====================================================================
                                  UNITED STATES
                       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
For the fiscal year ended December 31, 2004

[ ] Transition report pursuant to sections 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from                             to
                               ---------------------------   ----------------

                        Commission file number 000-21430
                          RIVIERA HOLDINGS CORPORATION
             (Exact name of Registrant as specified in its charter)

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

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

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

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

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

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

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

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

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

           Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act).
YES ___ NO _X_

           Based on the closing sale price of the Registrant's common stock on
the American Stock Exchange as June 30, 2004 the aggregate market value of the
common stock held by non-affiliates of the Registrant was approximately
$21,930,678. As of March 14, 2005 the number of outstanding shares of the
Registrant's Common Stock was 12,340,755.

Documents incorporated by reference:  None


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                               Page 1 of 57 pages
                    Exhibit Index Appears on Page 52 hereof.


<PAGE>
<TABLE>
<CAPTION>

                   RIVIERA HOLDINGS CORPORATION AND SUBSIDIARY
                    ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
                          YEAR ENDED DECEMBER 31, 2004

                                TABLE OF CONTENTS

<S>          <C>                                                          <C>
Item 1.   Business..........................................................3
             General .......................................................3
             Riviera Las Vegas..............................................3
             Riviera Black Hawk.............................................7
             Geographical Markets...........................................8
             Management Activities and New Venue Prospects ................10
             Competition...................................................10
             Employees and Labor Relations.................................12
             Regulation and Licensing......................................13
             Federal Registration..........................................20

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

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

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

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

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

Item 7.   Management's Discussion and Analysis of Financial
               Condition and Results of Operation..........................23
             Overall outlook and Recent Developments.......................23
             Results of Operations.........................................24
             2004 Compared to 2003.........................................24
             2003 Compared to 2002.........................................26
             Liquidity and Capital Resources...............................28
             Critical Accounting Policies..................................29
             Recently Issued Accounting Standards..........................30
             Forward-Looking Statements....................................31

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

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

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

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

Item 9B. Other Information.................................................33

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

Item 11.  Executive Compensation...........................................38

Item 12.  Security Ownership of Certain Beneficial Owners and Management
          and Related Stockholder Matters..................................46

Item 13.  Certain Relationships and Related Transactions ..................49

Item 14.  Principal Accountant Fees and Services...........................49

Item 15.  Exhibits and Financial Statement Schedules.......................50

</TABLE>

<PAGE>

         PART I

Item 1.    Business

General

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

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

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

Riviera Las Vegas

General

           Riviera Las Vegas is located on the corner of Las Vegas Boulevard and
Riviera Boulevard in Clark County, Nevada, across from Circus Circus. Riviera
Las Vegas targets slot and mid-level table game customers and various convention
groups 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 1,365 slot machines and 35 gaming tables, including blackjack,
craps, roulette, pai gow poker, Caribbean Stud(R) poker, Three Card Poker, Let
It Ride(R) and mini-baccarat. The casino also includes a keno lounge and a race
and sports book.

           Gaming operations at Riviera Las Vegas are continually updated to
respond to both changing market conditions and customer demand in an effort to
attract new customers and encourage repeat customer business through player
tracking and database management. We maintain a slot players club, through which
members receive special promotions and targeted mailings. New and innovative
slot and table games have been introduced based on customer feedback. Management
devotes substantial time and attention to the type, location and player activity
of all its slot machines. We maintain a capital investment program for the
upgrade of our slot machines. In 2004 we installed a new slot monitoring system
that will help us expand our marketing capabilities and allow us to accelerate
our commitment to provide our customers with the benefits that are now available
with ticket-in/ticket-out ("TITO")technology.

           Our current marketing programs are directed at mid-level gaming
customers as opposed to high-stakes bettors. Mid-level gaming customers tend to
provide a less volatile, more consistent gaming revenue stream. Consistent with
our focus on mid-level gaming customers is our tendency to offer lower table
game limits, stricter credit policies and more emphasis on slot machine play.

           During 2004, we continued a number of initiatives at Riviera Las
Vegas to increase slot play, including the replacement of older slot machines
with new machines utilizing the ticket-in/ticket-out technology to improve
service and convenience to our customers, completed installation of our new
player tracking system, and maintenance of our slot host program. Slot hosts are
our employees who interact with patrons as goodwill ambassadors to generate
loyalty. Our strategy is to continue to increase slot play through marketing
programs and other improvements, including (1) our ongoing slot upgrade program,
(2) implementation of our new player tracking system, (3) addition of new
signage, (4) promotion of the Riviera Las Vegas Player's Club, (5) sponsorship
of slot tournaments, (6) creation of promotional programs, (7) marketing of the
"Slot Frenzy" and "$40 for $20(R)" slot promotions, and (8) "Penny Town". Penny
Town is comprised primarily of penny and nickel slot machines, which is one of
the fastest growing segments of the Las Vegas slot market.


                                        3
<PAGE>

Hotel

           Riviera Las Vegas' hotel is comprised of five towers with 2,100 guest
rooms, including 169 suites.

<TABLE>
<CAPTION>
Riviera Las Vegas
                                                                  Latest
                          Year      Std.                         Refurbish
                          Built    Rooms     Suites     Total      Year
                          ----     -----     ------     -----      ----
<S>                       <C>       <C>        <C>       <C>       <C>
North Tower               1955      391        11        402       2004
South Tower               1967      147        31        178       2004
Monte Carlo               1974      220        72        292       2005
San Remo                  1977      243        6         249       1998
Monaco                    1988      930        49        979       2004
                                    ---       ---       ----
Total                             1,898       169      2,075
</TABLE>

     Despite  the  significant  increase  in rooms on the Las Vegas  Strip since
1997, the Company  believes  Riviera Las Vegas has attained room occupancy rates
that are  among  the  highest  on the Las Vegas  Strip.  From 1994 to 2000,  the
occupancy  rate  ranged from 95.2% to 98.2%,  and was 91.5% for 2001,  89.6% for
2002, 92.2% for 2003 and 92.6% for 2004 (based on available rooms).  The average
occupancy rate citywide was 88.6% in 2004 according to the Las Vegas  Convention
and Visitors Authority (the "LVCVA").

Restaurants

           The quality, value and variety of food services are critical to
attracting Las Vegas visitors. Riviera Las Vegas offers five bars and four
restaurants and serves an average of approximately 4,900 meals per day,
including banquets and room service. Riviera completely remodeled its buffet in
2001 upgrading the ambiance and food quality, featuring cuisine from various
countries as well as a carving station. The following table outlines, for each
restaurant, the type of service provided and total seating capacity:
<TABLE>
<CAPTION>

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

           In addition, Riviera Las Vegas operates a snack bar and continental
breakfast buffet as well as a fast-food court operated by a third party. The
food court has 200 seats and several fast-food restaurants, including A&W/KFC
Express, Pizza Hut Express(R), Panda Express(R), Quiznos(R) and La Salsa(R).
Riviera Las Vegas contracted with a third party for the remodel, ownership and
operation of a fifth restaurant at Riviera Las Vegas. This third party leases
the former Chinese restaurant and serves breakfast, lunch and dinner, and
features trendy appetizers, wine and has an ala carte menu with a French flair.

                                        4
<PAGE>

Convention Center

       Riviera Las Vegas features 160,000 square feet of convention, meeting and
banquet space. The convention center is one of the larger in Las Vegas and is an
important feature that attracts customers.  The facility can be reconfigured for
multiple  meetings of small groups or large  gatherings  of up to 5,000  people.
Riviera Las Vegas hosted 319  conventions in 2004. The hotel  currently has over
575,000  convention related advance bookings of rooms through 2008 consisting of
over 375,000  definite  bookings and over 200,000  tentative  bookings.  In 2004
approximately  30% of the rooms  were  occupied  for  conventions,  and based on
current  bookings  we  estimate  that  30% of the  rooms  will be  occupied  for
conventions in 2005.

           The Royal Pavilion portion of the convention center, which opened in
February 1999, and comprises approximately 60,000 square feet of our convention
facility, features state-of-the-art convention, meeting and banquet facilities,
teleconferencing, wireless Internet and satellite uplink capability and 12
skyboxes. The additional convention space at the Las Vegas and Mandalay
Convention Centers has enabled Las Vegas to attract and book new conventions
that may have had date and exhibit space conflicts in the past. Our flexibility
of meeting space and proximity to the Las Vegas Convention Center continue to
position us to increase our mix of small meetings and conventions, as well as
new multi-hotel conventions booked into the Las Vegas Convention Center.

Entertainment

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

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

           Name                     Type                     Seating Capacity

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


           In addition, Riviera Las Vegas presents major concerts which since
1998 have included performers such as The Beach Boys, Billy Ray Cyrus, Rich
Little, Drew Carey, Damon Wayans, Titus, Brett Butler and D.L. Hughley. The
addition of the Royale Pavilion has enabled us to increase attendance at special
events since, in the past, the then existing facilities could not accommodate
the demand for tickets. We have recently opened a nightclub, Syn City, which
operates five nights per week in our Le Bistro Theater. Syn City opens at 10:00
pm which allows us to continue to offer a variety of entertainment in the Le
Bistro Theater prior to 10:00 pm and during Syn City nights off.

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

Future Expansion Possibilities

           We continue to explore the possible development of an approximately
60,000 square-foot entertainment complex to be constructed directly over the
casino, which could contain specialty themed entertainment that will appeal to
the Riviera Las Vegas' main target audience, adults aged 45 to 65. The exit from
the complex would deliver patrons to the casino.

                                        5
<PAGE>

           We are exploring a number of options for the development of our
existing 26-acre site. These options include a joint venture for the development
of a time-share condominium tower or an additional hotel tower and parking
garage. Under the terms of the indenture governing our $215 million 11% Senior
Secured Notes (the "Note Indenture"), we could contribute up to 6 acres of land
to such projects, and if we decide to develop a time-share tower, a third party
would construct and sell time-share units and arrange financing. We believe that
additional rooms adjacent to the Las Vegas Convention Center would be
particularly attractive to business customers and would provide a base for
additional casino customers. The development of a time-share tower, hotel tower
or parking facility would require additional financing and, in the case of the
time-share tower, a joint venture partner, none of which we have in place at
this time.

         On February 15, 2005, we announced that we have requested our financial
advisor,   Jefferies  &  Company,  Inc.  ("Jefferies"),   to  explore  strategic
alternatives for maximizing  shareholder value, including development of our Las
Vegas  property,  refinancing,  joint  ventures,  mergers  and other  methods of
realizing the value of our stock.  We continue to work with Jefferies to explore
such alternatives.

Marketing Strategies-Las Vegas

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

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

           Create Repeat Customers

           Generating customer loyalty is a critical component of our business
strategy as retaining customers is less expensive than attracting new ones. We
have developed a focused and coordinated marketing program intended to develop a
loyal customer base which emphasizes (1) providing a high level of service to
our customers to ensure an enjoyable experience while at the Riviera Las Vegas,
(2) responding to customer surveys and (3) focusing marketing efforts and
promotional programs on customers with positive gaming profiles. We believe the
implementation of our new player tracking system will help us retain customers.
We use our research data to tailor promotional offers to the specific tastes of
targeted customers. All slot and table players are encouraged to join the
Riviera Las Vegas Player's Club which tracks their level of play, and to fill
out surveys that provide the Riviera Las Vegas with personal information and
preferences. Members of the Riviera Las Vegas Player's Club earn bonus points
based upon their level of play, redeemable for free gifts, complimentary
services or cash rebates. Promotional offers are made to qualifying customers
through direct mail and telemarketing. We design promotional offers targeted at
certain mid-level gaming patrons that are expected to provide significant
revenues based upon their historical gaming patterns. We contact these customers
through a combination of direct mail and telemarketing by an in-house marketing
staff, an outside consultant 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 targets and invites
the customers most appropriate for the customized events. In addition, we host
an array of special events, including slot and table game 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.

                                        6
<PAGE>

           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 a variety of 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 conducted through June of 2004 indicate that approximately 67%
of the 2004 show patrons came from outside the hotel and approximately
two-thirds of these individuals gambled at Riviera Las Vegas before or after the
shows.

           Attract Walk-In Traffic

           We seek to maximize the number of people who patronize the Riviera
Las Vegas but who are not guests in the hotel by capitalizing on Riviera Las
Vegas' prime Strip location, convention center proximity and the Riviera's
several popular in-house productions. Riviera Las Vegas is well situated on the
Las Vegas Strip near Circus Circus, Stardust Hotel & Casino, Westward Ho Casino
& Hotel, Sahara Hotel & Casino, Las Vegas Hilton, the Las Vegas Convention
Center, the new Wynn Resort scheduled to open April 28, 2005, as well as
numerous non-gaming condominium and time share projects which are either planned
or under construction within walking distance of our casino. We do and will
strive to attract customers from those facilities, as well as capitalize on the
visitors in Las Vegas in general, with the goal of increasing walk-in traffic by
(1) developing and promoting Penny Town, (2) providing a variety of quality,
value-priced entertainment and dining options, and (3) promoting "Slot Frenzy",
our daily slot tournament, the "Free Pull" and the "$40 for $20" slot
promotions, and placing them inside the casino.

           Focus on Convention Customers

           This market consists of two groups: (1) those trade organizations and
groups that hold their events in the banquet and meeting space provided by a
single hotel and (2) those attending city-wide events, usually held at the Las
Vegas Convention Center. Riviera Las Vegas targets convention business because
it typically provides patrons willing to pay higher room rates and we are able
to provide certain advance planning benefits, since conventions are usually
booked two years in advance of the event date. We focus our marketing efforts on
conventions whose participants have the most active gaming profile and higher
room rate, banquet and function spending habits. Riviera Las Vegas also benefits
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 2004
we derived 30.3% of our hotel occupancy from convention customers and consider
them a critical component of our customer base. We believe that the completed
expansion of the Riviera Las Vegas' convention facility in February 1999, from
100,000 to 160,000 square feet, has accommodated the growth in size and number
of groups that presently use the facility, attracted new convention groups and
increased the percentage of rooms occupied by conventioneers.

           Tour and Travel Operators

           We have found that many of our customers use tour and travel
"package" options to reduce the cost of travel, lodging and entertainment. These
packages are produced by wholesale operators and travel agents and emphasize
mid-week stays. Tour and travel patrons often book at off-peak periods enabling
us to maintain occupancy rates at the highest levels throughout the year. We
have developed specialized marketing programs and cultivated relationships with
wholesale operators, travel agents and major domestic air carriers to expand
this market. Our four largest tour and travel operators currently account for
approximately 18% of total available rooms and 21% of occupied rooms. We make an
effort to convert many tour and travel customers who meet our target customer
gaming profile into repeat slot customers.

           Internet

           The Internet segment of our business remained stable in 2004. This
segment attracts customers in search of a bargain, those making last minute
travel arrangements and those who have the confidence in and find it convenient
to book rooms over the Internet. In both 2003 and 2004, our Internet bookings
accounted for approximately 12% of total available rooms and 14% of occupied
rooms.

Riviera Black Hawk

Business

           Riviera Black Hawk opened on February 4, 2000. Located in Black Hawk,
Colorado, approximately 40 miles west of Denver, our casino is the first casino
encountered by patrons arriving from Denver on Highway 119. Our casino features
the third largest number of gaming devices in the market with approximately
1,000 slot machines and 10 blackjack tables. In Colorado, each slot machine and
each table game is considered one gaming device.

                                        7
<PAGE>

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

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

o        a 252-seat casual buffet-styled restaurant;

o        a new delicatessen;

o        two themed bars; and

o        an entertainment center with seating for approximately 400 people.

           The initial participants in this market were small, privately held
gaming facilities whose inability to offer convenient parking and a full range
of traditional casino amenities limited the growth of this market. Subsequently,
larger casinos offering such amenities have entered the market, have been
gaining market share and have contributed to the consistent growth in the
overall market. As of December 31, 2004, there were 26 casinos in the Black
Hawk/Central City market, with 11 casinos each offering more than 400 gaming
devices. The Isle of Capri, located across the street from our casino, with
approximately 1,330 gaming machines and 1,000 covered parking spaces, has been
the market leader in terms of win per gaming device.

Marketing strategy

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

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

           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 277,000 of these slot players have been identified as
of December 31, 2004. In addition, we promote our casino by advertising in
newspapers and on the radio in the local areas.

Geographical Markets

The Las Vegas Market

     Las Vegas is one of the largest and fastest growing  entertainment  markets
in the country.  According to the LVCVA,  the number of visitors who traveled to
Las Vegas during the 18-year period from 1986 through 2004 increased at a steady
and significant  rate from  approximately  15.2 million in 1986 to approximately
37.4 million in 2004, representing a 146.1% increase during that 18-year period.
Approximately 35 million people visited Las Vegas in 2001, 35.1 million in 2002,
35.5 million in 2003 and 37.4 million in 2004.  Clark County gaming continued to
be a strong and growing  business.  Clark County gaming revenues  increased from
$2.4  billion in 1986 to $8.7  billion in 2004,  a 262.5%  increase  during that
period.  Clark County gaming  revenues were $7.6 billion in 2001 and 2002,  $7.8
billion in 2003 and $8.7 billion in 2004. The terrorist attacks of September 11,
2001 had an adverse  effect on the number of  visitors  traveling  to Las Vegas.
Similar  events in the  future  could  have an  adverse  effect on the number of
visitors traveling to Las Vegas.

                                        8
<PAGE>

           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 market is the western
region of the United States, most significantly Southern California and Arizona,
Las Vegas also serves as a destination resort for visitors from all over the
world. Significant percentages of visitors originate from Latin America and
Pacific Rim countries such as Japan, Taiwan, Hong Kong and Singapore. The events
of September 11, 2001 have had, and may continue to have, an adverse impact on
the number of international visitors coming to Las Vegas.

     Historically,  Las Vegas has had one of the strongest  hotel markets in the
country.  The number of hotel and motel rooms in Las Vegas has increased by over
95% from approximately 67,000 at the end of 1989 to approximately 131,500 at the
end of 2004, 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 met or exceeded  84% for each of the years from
1993 through 2004, with an occupancy rate of 88.6% in 2004.  During 2004,
approximately 1,021 new hotel rooms opened in Las Vegas.

           We believe that the growth in the Las Vegas market has been enhanced
as a result of: (1) a dedicated program by the LVCVA and major Las Vegas
casino/hotels to promote Las Vegas as a major convention site, (2) the increased
capacity of McCarran Airport and (3) the introduction of large themed "must see"
destination resorts in Las Vegas. In 1988, approximately 1.7 million delegates
attended conventions in Las Vegas and generated approximately $1.2 billion of
economic impact. The number of convention delegates increased to over 5.7
million in 2004 with an economic impact in excess of $6.8 billion.

           During the past ten years, McCarran Airport has expanded its
facilities to accommodate the increased number of airlines and passengers which
it services. The number of passengers traveling through McCarran Airport has
increased from approximately 22.5 million in 1993 to an estimated 41.4 million
in 2004. Construction has recently been completed on numerous roadway
enhancements to improve access to the airport. McCarran Airport is ranked among
the 11th and 6th busiest airports in the world and North America, respectively,
based on passenger activity.

The Black Hawk/Central City Market

           Gaming was first introduced to the Black Hawk/Central City market in
October 1991 following a state-wide referendum where Colorado voters approved
limited stakes gaming for three historic mining towns, namely Black Hawk,
Central City and Cripple Creek. Limited stakes gaming is defined as a maximum
single bet of $5.00. Black Hawk and Central City are contiguous cities located
approximately 40 miles west of Denver and about 10 miles north of Interstate
Highway 70, the main east-west artery from Denver. Historically, these two gold
mining communities were popular tourist towns. However, since the inception of
casino gaming in October 1991, gaming establishments have displaced many of the
former tourist-related businesses.

           The first casino in the Black Hawk/Central City market opened in
October 1991, with 13 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, 2004.

           The Black Hawk/Central City market primarily caters to "day-trip"
customers from Denver, Boulder, Fort Collins and Golden as well as Cheyenne,
Wyoming. As of December 31, 2003, the Denver Metropolitan Area had a population
of approximately 3.6 million and an average household income in excess of
$81,000.

           Since 1992, the number of gaming devices in the Black Hawk/Central
City market has grown approximately 52% from 7,252 devices in 1992 to 11,000
devices in 2004. Gaming revenues in the Black Hawk/Central City market increased
by approximately 3.8% in 2004 over 2003. The City of Black Hawk itself
experienced an approximately 3.6% increase in gaming revenue in 2004.

           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

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<PAGE>

major highways, as patrons must first pass through Black Hawk to access Central
City from Denver. There is, however, a new road that recently opened which links
Central City directly with Interstate 70 that allows customers to reach Central
City without driving through Black Hawk. Although this road will allow customers
to access Central City directly, we believe that most customers will continue to
frequent Black Hawk casinos because of the superior amenities Black Hawk casinos
offer. Due to this superior location, larger casino operators have focused on
building in Black Hawk. As a result, casinos in Black Hawk now generally feature
a larger average number of gaming devices, a wider variety of amenities and
convenient free parking for patrons.

Management Activities and New Venue Prospects

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

           We filed an application with the Missouri Gaming Commission in
October of 2002 for a casino/hotel development project in Jefferson County,
Missouri, approximately 22 miles south of downtown St. Louis. Other applicants
had also filed applications for development projects in and around the St. Louis
metropolitan area. In August, 2004, the Missouri Gaming Commission granted two
licenses to another applicant.

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

           The significant contribution of our Black Hawk property to our
shareholder value reinforces our effort to diversify into new venues. We are
regularly reviewing opportunities to expand and become a larger
multi-jurisdictional casino company. The jurisdictions include California,
Mississippi, Pennsylvania, Missouri, New Mexico, Iowa and Mexico. We will
continue to pursue contacts to manage other casino properties which may include
financially distressed casino properties where we believe we may be able to
effect a turn-around and which we can obtain a significant equity stake.

