>
<CAPTION>
<S>                                                                     <C>
2001                                                                    $ 3,403
2002                                                                      3,403
2003                                                                      3,403
2004                                                                      2,997
2005                                                                        252

Total minimum lease payments                                             13,458
Taxes, maintenance, and insurance                                          (397)
Interest portion of payments                                             (3,174)

Present value of net minimum lease payments                             $ 9,887
</TABLE>

                       Rental expense under operating leases for the years ended
                December 31, 2000, 1999, and 1998 was approximately  $1,133,983,
                $453,772, and $404,199,  respectively.  Such leases were year to
                year in nature.

                       In addition,  the Company leases retail space  (primarily
                to retail shops and fast food  vendors) to third  parties  under
                terms of  noncancelable  operating leases that expire in various
                years through 2004.  Rental  income,  which is included in other
                income,  for the years ended December 31, 2000,  1999, and 1998,
                was  approximately  $1,584,300,   $1,803,000,   and  $1,615,000,
                respectively.









                                        F-20
<PAGE>
                       At December  31,  2000,  the  Company had future  minimum
                annual rental income due under noncancelable operating leases as
                follows (in thousands):
<TABLE>
<CAPTION>
<S>                                                                       <C>
2001                                                                    $ 1,399
2002                                                                      1,399
2003                                                                      1,399
2004                                                                      1,399
2005                                                                        350

Total                                                                   $ 5,946
</TABLE>

11.   $100 MILLION NOTES RETIRED BY U.S. TREASURY BILLS

                       On August 13, 1997, the Company used part of the proceeds
                from the 10% Notes to purchase U.S.  government  securities (the
                "Securities") at a cost of $109.8 million,  which were deposited
                into an  irrevocable  trust.  These  Securities,  together  with
                interest that was earned by the Securities, were used to pay the
                principal,  interest  from August 13, 1997 to June 1, 1998,  and
                call premium of $4,313,000  due on the 11% $100 million notes on
                June 1, 1998,  which was the earliest  date the 11% $100 million
                notes could be redeemed.  Interest earned from the Securities is
                included  in  interest  income on U.S.  Treasury  bills  held to
                retire $100 million  notes.  The interest  expenses from the 10%
                Notes  and  from  the  11%  $100  million   notes  are  reported
                separately on the consolidated  statements of income.  As a part
                of the funding for the retirement of these notes,  substantially
                all the covenants (other than payment of principal and interest)
                were released.  The call premium of $4.3 million and unamortized
                deferred  financing costs totaling $300,000 were recorded net of
                the 35 percent  income tax effect of $1.6 million,  resulting in
                an extraordinary loss of $3.0 million in June of 1998.

12.   FEDERAL INCOME TAXES

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

                       The effective income tax rates on income  attributable to
                continuing  operations  differ from the statutory federal income
                tax  rates  for  the  year  ended  December  31 as  follows  (in
                thousands):
<TABLE>
<CAPTION>
                                   2000                        1999                       1998
                           --------------------------  -------------------------- ------------------------
                             Amount        Rate          Amount        Rate         Amount       Rate

Benefit for income taxes
<S>                         <C>            <C>          <C>            <C>         <C>          <C>
  at federal statutory rate $ (2,349)      (35.0)%      $ (2,565)      (35.0)%     $ (2,164)    (35.0)%
Benefit from outcome of
  IRS examination                                         (1,874)      (25.6)
Other                           (146)       (2.2)            (22)       (0.2)            21       0.3

Benefit for income taxes    $ (2,495)      (37.2)%      $ (4,461)      (60.8)%     $ (2,143)    (34.7)%
</TABLE>

                                        F-21
<PAGE>
Comparative analysis of the provision (benefit) for income taxes is as follows:
<TABLE>
<CAPTION>

                                        2000           1999          1998
<S>                                  <C>             <C>            <C>
Current                              $ 1,223         $ (984)        $ 692
Deferred                              (3,718)        (3,477)       (1,217)
Extraordinary item                                                 (1,618)

Total                                $(2,495)       $(4,461)      $(2,143)
</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>
Deferred tax liabilities:
<S>                                                                            <C>            <C>
  Reserve differential for hospitality and gaming activities                  $ 1,393        $ 968
  Difference between book and tax-depreciable property                          5,217        6,174
  Other                                                                           560          430