Competition

Las Vegas, Nevada

           Intense competition exists among companies in the gaming industry,
many of which have significantly greater resources than we do. 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.

           Las Vegas gaming square footage and room capacity are continuing to
grow and are expected to continue to increase during the next several years.

           During 2004, approximately 1,000 new hotel rooms opened, and as of
December 31, 2004, there were approximately 4,000 hotel/motel rooms expected to
open in 2005. 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 2004, available room nights in the Las Vegas market increased
from approximately 46.8 million to approximately 47.4 million, or 1.2%, while
total room nights occupied increased from approximately 38.8 million to over
41.9 million, or 8.0%. The ending room inventory at December 31, 2004 was
approximately 131,500 compared to approximately 130,500 at December 31, 2003, an
increase of approximately 1,000 rooms or 0.8%. This has had the effect of

                                        10
<PAGE>

intensifying competition. At Riviera Las Vegas, room occupancy increased from
92.2% in 2003 to 92.6% in 2004 (higher than the Las Vegas hotel average of
88.6%). Room rates increased by $4.41, or 7.3% from $60.40 in 2003 to $64.81 in
2004. Revenue per available room (Rev/Par) increased $4.33 or 7.8% from $55.66
in 2003 to $59.99 in 2004.

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

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

Black Hawk, Colorado

           The Black Hawk/Central City gaming market is characterized by intense
competition. The primary competitive factors in the market are location,
availability and convenience of parking, number of slot machines and gaming
tables, promotional incentives, hotel rooms, types and pricing of non-gaming
amenities, name recognition and overall atmosphere. Our main competitors are the
larger gaming facilities, particularly those with considerable on-site or nearby
parking and established reputations in the local market. As of December 31,
2004, there were 21 gaming facilities in the Black Hawk market with 10 casinos
each offering more than 400 gaming positions. Additional projects have also been
announced, proposed, discussed or rumored for the Black Hawk/Central City
market.

           The gaming facilities near the intersection of Main and Mill Streets
provide significant competition to our casino. Colorado Central Station, which
has been one of the most successful casinos in Colorado, is located across the
street from our casino and has 765 slot machines, 10 gaming tables and
approximately 700 valet parking spaces. The Isle of Capri Casino, the most
successful casino in Colorado is located directly across the street from our
casino and features approximately 1,330 slot machines, 14 table games, 1,000
parking spaces, and 237 hotel rooms. Isle of Capri acquired Colorado Central
Station in 2003. The Isle of Capri is renovating Colorado Central Station by
adding a 1,400 space parking garage, a 165 room hotel and a restaurant on land
immediately across Main Street from Colorado Central Station and diagonally
across from our casino. We plan to construct an elevated walkway connecting our
property with the Isle of Capri. Also, Main Street is currently under
renovation. When completed ours will be the first property on Main Street to all
customers traveling to Black Hawk via State Route 119. Our parking garage will
be the first parking garage and will be easily accessible by way of a right hand
turn directly from Main Street. We believe that these renovations will increase
the probability that more customers will frequent the immediate area serviced by
Isle of Capri, Colorado Central Station and our casino. The renovations are
expected to be complete in 2005.

           The number of hotel rooms currently in the Black Hawk/Central City
market is approximately 400, with only three gaming facilities providing hotel
accommodations to patrons. These include Fortune Valley, formerly Harvey's Wagon
Wheel Casino Hotel, with approximately 120 rooms, the Lodge at Black Hawk with
approximately 50 rooms and the Isle of Capri Casino with 237 rooms. Casinos
offering hotel accommodations for overnight stay may have a competitive
advantage over our casino. However, we currently 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.

                                        11
<PAGE>

           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. However, there is a new road that recently opened, which links Central
City directly with Interstate 70 and allows customers to reach Central City
without driving through Black Hawk. Although this road allows customers to
directly access Central City, we believe that most customers will continue to
frequent Black Hawk casinos because of the superior amenities Black Hawk casinos
offer. This new road provides additional access to the Black Hawk/Central City
market, which is especially important on weekends when the traditional road
system is over burdened. We believe the new access road is important for the
continued growth of the market.

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

          It is also possible that new forms of gaming could compete with our
casino. Currently, Colorado law does not authorize video lottery terminals.
However, Colorado law permits the legislature, with executive approval, to
authorize new types of lottery gaming, such as video lottery terminals. Video
lottery terminals are games of chance, similar to slot machines, in which the
player pushes a button that causes a random set of numbers or characters to be
displayed on a video screen. The player may be awarded a ticket, which can be
exchanged for cash or credit play. This form of gaming could compete with slot
machine gaming. Voters of the State of Colorado have voted down a proposal which
would have authorized video lottery terminals in five race tracks in Colorado.
There is no guarantee that such or a similar proposal will not be approved in
the future.

           Pursuant to a license agreement, Riviera Las Vegas licenses the use
at 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, 2004 Riviera Las Vegas had 1,340 full-time equivalent
employees and had collective  bargaining  contracts  with eight unions  covering
approximately  775 of such  employees,  including  food and beverage  employees,
rooms  department  employees,  carpenters,   engineers,  stagehands,  musicians,
electricians,  painters and teamsters.  Riviera Las Vegas'  agreements  with the
Painters  Union and Carpenters  Union expire in May and July,  respectively , of
2005.  Agreements  with the  Southern  Nevada  Culinary  and  Bartenders  Union,
covering the majority of our unionized employees,  were renegotiated in 2002 and
expire in 2007 as does the agreement  with the Stagehands  Union.  The agreement
with the  Teamsters  Union  expires in 2008 while the  Operating  Engineers  and
Electrician  agreements expire in 2009. The collective bargaining agreement with
the  Musicians  Union  expired  in  1999.  Riviera  Las  Vegas is  currently  in
negotiations  with the Musicians  Union.  On June 17, 2002, the Teamsters  Union
filed a petition with the National Labor Relations Board to represent the clerks
in the marketing  department.  On July 26, 2002,  the marketing  clerks voted in
favor of  representation by the Teamsters Union by a vote of 5 to 1. On February
23, 2004, at the request of the affected employees, the Teamsters Union withdrew
its interest in the representation of the marketing clerks. Although unions have
been active in Las Vegas,  Riviera Las Vegas considers its employee relations to
be satisfactory. There can be no assurance, however, that new agreements will be
reached without union action or on terms satisfactory to Riviera Las Vegas.

Riviera Black Hawk

           As of December 31, 2004, the total number of full-time equivalent
employees was 299. 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.

                                        12

<PAGE>

Regulation and Licensing

Nevada

Nevada Gaming Authorities

           The ownership and operation of casino gaming facilities in Nevada are
subject to: (1) The Nevada Gaming Control Act and the regulations promulgated
thereunder (collectively, the "Nevada Act") and (2) various local ordinances and
regulations. Our gaming operations are subject to the licensing and regulatory
control of the Nevada Gaming Commission (the "Nevada Commission"), the State of
Nevada Gaming Control Board (the "Nevada Board"), the Clark County Business
Department and the Clark County liquor/gaming authorities (collectively, the
"Clark County Board"), all of which we 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: (1) the prevention of unsavory or unsuitable persons
from having a direct or indirect involvement with gaming at any time and in any
capacity; (2) the establishment and maintenance of responsible accounting
practices and procedures; (3) the maintenance of effective controls over the
financial practices of licensees, including the establishment of minimum
procedures for internal fiscal affairs and the safeguarding of assets and
revenues, providing reliable record keeping and requiring the filing of periodic
reports with the Nevada Gaming Authorities; (4) the prevention of cheating and
fraudulent practices; and (5) providing a source of state and local revenues
through taxation and licensing fees. Changes in such laws, regulations and
procedures could have an adverse effect on our operations.

           Riviera Operating Corporation is required to be and is licensed by
the Nevada Gaming Authorities (a "Corporate Licensee"). The gaming license held
by Riviera Operating Corporation requires the periodic payment of fees and taxes
and is not transferable. Riviera Operating Corporation is also licensed as a
manufacturer and distributor of gaming devices. Such licenses also require the
periodic payment of fees and are not transferable. We are registered by the
Nevada Commission as a publicly traded corporation (a "Registered Corporation")
and have been found suitable to own the stock of Riviera Operating Corporation.
As a Registered Corporation, we are required periodically to submit detailed
financial and operating reports to the Nevada Commission and to furnish any
other information which the Nevada Commission may require. No person may become
a stockholder of, or receive any percentage of profits from, Riviera Operating
Corporation without first obtaining licenses and approvals from the Nevada
Gaming Authorities. We and Riviera Operating Corporation have obtained, from the
Nevada Gaming Authorities, the various registrations, approvals, permits,
findings of suitability and licenses required in order to engage in gaming
activities and manufacturing and distribution activities in Nevada.

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

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

                                        13
<PAGE>

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

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

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

           The Nevada Act requires any person who acquires more than 5% of a
Registered Corporation's voting securities to report the acquisition to the
Nevada Commission. The Nevada Act requires that beneficial owners of more than
10% of our voting securities apply to the Nevada Commission for a finding of
suitability within thirty days after the Chairman of the Nevada Board mails the
written notice requiring such filing. Under certain circumstances, an
"institutional investor," as defined in the Nevada Act, which acquires more than
10%, but not more than 15%, of our voting securities may apply to the Nevada
Commission for a waiver of such finding of suitability if such institutional
investor holds our voting securities for investment purposes only. An
institutional investor that has obtained a waiver may, in certain circumstances,
hold up to 19% of our voting securities and maintain its waiver for a limited
period of time. An institutional investor shall not be deemed to hold our voting
securities for investment purposes unless the voting securities were acquired
and are held in the ordinary course of business as an institutional investor and
not for the purpose of causing, directly or indirectly, the election of a
majority of the members of our board of directors, any change in our corporate
charter, bylaws, management, policies or operations, or any of our gaming
affiliates, or any other action which the Nevada Commission finds to be
inconsistent with holding our voting securities for investment purposes only.
Activities which are deemed to be consistent with holding our voting securities
for investment purposes only include: (1) voting on all matters voted on by
stockholders; (2) making financial and other inquiries of management of the type
normally made by securities analysts for informational purposes and not to cause
a change in its management, policies or operations; and (3) such other
activities as the Nevada Commission may determine to be consistent with such
investment intent. If the beneficial holder of our voting securities who must be
found suitable is a business entity or trust, it must submit detailed business
and financial information including a list of beneficial owners. The applicant
is required to pay all costs of investigation.

           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 (1) pay that
person any dividend or interest upon voting our securities, (2) allow that
person to exercise, directly or indirectly, any voting right conferred through
securities held by that person, (3) pay remuneration in any form to that person
for services rendered or otherwise, or (4) fail to pursue all lawful efforts to
require such unsuitable person to relinquish his voting securities including, if
necessary, the immediate purchase of said voting securities for cash at fair
market value. Additionally, the Clark County Board has the authority to approve
all persons owning or controlling the stock of any corporation controlling a
gaming licensee.

           The Nevada Commission may, in its discretion, require the holder of
any of our debt securities to file applications, be investigated and be found
suitable to own such securities, if it has reason to believe that such ownership
would be inconsistent with the declared policies of the State of Nevada. If the
Nevada Commission determines that a person is unsuitable to own such security,
then pursuant to the Nevada Act, we can be sanctioned, including the loss of our
approvals, if without the prior approval of the Nevada Commission, we (1) pay to
the unsuitable person any dividend, interest, or any distribution whatsoever,
(2) recognize any voting right by such unsuitable person in connection with such
securities, (3) pay the unsuitable person remuneration in any form; or (4) make
any payment to the unsuitable person by way of principal, redemption,
conversion, exchange, liquidation, or similar transaction.


                                        14
<PAGE>

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

           We may not make a public offering of our securities without the prior
approval of the Nevada  Commission if the  securities or proceeds  therefrom are
intended  to be used to  construct,  acquire or  finance  gaming  facilities  in
Nevada,  or to retire or  extend  obligations  incurred  for such  purposes.  In
addition,  (1) a Corporate  Licensee  may not  guarantee a security  issued by a
Registered  Corporation pursuant to a public offering, or hypothecate its assets
to secure the payment or  performance  of the  obligations  evidenced  by such a
security, without the prior approval of the Nevada Commission; (2) the pledge of
the stock of a Corporate  Licensee,  such as Riviera Operating  Corporation,  is
void without the prior approval of the Nevada  Commission;  and (3) restrictions
upon the  transfer  of an equity  security  issued by a Corporate  Licensee  and
agreements  not to encumber such  securities are  ineffective  without the prior
approval of the Nevada Commission.

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

           The Nevada legislature has declared that some corporate acquisitions
opposed by management, repurchases of voting securities and corporate defense
tactics affecting Nevada corporate gaming licensees and Registered Corporations
that are affiliated with those operations may be injurious to stable and
productive corporate gaming. The Nevada Commission has established regulations
to ameliorate the potentially adverse effects of these business practices upon
Nevada's gaming industry and to further Nevada's policy to: (1) assure the
financial stability of corporate gaming licensees and their affiliates; (2)
preserve the beneficial aspects of conducting business in the corporate form;
and (3) promote a neutral environment for the orderly governance of corporate
affairs. Approvals are, in certain circumstances, required from the Nevada
Commission before the Registered Corporation can make exceptional repurchases of
voting securities above the current market price thereof and before a corporate
acquisition opposed by management can be consummated. The Nevada Act also
requires prior approval of a plan of recapitalization proposed by the Registered
Corporation's board of directors in response to a tender offer made directly to
the Registered Corporation's stockholders for the purposes of acquiring control
of the Registered Corporation.

           License fees and taxes, computed in various ways depending on the
type of gaming or activity involved, are payable to the State of Nevada and to
the county in which Riviera Operating Corporation's operations are conducted.
Depending upon the particular fee or tax involved, these fees and taxes are
payable monthly, quarterly or annually and are based upon either: (1) a
percentage of the gross revenues received; (2) the number of gaming devices
operated; or (3) the number of table games operated. A live entertainment tax is
also paid by casino operations where entertainment is furnished in connection
with admission charges, the serving or selling of food, refreshments or the
selling of merchandise. Nevada licensees that hold a license to manufacture and
distribute slot machines and gaming devices, such as Riviera Operating
Corporation, also pay certain fees and taxes to the State of Nevada.

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


                                        15
<PAGE>

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 Gaming and Liquor Regulation

Summary

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

Background

           Pursuant to an amendment to the Colorado Constitution (the"Colorado
Amendment"), 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 district of Black
Hawk, as defined by Black Hawk on May 4, 1978. 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 Gaming Act (the "Colorado Act") provides that,
in addition to any other applicable license fees, up to a maximum of 40% of the
total amounts wagered less payouts to players may be payable by a licensee for
the privilege of conducting limited stakes gaming. Such percentage is to be
established by the Colorado Commission annually.

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

Regulatory Structure

           The Colorado Act subjects the ownership and operation of limited
stakes gaming facilities in Colorado to extensive licensing and regulation by
the Colorado Commission. The Colorado Commission has full and exclusive

                                        16
<PAGE>

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 the following license applicable to
the operation of Riviera Black Hawk:

o        operator,

o        retail gaming,

o        support, and

o        key employee gaming licenses.

           The first two 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
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.

                                        17
<PAGE>

Duties of Licensees

           A licensee must keep the Division of Gaming advised of its business
operations including, but not limited to, gaming contracts and leases. All rules
for conduct of gaming activity must be followed to the letter of Colorado
statute and regulations.

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

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

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

Taxes, Fees and Fines

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

o        0.25% on the first $2 million of these amounts;

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

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

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

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

o        20% on amounts over $15 million.

           The municipality of Black Hawk assesses an annual device fee of
$750.00 per device on all devices exceeding 50. There is no statutory limit on
state or city device fees, which may be increased at the discretion of the
Colorado Commission or the city. In addition, a business improvement fee of as
much as $7.42 per device and a monthly transportation authority device fee of
$8.84 per device also may apply depending upon the location of the licensed
premises in Black Hawk.

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

           Violation of the Colorado Act or the Colorado Regulations generally
constitutes a class 1 misdemeanor, except as may be specifically otherwise
provided within the Colorado Act, which may subject the violator to fines or
incarceration or both. A licensee who violates the Colorado Act or Colorado
Regulations is subject to suspension of the license for a period of up to six
months, fines or both, or to license revocation.

                                        18
<PAGE>
Requirements for Publicly Traded Corporations

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

          Under Rule 4.5, gaming licensees, affiliated companies and controlling
persons  commencing  a public  offering  of voting  securities  must  notify the
Colorado  Commission no later than ten business days after the initial filing of
a registration  statement with the Securities and Exchange Commission.  Licensed
publicly traded  corporations  are also required to send proxy statements to the
Division of Gaming within five days after their distribution.  Licensees to whom
Rule 4.5  applies  must  include in their  charter  documents  provisions  that:
restrict the rights of the  licensees to issue  voting  interests or  securities
except in accordance with the Colorado Act and the Colorado  Regulations;  limit
the rights of persons to transfer  voting  interests or  securities of licensees
except in  accordance  with the Colorado 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

                                        19
<PAGE>

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.

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 Las Vegas

      The Riviera Las Vegas is located on the Las Vegas Strip, at 2901 Las Vegas
Boulevard  South,  Las Vegas,  Nevada and occupies  approximately  26 acres. The
buildings  comprise  approximately  1.8 million square feet,  including  110,000
square  feet of casino  space,  a 160,000  square foot  convention,  meeting and
banquet facility,  2,070 hotel rooms (including approximately 169 luxury suites)
in five  towers,  three  restaurants,  a buffet,  four  showrooms,  a lounge and
approximately 2,300 parking spaces. In addition, executive and other offices for
Riviera Las Vegas are located on the property.

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

           The Riviera Las Vegas and Riviera Black Hawk properties are
encumbered by deeds of trust securing our 11% Senior Secured Notes (the "11%
Notes") and our five-year senior secured credit facility, which matures in July
2007.

           Riviera Black Hawk

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

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

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

                                        20
<PAGE>

Item 3.    Legal Proceedings

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

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

           Not applicable.


                                        21
<PAGE>

           PART II


Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities

          (a) Our common stock began trading on the American Stock Exchange
("AMEX") on May 13, 1996 and was reported on the Over-the-Counter Bulletin Board
prior to that date. As of March 21, 2005, based upon information available to us
from our stock transfer agent and non-objecting beneficial ownership list, we
believe there were approximately 600 beneficial holders of our common stock.

           We have never paid any dividends on our common stock and do not
currently expect to pay any dividends (cash or otherwise) on our common stock
for the foreseeable future. Our ability to pay dividends is primarily dependent
upon receipt of dividends and distributions from our subsidiaries which
currently include the operations of Riviera Las Vegas and Riviera Black Hawk. In
addition, the Note Indenture and our secured credit facility materially restrict
our ability to pay dividends.

           Our common stock is traded on AMEX under the symbol RIV.  We do not
currently  meet the  earnings  or net  worth  standards  of AMEX.  We have  been
informed, however that according to AMEX policy, AMEX will not normally consider
suspending  dealings in or delisting  the  securities of a company that does not
meet the earnings or net worth  standards if the company's  publicly held shares
have a  market  value  of at  least  $15 million.  However,  we can not give any
assurance  that Amex will follow that policy or that our share price will enable
us to meet that standard in the future.  Based on the number of our publicly
held shares as of March 21, 2005, our share price would have to be at leaset
$1.22 in order for us to meet the $15 million standard If our shares were
eventually  delisted from  AMEX,  the marketability and liquidity of our common
stock  could be significantly reduced.

           The table below sets forth the high and low closing prices by quarter
for the years ended December 31, 2004 and 2003, based on AMEX reported prices by
certain brokers who have had transactions in our common stock during the year,
after giving effect to the three-for-one stock split effective March 11, 2005:
<TABLE>
<CAPTION>


                       First            Second            Third          Fourth
                      Quarter          Quarter           Quarter         Quarter
        2004
<S>                    <C>             <C>               <C>             <C>
        HIGH           $2.68           $3.27             $6.43           $13.93
        LOW             1.80            2.64              2.88             6.18

        2003
        HIGH           $1.66           $2.10             $1.88           $ 1.90
        LOW             1.22            1.32              1.69             1.78
</TABLE>

           On March 21, 2005, 43,700 shares of our common stock were traded on
AMEX, with a reported closing price of $12.57 per share.


                                        22
<PAGE>

<TABLE>
<CAPTION>
Equity Compensation Plan Information (as of December 31, 2004)
--------------------------------------------------------------
                           A                    B                      C
Plan category  Number of securities to    Weighted-average  Number of securities
-------------  be issued upon exercise   exercise price of   remaining available
               of outstanding options,  outstanding options, for future issuance
               warrants and rights       warrants and rights under equity compensation
               ----------------------    -------------------  plans (excluding
                                                            securities reflected
                                                              in column A)
                                                              ---------------
Equity compensation
plans approved by
<S>                     <C>                      <C>                 <C>
security holders        477,000                 $2.42                -0-

Equity compensation
plans not approved
by security holders       -0-                    -0-              440,538(1)

Total                   477,000                 $2.42             440,538
</TABLE>

           (1) Of the 440,538 shares referenced in column C of the above table,
394,518 are from the Company's Restricted Stock Plan and 46,020 are from the
Company's Stock Compensation Plan for Directors Serving on the Compensation
Committee, which are described in Notes 1 and 13, respectively, of the Company's
consolidated financial statements.

Item 6.    Selected Financial Data

           The following table sets forth a summary of selected financial data
for the Company for the years ended December 31 (in thousands, except Net Loss
Per Diluted Common Share, and adjusted for three-for-one stock split):
<TABLE>
<CAPTION>
 ------------------------ ---------- ---------- --------- ---------- ---------
                             2004       2003       2002      2001       2000
 ------------------------ ---------- ---------- --------- ---------- ---------
<S>                          <C>        <C>       <C>        <C>        <C>
 Net Operating Revenue     $201,350   $190,159  $188,292   $202,031   $201,531
 Net Loss                   (2,086)   (14,453)  (24,722)    (6,407)    (4,215)
 Net Loss Per Diluted
  Common Share              ($0.20)    ($1.39)   ($2.39)     ($.60)     ($.35)
 Total Assets               217,536    221,538   235,896    267,818    283,710
 Long-Term Debt             216,467    219,625   220,124    220,439    226,043
 ------------------------ ---------- ---------- --------- ---------- ---------
</TABLE>

The net losses for 2003 and 2004 were impacted by $2.4 million or ($0.23) per
share and $1.1 million or ($0.10) per share, respectively, for development and
project costs.

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

Overall Outlook and Recent Developments

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

           Our capital expenditures for Las Vegas are geared to maintain the
hotel rooms and amenities in sufficient condition to compete for our customers
in the convention market and the mature adult customer. Room rates and slot
revenues are the primary factors driving our operating margins. We use
technology to maintain labor costs at a reasonable level, including kiosks for
hotel check-in and slot club redemptions. In addition, we are in the process of
updating our gaming monitoring systems, including TITO capability on our slot
machines. At December 31, 2004 substantially all of our slot machines had been
converted to the new gaming monitoring system. As of December 31, 2004 we had
485 slot machines, or approximately 36% of our slot machines in Las Vegas, on
TITO. Depending upon the success of these conversions, we may accelerate the
conversion of the remaining machines or we may convert them based on normal

                                        23
<PAGE>

replacement schedules. If we accelerate the process, we would have to finance
the additional slot machine purchases by using our revolving credit facility or
separate financing arrangements for approximately $10 million.

           In Black Hawk, the $5 maximum bet restricts table games to a minimum
and the area is basically a "locals" slot customer market. Our capital
expenditures in Black Hawk are geared to maintain competitive slot machines
compared to the market. The gaming authorities approved TITO systems in Colorado
for Riviera Black Hawk on December 16, 2003 and we had 35 of our slot machines
on the TITO system as of December 31, 2003. By the end of 2004 we had 515 slot
machines, or 51% of our slot machines in Black Hawk, on TITO. Again, depending
upon the success of these conversions, we may accelerate the conversion of the
remaining machines or we may convert them based on normal replacement schedules.
If we accelerate the process, we would have to finance the additional slot
machine purchases by using our revolving credit facility or separate financing
arrangements for approximately $6 million.

           Effective March 11, 2005, we effected a three-for-one split of our
common stock. This increased the number of outstanding shares of our common
stock (net of treasury shares) to 12,340,755. All per share -related information
in this Form 10-K has been adjusted to reflect the stock split.

         On February 15, 2005, we announced that we have requested our Jefferies
to  explore  strategic alternatives for maximizing  shareholder value, including
development of our Las Vegas  property,  refinancing,  joint  ventures,  mergers
and other  methods of realizing the value of our stock.  We continue to work
with Jefferies to explore such alternatives.

         In 2004, we entered into confidential discussions regarding a potential
sale of our company to a third party.  Discussions  with one third party,  which
commenced in 2004,  ended in 2005 and we retained a one million  dollar fee paid
to us by that third  party.  Such  amount  will be  reflected  in our 2005 first
quarter results.

        Subject to stockholder approval at our 2005 annual meeting, we intend to
implement two new stock option plans and allocate a total of 1,150,000 shares to
them.  We will grant options for 6,000 shares to each non-emplyee director on
the effective date of the plan.  The option exercise price will be the closing
market price of our stock on the date of the option grant.  The options will
vest over five years at 20% per year, commencing on the first anniversary of the
grant.

        We will allocate one million shares to a new incentive stock option plan
for our officers and key employees.  Our Compensation Committee will have
discrestion as to whom those options will be granted and the number of shares
to be allocated to each option grant.  The option exercise price will be the
closing market price of our stock on the date of the option grant.  The options
will vest over four years, with 20% vesting on the date of grant, and an
additional 20% on each anniversary of the grant.

       At our 2005 annual meeting, we also intend to ask for shareholder
approval to issue 30,000 shares of stock to our four non-employee directors. In
April and May of 2004, we attempted to grant to those directors stock options
for a total of 30,000 shares.  However, we later determined that our stock
option plan had expired before the attempted grant, rendering those options null
and void.

       In March 2005, we granted to 19 of our executives a total of 337,500
shares of stock under our Restricted Stock Plan in substitution for options
for 337,500 shares that we attempted to grant to them in July 2003.  We later
determined that our stock option plan had expired before our attempted grant of
the options, which rendered them null and void.  The shares are subject to a 20%
annual vesting schedule, commencing March 10, 2006.  The shares vest immediately
upon death, disability, retirement at age 62, termination of employment by us
other than for cause, an event of hardship as approved by the Compensation
Committee, or in the event of a change in control of our company.

Results of Operations

2004 Compared to 2003

           The following table sets forth, for the periods indicated, certain
operating data for Riviera Las Vegas and Riviera Black Hawk. Net revenues
displayed in this table and discussed in this section are net of cash rebates
and promotional allowances. Operating income from properties is presented as
shown on the Consolidated Statement of Operations.


                                        24
<PAGE>
<TABLE>
<CAPTION>
                               Year Ended December 31,   $ Change    % Change
(In Thousands)                     2004         2003    Incr/(Decr) Incr/(Decr)

Net revenues:
<S>                               <C>           <C>          <C>         <C>
  Riviera Las Vegas            $ 147,949     $ 140,963     $ 6,986      5.0 %
  Riviera Black Hawk              53,401        49,196       4,205      8.5 %
                                 -------       -------      ------      -------
     Total Net revenues        $ 201,350     $ 190,159    $ 11,191      5.9 %
                                 =======       =======      ======      =====
Operating income:
  Riviera Las Vegas             $ 19,271      $ 12,373     $ 6,898     55.8 %
  Riviera Black Hawk              10,919         7,377       3,542     48.0 %
  Development and Project Costs  (1,193)       (2,365)       1,172    (49.6)%
  Corporate Expenses             (4,038)       (4,485)         447     (10.0)%
                                 -------       -------      ------     -------
     Total Operating income     $ 24,959      $ 12,900    $ 12,059     93.5 %
                                 =======       =======     =======     =======
</TABLE>
Riviera Las Vegas

Revenues

           Riviera Las Vegas net revenues increased by approximately $7.0
million, or 5.0%, from $141.0 million in 2003 to $148.0 million in 2004
primarily due to increased average daily rate for our rooms, higher average
check in our restaurants and increased covers in our entertainment venues. Room
revenues increased $2.6 million, as the average room rate increased $4.41 or
7.3% from $60.40 to $64.81 and hotel occupancy increased from 92.2% to 92.6%.
Revenue per available room (Rev Par) increased $4.33 from $55.66 to $59.99 or
7.8%. The increase is due to a 3.0% increase in Convention room revenue, which
made up 40% of total room revenue. Food and Beverage revenue increased by $1.4
million, or 5.3% due to higher menu prices resulting in higher average check in
all restaurants. Entertainment revenues increased by approximately $2.3 million
or 12.5% from $18.4 million during 2003 to $20.7 million during 2004 due to the
addition of new shows and popularity of some of our existing shows resulting in
an overall attendance increase of 17.6%.

Operating Income

           Operating income increased $6.9 million or 55.8% from $12.4 million
in 2003 to $19.3 million in 2004 primarily due to the increased revenues as
discussed above. During 2004, casino marketing and other expenses decreased $2.5
million which contributed to approximately 4% of the increase in margin. Room
operating income increased $1.3 million and the margin increased slightly. Food,
beverage and entertainment costs increased $4.0 million, which caused margins to
decrease approximately 3%. Depreciation was down $1.9 million as significant
equipment purchases five to seven years earlier became fully depreciated.

Riviera Black Hawk

Revenues

         Riviera Black Hawk net revenues increased $4.2 million, or 8.5% from
$49.2 million in 2003 to $53.4 million in 2004, as the operation increased
market share despite increased competition. Casino revenues, primarily from slot
machines, increased by $4.7 million, or 10.0% from $46.4 million in 2003 to
$51.4 million in 2004 due to higher win per customer. Average slot machine win
per unit increased from $149 per day in 2003 to $177 per day in 2004.

Operating Income

         Operating income increased by $3.5 million, or 48.0% from $7.4 million
in 2003 to $10.9 million in 2004. Due to increased incentive and ESOP
contributions as a result of increased profits, general and administrative costs
increased by $488,000. However, general and administrative expense as a percent
of revenue decreased from 22.7% in 2003 to 21.8% in 2004.

                                        25
<PAGE>

Consolidated Operations

Other Income (Expense)

         Interest expense for 2004 was $27.1 million, of which $25.3 million
related to interest and amortized loan fees on the 11% Notes. In 2003 our
interest expense was $27.4 million. Corporate expenses decreased from $4.5
million in 2003 to $4.0 million in 2004 due to expenses incurred in 2003
associated with a shareholder vote to amend our articles of incorporation.

Net Loss

         The consolidated net loss decreased approximately $12.4 million from
$14.5 million in 2003 to $2.1 million in 2004 mainly due to increased income
from operations as explained above. Results for 2003 were impacted by
development and projects costs totaling $2.4 million. We filed an application
with the New Mexico Racing Commission in March of 2002 for a "racino" in Hobbs,
New Mexico. We and three other prospective licensees made presentations to the
Commission in November of 2003. The Commission awarded the racino license to one
of the other applicants and we wrote off $1.3 million of costs associated with
the project. In addition during 2003 we wrote off development and project costs
associated with our Missouri project totaling $1.1 million. In August 2004, the
Missouri Gaming Commission awarded the license to one of the other applicants
and we wrote off an additional $1.0 million in development and project costs
associated with the project. The Missouri cost coupled with New Mexico wind-up
costs of $100,000 incurred in 2004 resulted in a total write off of $1.1 million
in 2004.

Results of Operations

2003 Compared to 2002

           The following table sets forth, for the periods indicated, certain
operating data for the Riviera Las Vegas and Riviera Black Hawk. Net revenues
displayed in this table and discussed in this section are net of cash rebates
and promotional allowances. Operating income from properties is presented as
shown on the Consolidated Statement of Operations.
<TABLE>
<CAPTION>
----------------------------------------------------------- -------------------
                                Year Ended December 31,  $ Change    % Change
(In Thousands)                   2003        2002        Incr/(Decr) Incr/(Decr)
Net Revenues:
<S>                               <C>         <C>           <C>          <C>
Rivera Las Vegas                $140,963    $139,159      $1,804       1.2%
Riviera Black Hawk                49,196      49,133          63       0.1%
                                  ------      ------       -----       ----
     Total Net revenues         $190,159    $188,292      $1,867       1.0%
                                --------    --------      ------       ----
Operating Income:
Riviera Las Vegas                $12,373    $12,265         $108       0.9%
Riviera Black Hawk                 7,377       7,350          27       0.4%
Development and Project Costs    (2,365)                 (2,365)        -
Corporate Expenses               (4,485)     (3,762)       (723)    (19.2)%
                                 -------     -------       -----    -------
      Total Operating Income     $12,900     $15,853    $(2,953)    (18.6)%
                                 -------     -------    --------    -------
</TABLE>

                                                26
<PAGE>
Riviera Las Vegas

Revenues

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

Operating Income

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

Riviera Black Hawk

Revenues

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

Operating Income

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

Consolidated Operations

Other Income (Expense)

         Interest expense for 2003 was $27.4 million, of which $25.3 million
related to interest and amortized loan fees on the 11% Notes. Interest expense
on the 11% Notes of $12.2 million plus related amortization of loan fees totaled
approximately $13.0 million in 2002. In addition, the interest expenses on the
retired 10% First Mortgage Notes, the retired Black Hawk 13% First Mortgage
Notes, and equipment and other financing costs totaled approximately $13.8
million in 2002 for a combined total of interest expense of $26.8 million.
Fiscal 2002 results were affected by the loss on extinguishment of debt totaling
$11.2 million. The costs included the call premium on our refinanced 10% First
Mortgage Notes and Riviera Black Hawk's refinanced 13% First Mortgage Notes, the
write off of unamortized deferred loan costs associated with the refinanced
bonds and the balance of the original issue discount on the 10% First Mortgage
Notes. Furthermore, the results were affected by approximately $2.7 million of
additional net interest expense, incurred as a result of the defeasance /
retirement of the debt.

Net Loss

           The consolidated net loss decreased approximately $10.2 million from
$24.7 million in 2002 to $14.5 million in 2003 mainly due to the cost of
extinguishment of debt of $11.2 million and defeasance interest of $2.7 million
in 2002 as explained above. Results for 2003 were impacted by development and
projects costs totaling $2.4 million. We filed an application with the New
Mexico Racing Commission in March of 2002 for a "racino" in Hobbs, New Mexico.
We and three other prospective licensees made presentations to the Commission in


                                        27
<PAGE>

November of 2003. The Commission awarded the racino license to one of the other
applicants and we wrote off $1.3 million of costs associated with the project.
We filed an application with the Missouri Gaming Commission on October 9, 2002
for a casino/hotel development project in Jefferson County, Missouri. In
February 2004, St. Louis County endorsed another gaming operator for a
casino/hotel development project. St. Louis County is located directly to the
north of Jefferson County. In August 2004 the Missouri Gaming Commission awarded
the license to the St. Louis County-endorsed applicant. During 2003 we incurred
$1.1 million of development and project costs associated with the Missouri
project.

Liquidity and Capital Resources

         We had cash and cash equivalents of $18.9 million at December 31, 2004,
which was a decrease of $458,000 from December 31, 2003. Cash balances include
amounts that may be required to fund our CEO's pension obligation in a rabbi
trust with 5 days notice. (See Note 7 to the financial statements, Other
Long-Term Liabilities.) Although we are aware of no current intention of our CEO
to require this funding, under certain circumstances, approximately $5.2 million
would have to be disbursed in a short period.

         For 2004, our net cash provided by operating activities was $12.4
million compared to $6.2 million in 2003 due primarily to an increase in
operating income. Cash flows used in investing activities were $10.1 million in
2004 compared to $8.3 million in 2003 due to an increase in capital
expenditures. Net cash used in financing activities was $2.8 million in 2004
compared to cash provided by financing activities of $1.2 million in 2003. We
believe that cash flow from operations, combined with the $18.9 million cash and
the $30 million available on our Senior Secured Credit Facility discussed below,
will be sufficient to cover our annual debt service and enable our investment in
budgeted capital expenditures. Such expenditures include approximately $8.0
million in maintenance capital expenditures (approximately $4 million of which
will be used to purchase 330 TITO machines for both properties) and property
upgrades of approximately $11.4 million. Approximately $8.4 million of the
property upgrades are associated with the Riviera Black Hawk expansion project
which includes the expansion of Main Street in front of our casino, construction
of a pedestrian bridge connecting our property directly with the Isle of Capri,
and expansion of the front of the casino and the purchase of additional machines
at the Riviera Black Hawk. The remaining $3.0 million of property upgrades will
be used primarily to complete the room renovation program at Rivera Las Vegas.

         On June 26, 2002, we secured new debt in the principal amount of $215
million in the form of the 11% Notes with a maturity date of June 15, 2010.
Interest on the 11% Notes is at the annual rate of 11% paid semiannually on each
June 15 and December 15, beginning December 15, 2002. The net proceeds of the
11% Notes, along with cash on hand, were used to defease Riviera Las Vegas' 10%
First Mortgage Notes due 2004 and to defease Riviera Black Hawk's 13% First
Mortgage Notes with contingent interest due 2005. Cash flow from operations is
not expected to be sufficient to pay 100% of the principal of the 11% Notes at
maturity. Accordingly, our ability to repay the 11% Notes at maturity will be
dependent upon our ability to refinance the 11% Notes. There can be no assurance
that we will be able to refinance the principal amount of the 11% Notes at
maturity. At any time prior to June 15, 2005, we may on any one or more
occasions redeem up to 35% of the aggregate principal amount of the 11% Notes at
a redemption price of 111% of the principal amount, plus accrued and unpaid
interest and liquidated damages, if any, to the redemption date, with the net
cash proceeds of one or more public equity offerings. On or after June 15, 2006,
we may redeem the 11% Notes from time to time at a premium beginning at 105.5%
and declining each subsequent year to par in 2009.

         The Note Indenture provides that, in certain circumstances, we must
offer to repurchase the 11% 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, we would be unable to pay the principal amount of the 11%
Notes without a refinancing.

         The Note Indenture contains certain covenants, which limit our ability,
subject to certain exceptions, to: (1) incur additional indebtedness; (2) pay
dividends or other distributions, repurchase capital stock or other equity
interests or subordinated indebtedness; (3) enter into certain transactions with
affiliates; (4) create certain liens; (5) sell certain assets; and (6) enter
into certain mergers and consolidations. As a result of these restrictions, our
ability 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, we 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, 2004, we
believe that we are in compliance with the covenants.

         On July 26, 2002, we entered into a $30 million, five-year senior
secured credit facility. The credit facility is secured by substantially the
same collateral that secures the 11% Notes. The lien on the collateral securing


                                        28
<PAGE>

the credit facility is senior to the lien on the collateral securing the 11%
Notes. The credit facility contains customary conditions to borrowing and
certain representations and warranties customary in gaming-related finance. The
credit facility also contains financial covenants and restrictions regarding,
among other things, indebtedness, distributions and changes in control. Under
the credit facility, we can obtain extensions of credit in the forms of cash and
letters of credit. We are required to pay interest on all outstanding cash
advances at the rate of interest announced by Wells Fargo at its principal
office in San Francisco at its prime rate plus 0.75% or at the rate at which
major international banks in London charge each other for borrowings in U.S.
dollars plus 3.00%. However, the minimum interest rate we will be charged on
outstanding cash advances is 4.50%.

         Self-insurance reserves can be affected by price changes in the medical
field, speed of processing claims by our third party administrator, estimates of
claims incurred but not reported, homogeneous nature of claims and other
factors. Significant changes in those factors could affect the estimates for
self-insurance by $100,000 or more. A 10% increase in medical costs could impact
our reserves and increase our expense by approximately $460,000 on an annual
basis.

Contractual Obligations

           The table under "Item 7A. Quantitative and Qualitative Disclosures
about Market Risk" summarizes our contractual obligations and commitments as of
December 31, 2004.

Critical Accounting Policies

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

         We have determined that the following accounting policies and related
estimates are critical to the preparation of our consolidated financial
statements:

Long-lived Assets

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

Deferred Tax Assets

         We utilize estimates related to cash flow projections for the
application of Statement of Financial Accounting Standards ("SFAS") No. 109 to
the realization of deferred tax assets. Our estimates are based upon recent
operating results and budgets for future operating results. These estimates are
made using assumptions about the economic, social and regulatory environments in
which we operate. These estimates could be negatively impacted by numerous
unforeseen events including changes to regulations affecting how we operate our
business, changes in the labor market or economic downturns in the areas where
we operate.

Allowance for Credit Losses

         We maintain an allowance for estimated credit losses based on
historical experience and specific customer collection issues. Any unforeseen
change in customer liquidity or financial condition could adversely affect the
collectibility of that account and our operating results.

                                        29

<PAGE>

Litigation Reserves

         We assess our exposures to loss contingencies including legal matters,
and we provide for an exposure if it is judged to be probable and estimable. If
the actual loss from a contingency differs from our estimate, operating results
could be impacted.

Self-insurance Reserves

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

Loyalty Club Program

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

Recently Issued Accounting Standards

         In December 2004, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 123(R), Share-Based Payments, which establishes accounting
standards for all transactions in which an entity exchanges its equity
instruments for goods and services. SFAS No. 123(R) focuses primarily on
accounting for transactions with employees, and carries forward without change
prior guidance for share-based payments for transactions with non-employees.

         SFAS No. 123(R) eliminates the intrinsic value measurement objective in
Accounting Principles Board ("APB") Opinion No. 25 and generally requires us to
measure the cost of employee services received in exchange for an award of
equity instruments based on the fair value of the award on the date of the
grant. The standard requires grant date fair value to be estimated using either
an option-pricing model which is consistent with the terms of the award or a
market observed price, if such a price exists. Such cost must be recognized over
the period during which an employee is required to provide service in exchange
for the award in the requisite service period (which is usually the vesting
period). The standard also requires us to estimate the number of instruments
that will ultimately be issued, rather than accounting for forfeitures as they
occur.

         We are required to apply SFAS No. 123(R) to all awards granted,
modified or settled in our first reporting period under U.S. generally accepted
accounting principles beginning after June 15, 2005. We are also required to use
either the "modified prospective method" or the "modified retrospective method."
Under the modified prospective method, we must recognize compensation cost for
all awards granted after we adopt the standard and for the unvested portion of
previously granted awards that are outstanding on that date.

         Under the modified retrospective method, we must restate our previously
issued financial statements to recognize the amounts we previously calculated
and reported on a pro forma basis, as if the prior standard had been adopted.
See Note 1 to our audited financial statements included in this Form 10-K.

         Under both methods, we are permitted to use either a straight line or
an accelerated method to amortize the cost as an expense for awards with graded
vesting. The standard permits and encourages early adoption.

         We have commenced our analysis of the impact of SFAS 123(R), but have
not yet decided: (1) whether we will elect to adopt early, (2) if we elect to
adopt early, then at what date we would do so, (3) whether we will use the
modified prospective method or elect to use the modified retrospective method,
and (4) whether we will elect to use straight line amortization or an
accelerated method.

                                        30
<PAGE>

        In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary
Assets which is an amendment of APB Opinion No. 29. This Statement amends APB
Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar
productive assets and replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance. The Statement
specifies that a nonmonetary exchange has commercial substance if the future
cash flows of the entity are expected to change significantly as a result of the
exchange. This Statement is effective for nonmonetary asset exchanges occurring
in fiscal periods beginning after June 15, 2005. Earlier application is
permitted for nonmonetary asset exchanges occurring in fiscal periods beginning
after the date this Statement is issued. Retroactive application is not
permitted. We are analyzing the requirements of this new Statement and we
believe that its adoption will not have any significant impact on our financial
position, results of operations or cash flows.