Total                                                                           7,170        7,572

Deferred tax assets:
  Net operating loss carryforward                                               3,309        3,064
  Reserves not currently deductible                                             2,416        1,162
  Bad debt reserves                                                               483          564
  AMT and other credits                                                         3,851        3,137

Total                                                                          10,059        7,927

Net deferred tax asset                                                        $ 2,889        $ 355
</TABLE>


                       The Company has  $3,452,000  of  alternative  minimum tax
                ("AMT") credit and $398,000 of general business credit available
                to offset future income tax  liabilities.  The AMT credit has no
                expiration  date. The general  business credit will not begin to
                expire until 2009.

13.   COMMITMENTS AND CONTINGENCIES

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

                       Allen Paulson  Merger/Litigation - In September 1997, the
                Company entered into an agreement (the "Merger  Agreement") with
                Allen E. Paulson  ("Paulson"),  whereby a company  controlled by
                Paulson would acquire 100 percent of the Company's stock for $15
                per share,  plus an interest  factor.  The  stockholders  of the
                Company  approved the Merger Agreement on February 8, 1998. As a
                condition of the Merger  Agreement,  approximately  $5.8 million
                was  placed in  escrow  for the  holders  of  1,770,000  Riviera
                Contingent  Value  Rights  ("CVRs").  The  CVRs  entitled  their
                holders  to share only in the  proceeds  of the funds in escrow.
                Excluded from  participating in the CVRs were Morgens Waterfall,
                SunAmerica, Inc. ("SunAmerica"),  Keyport Life, and Paulson, and
                their   affiliates  and  associates,   who  owned  an  aggregate
                3,355,000 Riviera shares.

                        In March 1998,  the Company was notified by Paulson that
                he was  terminating  the  Merger  Agreement  and filed a lawsuit
                against the Company.
                                        F-22
<PAGE>
                       The Company entered into a Settlement Agreement, dated as
                of July 2,  1999  (the  "Settlement  Agreement"),  by and  among
                Paulson, R&E Gaming Corp.  ("Gaming"),  Riviera Acquisition Sub,
                Inc.  (RAS"),  Elsinore  Acquisition  Sub, Inc.  ("EAS"),  Carlo
                Corporation  ("Carlo," and  collectively  with Paulson,  Gaming,
                EAS,  and  RAS,  the  "Paulson  Plaintiffs"),  and the  Company,
                subject to approval by the courts.

                       On October 7, 1999,  the Federal  District  Court for the
                Central District of California  entered a bar order as part of a
                settlement  of  the  lawsuit  brought  by  Paulson  against  the
                Company.  Pursuant to the terms of the Settlement Agreement, the
                Company  purchased  463,655  shares  from  Paulson for $7.50 per
                share.  The purchased  shares are included in treasury  stock at
                December 31, 1999.  Holders of the 1,770,000 CVRs received $2.46
                for  each  CVR,  and  all  related  suits  between  the  Paulson
                Plaintiffs and the Company were dropped.

                       Other  (expense)  income for the year ended  December 31,
                2000, 1999, and 1998,  includes $1,500,000 of insurance recovery
                and   $1,964,000   and   $1,231,000   of   litigation   expense,
                respectively,  relating  to the Paulson  merger/litigation.  The
                1999 amount of $1,964,000 includes $1,159,000 or $2.00 per share
                in the purchase of the 463,655  shares from  Paulson,  which was
                the  difference  between  the $7.50 and the market  price of the
                Company's stock on July 1, 1999.

                 Morgens, Waterfall,  Vintiadis Litigation - Morgens, Waterfall,
                Vintiadis & Company, Inc. ("Morgens  Waterfall"),  a stockholder
                of the  Company,  filed a complaint  against the Company and its
                directors  seeking  indemnification  from the  Company for costs
                related to the Paulson  litigation.  It also seeks other  relief
                and makes other claims  stemming from the Settlement  Agreement.
                The  Company  believes  that the  claims are  without  merit and
                intends to vigorously defend against them.