Forward-Looking Statements

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

         Specific factors that might cause our actual results to differ from our
expectations, might cause us to modify our plans or objectives, or might affect
our ability to meet our expectations include, but are not limited to:

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

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

o    the results of our recently announced plan to explore strategic
     alternatives for maximizing shareholder value;

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

o    fluctuations in the value of our real estate, particularly in Las Vegas;

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

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

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

o    actions taken or not taken by third parties, such as our
     customers, suppliers and competitors, as well as legislative,
     regulatory, judicial and other governmental authorities;

o    retirement or other loss of our senior officers;

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

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

o    a decline in the public acceptance of gaming;

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


                                        31
<PAGE>

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

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

o    the consequences of the war in Iraq and other military conflicts
     in the Middle East and any future security alerts and/or terrorist
     attacks such as the attacks that occurred on September 11, 2001;
     and

o    other risk factors discussed elsewhere in this report.

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

Item 7A.      Quantitative and Qualitative Disclosures about Market Risk

         Market risks relating to our operations result primarily from changes
in interest rates. We invest our cash and cash equivalents in U.S. Treasury
Bills with maturities of 30 days or less. Such investments are generally not
affected by changes in interest rates.

         As of December 31,  2004, we had $216.5 million in borrowings.  The
borrowings  include $215 million in 11% Notes  maturing in 2010 (with a carrying
value of $212.8  million) and capital  leases  maturing at various dates through
2005.  Interest  under  the 11%  Notes  is  based  on a fixed  rate of 11%.  The
equipment  loans and capital  leases have  interest  rates  ranging from 5.2% to
13.5%.  The borrowings also include $761,000 in a special  improvement  district
bond offering  ("SID Bonds") with the City of Black Hawk.  Our share of the debt
on the SID Bonds of $1.2 million is payable over 10 years beginning in 2000. The
SID Bonds bear  interest at 5.5%. We are not  susceptible  to interest rate risk
because our outstanding  debt is at fixed rates.  Our $30 million senior secured
revolver  credit  facility  is at prime plus  three-quarters  of one percent and
would not subject us to a material interest rate fluctuation. As of December 31,
2004, we had no borrowing outstanding under our senior secured credit facility.
<TABLE>
<CAPTION>
Interest Rate Sensitivity
Principal (Notational Amount by Expected Maturity)
Average Interest Rate

(Dollars in Thousands)                                                                        Fair Value
                                2005     2006     2007     2008    2009  Thereafter   Total   At 12/31/04

Long -Term Debt                          All interest rates are fixed
Including Current Portions
Equipment loans and
<S>                             <C>      <C>      <C>      <C>      <C>     <C>       <C>        <C>
capital leases-Las Vegas        $667     $707     $751     $186     $55              $2,366     $2,366
Average interest rate           6.0%     6.0%     6.0%     6.0%    5.5%


11% Senior Secured Notes                                                  $215,000  $215,000  $240,263
Less unamortized discount                                                  (2,208)   (2,208)   (2,208)
Average interest rate                                                       11.8%

Capital leases,
 Black Hawk, Colorado           $658                                                    $658      $658
Average interest rate          10.8%

SID Bonds-Black Hawk,
 Colorado casino project        $116     $124     $129     $137    $145                 $651      $651
Average interest rate           5.5%     5.5%     5.5%     5.5%    5.5%

Total of all Long-Term Debt
Including Current Portion     $1,441     $831     $880     $323    $200   $212,792  $216,467  $241,730

Other Long - Term Liabilities
including Current Portion
CEO pension plan obligation   $1,000   $1,000   $1,000   $1,000  $1,000       $152    $5,152   $5,152
Average interest rate          11.8%    11.8%    11.8%    11.8%   11.8%      11.8%

Expected Interest payments   $24,315  $24,148  $23,984  $23,828 $23,699    $10,840  $130,814
</TABLE>

                                                32
<PAGE>

Item 8.    Financial Statements and Supplementary Data

           See Financial Statements included in Part IV; Item 15(a).

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

           None.

Item 9A.   Controls and Procedures

           We maintain disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) that are designed to ensure that
information required to be disclosed in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the Securities and Exchange Commission, and that such
information is accumulated and communicated to our management, including our
chief executive officer and chief financial officer, as appropriate, to allow
timely decisions regarding required disclosure. In designing and evaluating the
disclosure controls and procedures, our management recognized that any controls
and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and our
management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.

           As of December 31, 2004, we carried out an evaluation, under the
supervision and with the participation of our management, including our chief
executive officer and chief financial officer, of the effectiveness of the
design and operation of our disclosure controls and procedures. Based on the
foregoing, our chief executive officer and chief financial officer concluded
that the Company's disclosure controls and procedures were effective.

           During our last fiscal quarter there were no changes in our internal
control over financial reporting that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.

Item 9B.  Other Information

None.

         PART III

Item 10.   Directors and Executive Officers of the Registrant


         The following table presents information as of March 17, 2005 regarding
our directors and the directors of Riviera Operating Corporation ("ROC"), our
wholly-owned subsidiary:

<TABLE>
<CAPTION>
      Name                                Age                  Position

<S>     <C>                               <C>                      <C>
William L. Westerman                      73        Our Chairman of the Board,
                                                    Chief Executive Officer and
                                                    President; Chairman of the
                                                    Board and Chief Executive
                                                    Officer of ROC.

 Robert R. Barengo                        63        Our and ROC's Director;
                                                    Director of Government and
                                                    Public Affairs of ROC

 Jeffrey A. Silver                        59        Our and ROC's Director

 Paul A. Harvey                           67        Our and ROC's Director

 Vincent L. DiVito                        45        Our and ROC's Director

 James N. Land, Jr.                       75        Our and ROC's Director
</TABLE>

                                        33
<PAGE>

     William L. Westerman has been our Chairman of the Board and Chief Executive
Officer ("CEO") since February 1993. Mr.  Westerman was a consultant to Riviera,
Inc. (our predecessor company) from July 1, 1991 until he was appointed Chairman
of the Board and CEO of Riviera,  Inc. on January 1, 1992. From 1973 to June 30,
1991, Mr. Westerman was President and CEO of Cellu-Craft Inc., a manufacturer of
flexible packaging  primarily for food products,  and then had several positions
with Alusuisse,  a multi-national  aluminum and chemical company,  following its
acquisition of  Cellu-Craft in 1989. Mr.  Westerman was on the Board of Managers
of Peninsula Gaming Partners, LLC from June 1999 to December 2000.

     Robert R. Barengo has been one of our and ROC's  Directors  since  February
1993. Mr. Barengo was a consultant to Riviera, Inc. from January 1993 until June
30, 1993.  Since 1972, Mr.  Barengo has been engaged in the private  practice of
law in Reno,  Nevada. Mr. Barengo was elected to the Nevada Assembly in 1972 and
served until 1982. In 1979, Mr.  Barengo was elected  Speaker Pro Tempore and in
1981 Mr.  Barengo was elected  Speaker of the Assembly.  Since 1993, Mr. Barengo
has been the President and the sole  stockholder  of Silver State  Disseminators
Company,  a company licensed by Nevada gaming  authorities to disseminate racing
information  in the State of Nevada.  In October  1992,  the  Governor of Nevada
appointed Mr. Barengo as a member of the State of Nevada Dairy  Commission.  The
term ended July 1, 2004.  On  December 3, 2003,  Governor  Guinn  appointed  Mr.
Barengo as a member of the Nevada Tax  Commission.  Mr. Barengo was the Chairman
of the Board and a Director of Western Thrift and Loan, a Nevada licensed thrift
company,  from 1997 to 2003 when he sold his interest and resigned.  Mr. Barengo
accepted  the  position of Director of  Government  and Public  Affairs with ROC
effective  January  1, 2001,  in  addition  to his  duties as a director  of the
Company and of ROC.

         Jeffrey A. Silver has been one of our and ROC's Directors since
February 26, 2001. Mr. Silver is currently a shareholder with the law firm of
Gordon & Silver, Ltd., in Las Vegas, Nevada. Mr. Silver served as the Chief
Deputy District Attorney, Clark County, Nevada from 1972 to 1975 and was a Board
Member with the Nevada Gaming Control Board from 1975 to 1978 before engaging in
the private practice of law from 1979 to 1981 and 1984 to the present. Mr.
Silver was the Chief Operating Officer and General Counsel of the Landmark Hotel
& Casino from 1981 to 1983, CEO of the Riviera, Inc. from 1983 to 1984 and
Senior Vice President at Caesars Palace in 1984. Mr. Silver served on the Board
of the LVCVA from 1989 to 1992 as Secretary/Treasurer and also served as
trustee. He was a member of the Board of Directors of the Greater Las Vegas
Chamber of Commerce from 1988 to 1995 and in 1988 was its Chairman. Mr. Silver
served for four years as a member of the United States Travel and Tourism
Advisory Board. He was President of the International Association of Gaming
Attorneys from 1992 to 1994 and Chairman of the American Bar Association Section
of Gaming Law from 1994 to 1996.

         Major General Paul A. Harvey USAF (Ret) has been one our and ROC's
Directors since May 18, 2001. General Harvey is currently a consultant to the
gaming, hotel and resort industry. General Harvey spent 32 years on active duty
in the United States Air Force where he held numerous command positions
throughout the United States, Europe, Africa and the Middle East. He flew 160
combat missions in Vietnam and Southeast Asia before retiring in 1991 as a
command pilot with over 5,000 flying hours. Following retirement, he was an
Executive in Residence and Assistant to the President of William Carey College
and taught MBA studies in management and leadership. General Harvey was the
Executive Director of the Mississippi Gaming Commission from 1993 through 1998
before becoming President and CEO of Signature Works, Inc., which is the largest
employer of blind and visually impaired people in the world. In 2000 Signature
Works, Inc. merged with LCI, Inc. His present company, PDH Associates, Inc.,
provides consulting service to the gaming, hotel and resort industry. In
February 2002, General Harvey was named President of Karhouse, Inc.,
headquartered in Pensacola, Florida, which provides automobile storage for
Department of Defense personnel who are on deployed or overseas status. Since
1996, General Harvey has served on the Board of Directors of the National Center
for Responsible Gaming. He also serves on the Board of Directors of VirtGame
Corp., which is headquartered in San Diego, California and has a class of
securities registered under the Securities Exchange Act of 1934. General Harvey
is also a Commissioner on the Mississippi Band of Choctaw Indians Athletic and
Boxing Commission.

                                        34
<PAGE>

         Vincent L. DiVito was appointed as one of our and ROC's Directors
effective June 14, 2002. Mr. DiVito is currently Vice President, Chief Financial
Officer and Treasurer of Lonza, Inc., a global specialties chemical business
headquartered in Fair Lawn, New Jersey. Lonza, Inc. is part of Lonza Group,
whose stock is traded on the Swiss Stock Exchange. He also serves on the Board
of Directors of VirtGame Corp., which is headquartered in San Deigo, California
and has a class of securities registered under the Securities Exchange Act of
1934. Prior to September 2000, Mr. DiVito was the Vice President and Chief
Financial Officer of Algroup Wheaton, a global pharmaceutical and cosmetics
packaging company, after having served as the Director of Business Development.
From 1984 to 1990 Mr. DiVito was the Vice President of Miracle Adhesives Corp.
(a division of Pratt & Lambert, an American Stock Exchange-listed manufacturer
of paints, coatings and adhesives). Prior to 1984, Mr. DiVito spent two years on
an audit team at Ernst & Whinney (now Ernst & Young). Mr. DiVito is a certified
public accountant and certified management accountant.

         James N. Land, Jr., is currently a corporate consultant and was
appointed as one of our and ROC's Directors effective April 12, 2004. Mr. Land
was first elected a Director of the Company and ROC on January 21, 1999 and
thereafter resigned on May 31, 2002. From 1956 to 1976, Mr. Land was employed by
The First Boston Corporation in various capacities, including Director, Senior
Vice President, Co-Head of Corporate Finance, and head of International
Operations. From 1971 through 1999, he served as Director of various companies,
including Kaiser Industries Corporation, Marathon Oil Company, Castle & Cooke,
Inc., Manville Corporation, NWA, Inc., Northwest Airlines, and Ratheon Company.

Executive Officers

         The following table presents information as of March 17, 2005 regarding
our and ROC's executive officers:

<TABLE>
<CAPTION>
Name                                Age         Position

<S>                                 <C>                     <C>
William L. Westerman                73          Our and ROC's Chairman of the
                                                Board and CEO, and our President

Duane R. Krohn                      59          Our and ROC's Treasurer and
                                                Chief Financial Officer, and
                                                Executive Vice President of
                                                Finance of ROC

Tullio J. Marchionne                50          Our Secretary and General
                                                Counsel, and Secretary and Vice
                                                President of ROC

Robert A. Vannucci                  57          President and Chief Operating
                                                Officer of ROC

Ronald P. Johnson                   56          Executive Vice President of
                                                Gaming Operations of ROC
</TABLE>
         For a description of the business experience of William L. Westerman,
see "Directors" above.

         Duane R. Krohn, CPA, became our and ROC's Treasurer on June 30, 1993
and was elected Vice President of Finance of ROC on April 26, 1994 and Executive
Vice President of Finance of ROC on July 1, 1998. He served as Secretary from
June 8, 1999 to February 17, 2000. Mr. Krohn was initially employed by Riviera,
Inc. in April 1990, as Director of Corporate Finance and served as Vice
President-Finance from March 1992 to June 30, 1993. Prior to 1990, Mr. Krohn was
Chief Financial Officer of the Imperial Palace, the Mint and the Dunes in Las
Vegas, Nevada, and Bally's Park Place in Atlantic City, New Jersey.

                                        35
<PAGE>

         Tullio J. Marchionne became our General Counsel on January 10, 2000,
was appointed as our and ROC's Secretary on February 17, 2000 and was elected
Vice President of ROC on February 26, 2001. Mr. Marchionne was initially
employed by Riviera, Inc., in June 1986 as a casino games dealer and served in
various capacities including Pit Manager, General Counsel and Director of Gaming
Administration until September 1996, when he was transferred to the Four Queens
Hotel and Casino as Director of Casino Operations pursuant to the management
agreement we had with the Four Queens through our subsidiary. He served in that
position until May 1997. Mr. Marchionne served as the General Manager of the
Regency Casino Thessaloniki, located in Thessaloniki, Greece, from June 1997
until December 1997. Mr. Marchionne served as a Casino Supervisor with Bally's,
Las Vegas, from February 1998 until June 1998, Director of Casino Operations at
the Maxim Hotel and Casino in Las Vegas from June 1998 until November 1998 and
Director of Table Games at the Resort At Summerlin (a Las Vegas casino/hotel)
from November 1998 until December 1999.

         Robert A. Vannucci was elected Vice President of Marketing and
Entertainment of ROC on April 26, 1994, Executive Vice President of Marketing
and Entertainment on July 1, 1998 and President of ROC on October 1, 2000. Mr.
Vannucci had been Director of Marketing of ROC since July 19, 1993. Mr. Vannucci
was Senior Vice President of Marketing and Operations at the Sands Casino Hotel
in Las Vegas from April 1991 to February 1993. He was Vice President and General
Manager of Fitzgerald's Las Vegas (a casino/hotel) from 1988 to January 1991.

         Ronald P. Johnson became Vice President of Gaming Operations of ROC in
September 1994, Executive Vice President of Gaming Operations of ROC on July 1,
1998, and on February 10, 1999, President of Riviera Black Hawk, Inc. (our
wholly-owned subsidiary which owns and operates the Riviera Black Hawk), a
position he holds concurrently with his ROC Executive Vice President position.
Mr. Johnson became Director of Slots on June 30, 1993 and was elected Vice
President of Slot Operations and Marketing on April 26, 1994. Mr. Johnson was
Vice President-Slot Operations and Marketing of Riviera, Inc. from April 1991
until June 30, 1993. He was Vice President-Slot Operations for Sands Hotel and
Casino Inc. from September 1989 until he joined Riviera, Inc.

         Our and ROC's officers serve at the discretion of our and ROC's
respective Boards of Directors, and they are also subject to the licensing
requirements of the Nevada Gaming Commission.

Audit Committee Financial Expert

           Our Board of Directors has determined that the Chairman of our Audit
Committee, Vincent L. DiVito, who meets the American Stock Exchange audit
committee independence requirements, is a financial expert. Mr. DiVito is a
certified public accountant, certified management accountant, spent two years on
the audit team at Ernst & Whinney (now Ernst & Young) and is currently the Chief
Financial Officer and treasurer of a global specialties chemical business.

Audit Committee Report; Audit Committee Independence

         In accordance with its written charter adopted by our Board of
Directors, our Audit Committee assists our Board of Directors in fulfilling its
responsibility for oversight of the quality and integrity of our accounting,
auditing and financial reporting practices.

         During our fiscal year ended December 31, 2004, our Audit Committee met
seven times, and our Audit Committee chairman, as representative of the Audit
Committee, discussed the interim financial information contained in each of our
quarterly earnings announcement with our Chief Financial Officer and independent
auditors prior to public release.

         In discharging its oversight responsibility as to the audit process,
our Audit Committee obtained from our independent auditors a formal written
statement describing all relationships between the auditors and the Company that


                                        36
<PAGE>

might bear on the auditors' independence consistent with Independence Standards
Board Standard No. 1, "Independence Discussions with Audit Committees,"
discussed with the auditors any relationships that may impact their objectivity
and independence and satisfied itself as to the auditors' independence. Our
Audit Committee specifically addressed, discussed and concluded that the
independent auditors' provision of non-audit services was compatible with
maintaining the auditors' independence. Our Audit Committee also discussed with
our management, our internal auditors and the independent auditors the quality
and adequacy of our internal controls and the internal audit function's
organization, responsibilities, budget and staffing. The Audit Committee
reviewed with both the independent auditors and our internal auditors their
audit plans, audit scope, and identification of audit risks.

         The Audit Committee discussed and reviewed with the independent
auditors all communications required by generally accepted auditing standards,
including those described in Statement on Auditing Standards No. 61, as amended
(Codification of Statements on Auditing Standards, AU Section 380), and with and
without our management present, discussed and reviewed the results of the
independent auditors' examination of our financial statements. The Audit
Committee also discussed the results of the internal audit examinations.

         The Audit Committee reviewed our audited financial statements as of and
for the fiscal year ended December 31, 2004, with our management and the
independent auditorsOur management has the responsibility for the preparation of
our financial statements and the independent auditors have the responsibility
for the examination of those statements.

         Based on the above-mentioned review and discussions with management and
the independent auditors, the Audit Committee recommended to our Board of
Directors that our audited financial statements be included in our Annual Report
on Form 10-K for the fiscal year ended December 31, 2004, for filing with the
Securities and Exchange Commission. The Audit Committee also recommended the
reappointment of the independent auditors and our Board of Directors concurred
in such recommendation.

         The Audit Committee presently consists of three members who all meet
the independence requirements of the American Stock Exchange's listing standards
that apply to us.

Date:             March 17, 2005           Vincent L. Divito           Chairman
                                           Paul A. Harvey              Member
                                           James N. Land, Jr.          Member

Section 16(a) Beneficial Ownership Reporting Compliance

         Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers and persons who own more than 10% of our common
stock to file with the Securities and Exchange Commission certain reports
regarding common stock ownership. Such persons are required to furnish us with
copies of all Section 16(a) reports they file. To our knowledge, all of these
persons met their Section 16(a) reporting obligations on a timely basis during
2004.

Code of Ethics

         We have adopted certain ethical policies that apply to all of our
employees at the level of Supervisor or higher, including our principal
executive officer, principal financial officer and principal accounting officer.
Those policies, together with certain rules adopted by our Disclosure Committee,
comprise what we consider to be our code of ethics. Those policies and rules are
posted on our Internet web sit at www.theriviera.com.


                                        37
<PAGE>
Item 11.   Executive Compensation

         The following table presents a summary of the compensation we paid in
the years ended December 31, 2002, 2003 and 2004 to our and ROC's CEO, and to
our four other most highly compensated executive officers who received over
$100,000 in compensation from us during 2004 (collectively, the "Named Executive
Officers").
<TABLE>
<CAPTION>
                        Summary Compensation Table

                           Annual Compensation
                          --------------------
                                                        Other        Securities
                                                        Annual       Underlying   All Other
    Name and                                           Compen-         Options     Compen-
Principal Position       Year   Salary($)  Bonus($)   sation ($)(1) (# of Shares) sation ($)(2)
-----------------------------------------------------------------------------------------------

<S>                      <C>   <C>              <C>     <C>      <C>        <C>    <C>
William L. Westerman     2004  $1,000,000       $0      $446,178 (3)        0      $1,438
Our Chariman of the      2003  $1,000,000       $0      $547,591 (3)        0      $1,438
Board and CEO,           2002    $600,000       $0      $482,848 (3)        0      $1,438
CEO of ROC

Robert A. Vannucci       2004    $300,000 $114,000      $104,000 (5)               $1,720
President and Chief      2003    $300,000       $0 (4)  $103,000 (5)               $1,720
Operating Officer        2002    $300,000       $0 (4)  $103,000 (5)   20,000      $1,720
of ROC

Duane R. Krohn           2004    $250,000  $57,000        $4,000                   $1,438
Our Treasurer            2003    $250,000       $0 (4)    $3,500                   $1,438
and Executive Vice       2002    $250,000       $0 (4)    $3,000       10,000      $1,438
President of Finance
and Treasurer of ROC

Ronald P. Johnson        2004    $250,000  $90,500        $4,000                   $1,438
Executive Vice President 2003    $250,000       $0 (4)    $3,500                   $1,438
of Gaming Operations of  2002    $250,000       $0 (4)   $10,500 (6)   10,000      $1,438
ROC

Jerome P. Grippe (7)     2004    $250,000       $0        $4,000                   $1,438
Executive Vice President 2003    $250,000       $0 (4)    $3,500                   $1,438
of Operations of ROC     2002    $250,000       $0 (4)    $3,000       10,000      $1,438
</TABLE>

(1) Includes amounts that we contributed under our Profit Sharing and 401(k)
Plans. We contributed $4,000 for the account of each of the Named Executive
Officers in 2004, $3,500 for the account of each of them in 2003 and $3,000 for
the account of each of them in 2002.
(2) Includes premiums that we paid for excess life insurance.
(3) The amount reported represents the portion of the interest earned on Mr.
Westerman's retirement account that exceeds the interest, which would have been
earned if the interest rate had been 120% of the applicable federal long-term
rate, with compounding, prescribed under Section 1274(d) of the Internal Revenue
Code. Additional interest earned on Mr. Westerman's retirement account that is
not reported in the above table amounted to $195,977 in 2004, $210,095 in 2003
and $357,302 in 2002.
(4) There was no incentive bonus award in 2003 or 2002.