                       Employees and Labor  Relations - As of December 31, 2000,
                the  Riviera  had  approximately   1,928  full-time   equivalent
                employees and had  collective  bargaining  contracts  with eight
                unions covering approximately 1,215 of such employees, including
                food  and  beverage  employees,   rooms  department   employees,
                carpenters,  engineers,  stage hands,  musicians,  electricians,
                painters,  and  teamsters.  The  Company's  agreements  with the
                Southern  Nevada  Culinary and Bartenders  Union and Stage Hands
                Union,  which  cover the  majority  of the  Company's  unionized
                employees,  were  renegotiated  in 1998 and  expire  in the year
                2002.   Collective  bargaining  agreements  with  the  operating
                engineers,  painters, and electricians were renegotiated in 2000
                and expire in 2004, 2005, and 2004, respectively. The agreements
                with the  carpenters  expired  in 2000 and are  currently  under
                negotiation.  The  Company  is also  in  negotiations  with  the
                Musicians  Union.  A  new  agreement  was  negotiated  with  the
                Teamsters,  which  expires in 2003.  Although  unions  have been
                active in Las Vegas, management considers its employee relations
                to be satisfactory. There can be no assurance, however, that new
                agreements  will be reached  without  union action or will be on
                terms satisfactory to the Company.




                                        F-23
<PAGE>
                       Deposit   Account  -  Pursuant   to  a  deposit   account
                agreement,  dated as of June 3,  1999,  among Bank of America as
                deposit bank,  Riviera  Holdings  Corporation and First American
                Title Insurance Company,  Riviera Holdings Corporation deposited
                $5.0 million to insure First  American  against  mechanics  lien
                claims  against  the Black  Hawk  property.  Such  $5.0  million
                deposit was returned to Riviera  Holdings  Corporation  in 2000.
                These  amounts  were  included  in cash  and  cash  equivalents,
                restricted at December 31, 1999.

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

14.   MANAGEMENT AGREEMENTS

                       From August 1996 until  February  1997, RGM was operating
                the  Four  Queens  in  downtown   Las  Vegas  under  an  interim
                management agreement for a fee of $83,333 per month. A long-term
                management  agreement (the "Four Queens  Management  Agreement")
                with Elsinore  Corporation  ("Elsinore"),  the owner of the Four
                Queens,  went into effect on February  28, 1997,  the  effective
                date of the Chapter 11 plan of reorganization  of Elsinore.  The
                Company  believes  that the terms of the Four Queens  Management
                Agreement  were no less  favorable  to the  Company  than if the
                Company had negotiated with an independent  party.  RGM was paid
                the minimum annual  management fee of $1.0 million.  In a letter
                dated  September  1,  1999,   Elsinore  and  Four  Queens,  Inc.
                terminated  the Four Queens  Management  Agreement  December 30,
                1999.  The  Company   completed  its   requirements   under  the
                agreement,   and  the  Four  Queens  Management   Agreement  was
                terminated December 30, 1999.

                       RBH has entered into a management  agreement in principle
                (the "RBH Management  Agreement") with Riviera Gaming Management
                of Colorado,  Inc., (the "Manager") a wholly owned subsidiary of
                Riviera  Holdings  Corporation,  which,  in exchange  for a fee,
                manages RBH. The  management fee consists of a revenue fee and a
                performance  fee.  The  revenue fee is based on 1 percent of net
                revenues  (gross revenues less  complimentaries)  and is payable
                quarterly  in  arrears.  The  performance  fee is  based  on the
                following  percentages of EBITDA,  whose components are based on
                generally  accepted  accounting  principles):  (1) 10 percent of
                EBITDA from $5 million to $10 million,  (2) 15 percent of EBITDA
                from $10 million to $15 million, and (3) 20 percent of EBITDA in
                excess  of $15  million.  The  performance  fee is  based on the
                preceding quarterly installments subject to year-end adjustment.
                The  management  fee began on February 4, 2000,  the date of the
                opening  of the  Riviera  Black  Hawk  Casino.  If  there is any
                default under the RBH Management Agreement, the Manager will not
                be  entitled  to  receive  management  fees  but  will  still be
                entitled to  inter-company  service  fees. At December 31, 2000,
                RBH had  accrued but not paid,  and the  Manager had  recognized
                management   fees  of   $557,000   which   are   eliminated   in
                consolidation.