                                        38
<PAGE>

(5) Includes $100,000 cash award or award of restricted stock (Mr. Vannucci has
the choice to be awarded $25,000 in cash or $25,000 in restricted stock per
quarter) pursuant to Mr. Vannucci's employment agreement. See "Restricted Stock
Plan" below for a summary of our Restricted Stock Plan.
(6) Includes $7,500 compensation for a planned vacation that we asked Mr.
Johnson to forgo so he could participate in the nationwide presentations to sell
our senior secured notes.
(7)Mr. Grippe retired effective February 16, 2005.

Option Grants

         We granted no stock options in 2004. The information set forth below in
this subsection is on an as- adjusted basis, giving effect to our three-for-one
stock split that occurred in 2005.

      The number of shares allocated to our 1993 Employee Stock Option Plan (the
"Stock Option Plan") was 3,000,000.  Excluding options for 1,197,000 shares that
were  surrendered  and forfeited in 2001,  options for an aggregate of 2,554,500
shares were granted under the Stock Option Plan prior to its expiration. On July
15, 2003,  we attempted to grant  385,500  options  under the Stock Option Plan.
Subsequently,  however,  we determined that the Stock Option Plan had expired on
July 1, 2003, rendering the July 15 grants null and void. Two executives to whom
we attempted to grant options for a total of 48,000 shares have since  separated
from employment with us. In March 2005, we granted to 19 remaining  executives a
total of 337,500  shares of Common  Stock under our  Restricted  Stock Plan (see
"Restricted  Stock Plan" below) in  substitution  for the stock  options that we
attempted  to grant to them on July 15,  2003.  Those  shares  are  subject to a
five-year  vesting  schedule,  vesting 20% each March 10,  commencing  March 10,
2006. The shares completely vest immediately upon death, disability,  retirement
at age 62, termination of employment by the Company other than for cause, events
of  hardship  as approved  by the  Compensation  Committee  or in the event of a
change in control of the Company.

         See "Compensation of Directors" below for a discussion of stock options
that we attempted to grant to our non-employee directors after expiration of our
other stock option plan, and our future intentions in this regard.

         Subject to approval of our stockholders at the 2005 Annual Meeting of
Stockholders, we intend to implement a new employee stock option plan to which
we will allocate 1,000,000 shares of Common Stock.

Option Exercises and Year-End Option Values

         The following table presents information regarding stock options
exercised during 2004 and the value at December 31, 2004 of unexercised,
in-the-money options held by the Named Executive Officers. There were 523,500
options (on an as-adjusted basis giving effect to the 2005 stock split)
exercised in 2004 by the Named Executive Officers.
<TABLE>
<CAPTION>

              Number      Value          Number of         Value of Unexercised,
             of Shares   Realized     Shares Underlying    In-The-Money Options
             Acquired   ---------   Unexercised Options
                In
   Name      Exercise                Exer-   Unexer-        Exer-      Unexer-
   ----      --------              -------   -------       -------    -------
                                   cisable   cisable       cisable     cisable
                                   -------   -------       -------    -------
<S>           <C>        <C>          <C>       <C>          <C>         <C>
William L.    150,000     $700,000     0         0         $   0      $   0
Westerman
Robert A.
Vannucci      90,000     $435,000  105,000   15,000       $1,195,100   $170,700
Duane R.
Krohn        142,500     $643,900        0    7,500       $       0     $85,350
Ronald P.
Johnson      120,000     $661,325   22,500    7,500       $256,050      $85,350
Jerome P.
Grippe        21,000     $108,500   94,500    7,500      $1,174,470     $85,350
</TABLE>
                                        39
<PAGE>

Employment Agreements

         William L. Westerman serves as our Chairman of the Board, President
and CEO, and as Chairman of the Board and CEO of ROC.

         Under Mr. Westerman's employment agreement, which was last amended on
July 15, 2003, he is employed for an indefinite period, subject to termination
by either Mr. Westerman upon at least 180 days written notice or by us upon at
least 90 days written notice. Mr. Westerman's base annual compensation is
$1,000,000. Under his amended employment agreement, Mr. Westerman is not
entitled to participate in the Senior Management Compensation Bonus Plan or any
other executive bonus plan.

         The employment agreement required us to fund a retirement account for
Mr. Westerman. Pursuant to that agreement, we make no further principal
contributions to the retirement account subsequent to January 1, 2001. The
account continues to accrue interest pursuant to the employment agreement. The
retirement account had an accrued balance of $5,152,536 as of December 31, 2004.

         We credit Mr. Westerman's retirement account quarterly with interest on
the first day of each succeeding calendar quarter in an amount equal to the
product of (1) our average borrowing cost for the immediately preceding fiscal
year, as determined by the our Chief Financial Officer, and (2) the average
outstanding balance in the retirement account during the preceding calendar
quarter. At the recommendation of our Compensation Committee, in order to reduce
the amount that would be payable immediately upon Mr. Westerman's separation
from employment with us, Mr. Westerman and we agreed to the following cash
payments commencing April 1, 2003, and continuing the first day of each quarter
thereafter: (1) a distribution of $250,000 from the principal balance of his
retirement account; and (2) the quarterly interest credited to his retirement
account one quarter in arrears. Total interest accrued for Mr. Westerman in 2004
was $638,154, while interest accrued was $757,686 for 2003 and $840,150 for
2002.

         We retain beneficial ownership of the retirement account, which is
earmarked to pay Mr. Westerman's retirement benefits. However, upon (1) the vote
of a majority of the outstanding shares of Common Stock approving a "Change of
Control" (as defined below), (2) the occurrence of a Change of Control without
Mr. Westerman's consent, (3) a breach by us of a material term of the employment
agreement or (4) the expiration or earlier termination of the employment
agreement for any reason other than cause, Mr. Westerman has the right to
require us to establish a "Rabbi Trust" for his benefit. He also has the right
to require us to fund such trust with cash equal to the amount then credited to
the retirement account, including any amount to be credited to the retirement
account upon a Change of Control.

         On February 5, 1998, our stockholders approved a merger agreement that
constituted a Change of Control under Mr. Westerman's employment agreement. On
March 5, 1998, Mr. Westerman exercised his right to require us to establish and
fund a Rabbi Trust for his benefit. On March 20, 1998, Mr. Westerman waived his
right to have us fund the Rabbi Trust in exchange for our agreement to fund it
within five business days after notice from him.

         If Mr. Westerman ceases to be employed by us (except for termination
for cause, in which case Mr. Westerman would forfeit all rights to monies in the
retirement account), he will be entitled to receive the amount in the retirement
account (principal and current interest) in 20 equal quarterly installments
commencing as of the date he ceases to be employed. In the event that Mr.
Westerman's Rabbi Trust has not yet been funded, the balance of principal and
interest of the retirement account shall be paid directly to Mr. Westerman upon
his retirement or termination (except for cause) or upon a change of control.

                                        40
<PAGE>

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

         In addition to Mr. Westerman, one other executive, Robert Vannucci, has
an employment agreement with us.

         Mr. Vannucci serves as President of ROC and his employment agreement
was last amended on March 24, 2003. Mr. Vannucci's base compensation is
$300,000. His employment agreement also provides for a "Normal Incentive Bonus"
entitling Mr. Vannucci to participate in our Incentive Compensation Plan, which
enables him to share in that plan's pool, which provides for an incentive bonus
based on achievement of a predetermined EBITDA target. Such amounts are credited
to the Incentive Compensation Plan's pool up to a maximum of $1.2 million. Mr.
Vannucci did not receive an incentive bonus for the year2003 and received an
incentive bonus in the amount of $114,000 for the year 2004.

         Mr. Vannucci also receives compensation in the form of Common Stock
under our Restricted Stock Plan (see "Restricted Stock Plan" below). Mr.
Vannucci's agreement provides that he is to receive $25,000 in Common Stock,
based on the stock's market value, on the first business day of each quarter,
plus Common Stock, based on the stock's market value, in the same amount he
receives under our Incentive Compensation Plan. Under the Restricted Stock Plan,
Mr. Vannucci is presently entitled to rights of ownership with respect to the
shares, including the right to vote and receive dividends. Mr. Vannucci may not,
however sell, assign, pledge, encumber or otherwise transfer any of the shares
so long as he is employed by us, without our written consent. The shares fully
vest to Mr. Vannucci upon his separation of employment from us, unless he is
terminated for cause. Mr. Vannucci's agreement was amended on March 4, 2003 and
again on March 24, 2003 so that, commencing with the Restricted Stock Plan award
of April 1, 2003 and for each quarter thereafter, Mr. Vannucci can choose
between receiving $25,000 in cash or $25,000 in Common Stock. Mr. Vannucci chose
to receive $25,000 in Common Stock and $75,000 in cash in 2003, and $100,000 in
cash in 2004, pursuant to this provision. Mr. Vannucci also has the choice
between cash and Common Stock as a match to his annual incentive bonus award.
Mr. Vannucci received no such matching award in 2003. Mr. Vannucci chose to
receive his matching award of $57,000in cash for 2004. Mr. Vannucci's agreement
automatically renews annually subject to 120 days prior written notice by him or
us.

Profit Sharing and 401(k) Plans

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

         Effective January 1, 2000, we suspended contributions to the
profit-sharing component of the Profit Sharing and 401(k) Plans and substituted
contributions to an Employee Stock Ownership Plan, which is discussed directly
below.

      We have an identical 401(K) plan for our 100% indirectly-owned subsidiary,
Riviera Black Hawk, Inc., which operates the Riviera Black Hawk. Employees hired
prior  to June  30,  2000,  who  were at  least 21 years of age and who were not
covered by a  collective  bargaining  agreement  were  immediately  eligible  to
participate.  After June 30, 2000,  all new employees who were at least 21 years
of age and not covered by a collective  bargaining  agreement  were  eligible to
participate after one year of service at Riviera Black Hawk.

         We may make a matching contribution to the 401(k) component of the
Profit Sharing and 401(k) Plans in an amount not to exceed 25% of the first 8%
of each participant's compensation, which is contributed as a salary deferral.
Our Common Stock is not an investment option to participants in the 401(k)
component and any contribution that we make to the 401(k) component is in the
form of cash, to be invested in the participant's selected investment options.
Our 401(k) matching contribution was $302,882 in 2004.

                                        41
<PAGE>

Employee Stock Ownership Plan

         We have an Employee Stock Ownership Plan ("ESOP"). The ESOP was
established effective January 1, 2000 and effectively replaced the
profit-sharing contribution component of the Profit Sharing and 401(k) Plans.
The ESOP provides that all employees of Riviera Las Vegas and Riviera Black Hawk
employed in the plan year who completed a minimum of 1,000 hours of service in
that year, were employed through December 31 of that plan year, were at least 21
years of age and were not covered by a collective bargaining agreement are
eligible to participate. We make contributions for the ESOP's participants at
our Las Vegas and Black Hawk properties relative to the economic performance of
each property. For Riviera Las Vegas, we make a contribution equal to 1% of each
eligible employee's annual compensation if a prescribed annual operating results
target is attained and an additional 1% thereof for each $2 million by which
that target is exceeded, up to a maximum of 5%. For Riviera Black Hawk, we make
a contribution equal to 1% of each eligible employee's annual compensation if a
prescribed annual operating results target is attained and an additional 1%
thereof for each $1 million by that target is exceeded, up to a maximum of 5%.
Under the ESOP, our contribution will be made in cash, which the ESOP trustee
uses primarily to buy Common Stock. We contributed $899,253 in cash to our ESOP
for 2004.

Incentive Compensation Programs

         Approximately 60 executives and other significant employees at Riviera
Las Vegas and 25 at Riviera Black Hawk participate in incentive compensation
programs. Participants in each of the two programs are eligible to receive an
annual incentive bonus based on attainment of predetermined financial targets at
each location. We awarded an aggregate of $546,000 and $397,300 to participants
at Riviera Las Vegas and Black Hawk, respectively, under these programs in the
year ended December 31, 2004.

Deferred Compensation Plan

         On October 2, 2000, we adopted a Deferred Compensation Plan to give
eligible employees the opportunity to defer cash compensation. Participation in
this non-qualified plan is limited to employees who receive compensation of at
least $100,000. The deferred funds are maintained on our books as liabilities.
All elections to defer the receipt of compensation must be made by December 1st
preceding the plan year to which the election relates and are irrevocable for
the duration of such year. Five of our executives currently participate in this
plan.

Restricted Stock Plan

         On October 2, 2000, we adopted a Restricted Stock Plan to attract and
retain highly competent persons as officers and key employees by providing them
with opportunities to receive shares of our Common Stock, subject to certain
restrictions. Participants consist of such officers and key employees as our
Compensation Committee determines are significantly responsible for our success
and future growth and profitability. Awards of stock are subject to such terms
and conditions as we determine are appropriate at the time of the awards,
including restrictions on the sale or other disposition of such stock and
provisions for total or partial forfeiture of such stock upon termination of the
participant's employment within specified periods or under certain conditions.

Salary Continuation Agreements

         Approximately 65 officers and significant employees (excluding Messrs.
Westerman and Vannucci) of ROC have salary continuation agreements effective
through December 31, 2005, under which each of them will be entitled to receive
(1) from six months' to two years' base salary if their employment is
terminated, without cause, within 12 or 24 months of a change of control of the
Company or ROC; and (2) certain benefits for periods of either one or two years.
The base salary is payable in bi-weekly installments subject to the employee's
duty to mitigate by using his or her best efforts to find other employment. In
addition, four officers and significant employees have salary continuation
agreements effective through December 31, 2005, under which each of them will be

                                        42
<PAGE>

entitled to receive two years' base salary and certain benefits for two years,
if their employment is terminated without cause within 24 months of a change of
control of the Company or ROC. These four salary continuation agreements are not
subject to a duty to mitigate. As of March 17, 2005, the total amount that would
be payable under all such agreements if all payment obligations were to be
triggered was approximately $6.7 million, including $1.5 million in benefits.

Compensation of Directors

         Messrs. Silver, Harvey and Land are each paid an annual fee of $50,000
for services as a director. Mr. DiVito is paid an annual fee of $75,000 for
services as a director and as Chairman of our Audit Committee. Each director is
also reimbursed for expenses incurred in connection with attendance at meetings
of the Board of Directors.

         On March 5, 1996, we adopted the Nonqualified Stock Option Plan for
Non-Employee Directors ("Directors' Option Plan"), which was approved by our
stockholders. Under the Directors' Option Plan, each individual elected,
re-elected or continuing as a non-employee director would automatically receive
a nonqualified stock option for 6,000 shares of Common Stock, with an exercise
price equal to the fair market value of our Common Stock on the date of grant.
150,000 shares were reserved for issuance under the Directors' Option Plan (on
an as-adjusted basis giving effect to the 2005 stock split). The Directors'
Option Plan expired on July 1, 2003. In 2004, however, before we determined that
the Directors' Option Plan had expired, we attempted to grant options to our
non-employee Directors for a total of 30,000 shares of Common Stock.

         Options to purchase 6,000 shares at $4.50 per share were granted to Mr.
Barengo on May 12, 1997, options to purchase 6,000 shares at $3.00 per share
were granted to him on May 11, 1998, options to purchase 6,000 shares at $1.63
per share were granted to him on May 10, 1999 and options to purchase 6,000
shares at $2.58 per share were granted to him on May 10, 2000. No options were
granted to Mr. Barengo under the Directors' Option Plan after 2000 because he
became an employee effective January 1, 2001. Mr. Barengo was granted options to
purchase 22,500 shares at $2.00 per share and 30,000 shares at $2.45 on August
7, 2001 and May 14, 2002, respectively, under our Stock Option Plan.  Mr.
Barengo's compensation in 2004 was $137,000.

         Upon becoming a Director, Mr. Silver was granted options under the
Directors' Option Plan to purchase 6,000 shares at $2.35 per share on February
26, 2001. Mr. Silver was subsequently granted options to purchase 6,000 shares
at $2.18 per share on May 10, 2001, 6,000 shares at $2.58 on May 10, 2002 and
6,000 shares at $1.87 on May 12, 2003.

         Upon becoming a Director, Mr. Harvey was granted options under the
Directors' Option Plan to purchase 6,000 shares at $2.20 per share on May 18,
2001. Mr. Harvey was subsequently granted options to purchase 6,000 shares at
$2.58 on May 10, 2002 and 6,000 shares at $1.87 on May 12, 2003.

         Upon becoming a Director, Mr. DiVito was granted options under the
Director's Option Plan to purchase 6,000 shares at $1.87 per share on July 12,
2002. Mr. DiVito was subsequently granted options to purchase 6,000 shares at
$1.87 on May 12, 2003.

                                        43
<PAGE>

         Directors who are also our officers or employees do not receive
additional compensation for services as a Director. Currently, Messrs. Westerman
and Barengo are such Directors.

         We intend to issue our Directors, subject to approval of our
stockholders at the 2005 Annual Meeting of Stockholders, 30,000 restricted
shares of our Common Stock to replace the null and void option grants. We also
intend to implement, subject to stockholder approval, a new non-employee
director stock option plan to which we will allocate 150,000 shares of Common
Stock.

         Under our Stock Compensation Plan, our Directors who are members of our
Compensation Committee have the right to receive all or part of their annual
fees in the form of Common Stock having a fair market value equal to the amount
of their fees. Of the 50,000 shares that we allocated to this plan (on an
as-adjusted basis giving effect to the 2005 stock split), 46,020 remain
available for issuance.

Compensation Committee Report on Executive Compensation

           Our Compensation Committee endeavors to ensure that the compensation
program for our executive officers is effective in attracting and retaining key
executives responsible for our success and is tailored to promote our and our
stockholders' long-term interests. Our 2004 executive officer compensation
program was principally comprised of base salary, an executive incentive plan, a
401(k) plan, contributions to the ESOP, the Deferred Compensation Plan and the
Restricted Stock Plan.

         Our Compensation Committee takes into account various qualitative and
quantitative indicators of corporate and individual performance in determining
the level and composition of compensation for our CEO and his recommendations
regarding the other executive officers. In particular, the Compensation
Committee considers several financial performance measures, including revenue
growth and net income. However, the Compensation Committee does not apply any
specific quantitative formula in making compensation decisions. The Compensation
Committee also considers achievements that, while difficult to quantify, are
important to our long-term success. The Compensation Committee seeks to create a
mutuality of interest between our officers and our stockholders by increasing
the executive officers' ownership of Common Stock through the ESOP, Deferred
Compensation Plan and Restricted Stock Plan. On March 10, 2005, due to the
expiration of the Stock Option Plan, the Compensation Committee approved a new
employee stock option plan, covering 1,000,000 shares of Common Stock, which we
plan to submit for stockholder approval at our 2005 Annual Meeting of
Stockholders.

         Salary levels for our executive officers are significantly influenced
by the need to attract and retain management employees with high levels of
expertise. In each case, we consider personal factors, such as the individual's
experience, responsibilities and work performance, and external factors, such as
salaries paid by comparable companies in the gaming industry. With regard to the
latter, it is important to recognize that because of the opening of new
properties and expansion of existing properties on the Las Vegas Strip coupled
with the growth of riverboat and dockside gaming, Native American gaming
operations and the proliferation of jurisdictions in which gaming is permitted,
we compete with numerous other companies for a limited pool of experienced and
skilled personnel. Therefore, it is critical that we provide base salaries that
are competitive in the casino industry. With respect to the personal factors,
the Compensation Committee makes salary decisions in an annual review based on
the recommendations of our CEO. This annual review considers the decision-making
responsibilities of each position as well as the experience and work performance
of each executive. Our CEO views work performance as the single most important
measurement factor. As a baseline measure, in 2001 the Compensation Committee
engaged the services of an independent CPA firm, other than Deloitte & Touche
LLP, which conducted a compensation survey of comparable Las Vegas resorts. The
CPA firm concluded that compensation of our executives was consistent with other
members of the industry.

                                        44
<PAGE>

         The compensation of Mr. Westerman for our last completed fiscal year
was set pursuant to the employment agreement described above in "Employment
Agreements."

         Date:    March 17, 2005        Jeffrey A. Silver          Chairman
                                        Paul A. Harvey.            Member
                                        Vincent L. DiVito          Member

                                        45
<PAGE>

Compensation Committee Interlocks And Insider Participation

         Jeffrey A. Silver, a Director and Chairman of our Compensation
Committee, is a shareholder in the law firm of Gordon & Silver, Ltd., which we
have retained for various legal matters during each of our last three fiscal
years and in 2005.

              Comparison of Five-Year Cumulative Total Returns
                         Performance Graph for
                      Riviera Holdings Corporation

             Produced on 03/22/05 including data to 12/31/2004

         The following graph compares the annual change in the cumulative  total
return,  assuming reinvestment of dividends,  on the Company's Common Stock with
the annual  change in the  cumulative  total returns of the NASDAQ Broad Market,
the  American  Stock  Exchange  Index  (the  "AMEX  Index"),  the New York Stock
Exchange (the "NYSE") and the NASDAQ  Amusement and  Recreation  Services  Index
(the "NASDAQ 79xx"),  which the Company considers to be its peer industry group.
The graph  assumes an  investment  of $100 on December 31, 1999,  in each of the
Common  Stock,  the  stocks  comprising  the  NASDAQ  Broad  Market,  the stocks
comprising the AMEX Index and the stocks comprising the NASDAQ 79xx.