                                        F-24
<PAGE>
15.   EMPLOYMENT AGREEMENTS AND EMPLOYEE BENEFIT PLANS

                       The  Company  has  an  employment   agreement   with  Mr.
                Westerman,  Chairman of the Board and Chief Executive Officer of
                the Company.  This agreement  includes an annual base salary, an
                incentive  bonus  based  upon the extent of  adjusted  operating
                earnings,  contributions  to a  non-qualified  pension plan, and
                contributions  to  a  Profit  Sharing  and  401(k)  Plan.  While
                employed by the Company,  contributions  to the pension plan are
                in amounts  equal to Mr.  Westerman's  salary  each  year,  plus
                interest  on  accrued  amounts  of a rate  equal to the  current
                effective interest rate of the Company (10.6 percent at December
                31, 2000).

                       As discussed in Note 18, Related Party Transactions,  the
                Company  has a  management  agreement  with  Penninsula  Gamping
                Partners LLC. See the note for further information.

                       On March 20, 1998,  Mr.  Westerman  exercised a clause in
                the agreement that requires the Company to establish a trust for
                the money in his retirement fund, as permitted in his employment
                agreement,  following  stockholder  approval  of  a  "change  in
                control."  The  approval  by the  stockholders  of the merger on
                February 5, 1998  constituted a change of control (see Note 12).
                The Company has entered into an agreement with Mr.  Westerman to
                permit funding the trust amount at his option.

                       In  addition  to  Mr.  Westerman,  four  executives  have
                employment  contracts with the Company for fixed terms of either
                two or three years.

                       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, 2000,
                1999,  and  1998,  the  Company   recorded  accrued  bonuses  of
                $2,258,500, $1,871,632, and $1,593,475, respectively, based upon
                the  above  incentive   compensation   plan  and  the  incentive
                compensation  plan  established  for the  Chairman  of the Board
                under his employment agreement.

                       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 $1,688,000,  $1,637,000,  and $1,658,000,  for the
                years ended  December 31, 2000,  1999,  and 1998,  respectively.
                These  contributions  were for  approximately  1,400  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.

                       The  Company  sponsors a Profit  Sharing  and 401(k) Plan
                that incurred  administrative expenses of approximately $25,000,
                $21,851,  and $36,000, for the years ended 2000, 1999, and 1998,
                respectively.

                       The  profit-sharing  component of the Profit  Sharing and
                401(k) Plan provides  that the Company will make a  contribution
                equal  to  one  percent  of  each  eligible   employee's  annual
                compensation,  if a prescribed annual operating  earnings target
                is attained,  and an additional one-tenth of one percent thereof
                for each $200,000 by which operating earnings is exceeded, up to
                a maximum of three percent thereof. The Company may elect not to
                contribute to the Profit  Sharing and 401(k) Plan if it notifies
                its employees by the first day of January of the Profit  Sharing
                and 401(k)  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  percent
                increments  for  each  year  of  service   commencing  with  the
                attainment  of two years of service.  An employee  will be fully
                vested following the completion of six years of service.
                                        F-25
<PAGE>
                       The 401(k)  component  of the Profit  Sharing  and 401(k)
                Plan provides that each eligible  employee may  contribute up to
                15 percent of such employee's annual compensation,  and that the
                Company  will  contribute  1 percent of each  employee's  annual
                compensation  for each 4 percent of compensation  contributed by
                the  employee,  up to a  maximum  of 2  percent.  All  non-union
                employees  of the Company are  eligible  to  participate  in the
                Profit  Sharing and 401(k) Plan after 12  consecutive  months of
                service with the Company.

                       As a result of the  scheduled  opening of several new Las
                Vegas Strip  properties  in 1998,  1999,  and 2000, an estimated
                38,000 new jobs were to be filled,  including 5,000  supervisory
                positions.  Because of the Riviera's performance and reputation,
                its employees are prime candidates to fill these  positions.  In
                the third  quarter of 1998,  management  instituted  an employee
                retention  plan (the  "Plan"),  which  covers  approximately  90
                executive,  supervisory,  and technical support  positions,  and
                includes  a  combination  of  employment   contracts,   stay-put
                agreements,  bonus  arrangements,  and salary  adjustments.  The
                period  costs  associated  with the Plan are  being  accrued  as
                additional  payroll costs and included  approximately  $713,000,
                $1,000,000,  and  $287,000  in  fiscal  2000,  1999,  and  1998,
                respectively.  The  total  cost of the Plan is  estimated  to be
                approximately  $2.1 million over the period July 1, 1998 through
                June 30, 2001.