The graph is a Comparison of Cumulative Total Return Among the Company, NYSE/
AMEX/Nasdaq Stock Market (US Companies) and Nasdaq stocks (SIC 7900 - 7999 US
Companies amusement and recreation services) (1).
<TABLE>
<CAPTION>

                     Riviera           NYSE/AMEX/Nasdaq            Nasdaq
                                        U.S. Companies            (SIC 79xx)
                                                          US Amusement Companies

<S> <C>               <C>                  <C>                      <C>
 12/31/99             100.0                100.0                    100.0
 12/31/00             111.8                 88.7                     84.2
 12/31/01              66.5                 79.2                     98.6
 12/31/02              67.8                 62.9                     81.7
 12/31/03              84.9                 82.9                    116.1
 12/31/04             651.0                 93.1                    153.6
</TABLE>

(1) Comprised of companies whose stock is traded on the Nasdaq National Market
    and whose standard industrial classification is within 7900-7999.  The
    company does not necessarily believe that this is an indication of the value
    of the Company's stock.

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

         Our Common Stock is listed on the American Stock Exchange. The
following table sets forth certain information regarding the beneficial
ownership of our Common Stock as of March 21, 2005, by (1) each person who, to
our knowledge, beneficially owns more than 5% of our outstanding common stock
(based on reports filed with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, or upon information furnished to us), (2) each
of our directors and executive officers and (3) all of our directors and
executive officers as a group. The percentage of our outstanding Common Stock
represented by each named person's stock ownership assumes the exercise by such
person of all stock options that are exercisable within 60 days of March 21,
2005, but does not assume the exercise of stock options by any other persons.

                                        46

<PAGE>

The percentage of our outstanding common stock represented by the stock
ownership of all executive officers and directors as a group assumes the
exercise of stock options by all members of that group, but does not assume the
exercise of options by any persons outside of that group. Except as indicated in
the footnotes to the table, each person listed below has sole voting and
investment power with respect to the shares set forth opposite such person's
name.

<TABLE>
<CAPTION>
                                                 Shares Beneficially Owned

Name                                              Number          Percentage

<S>                 <C>                          <C>                  <C>
William L. Westerman(1)(2)                       2,095,593            17.0%
Robert R. Barengo(1)(3)                            451,880             3.7
Jeffrey A. Silver (1)(4)                            28,200              *
Paul A. Harvey(1)(5)                                 7,200              *
Vincent L. DiVito(1)(6)                              2,400              *
James N. Land, Jr. (1)                                   0              *
Robert A. Vannucci (1)(7)                          480,330             3.9
Ronald P. Johnson(1)(8)                            402,207             3.3
Duane R. Krohn(1)(9)                               397,695             3.2
Tullio J. Marchionne(1)(10)                         59,871              *
D.E. Shaw Laminar Portfolios, L.L.C.(11)         1,050,000             8.5
AIG Sun America Inc. and Sun America
Life Insurance Co.(12)                           1,037,700             8.4
Steven A. Cohen(13)                                782,700             6.5
Employee Stock Ownership Plan (ESOP) (14)        1,000,581             8.1
All directors and executive officers as a
group (15)                                       3,925,376            31.2
-------------------------------
*   Less than 1%.
</TABLE>

(1)    The address for each director and executive  officer is c/o Riviera
       Holdings  Corporation,  2901 Las Vegas Boulevard South, Las Vegas,
       Nevada 89109.
(2)    Includes 4,308 shares held through the ESOP.
(3)    Includes  37,500 shares which may be acquired  within 60 days of March
       21, 2005 upon the exercise of outstanding options, 30,000 shares under
       our Restricted Stock Plan and 1,038 shares held through the ESOP.
(4)    Includes 15,600 shares which may be acquired within 60 days of March 21,
       2005 upon the exercise of outstanding options.
(5)    Includes 10,800 shares which may be acquired within 60 days of March 21,
       2005 upon the exercise of outstanding options.
(6)    Includes 6,000 shares which may be acquired within 60 days of March 21,
       2005 upon the exercise of outstanding options.
(7)    Includes 120,000 shares which may be acquired within 60 days of March
       21, 2005 upon the exercise of outstanding options, 240,831 shares under
       our Restricted Stock Plan, 24,390 shares under our Deferred Compensation
       Plan and 4,797 shares held through the ESOP.
(8)    Includes 30,000 shares which may be acquired within 60 days of March 21,
       2005 upon the exercise of outstanding options, 30,000 shares under our
       Restricted Stock Plan 82,470 shares under our.
       Deferred Compensation Plan and 4,797 shares held through the ESOP.
(9)    Includes 7,500 shares which may be acquired within 60 days of March 21,
       2005 upon the exercise of outstanding  options, 30,000 shares under our
       Restricted Stock Plan 73,722 shares under our Deferred Compensation Plan
       and 4,797 shares held through the ESOP.


                                        47
<PAGE>

(10)   Includes  36,000  shares which may be acquired  within 60 days of March
       21, 2005 upon the exercise of  outstanding  options, 19,500 shares under
       our Restricted Stock Plan and 2,571 shares held
       through the ESOP.
(11)   The address for D.E. Shaw Laminar Portfolios, L.L.C. ("Laminar") is 120
       West 45th Street, Floor 39, Tower 45, New York, NY 10036. D.E. Shaw &
       Co., L.P. ("DESCO LP") acts as an investment advisor to Laminar. D.E.
       Shaw & Co., LLC ("DESCO LLC") acts as managing member to Laminar.
       David E. Shaw is the president and sole shareholder of certain companies
       that are associated with DESCO LLC or DESCO LP. Accordingly, DESCO LLC,
       DESCO LP and Mr. Shaw may also be deemed the beneficial owner of the
       Common Stock that Laminar beneficially owns. Their respective addresses
       are the same as Laminar's address. This information is based on
       information reported by Laminar, DESCO LLC, DESCO LP and Mr. Shaw in a
       Schedule 13D filed with the Securities and Exchange Commission on April
       15, 2004.
(12)   AIG SunAmerica Inc. and SunAmerica Life Insurance Company ("SunAmerica")
       have shared voting and dispositive power over 1,037,700 shares of our
       Common Stock. The address of their principal business office is 2929
       Allen Parkway A37-01, Houston, Texas 77019 attention Thomas Reeg.
       American International Group, Inc. is the parent holding company of these
       two entities and also has shared voting and dispositive power over those
       1,037,700 shares. Its address is 70 Pine Street, New York, New York
       10270. All of this information is based on information reported by these
       companies in Amendment No. 1 to Schedule 13G filed with the Securities
       and Exchange Commission on April 15, 2003.
(13)   Steven A. Cohen is deemed the beneficial owner of these shares because he
       controls S.A.C. Capital Advisors, LLC. ("SAC Advisors"); S.A.C. Capital
       Management LLC. ("SAC Management"): and Sigma Capital Management LLC
       ("Sigma Management"). Pursuant to investment agreements, SAC Advisors and
       SAC Management share all investment and voting power with respect to
       securities held by S.A.C. Capital Associates, LLC ("SAC Associates").
       Pursuant to an investment agreement, Sigma Capital Management, LLC
       ("Sigma Management") maintains investment and voting power with respect
       to securities held by Sigma Capital Associates, LLC ("Sigma Associates").
       As a result of these relationships, (1) each of SAC Associates, SAC
       Advisors, SAC Management and Mr. Cohen may be deemed to own beneficially
       (with shared voting and dispositive power) 760,200 shares of our Common
       Stock (constituting approximately 6.3% of our outstanding shares) and
       (2) Sigma Associates, Sigma Management and Mr. Cohen may be deemed to own
       beneficially (with shared voting and dispositive power) 22,500 shares
       (constituting approximately 0.2% if our outstanding shares). SAC
       Advisors, SAC Management, Sigma Management and Mr. Cohen have disclaimed
       beneficial ownership of our Common Stock. The principal business office
       addresses of these persons are as follows: Mr. Cohen and SAC Advisors -
       72 Cummings Point Road, Stamford, Connecticut 06902; SAC Management and
       Sigma Management - 540 Madison Avenue, New York, New York 10022; and SAC
       Associates and Sigma Associates - P.O. Box 58, Victoria House, The
       Valley, Anguilla, British West Indies. All of this information is based
       on information reported by SAC Associates, SAC Advisors, SAC Management,
       Sigma Associates, Sigma Management, and Steven A. Cohen, in a Schedule
       13G filed with the Securities and Exchange Commission on December 30,
       2004.
(14)   The Trustee of the ESOP and its address are Marshall & Ilsley Trust
       Company N.A., 1000 North Water Street, Suite 1200, Milwaukee, Wisconsin
       53202. All of the shares held by the ESOP are voted on each proposal in
       proportion to the voting instructions received by the Trustee from all
       ESOP participants who submit voting instructions. For example, if (a)
       the ESOP holds 1,000 shares of Common Stock, (b) the Trustee receives
       voting instructions from participants on whose behalf the ESOP holds
       only 500 shares, and (c) those participants, in the aggregate, instruct
       the Trustee to vote 300 shares in favor of a proposal and 200 shares
       against it, then 600 shares held by the ESOP will be voted for the
       proposal and 400 shares will be voted against it. Common Stock held by
       the ESOP on behalf of executive officers is reported in the ESOP's
       Common Stock ownership listing as well as in the Common Stock ownership
       listings for the respective executive officers and for executive
       officers and directors as a group.
(15)   Includes a total of 263,400 shares which may be acquired by directors
       and executive officers as a group within 60 days of March 17, 2005 upon
       the exercise of outstanding options, 350,331 shares under our Restricted
       Stock Plan, 180,582 shares under our Deferred Compensation Plan and
       27,198 shares held through the ESOP (on behalf of directors and
       executive officers).

                                        48
<PAGE>

        We are a party to a registration rights agreement with SunAmerica.
SunAmerica can require us to register under the Securities Act of 1933 the
Common Stock that it owns. In addition, the agreement grants to SunAmerica the
right to have included, subject to certain limitations, all shares of Common
Stock owned by SunAmerica in any registration statement that we file under the
Securities Act. We will pay all costs and expenses, other than underwriting
discounts and commissions, in connection with the registration and sale of
Common Stock under the agreement.

        See Part I, Item 5 for information concerning our equity compensation
plans under which we may issue our Common Stock.

Item 13.   Certain Relationships and Related Transactions

         Jeffrey A. Silver, a Director and Chairman of our Compensation
Committee, is a shareholder in the law firm of Gordon & Silver, Ltd., which we
have retained for various legal matters during each of our last three fiscal
years and in 2005.

         In 2004, Ronald P. Johnson, Executive Vice President of Gaming
Operations of ROC, was indebted to us in the amount of $81,454. The indebtedness
consisted of profits attributable to his purchases and sales of our Common Stock
within a six-month period which, under Section 16(b) of the Securities Exchange
Act of 1934, was recoverable by us. Mr. Johnson paid us in full in 2004 and as
of March 21, 2005, he has no outstanding indebtedness to us.

Item 14.   Principal Accountant Fees and Services

Audit Fees

         We were billed by our principal accountants, namely Deloitte & Touche
LLP, the member firms of Deloitte Touche, Tohmatsu and their respective
affiliates (collectively "Deloitte"), a total of $217,000 and $208,700 for
fiscal years 2004 and 2003, respectively, for their audit of our annual
consolidated financial statements and their review of our consolidated financial
statements in our quarterly reports on Form 10-Q.

Audit-Related Fees

         We were billed by Deloitte $37,500 and $36,100 for benefit plan audits
for the fiscal years 2004 and 2003, respectively.

Tax Fees

         We were billed by Deloitte $61,184 and $88,200 for income tax services
for the fiscal years 2004 and 2003, respectively. Those services consisted of
preparation of federal and state income tax returns and related tax advice.

All Other Fees

         We were billed by Deloitte $4,800 for other professional services in
fiscal 2004 and no fees for other professional services rendered in fiscal 2003.

Audit Committee's Pre-Approval of Engagement

         Our policy is that before we engage our independent public accountants
annually to render audit or non-audit services, the engagement is reviewed and
approved by our Audit Committee. All of our independent public accountants'
services for which we paid audit-related fees or tax fees for 2004 and 2003, as
described above, were within the scope of the engagement that our Audit
Committee approved before we entered into the engagement.

                                        49
<PAGE>

         PART IV

Item 15.   Exhibits and Financial Statement Schedules

           (a)(1)   List of Financial Statements

           The following Independent Auditors' Report and the consolidated
           Financial Statements of the Company are incorporated by reference
           into this Item 15 by Item 8 hereof:

           - Report of Independent Registered Public Accounting Firm.
           - Consolidated Balance Sheets as of December 31, 2004 and 2003.
           - Consolidated Statements of Operations for the Years Ended December
             31, 2004, 2003 and 2002.
           - Consolidated Statements of Stockholders' Equity (Deficiency) for
             the Years Ended December 31, 2004, 2003, and 2002.
           - Consolidated Statements of Cash Flows for the Years Ended December
             31, 2004, 2003 and 2002.
           - Notes to Consolidated Financial Statements.

           (a)(2)   List of Financial Statement Schedules

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

           (a)(3)   List of Exhibits

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

           (b) The exhibits required by Item 601 of Regulation S-K are filed as
               exhibits to this Form 10-K.

           (c) Not applicable






                                        50
<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 report 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 25, 2005


           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 25, 2005
------------------------     Executive Officer and President
William L. Westerman

/s/ DUANE R. KROHN           Treasurer (Principal Financial      March 25, 2005
------------------------     and Accounting Officer)
Duane R. Krohn


/s/ ROBERT R. BARENGO        Director                            March 25, 2005
-----------------------
Robert R. Barengo


/s/ JEFFREY A. SILVER        Director                            March 25, 2005
-----------------------
Jeffrey A. Silver


/s/ PAUL A. HARVEY           Director                            March 25, 2005
-----------------------
Paul A. Harvey


/s/ VINCENT L. DIVITO        Director                            March 25, 2005
----------------------
Vincent L. DiVito


/s/ JAMES N. LAND JR         Director                            March 25, 2005
----------------------
James N. Land Jr.


                                        51
<PAGE>





                             EXHIBIT INDEX

Exhibit       Description
Number


3.1*         Articles of Incorporation of the Company (see Exhibit 3 to
             Quarterly Report on Form 10-Q filed with the Commission on
             November 10, 2003, Commission File No. 0-21430)

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

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

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

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

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

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

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

3.9*         Articles of Amendment to the Articles of Incorporation of Riviera
             Black Hawk, Inc. (see Exhibit 3.01 to Amendment No. 1 to
             Registration Statement on Form S-4 filed by Riviera Black Hawk,
             Inc. with the Commission on August 31, 1999, Commission File No.
             333-81613)

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

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

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

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

                                        52
<PAGE>

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

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

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

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

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

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

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

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

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

10.10*(A)    Form of Termination Agreement with the Company dated June 11,
             2002 (see Exhibit 10.10 to Amendment No. 1 to Registration
             Statement on Form S-4 filed with the Commission on September
             26, 2002, Commission File No. 333-97907)

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

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

10.13*(A)    1993 Stock Option Plan (see Exhibit 4.4 to Registration
             Statement on Form S-8 filed with the Commission on May 13,
             1996, Commission File No. 333-03631)

                                        53
<PAGE>
10.14*(A)    Stock Compensation Plan for Directors Serving on the
             Compensation Committee (see Exhibit 10.14 to Registration
             Statement on Form S-4 filed with the Commission on August 9,
             2002, Commission File No. 333-97907)

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

10.16*(A)    Employment Agreement between the Company and Robert A. Vannucci
             effective July 1, 1998 (see Exhibit 10.36 to Form 10-Q filed
             November 6, 1998, Commission File No. 0-21430)

10.17*(A)    Amendment to Employment Agreement between the Company and
             Robert A. Vannucci effective October 1, 2000 (see Exhibit
             10.39 to Form 10-K filed March 23, 2001, Commission File No.
             0-21430)

10.18*(A)    Amendment to Employment Agreement between the Company and
             William L. Westerman effective January 1, 2001 (see Exhibit
             10.40 to Form 10-K filed March 23, 2001, Commission File No.
             0-21430)

10.19(A)     Deferred Compensation Plan dated November 1, 2000, adopted by the
             Company on October 2, 2000

10.20(A)     Restricted Stock Plan dated January 2, 2001, adopted by the Company
             on October 2, 2000

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

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

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

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

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

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

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

                                        54
<PAGE>

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

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

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

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

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

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

10.34*       Deed of Trust, Assignment of Rents, Leases, Fixture Filing and
             Security Agreement dated July 26, 2002, executed by the Company for
             the benefit of Foothill Capital Corporation (see Exhibit 10.34 to
             Amendment No. 1 to Registration Statement on Form S-4 filed with
             the Commission on September 26, 2002, Commission File No.
             333-97907)

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

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

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

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

                                        55
<PAGE>

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

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

10.41*       Deed of Trust to Public Trustee, Security Agreement, Fixture Filing
             and Assignment of Rents, Leases and Leasehold Interests dated July
             26, 2002, executed by Riviera Black Hawk, Inc. for the benefit of
             Foothill Capital Corporation (see Exhibit 10.41 to Amendment No. 1
             to Registration Statement on Form S-4 filed with the Commission on
             September 26, 2002, Commission File No. 333-97907)

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

10.43*(A)    Non-Qualified Stock Option Plan for Non-Employee Directors
             (see Exhibit 4.6 to Registration Statement on Form S-8 filed
             with the Commission on May 13, 1996, Commission File No.
             333-03631)

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

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

10.46*(A)    Second Amendment to Employment Agreement between the Company
             and William L. Westerman effective July 15, 2003 (see Exhibit
             10.46 to Form 10-K filed with the Commission on March 16,
             2004, Commission File No. 0-21430)

10.47(A)     Amendment of 1993 Stock Option Plan

10.48        Amendment Numbers One, Two, Three and Four to Loan and Security
             Agreement, originally dated July 26, 2002, by and among the
             Company and the other borrowers thereto, the Guarantors party
             thereto and Foothill Capital Corporation

10.49        Purchase and License Agreement, dated September 25, 2003, between
             Bally Gaming, Inc. and Riviera Operating Corporation

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

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

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

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

                                        56
<PAGE>

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

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

(A) Management contract or compensatory plan or arrangement




                                        57
<PAGE>




       Riviera Holdings Corporation
       Consolidated Financial Statements for the Years Ended December 31, 2004,
       2003 and 2002 and Report of Independent Registered Public Accounting Firm
       and Supplemental Consolidating Schedules as of and for the Year Ended
       December 31, 2004




<PAGE>


<TABLE>
<CAPTION>

RIVIERA HOLDINGS CORPORATION

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


                                                                         Page

<S>                                                                     <C>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                  F-1

CONSOLIDATED FINANCIAL STATEMENTS:

   Balance Sheets as of December 31, 2004 and 2003                       F-2

   Statements of Operations for the Years Ended December 31,
      2004, 2003 and 2002                                                F-3

   Statements of Stockholders' Equity (Deficiency) for
     the Years Ended December 31, 2004, 2003 and 2002                    F-4

   Statements of Cash Flows for the Years Ended December 31,
     2004, 2003 and 2002                                               F-5 F-6

   Notes to Consolidated Financial Statements                          F-7 F-30

   Unaudited Quarterly Financial Data                                    F-30
</TABLE>





<PAGE>









REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors
Riviera Holdings Corporation

We have audited the accompanying consolidated balance sheets of Riviera Holdings
Corporation and subsidiaries (the "Company") as of December 31, 2004 and 2003
and the related consolidated statements of operations, stockholders' equity
(deficiency), and cash flows for each of the three years in the period ended
December 31, 2004. 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  standards  of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements  are free of material  misstatement.  The Company is not  required to
have,  nor were we engaged to perform,  an audit of its  internal  control  over
financial reporting.  Our audit included  consideration of internal control over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances  but not for the  purpose  of  expressing  an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting. Accordingly,  we express  no such  opinion.  An  audit also  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   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, 2004
and 2003 and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 2004 in conformity with
accounting principles generally accepted in the United States of America.