                       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  (6)   Company   executives   are   currently
                participating in the Plan.

                       Restricted  Stock Plan - On October 2, 2000, the Board of
                Directors adopted a Restricted Stock Plan to provide  incentives
                which  will  attract  and  retain  highly  competent  persons as
                officers and key employees by providing  them  opportunities  to
                receive   restricted  shares  of  the  Company's  common  stock.
                Participants  will consist of such officers and key employees of
                the Company as the Company's  Compensation  Committee determines
                to be  significantly  responsible  for the  success  and  future
                growth and  profitability  of the Company.  Awards of restricted
                stock are  subject to such terms and  conditions  as the Company
                determines to be appropriate at the time of the grant, including
                restrictions on the sale or other disposition of such shares and
                the provision  for the  forfeiture of such shares for partial or
                no   consideration   upon   termination  of  the   participant's
                employment within specified periods or under certain  condition.
                Mr. Robert  Vannucci,  President of the  Company's  wholly-owned
                subsidiary,  Riviera Operating  Corporation,  and Executive Vice
                President of Riviera  Operating  Corporation  are  currently the
                only  participants in the Restricted Stock Plan.  During 2000, a
                bonus of $52,833 was accrued for Mr.  Grippe which is payable on
                or about March 15, 2001 as restricted stock.

16.   STOCK OPTION PLANS

                       At a meeting held on July 27, 1993,  the Company's  Board
                of  Directors  adopted a stock  option plan (the  "Stock  Option
                Plan")  providing  for the  issuance of both  non-qualified  and
                incentive  stock  options  (as defined in the  Internal  Revenue
                Code).  The Stock  Option  Plan was  ratified  by the  Company's
                stockholders at the April 26, 1994 annual meeting.  Options vest
                25 percent on the date of grant and 25 percent  each  subsequent
                year. The term of an option can in no event be exercisable  more
                than 10  years  (5  years  in the  case of an  incentive  option
                granted  to a  stockholder  owning  more than 10  percent of the
                Common  Stock),  or  such  shorter  period,  if  any,  as may be
                necessary to comply with the  requirements  of state  securities
                laws, from the date such option is granted.  Options are granted
                at market  value on the date of the grant.  The number of shares
                initially  available for purchase under the Stock Option Plan as
                adopted  was  120,000  (as  adjusted  pursuant  to  antidilution
                provisions).  The  stockholders  approved a  four-for-one  stock
                split, increasing the number of shares of common stock available
                for purchase under the Stock Option Plan to 480,000. On November
                21, 1996, the Company  amended the Stock Option Plan,  which was
                                        F-26
<PAGE>
                approved at the annual  meeting held on May 8, 1997, to increase
                the number of shares  available under the Stock Option Plan from
                480,000 shares to 1,000,000 shares.

                       In connection  with the resignation of a board member and
                an employee,  the Company paid approximately  $258,000 (included
                in  non-recurring  corporate  expenses in fiscal 1998) on 54,000
                options for the difference between the  weighted-average  option
                price of $2.22, compared to the weighted-average market price of
                $7.00 on the dates of exercise.

                       On  May   10,   1996,   the   stockholders   approved   a
                Non-qualified Stock Option Plan for Non-employee  Directors (the
                "Non-qualified Stock Option Plan") and a Stock Compensation Plan
                for Directors serving on the Compensation  Committee (the "Stock
                Compensation  Plan").  The total number of shares  available for
                purchase  under  each plan is  50,000.  Options  are  granted at
                market  value on the date of the grant.  The  options  vest over
                five years. As a result of the departure of board members, 6,000
                non-qualified options were extinguished during 1998.

                       Option  Surrenders - On November 26, 1996,  414,000 stock
                options were granted to eighteen  (18) Riviera  Executives at an
                option price of $13.625 per share, 320,000 of which were granted
                to Mr. Westerman.  Two (2) of these executives' options totaling
                11,000 shares have since been cancelled due to those  executives
                leaving the Company,  resulting in a balance of 403,000  options
                at $13,625 per share held by sixteen  (16)  Company  executives.
                These  options  were vested in their  entirety in these  sixteen
                (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,  grant  new  options  in an  amount  no less than the
                shares  surrendered,  to be issued no sooner than six (6) months
                and a day after the  surrender of the $13.625  options.  Any new
                options  granted  will be at the price of the  Company's  common
                stock  on the  date of  grant  and are  subject  to the  vesting
                requirements of the Company's Employee Stock Option Plan.

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








                                        F-27
<PAGE>
The activity of the Stock Option Plan and the Non-Qualified Stock Option Plan is
as follows:
<TABLE>
<CAPTION>

<S>                                                                     <C>       <C>      <C>
Outstanding at December 31, 1998                                       520,000   $2.08 to $13.63
  Grants                                                                99,000    $4.50 to $5.25

Outstanding at December 31, 1999                                       619,000   $2.08 to $13.63
  Grants                                                                97,000        $7.69
  Cancelled                                                             (4,000)       $7.69

Outstanding at December 31, 2000                                       712,000    $2.08 to $13.63

Non-Qualified Stock Option Plan

Outstanding at January 1, 1998                                          10,000  $13.25 to $13.50
  Automatic grant to directors                                           8,000   $7.50 to $9.00
  Cancelled                                                            (10,000)  $9.00 to $13.50

Outstanding at December 31, 1998                                         8,000   $7.50 to $13.50
  Automatic grant to directors                                           6,000    $4.88 to $7.50

Outstanding at December 31, 1999                                        14,000   $4.88 to $13.50
  Automatic grant to directors                                           6,000        $7.75
  Cancelled                                                             (6,000)  $4.88 to $7.75

Outstanding at December 31, 2000                                        14,000    $4.88 to $13.50
</TABLE>

                       No compensation  cost has been recognized for unexercised
                options  remaining in the stock option  plan.  Had  compensation
                cost for the Company's stock option plan been  determined  based
                on the fair  value at the date of grant  for  awards  consistent
                with the  provisions of SFAS No. 123, the Company's net loss and
                pro forma net loss  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>
                                                                   2000          1999           1998
<S>                                                             <C>            <C>           <C>
Net loss - as reported                                          $ (4,215)      $ (2,869)     $ (4,057)
Net loss - pro forma                                            $ (4,466)      $ (3,226)     $ (4,548)
Basic loss per common share - as reported                        $ (1.05)       $ (0.58)      $ (0.81)
Basic loss per common share - pro forma                          $ (1.11)       $ (0.65)      $ (0.90)
Diluted loss per common and common
  share equivalent - as reported                                 $ (1.05)       $ (0.58)      $ (0.81)
Diluted loss per common and common share
  equivalent - pro forma                                         $ (1.11)       $ (0.65)      $ (0.90)
</TABLE>
                                        F-28
<PAGE>
                       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
                2000, 1999, and 1998, respectively:  dividend yield of 0 percent
                for all years; expected volatility of 44 percent, 60 percent and
                62  percent;  risk-free  interest  rates of 5.00  percent,  5.00
                percent and 5.46 percent;  and expected  lives of five years for
                all years.  The weighted fair value of options  granted in 2000,
                1999, and 1998, was $3.56, $4.57, and $7.21, respectively.

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

                       Employee  Stock  Ownership Plan - On October 2, 2000, the
                Board of  Directors  adopted an Employee  Stock  Ownership  Plan
                ("ESOP"). The ESOP was established effective January 1, 2000 and
                replaces the profit sharing contribution component of the Profit
                Sharing  and  401(k)  Plans.   The  401(k)   component   remains
                unchanged.  The ESOP  provides that all employees of Riviera Las
                Vegas and its indirectly owned  subsidiary,  Riviera Black Hawk,
                Inc.,  which  operates  its  casino  in  Black  Hawk,  Colorado,
                employed  in the Plan Year who had  completed  a minimum  of one
                thousand  (1,000)  hours of  service  in that  Plan  Year,  were
                employed  through  December 31 of that Plan Year,  were at least
                twenty-one  (21)  years  of age and were  are 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
                operating  earnings  target as  attained  and an  additional  1%
                thereof  for each $2  million  by which  operating  earnings  is
                exceeded, up to a maximum of 4% for 2000 and 5% thereafter.  For
                Riviera Black Hawk, the Company will make a  contribution  equal
                to 1% of  each  eligible  employee's  annual  compensation  if a
                prescribed  annual operating  earnings target is attained and an
                additional  1% thereof  for each $1  million by which  operating
                earnings  is  exceeded,  up to a  maximum  of 4% for 2000 and 5%
                thereafter.  Under the ESOP,  the Company  contribution  will be
                made in cash which will be used to buy Company common stock.