/s/Deloitte & Touche LLP


Las Vegas, Nevada
March 24, 2005


                                        F-1
<PAGE>

<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2004 AND 2003
(In Thousands, Except Share Amounts)
-------------------------------------------------------------------------------


ASSETS                                                  2004             2003

CURRENT ASSETS:
<S>                                                    <C>               <C>
  Cash and cash equivalents                         $ 18,886          $ 19,344
  Accounts receivable net                              3,898             2,990
  Inventories                                          2,047             2,026
  Prepaid expenses and other assets                    4,101             3,001
                                                      ------            -------
           Total current assets                       28,932            27,361

PROPERTY AND EQUIPMENT Net                           177,115           180,293

OTHER ASSETS                                           9,043            11,438

DEFERRED INCOME TAXES                                  2,446             2,446
                                                     --------          --------
TOTAL                                              $ 217,536         $ 221,538
                                                  ===========         =========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES:
  Current portion of long-term debt                  $ 1,441           $ 3,750
  Accounts payable                                     8,872             8,072
  Notes payable                                                          2,000
  Accrued interest                                     1,089             1,096
  Accrued expenses                                    16,197            14,870
                                                      ------            ------
           Total current liabilities                  27,599            29,788
                                                      ------            ------
OTHER LONG-TERM LIABILITIES                            4,203             5,912
                                                     -------           -------
LONG-TERM DEBT Net of current portion                215,026           215,875
                                                     -------           -------
COMMITMENTS AND CONTINGENCIES (Note 11)

STOCKHOLDERS' EQUITY (DEFICIENCY):
  Common stock, $.001 par value 60,000,000
    shares authorized; 16,548,324 and
    15,498,624 shares issued at December 31,
    2004 and 2003, respectively                           16                15
  Additional paid-in capital                          15,692            13,723
  Treasury stock, 5,047,074 and 5,063,871
    shares at December 31, 2004 and 2003,
    respectively                                     (10,459)          (11,320)
  Accumulated deficit                                (34,541)          (32,455)
                                                     --------          --------
           Total stockholders' deficiency            (29,292)          (30,037)
                                                    ---------          --------
TOTAL                                              $ 217,536         $ 221,538
                                                   ==========        ==========
See notes to consolidated financial statements.
</TABLE>
                                        F-2
<PAGE>

<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(In Thousands, Except Per Share Amounts)
-----------------------------------------------------------------------------


                                          2004          2003          2002

REVENUES:
<S>                                       <C>           <C>           <C>
  Casino                               $ 110,461     $ 105,736     $ 106,122
  Rooms                                   46,925        44,312        42,343
  Food and beverage                       34,123        32,584        32,367
  Entertainment                           20,767        18,641        17,918
  Other                                    8,243         7,872         7,945
                                         -------       -------       -------
          Total revenues                 220,519       209,145       206,695
  Less promotional allowances             19,169        18,986        18,403
                                         -------       -------       -------
          Net revenues                   201,350       190,159       188,292
                                         -------       -------       -------
COSTS AND EXPENSES:
  Direct costs and expenses of
  operating departments:
    Casino                                54,530        56,273        58,061
    Rooms                                 25,987        24,704        23,127
    Food and beverage                     23,675        22,220        21,207
    Entertainment                         14,066        12,160        12,324
    Other                                  2,836         2,761         2,771
  Other operating expenses:
    General and administrative            40,252        40,565        37,213
    Development and project costs          1,193         2,365
    Depreciation and amortization         13,852        16,211        17,736
                                         -------       -------       -------
         Total costs and expenses        176,391       177,259       172,439
                                         -------       -------       -------
INCOME FROM OPERATIONS                    24,959        12,900        15,853
                                         -------       -------       -------
OTHER (EXPENSE) INCOME:
  Interest expense                       (27,079)      (27,380)      (26,842)
  Interest expense net bonds
    held for retirement                                               (2,692)
  Loss on extinguishment of debt                                     (11,211)
  Interest income                             34            27           200
  Other net                                                              (30)
                                         --------      --------      --------
          Total other expense            (27,045)      (27,353)      (40,575)
                                         --------      --------      --------
LOSS BEFORE BENEFIT FOR INCOME TAXES      (2,086)      (14,453)      (24,722)

BENEFIT FOR INCOME TAXES
                                         --------      --------      --------
NET LOSS                                $ (2,086)    $ (14,453)    $ (24,722)
                                         =======       =======       ========
EARNINGS PER SHARE DATA Loss per
   share, basic and diluted              $ (0.20)      $ (1.39)      $ (2.39)
                                         ========       =======       =======
  Weighted-average common and
   common equivalent shares               10,671        10,422         10,350
                                         =======        =======       =======

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

<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars In Thousands, Except Share Amounts)
----------------------------------------------------------------------------------------------------------------------------------

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

<S>             <C>          <C>          <C>      <C>        <C>        <C>          <C>        <C>
BALANCE January 1, 2002      15,320,328   $ 15   $ 13,475   $ 6,720    (5,022,432)  $(11,246)  $ 8,964

Purchase of treasury stock
   deferred compensation trust                                            (36,330)       (67)     (67)
Issuance of restricted stock     86,991      -        153                                          153
Net loss                                                    (24,722)                          (24,722)
                              ----------   ----    -------  --------   -----------   --------  -------
BALANCE December 31, 2002    15,407,319     15     13,628   (18,002)   (5,058,762)   (11,313) (15,672)

Stock issued under executive
   option plan                   75,000      -         70                                           70
Purchase of treasury stock
   deferred compensation trust                                             (5,109)        (7)      (7)
Issuance of restricted stock     16,305      -         25                                           25
Net loss                                                    (14,453)                          (14,453)
                              ----------   ----    -------  --------   -----------   --------  -------
BALANCE December 31, 2003    15,498,624     15     13,723   (32,455)   (5,063,871)   (11,320) (30,037)

Stock issued under executive
    option plan               1,048,500      1      2,167                                        2,168
Distribution of treasury stock
   deferred compensation trust                                             16,707         37        37
Other                             1,200      -      (198)                      90        824       626
Net loss                                                     (2,086)                           (2,086)
                             ----------   ----    -------  --------   -----------   --------  --------
BALANCE December 31, 2004    16,548,324   $ 16   $15,692   $(34,541)  (5,047,074)  $(10,459) $(29,292)
                             ==========   ====    ======   ========   ===========  =========  ========

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

<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(In Thousands)
-------------------------------------------------------------------------------


                                                    2004       2003        2002

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                               <C>         <C>        <C>
Net loss                                        $ (2,086)   $(14,453)  $(24,722)
Adjustments to reconcile net loss to net
    cash provided by operating activities:
  Depreciation and amortization                   13,852      16,211     17,736
  Write off of development and project cost        1,193       1,667
  Provision for bad debts                            (49)        441        518
  Interest expense                                27,079      27,380     26,842
  Interest paid                                  (25,023)    (25,219)   (31,075)
  Interest expense, net, bonds held for
    retirement                                                            2,692
  Loss on extinguishment of debt                                         11,211
  Changes in operating assets and liabilities:
  Decrease (increase) in accounts receivable net    (859)        579       (999)
  Decrease (increase) in inventories                 (21)       (202)       429
  Decrease (increase) in prepaid expenses
      and other assets                            (1,100)        967       (885)
  Increase (decrease) in accounts payable            800        (266)       139
  Increase (decrease) in accrued expenses            326        (706)       836
  Increase (decrease) in other long-term
    liabilities deferred compensation
    plan obligation                                 (691)         29        134
  Decrease in deferred tax asset                                 517      2,125
  Decrease in other long-term liabilities
    non-qualified pension
    plan obligation to CEO upon retirement        (1,000)       (750)    (1,900)
                                                  -------      ------    -------
       Net cash provided by operating activities  12,421       4,528      3,081
                                                  -------      ------    -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property and
    equipment Las Vegas                           (7,169)     (6,531)    (3,869)
Capital expenditures for property and
    equipment Black Hawk                          (3,477)     (1,712)    (1,565)
Decrease (increase) in other assets                  557         (12)      (310)
                                                 -------       ------    -------
     Net cash used in investing activities       (10,089)     (8,255)    (5,744)
                                                 -------       ------    -------

                                                                    (Continued)
</TABLE>
                                        F-5
<PAGE>

<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(In Thousands)
------------------------------------------------------------------------------


                                                2004        2003         2002

CASH FLOWS FROM FINANCING ACTIVITIES:
<S>                                            <C>        <C>           <C>
  Proceeds from long-term borrowings           $ 316      $ 2,786    $ 211,781
  Increase in deferred loan fees                                       (13,291)
  Draw (repayment) on Foothill line of credit  (2,000)      2,000
  Payments on long-term borrowings             (3,937)     (3,690)    (222,299)
  Short-swing profit reimbursement                88
  Purchase of treasury stock, general
  Purchase of treasury stock, deferred
    compensation trust                            538          (7)         (67)
  Distribution of treasury stock -
    deferred compensation                          37
  Issuance of restricted stock,
    deferred compensation                                      25          153
  Exercise of employee stock options            2,168          70
                                               ------        -----        -----
    Net cash provided by (used in)
       financing activities                    (2,790)       1,184     (23,723)
                                               -------       -----     --------
DECREASE IN CASH AND CASH EQUIVALENTS            (458)        (876)    (26,386)

CASH AND CASH EQUIVALENTS Beginning of year    19,344       20,220      46,606
                                              -------      -------     --------
CASH AND CASH EQUIVALENTS End of year        $ 18,886     $ 19,344     $20,220
                                             ========      =======     =======

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Income
  taxes refunded, State of Colorado

SUPPLEMENTAL DISCLOSURES OF NONCASH
    FINANCING ACTIVITIES:
  Property acquired with accounts payable
    Las Vegas, Nevada                          $ 331       $ 191        $ 94
                                              ======       ======       =====
  Property acquired with debt
    Las Vegas, Nevada                          $ 325     $ 2,786
                                              ======       =====
  Property acquired with accounts payable
    Black Hawk, Colorado                       $ 354       $ 197
                                              ======       =====

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
-------------------------------------------------------------------------------


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

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

      Principles of Consolidation--The consolidated financial statements include
      the accounts of the Company, its wholly owned subsidiaries, ROC RGMM,
      RGMNM 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
      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.

                                        F-7

<PAGE>

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

      Management determines the appropriate classification of its investment
      securities at the time of purchase, including the determination as to
      restricted versus nonrestricted assets, and re-evaluates such
      determination at each balance sheet date. Held-to-maturity securities are
      required to be carried at amortized cost. At December 31, 2004 and 2003
      the Company did not have any securities accounted for under SFAS No.115.
      Securities classified as cash equivalents comprising of securities issued
      by the U.S. Treasury and other U.S. government corporations and agencies
      or mutual funds invested in these securities and repurchase agreements,
      had a value of $4,816,748 and $4,599,471 at December 31, 2004 and 2003,
      respectively. These investments had an original maturity in three months
      or less.

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

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

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

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

      Stock-Based Compensation--As of December 31, 2004, the Company has one
      active stock-based employee compensation plan, one active non-employee,
      director compensation plan for those directors serving on the compensation
      committee and two expired stock-based employee compensation plans, one
      qualified and one non-qualified, each of which is more fully discussed in
      Note 13. The effect of stock options in the income statement is reported
      in accordance with Accounting Principles Board ("APB") Opinion No. 25,
      Accounting for Stock Issued to Employees, and related interpretations. The
      Company has adopted the disclosure-only provisions of SFAS No. 123,
      Accounting for Stock-Based Compensation ("SFAS 123"). as amended by SFAS
      No. 148, Accounting for Stock-Based Compensation--Transition and
      Disclosure. Accordingly, no compensation cost has been recognized for
      unissued stock options in the stock option plan, as all options granted
      had an exercise price equal to the market value of the underlying common

                                        F-8
<PAGE>

      stock on the date of grant. Under the non-employee stock compensation plan
      the Company shall at the discretion of the non-employee directors serving
      on the Company's Compensation Committee, issue shares of Company common
      stock to those directors in lieu of cash compensation. The amount of
      shares issued under this plan equals the market value of the shares on the
      normal director compensation date.

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

 <TABLE>
<CAPTION>
                                                2004        2003         2002

<S>                                              <C>         <C>         <C>
Net loss as reported                          $ (2,086)   $(14,453)   $(24,722)
Deduct:  Total stock-based
  employee compensation expense
  determined under fair value-based
  methods for awards net of related
  tax effects                                    $ (48)     $ (234)     $ (295)
Net loss pro forma                            $ (2,134)  $ (14,687)  $ (25,017)
Basic loss per common share as reported       $  (0.20)  $  (1.39)   $  (2.39)
Basic loss per common share pro forma         $  (0.20)  $  (1.41)   $  (2.42)
Diluted loss per common and common
  share equivalent as reported                $  (0.20)  $  (1.39)   $  (2.39)
Diluted loss per common and common share
  equivalent pro forma                        $  (0.20)  $  (1.41)   $  (2.42)
</TABLE>


      The fair value of each option grant is estimated on the date of grant
      using the Black-Scholes option pricing model with the following
      weighted-average assumptions used for grants in 2004, 2003 and 2002,
      respectively: dividend yield of 0% for all years; expected volatility of
      34%, 34% and 52%; risk-free interest rates of 3.046%, 2.27% and 4.49%; and
      expected lives of 10 years for all years. The weighted fair value of
      options granted in 2003 and 2002 was $1.76 and $1.65, respectively. No
      options were granted in 2004.

      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.

      Fair Value Disclosures

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

      Long-Term Debt--The fair value of the Company's long-term debt is
      estimated based on the quoted market prices for the same or similar issues
      or on the current rates offered to the Company for debt of the same
      remaining maturities. Based on the borrowing rates currently available to
      the Company for debt with similar terms and average maturities, the
      estimated fair value of long-term debt outstanding is approximately
      $241,730,000 and $223,925,000 in 2004 and 2003, 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.
      Net win is also adjusted for the effects of slot club cash points and cash
      vouchers and other related customer cash incentives.

      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. Prices are fixed or determinable, pervasive evidence of an
      arrangement exists and collection is reasonably assured.

      Preopening Costs--The Company expenses preopening costs when incurred.

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

<TABLE>
<CAPTION>
                                                   Year Ended December 31
-------------------------------------------------------------------------------
(in thousands)                                  2004          2003       2002

<S>                                              <C>           <C>        <C>
Food and beverage                             $ 8,693       $ 8,398    $ 9,037
Rooms                                           1,096         1,231      1,174
Entertainment                                     890         1,641      1,670
                                                -----        ------     ------
Total costs allocated to casino departments   $10,679       $11,270    $11,881
                                               ======        ======     ======
</TABLE>

      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 (U.S.GAAP)requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities,
      disclosure of contingent assets and liabilities at the date of the
      financial statements, and the reported amounts of revenues and expenses
      during the reporting period. Significant estimates used by the Company
      include recoverability of and estimated useful lives for depreciable and
      amortizable assets, certain accrued liabilities, realizability of deferred
      tax assets and liabilities, and the estimated allowances for receivables.
      Actual results may differ from estimates.

                                        F-10
<PAGE>

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

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

      Recently Issued Accounting Standards--In December 2004, the Financial
      Accounting Standards Board ("FASB") issued SFAS No. 123(R), Share-Based
      Payments, which establishes accounting standards for all transactions in
      which an entity exchanges its equity instruments for goods and services.
      SFAS No. 123(R) focuses primarily on accounting for transactions with
      employees, and carries forward without change prior guidance for share-
      based payments for transactions with non-employees.

      SFAS No. 123(R) eliminates the intrinsic value measurement objective in
      APB Opinion No. 25 and generally requires us to measure the cost of
      employee services received in exchange for an award of equity instruments
      based on the fair value of the award on the date of the grant. The
      standard requires grant date fair value to be estimated using either an
      option-pricing model, which is consistent with the terms of the award, or
      a market observed price, if such a price exists. Such cost must be
      recognized over the period during which an employee is required to provide
      service in exchange for the award in the requisite service period (which
      is usually the vesting period). The standard also requires us to estimate
      the number of instruments that will ultimately be issued, rather than
      accounting for forfeitures as they occur.

      We are required to apply SFAS No. 123(R) to all awards granted, modified
      or settled in our first  reporting  period under U.S. GAAP beginning after
      June 15, 2005. We are also required to use either the"modified prospective
      method" or the "modified  retrospective  method." Under the modified
      prospective method, we must  recognize  compensation  cost for all  awards
      granted  after we adopt the standard  and for the unvested  portion of
      previously  granted  awards that are outstanding on that date.

      Under the modified retrospective method, we must restate our previously
      issued financial statements to recognize the amounts we previously
      calculated and reported on a pro forma basis, as if the prior standard had
      been adopted.

      Under both methods, we are permitted to use either a straight line or an
      accelerated method to amortize the cost as an expense for awards with
      graded vesting. The standard permits and encourages early adoption.

      We have commenced our analysis of the impact of SFAS No.123(R), but have
      not yet decided: (1) whether we will elect to adopt early, (2) if we elect
      to adopt early, then at what date we would do so, (3) whether we will use
      the modified prospective method or elect to use the modified retrospective
      method, and (4) whether we will elect to use straight line amortization or
      an accelerated method.

                                        F-11
<PAGE>

      In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary
      Assets, an amendment of APB Opinion No. 29. This Statement amends APB
      Opinion No. 29 to eliminate the exception for nonmonetary exchanges of
      similar productive assets and replaces it with a general exception for
      exchanges of nonmonetary assets that do not have commercial substance.
      This Statement specifies that a nonmonetary exchange has commercial
      substance if the future cash flows of the entity are expected to change
      significantly as a result of the exchange. This Statement is effective for
      nonmonetary asset exchanges occurring in fiscal periods beginning after
      June 15, 2005. Earlier application is permitted for nonmonetary asset
      exchanges occurring in fiscal periods beginning after the date this
      Statement was issued. Retroactive application is not permitted. Management
      is analyzing the requirements of this new Statement and believes that its
      adoption will not have any significant impact on the Company's financial
      position, results of operations or cash flows.

2. ACCOUNTS RECEIVABLE

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

<TABLE>
<CAPTION>
                                               2004         2003

<S>                                            <C>          <C>
Casino                                        $1,556       $1,160
Hotel                                          3,556        2,877
                                               -----        -----
Total                                          5,112        4,037
Allowance for bad debts and discounts         (1,214)      (1,047)
                                              ------       ------
Ending balance                                $3,898       $2,990
                                              ======        =====
</TABLE>

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

<TABLE>
<CAPTION>
                                  2004         2003         2002

<S>                               <C>          <C>         <C>
Beginning balance                $1,047        $990       $1,485
Write-offs                        (145)       (316)      (1,037)
Recoveries                          312          21           24
Provision for bad debts
  and gaming discounts                          352          518
                                  ------      -----        -----
Ending balance                   $1,214      $1,047         $990
                                  =====       =====        =====
</TABLE>


3. PREPAID EXPENSES AND OTHER ASSETS

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

<TABLE>
<CAPTION>
                                            2004         2003

<S>                                          <C>            <C>
Prepaid gaming taxes                       $1,110         $ 915
Prepaid insurance                             921           456
Other prepaid expenses                      2,070         1,630
                                            -----         -----
Total                                      $4,101        $3,001
                                            =====        ======
</TABLE>
                                        F-12
<PAGE>


4. PROPERTY AND EQUIPMENT

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

<TABLE>
<CAPTION>
                                            2004          2003

<S>                                         <C>             <C>
Land and improvements                    $ 38,130        $ 38,130
Buildings and improvements                143,417         143,417
Equipment, furniture, and fixtures        137,690         127,043
                                          -------        --------
Total property and equipment              319,237         308,590
Accumulated depreciation                 (142,122)       (128,297)
                                         --------        --------
Net property and equipment               $177,115        $180,293
                                         ========        ========
</TABLE>

      Substantially all of the Company's property and equipment is pledged as
      collateral to secure debt (see Note 8). Repairs and maintenance that do
      not significantly improve the life of fixed assets are expensed as
      incurred. Costs for significant improvements that extend the expected life
      of fixed assets more than one year are capitalized and depreciated over
      the remaining extended life, using a straight-line and 150% declining
      balance method of depreciation.

5. OTHER ASSETS

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

<TABLE>
<CAPTION>
                                            2004           2003

<S>                                          <C>             <C>
Deposits                                     $ 140           $ 54
Bond offering costs and commissions,
  net of accumulated amortization
  of $3,962 and $2,367 respectively          7,747          9,341
Other                                        1,156          2,043
                                            ------         ------
Total                                      $ 9,043        $11,438
                                            ======         ======
</TABLE>

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

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

<TABLE>
<CAPTION>
                                              2004         2003

<S>                                          <C>          <C>
Outstanding chip and token liability         $ 609        $ 831
Slot club liabilities                        1,002        1,074
Progressive liabilities                        457          416
Casino account deposits and
  miscellaneous gaming                         220          162
                                             -----        -----
Total liabilities related to
  gaming activities                          2,288        2,483

Accounts payable to vendors                  4,355        3,966
Insurance contracts                            648          235
Hotel deposits                                 874          859
Other                                          707          529
                                             -----        -----
Total                                       $8,872       $8,072
                                             =====        =====
</TABLE>
                                        F-13
<PAGE>

      Accrued expenses consist of the following at December 31 (in thousands):
<TABLE>
<CAPTION>
                                             2004          2003

Payroll, related payroll taxes
<S>                                        <C>          <C>
  and employee benefits                    $ 8,417      $ 9,741
Incentive and ESOP                           1,785          544
Other                                        5,995        4,585
                                            ------       ------
Total                                      $16,197      $14,870
                                            ======       ======
</TABLE>

7. OTHER LONG-TERM LIABILITIES

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

      See Note 12 for a description of these plans.

<TABLE>
<CAPTION>
   (in thousands)                            2004         2003

Nonqualified pension obligation CEO,
<S>                                         <C>          <C>
  unfunded                                  $1,513       $2,513
Less current portion                        (1,000)      (1,000)
Accrued interest on pension CEO,
  unfunded                                   3,639        3,658
Deferred compensation funded                    51          741
                                            ------        -----
Total                                       $4,203       $5,912
                                            ======        =====
</TABLE>
During the current year the Company reclassified certain amonts from deferred
compensation liabilities to offset their related equity accounts.