17.   EARNINGS PER SHARE

                       Basic  EPS is  computed  by  dividing  net  income by the
                weighted-average  number of common  shares  outstanding  for the
                period.  Diluted EPS is  computed by dividing  net income by the
                weighted   number  of  common  and  common   equivalent   shares
                outstanding  for the period.  Options to purchase  common stock,
                whose  exercise  price was greater than the average market price
                for the  period,  have been  excluded  from the  computation  of
                diluted EPS. Such  antidilutive  options  outstanding for the 12
                months ended December 31, 2000,  1999,  and 1998,  were 732,000,
                633,000 and 531,000, respectively.




                                        F-29
<PAGE>
                       A  reconciliation  of  income  and  shares  for basic and
                diluted  EPS is as follows  (amounts  in  thousands,  except per
                share amounts):
<TABLE>
<CAPTION>

                                                                Year Ended 2000
                                                     Income          Shares        Per Share
                                                   (Numerator)     (Denominator)     Amount

Basic EPS -
<S>                                                  <C>              <C>           <C>
  Loss available to common stockholders              $(4,215)         4,013         $ 1.05
Effect of dilutive securities -
  Options

Diluted EPS -
  Loss available to common stockholders plus
    assumed conversions                              $(4,215)         4,013         $ 1.05


                                                               Year Ended 1999
                                                     Income          Shares        Per Share
                                                   (Numerator)     (Denominator)     Amount

Basic EPS -
  Loss available to common stockholders               $(2,869)        4,978         $(0.58)
Effect of dilutive securities -
  Options

Diluted EPS -
  Loss available to common stockholders plus
    assumed conversions                               $(2,869)        4,978         $(0.58)

                                                               Year Ended 1998
                                                     Income          Shares        Per Share
                                                   (Numerator)     (Denominator)     Amount

Basic EPS -
  Loss available to common stockholders               $(4,057)        5,037         $(0.81)
Effect of dilutive securities -
  Options

Diluted EPS -
  Loss available to common stockholders plus
    assumed conversions                               $(4,057)        5,037         $(0.81)

</TABLE>

                       During  2000,  1999,  and  1998,  the  Company  purchased
                257,893,  4,800, and 34,300 shares of treasury stock on the open
                market for  approximately  $2,093,000,  $22,000,  and  $167,000,
                respectively.  In addition to the purchase of stock from Paulson
                as  described  in Note 12, the Company  purchased  81,000 of its
                shares from  SunAmerica  at $7.50 per share on October 18, 1999.
                This transaction reduced  SunAmerica's  ownership of the Company
                to under 15 percent.  On February 8, 2000, the Company completed
                a tender offer  wherein  approximately  590,000  shares of stock
                were  purchased  for $7.50 per share.  The Company used its cash
                and cash equivalents to purchase the shares. After giving effect
                to such share  repurchases,  the Company had 3,668,128 shares of
                common  stock  outstanding.   The  purchases  were  recorded  in
                treasury stock.
                                        F-30
<PAGE>

18.   SEGMENT DISCLOSURES

                       At December  31, 2000,  the Company  adopted a management
                review process 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.  Due to this
                change  in  management's   review  of  operating  results,   all
                corresponding prior years' data has been restated to reflect the
                current  review  process.  All  intersegment  revenues have been
                eliminated.
<TABLE>
<CAPTION>

(in thousands)                                             2000          1999          1998
                                                                     (Restated)     (Restated)
Net revenues:
<S>                                                      <C>           <C>           <C>
   Riviera Las Vegas                                     $166,841      $157,109      $158,995
   Riviera Black Hawk                                      39,713
   Riviera Gaming Management                                  233         1,064         1,000

        Total net revenues                               $206,787      $158,173      $159,995

EBITDA:

   Riviera Las Vegas                                    $  29,249     $  24,631     $  28,067
   Riviera Black Hawk                                       6,597             1
   Riviera Gaming Management                                   88         1,047         1,000

        Total EBITDA                                   $   35,928     $  25,679      $ 29,067

EBITDA margin (1):
   Riviera Las Vegas                                       17.5 %        15.7 %        17.7 %
   Riviera Black Hawk                                      16.6
   Riviera Gaming Management                               37.8          98.4         100.0

        Total EBITDA                                       17.4 %        16.2 %        17.5 %

Income (loss) from operations:

   Riviera Las Vegas                                    $  14,910     $  10,641     $  15,379
   Riviera Black Hawk (Preopening expenses in 1999)         1,881          (595)
   Riviera Gaming Management                                   88         1,047         1,000

        Total income form operations                    $  16,879     $  11,093     $  16,379

                                                                December 31,
                                                            2000           1999
Assets (2):                                                             (Restated)
     Riviera Las Vegas                                   $138,525       $145,925
     Riviera Black Hawk                                    68,505         56,734
     Riviera Gaming Management                           _______         _______

          Total Assets                                   $207,030       $202,659

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


                                        F-31

<PAGE>

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

                       RIVIERA

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

                       RIVIERA BLACK HAWK

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

19.   RELATED PARTY TRANSACTIONS

                       Robert R. Barengo,  a member of the Board of Directors of
                the Company,  is a director of American  Wagering,  Inc. ("AWI")
                and owns 7 percent of the outstanding stock of AWI, which leases
                approximately 12,000 square feet of the Riviera Hotel & Casino's
                casino  floor.  AWI  is the  operator  of the  Riviera  Hotel  &
                Casino's  sport book  operations.  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  $188,000,  $250,000, and $212,000, in each of the
                years ended December 31, 2000, 1999, and 1998, respectively. The
                Company  believes  that the terms of the  lease  with AWI are at
                least as  favorable  to the  Company  and ROC as could have been
                obtained  from  unaffiliated  third  parties and are at lease as
                favorable as terms obtained by other casino hotels in Las Vegas.

                       The  Company  entered  into a letter  agreement  with Mr.
                Barengo, a member of the Bar of the State of Nevada, pursuant to
                which Mr. Barengo has been assisting the Company and its outside
                counsel in enforcing the Company's  rights under the  litigation
                related to the Paulson merger, the Morgens Waterfall  litigation
                and with  related  matters.  Under such  letter  agreement,  Mr.
                Barengo  receives a fee of $10,000 per month for his  counseling
                services.   Fees  paid  under  this   agreement  were  $120,000,
                $120,000,  and $90,000 for the years ended  December  31,  2000,
                1999,  and 1998,  respectively.  Mr.  Barengo became an employee
                director in January 2001. He and the Company mutually terminated
                the agreement effective December 31, 2000.

                                        F-32
<PAGE>
                       Peninsula  Gaming  Partners  LLC  ("PGP")  engaged RGM to
                assist, on an interim basis, with transitional  matters relating
                to the operations of the Diamond Jo gaming riverboat in Dubuque,
                Iowa. Such services include  assisting in the selection of a new
                chief operating  officer to oversee  riverboat casino operations
                and other  matters.  RGM has  earned  fees and  expenses  in the
                amount of $232,000 and $64,000 for the years ended  December 31,
                2000 and 1999,  respectively.  PGP terminated its agreement with
                RGM in September 2000. Mr.  Westerman served as a manager on the
                board of managers of Peninsula  Gaming  Partners,  LLC until his
                resignation  effective  December 31, 2000. The Company  believes
                that the fees were no less  favorable  than would have been paid
                in an arm's-length transaction.

                       In 1998 the Company restructured its corporate management
                team and Board of Directors.  Costs associated with this actvity
                are included in Corporate Expenses - Severence Pay in 1998.













                                        F-33

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

Year Ended December 31, 1999:
  Net Revenues                             $40,297        $40,650          $38,904            $38,322
  Operating Income                           3,859          3,281            1,438              2,515
  Income (Loss) Before Taxes (Benefit)         252         (1,164)          (4,472)            (1,946)
  Net Income (Loss)                            166           (812)          (2,172)               (51)
  Earnings (Loss) Per Share, Basic          $ 0.03        $ (0.16)         $ (0.43)           $ (0.01)
  Earnings (Loss) Per Share, Diluted        $ 0.03        $ (0.16)         $ (0.43)           $ (0.01)
</TABLE>


                                        F-34