                                        14
<PAGE>

8. LONG-TERM DEBT

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

<TABLE>
<CAPTION>
                                                   2004            2003

11% Senior Secured Notes maturing on June
  15, 2010, bearing interest, payable
  semiannually on June 15 and December 15
  of each year, redeemable through June
  15, 2005 at 111%; beginning June 15, 2006
  at 105.5%;  2007 at 103.7%, 2008 at 101.8%,
  2009 and thereafter at 100%. These notes
  are collateralized by the land and physical
  structures comprising the Riviera Hotel and
  Casino and secondarily the assets of Riviera
<S>                                               <C>             <C>
  Black Hawk                                      $212,792        $212,387

5.6% to 9% Notes collateralized by equipment
  and vehicles, payable monthly, including
  interest, maturing through February 2007           2,056           3,157

Capitalized lease obligations (Note 9)                 968           3,320

5.5% Special Improvement District Bonds -
  issued by the City of Black Hawk, Colorado,
  interest and principal payable monthly
  over 10 years beginning in 2000                      651             761
                                                    ------         --------
Total long-term debt                               216,467         219,625
Current maturities by terms of debt                (1,441)         (3,750)
                                                   -------         -------
Total                                             $215,026        $215,875
                                                  ========         =======
</TABLE>

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

<TABLE>
<CAPTION>
<C>                                                              <C>
2005                                                             $ 1,441
2006                                                                 831
2007                                                                 880
2008                                                                 323
2009                                                                 200
Thereafter                                                       212,792
                                                                 -------
Total                                                          $ 216,467
                                                                 =======
</TABLE>

      On June 26, 2002, the Company secured new debt in the principal amount of
      $215 million in the form of 11% senior secured notes with a maturity date
      of June 15, 2010, substantially all of which were later exchanged for
      notes of the Company that were registered under the Securities Act of
      1933, as amended (collectively, the "Notes"). Interest on the Notes is at
      the annual rate of 11% paid semiannually on each June 15 and December 15,
      beginning December 15, 2002. The net proceeds of the Notes, along with
      cash on hand, were used to defease Riviera Las Vegas' 10% First Mortgage
      Notes due 2004 and to defease Riviera Black Hawk's 13% First Mortgage
      Notes due 2005 with contingent interest. Cash flow from operations is not
      expected to be sufficient to pay 100% of the principal of the Notes at
      maturity on June 15, 2010. Accordingly, the ability of the Company and its
      subsidiaries to repay the Notes at maturity will be dependent upon their


                                        15
<PAGE>

      ability to refinance the Notes. There can be no assurance that the Company
      and its subsidiaries will be able to refinance the principal amount of the
      Notes at maturity. On or after June 15, 2006, the Company may redeem Notes
      from time to time at a premium beginning at 105.5% and declining each
      subsequent year to par in 2009.

      The Indenture governing the Notes (the "Note Indenture") provides that, in
      certain circumstances, the Company and its subsidiaries must offer to
      repurchase the Notes upon the occurrence of a change of control or certain
      other events. In the event of such mandatory redemption or repurchase
      prior to maturity, the Company and its subsidiaries would be unable to pay
      the principal amount of the Notes without a refinancing.

      At any time prior to June 15, 2005, the Company may on any one or more
      occasions redeem up to 35% of the aggregate principal amount of the Notes
      at a redemption price of 111% of the principal amount, plus accrued and
      unpaid interest and liquidated damages, if any, to the redemption date,
      with the net cash proceeds of one or more public equity offerings;
      provided that:

         (1)     at least 65% of the aggregate principal amount of the Notes
                 remains outstanding immediately after redemption (excluding
                 Notes held by the Company and its subsidiaries); and

         (2)     the redemption occurs within 45 days of the date of the closing
                 of such public equity offering.

        Except pursuant to the preceding paragraph, the Notes are not redeemable
        at the Company's option prior to June 15, 2006.

        On or after June 15, 2006, the Company may redeem all or part of the
        Notes upon not less than 30 nor more than 60 days' notice, at the
        redemption prices (expressed as percentages of principal amount) set
        forth below plus accrued and unpaid interest and liquidated damages, if
        any, on the Notes redeemed, to the applicable redemption date, if
        redeemed during the twelve-month period beginning on June 15 of the
        years indicated below:

                      Year                         Percentage
                      2006 .........................105.500%
                      2007..........................103.667%
                      2008..........................101.833%
                      2009 and thereafter...........100.000%

      The Note Indenture contains certain covenants, which 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, 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


                                        16
<PAGE>

      cover cash requirements, the Company and its subsidiaries may 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, 2004, the Company believes that it is in compliance with the
      covenants.

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

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

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

9. LEASING ACTIVITIES

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

                                        F-17
<PAGE>

      The following is a schedule by year of the minimum rental payments due
      under capital leases as of December 31, 2004 (in thousands):

<TABLE>
<CAPTION>

<S>                                                             <C>
2005                                                            $ 744
2006                                                               83
2007                                                               83
2008                                                               83
2009                                                               61
Thereafter
                                                                -----
Total minimum lease payments                                    1,054
Taxes, maintenance, and insurance                                (41)
Interest portion of payments                                     (45)
                                                                -----
Present value of net minimum lease payments                     $ 968
                                                                =====
</TABLE>


      Fixed assets under capital lease as of December 31, 2004 and 2003 were
      $11.1 million with accumulated depreciation of $10.9 million and $8.9
      million, respectively.

      Rental expense under operating leases for the years ended December 31,
      2004, 2003 and 2002 was approximately $964,166, $1,596,487 and $1,177,382,
      respectively. Such leases were year to year in nature. As such, there are
      no future minimum amounts associated with increasing leases.

      In addition, the Company leases retail space to third parties (primarily
      retail shops and fast food vendors) under terms of noncancelable operating
      leases that expire in various years through 2009. Rental income, which is
      included in other revenue, for the years ended December 31, 2004, 2003 and
      2002 was approximately $1,907,400, $1,835,000 and $1,810,700 respectively.

      The Company's Las Vegas operation has recently added a buyout/liquidated
      damages provision to its standard lease. The modification provides that in
      the event of a major renovation or certain other events, the Company's has
      the right, according to an agreed upon formula to buy out any remaining
      term of the lease by providing the tenant twelve months written notice.
      This provision or similar wording is included in new leases and renewals.

      At December 31, 2004, the Company had future minimum annual rental income
      due under noncancelable operating leases as follows (in thousands):

<TABLE>
<CAPTION>
<S>                                                           <C>
2005                                                          $ 1,492
2006                                                            1,179
2007                                                              760
2008                                                              334
2009                                                               35
                                                                -----
Total                                                         $ 3,800
                                                               ======
</TABLE>

                                        F-18
<PAGE>

10. INCOME TAXES

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

      The effective income tax rates on income attributable to continuing
      operations differ from the statutory federal income tax rates for the
      years ended December 31 as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                 2004              2003              2002
                           ---------------- ------------------- ---------------
                            Amount   Rate    Amount    Rate     Amount   Rate

Benefit for income taxes
<S>                         <C>    <C>      <C>       <C>      <C>       <C>
  at federal statutory rate $(730) (35.0)%  $(5,054)  (35.0)%  $(8,652)  (35.0)%
Taxes, state, other
Benefit from outcome of
  IRS examination
Employee Benefits            1,555   74.6%     (433)   (3.0)%     (439)   (1.8)%
Other                        (308)  (14.8%)
Valuation allowance          (517)  (24.8%)   5,487    38.0 %     9,091   36.8 %
                             ----   -----    ------    ------    ------   ------
Benefit for income taxes      $ -    0.0 %     $ -      0.0 %      $ -     0.0 %
                             ====   =====     ======   ======    ======   ======
</TABLE>

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

<TABLE>
<CAPTION>

                                2004         2003          2002

<S>                               <C>         <C>          <C>
Current                        $  -        $ (517)      $(2,124)
Deferred                          -           517         2,124

                                 ----        ----         -----
Total                            $ -         $ -           $ -
                                 ====        ====         =====
</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>
                                                     2004            2003

Deferred tax liabilities:
  Reserve differential for hospitality
<S>                                                   <C>              <C>
    and gaming activities                           $ 1,015          $ 760
  Difference between book and
    tax-depreciable property                          4,385          4,671
  Other                                                 511            511
                                                      -----          -----
Total                                                 5,911          5,942
                                                      =====          =====
</TABLE>

                                        F-19
<PAGE>
<TABLE>
<CAPTION>
                                                       2004           2003

Deferred tax assets:
<S>                                                    <C>            <C>
  Net operating loss carryforward                    $18,279        $18,389
  Reserves not currently deductible                    2,195          1,853
  Bad debt reserves                                      465            324
  AMT and other credits                                2,622          2,405
                                                      ------         ------
Total                                                 23,561         22,971
                                                      ------         ------
Valuation allowance                                  (15,204)       (14,583)
                                                      ------         ------
Net deferred tax asset                               $ 2,446        $ 2,446
                                                      ======         ======
</TABLE>

      The Company has $2,621,697 of alternative minimum tax ("AMT") credit and
      general business credit available to offset future income tax liabilities.
      The AMT credit of $1,767,868 has no expiration date. The general business
      credit will not begin to expire until 2010. The Company has approximately
      $52,250,000 net operating loss carryforwards, which will expire between
      2013 and 2025.

      The realizability of the assets related to Rivera Las Vegas is dependent
      upon future earnings. The Company's net deferred tax asset appoximates its
      alternative minimum tax credit carryforwards whcih have an indefinite
      life.

11. COMMITMENTS AND CONTINGENCIES

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

      Employees and Labor Relations-- As of December 31, 2004 the Company had
      approximately 1,625 full-time equivalent employees and had collective
      bargaining agreements with eight unions covering approximately 775 of such
      employees, including food and beverage employees, rooms department
      employees, carpenters, engineers, stagehands, musicians, electricians,
      painters and teamsters. The Company's agreements with the Carpenters and
      Painters Unions expire in 2005. Agreements with the Southern Nevada
      Culinary and Bartenders Union, covering the majority of the Company's
      unionized employees, were renegotiated in 2002 and expire in 2007 as does
      the agreement with the Stagehands Union. The agreement with the Teamsters
      Union expires in 2008 while the Operating Engineers and Electrician
      agreements expire in 2009. The collective bargaining agreement with the
      Musicians Union expired in 1999. The Company is currently in negotiations
      with the Musicians Union. On June 17, 2002, the Teamsters Union filed a
      petition with the National Labor Relations Board to represent the clerks
      in the marketing department of the Company's Las Vegas property. On July
      26, 2002, the marketing clerks voted in favor of representation by the
      Teamsters Union by a vote of 5 to 1. On February 23, 2004, at the request
      of the affected employees, the Teamsters Union withdrew its interest in
      the representation of the marketing clerks. Although unions have been
      active in Las Vegas, management considers its employee relations to be
      satisfactory. There can be no assurance, however, that new agreements will
      be reached without union action or on terms satisfactory to the Company.

                                        F-20
<PAGE>

12. EMPLOYMENT AGREEMENTS AND EMPLOYEE BENEFIT PLANS

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

      Under Mr. Westerman's employment agreement with the Company, which was
      last amended on July 15, 2003, he is employed for an indefinite period,
      subject to termination by either Mr. Westerman upon at least 180 days
      written notice or the Company upon at least 90 days written notice. Mr.
      Westerman's base annual compensation is $1,000,000. Under his amended
      employment agreement, Mr. Westerman is not entitled to participate in the
      Senior Management Compensation Bonus Plan or other executive bonus plan
      established by the Company's Board of Directors.

      The employment agreement required the Company to fund a retirement account
      for Mr. Westerman. Pursuant to that agreement, the Company makes no
      further principal contributions to the retirement account subsequent to
      January 1, 2001. The account continues to accrue interest pursuant to the
      employment agreement. The retirement account had a balance, including
      accrued interest, of $5,152,536 as of December 31, 2004.

      Mr. Westerman's retirement account is credited quarterly with interest on
      the first day of each succeeding calendar quarter in an amount equal to
      the product of (i) the Company's average borrowing cost for the
      immediately preceding fiscal year, as determined by the Company's Chief
      Financial Officer, and (ii) the average outstanding balance in the
      retirement account during the preceding calendar quarter. At the
      recommendation of our Compensation Committee, in order to reduce the
      amount that would be payable immediately upon Mr. Westerman's separation
      from the Company, it was requested that commencing April 1, 2003, and
      continuing the first day of each quarter thereafter, he be paid the
      following in cash: (i) a distribution of $250,000 from the principal
      balance of his retirement account; and (ii) the quarterly interest
      credited to his retirement account one quarter in arrears. Total interest
      accrued to Mr. Westerman in 2004 was $638,154 while interest accrued was
      $757,686 for 2003 and $840,150 for 2002.

      We retain beneficial ownership of the retirement account, which is
      earmarked to pay Mr. Westerman's retirement benefits. However, upon (1)
      the vote of a majority of the outstanding shares of Common Stock approving
      a "Change of Control" (as defined below), (2) the occurrence of a Change
      of Control without Mr. Westerman's consent, (3) a breach by us of a
      material term of the employment agreement or (4) the expiration or earlier
      termination of the employment agreement for any reason other than cause,
      Mr. Westerman has the right to require us to establish a "Rabbi Trust" for
      his benefit. He also has the right to require us to fund such trust with
      cash equal to the amount then credited to the retirement account,
      including any amount to be credited to the retirement account upon a
      Change of Control.

      On February 5, 1998, our stockholders approved a merger agreement with R&E
      Gaming Corp., and its subsidiary. That approval constituted a Change of
      Control under Mr. Westerman's employment agreement. On March 5, 1998, Mr.
      Westerman exercised his right to require us to establish and fund a Rabbi
      Trust for his benefit. On March 20, 1998, Mr. Westerman waived his right
      to have us fund the Rabbi Trust in exchange for our agreement to fund it
      within five business days after notice from him.

                                        F-21
<PAGE>

      In the event that Mr. Westerman ceases to be employed by us (except for
      termination for cause, in which case Mr. Westerman would forfeit all
      rights to monies in the retirement account), Mr. Westerman will be
      entitled to receive the amount in the retirement account (principal and
      current interest) in 20 equal quarterly installments commencing as of the
      date he ceases to be employed. In the event that Mr. Westerman's Rabbi
      Trust has not yet been funded, the balance of principal and interest of
      the retirement account shall be paid directly to Mr. Westerman upon his
      retirement or termination (except for cause) or upon a change of control.

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

      In addition to Mr. Westerman, one other executive, Robert Vannucci, has an
      employment agreement with us.

      Mr. Vannucci serves as President of ROC and his employment agreement was
      last amended on March 24, 2003. Mr. Vannucci's base compensation is
      $300,000 in cash and $100,000 in restricted stock, which he may elect to
      receive in cash.

      Mr. Vannucci receives compensation in the form of restricted Common Stock
      pursuant to our Restricted Stock Plan (see "Restricted Stock Plan" below).
      Mr. Vannucci's agreement provides that he is to receive $25,000 in Common
      Stock, based on the stock's market value, on the first business day of
      each quarter, plus Common Stock, based on the stock's market value, in the
      same amount he receives pursuant to our Incentive Compensation Plan.
      Pursuant to the Restricted Stock Plan, Mr. Vannucci is presently entitled
      to rights of ownership with respect to the restricted shares, including
      the right to vote and receive dividends. Mr. Vannucci may not, however
      sell, assign, pledge, encumber or otherwise transfer any of the shares so
      long as we employ him, without our written consent. The restricted shares
      fully vest to Mr. Vannucci upon his separation of employment from us, so
      long as such separation is not a termination for cause. Mr. Vannucci's
      agreement was amended on March 4, 2003 and again on March 24, 2003 so
      that, commencing with the restricted stock award of April 1, 2003. Mr.
      Vannucci can choose between receiving $25,000 in cash or $25,000 in Common
      Stock. Mr. Vannucci chose to receive $100,000 in cash in 2004 pursuant to
      this provision.

      Mr. Vannucci's employment agreement provides for an incentive bonus
      entitling Mr. Vannucci to participate in our Las Vegas Incentive
      Compensation Plan, whereby he may share in a portion of such plan's pool.
      Mr. Vannucci's agreement also provides for an additional incentive award
      in his choice of either restricted stock or cash in an amount, which
      matches his incentive bonus award. Mr. Vannucci did not receive an
      incentive bonus for the year 2003. For 2004 Mr. Vannucci will receive an
      incentive bonus of $57,000 cash and he is entitled to $57,000 in
      restricted stock, which he has elected to be paid in cash. Mr. Vannucci's
      agreement automatically renews annually subject to 120 days prior written
      notice by him or us.

                                        F-22
<PAGE>

      Incentive Plan--The Company has an incentive compensation plan covering
      employees of the Company who, in the opinion of the Chairman of the Board,
      either serve in key executive, administrative, professional, or technical
      capacities with the Company, or other employees who also have made a
      significant contribution to the successful and profitable operation of the
      Company. The amount of the bonus is based on operating earnings before
      depreciation, amortization, interest expense, provision for income taxes,
      extraordinary losses and gains, and any provisions or payments made
      pursuant to the plan. During the years ended December 31, 2004, 2003 and
      2002, the Company recorded accrued bonuses of $1,085,092, $302,216 and
      $1,160,440 respectively, based upon the above incentive compensation plan.

      Pension Plan Contributions--The Company contributes to multi-employer
      pension plans under various union agreements to which the Company is a
      party. Contributions, based on wages paid to covered employees, were
      approximately $1,714,812, $1,646,000 and $1,599,000 for the years ended
      December 31, 2004, 2003 and 2002, respectively. These contributions were
      for approximately 813 employees, including food and beverage employees,
      room department employees, carpenters, engineers, stagehands,
      electricians, painters, and teamsters. The Company's share of any unfunded
      liability related to multi-employer plans, if any, is not determinable.

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

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

      The Company may make a contribution to the 401(k) component of the Plan in
      an amount not to exceed 25% of the first 8% of each participant's
      compensation, which is contributed as a salary deferral. The Company made
      contributions of $302,882, $220,900 and $226,100 for the years ended
      December 31, 2004, 2003 and 2002. The Company also paid administrative
      costs of the Profit Sharing and 401K Plans of $0, $9,223 and $16,888 for
      the years ended December 31, 2004, 2003 and 2002, respectively. On July 1,
      2003 the Company changed the administrator for our 401(k) plan, which
      accounts for the reduction in administrative costs in 2003 and 2004.

                                        F-23
<PAGE>

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

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

      Employee Stock Ownership Plan--On October 2, 2000, we adopted an ESOP. The
      ESOP was established effective January 1, 2000 and replaces the profit
      sharing contribution component of the Profit Sharing and 401(k) Plans. The
      401(k) component remains unchanged. The ESOP provides that all employees
      of Riviera Las Vegas and Riviera Black Hawk employed in the plan year who
      had completed a minimum of 1,000 hours of service in that plan year, were
      employed through December 31 of that plan year, were at least 21 years of
      age and were not covered by a collective bargaining agreement are eligible
      to participate in the ESOP. The ESOP provides that the Company will make a
      contribution to the ESOP's participants at the Las Vegas and Black Hawk
      properties relative to the economic performance of each property. For
      Riviera Las Vegas, the Company will make a contribution equal to 1% of
      each eligible employee's annual compensation if a prescribed annual
      operating earnings target is attained and an additional 1% thereof for
      each $2 million by which operating earnings is exceeded, up to a maximum
      of 4% for 2000 and 5% thereafter. For Riviera Black Hawk, the Company will
      make a contribution equal to 1% of each eligible employee's annual
      compensation if a prescribed annual operating earnings target is attained
      and an additional 1% thereof for each $1 million by which operating
      earnings is exceeded, up to a maximum of 4% for 2000 and 5% thereafter.
      Under the ESOP, Company contributions are made in cash, which may be used
      to buy Company common stock and pay participants upon separation of
      service. The Company contributed to the ESOP $899,253 in 2004, $348,435 in
      2003 and $294,004 in 2002.

      Deferred Compensation Plan--On October 2, 2000, we 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 annual 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 December 1st preceding the plan
      year to which the election relates and are irrevocable for the duration of
      that plan year. Six Company executives are currently participating in the
      Plan. The plan is distributing stock to participants under established
      schedules.

                                        F-24
<PAGE>

      Restricted Stock Plan--On October 2, 2000, we 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 our
      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
      provisions for the forfeiture of such shares for partial or no
      consideration upon termination of the participant's employment within
      specified periods or under certain conditions.

      Salary Continuation Agreements--Approximately 59 executive officers and
      significant employees (excluding Mr. Westerman and Mr. Vannucci) of ROC
      have salary continuation agreements effective through December 2005,
      pursuant to which each of such employees will be entitled to receive (1)
      either six months' or one year's salary if their employment with the
      Company is terminated, without cause, within 12 or 24 months of a change
      of control of the Company; and (2) group health insurance for periods of
      either one or two years. The base salary payments are payable in biweekly
      installments, subject to the employee's duty to mitigate by using his or
      her best efforts to find employment. In addition, four officers and
      significant employees have salary continuation agreements effective
      through December 31, 2005, pursuant to which each of them will be entitled
      to receive two year's base salary and certain benefits for two years, if
      their employment is terminated without cause within 24 months of a change
      of control of the Company. These four salary continuation agreements are
      not subject to a duty to mitigate. The estimated total amount payable
      under all such agreements was approximately $6.7 million, including $1.5
      million in benefits, as of December 31, 2004.

13. STOCK OPTION PLANS

      Stock Compensation Plans--At December 31, 2004, the Company has two
      stock-based compensation plans, which are described below. The Company
      accounts for the fair value of its grants under those plans in accordance
      with APB Opinion No. 25. Under the 1993 Employee Stock Option Plan (the
      "1993 Option Plan"), the Company could grant options to its employees for
      up to one million shares of common stock. Under the Non-Qualified Stock
      Option Plan for Non-Employee Directors (the "1996 Option Plan"), the
      Company may grant options to non-employee directors for up to 150,000
      shares of common stock. Under these plans, the exercise price of each
      option equals the market price of the Company's stock on the date of grant
      and an option's maximum term is 10 years (5 years in the case of an
      incentive option granted to a stockholder owning more than 10% of the
      common stock). Under the 1993 Plan, options vest 25% on the date of grant
      and 25% each subsequent year. Under the 1996 Plan, options vest over 5
      years. There remain valid options, which were granted pursuant to the 1993
      Plan and 1996 Plan prior to the expiration of those plans.

      During the third quarter of 2004, we determined that 397,500 (132,500
      prior to three-for-one split) stock options, with an average exercise
      price of $1.84 per share ($5.53 prior to three-for-one split), which we
      had intended to grant under our stock option plans between July 15, 2003
      and May 10, 2004, could not be granted because those plans had expired on
      June 30, 2003. Prior to this determination, we had reported those options
      as being outstanding and unexercised. On March 10, 2005 the Compensation

                                        F-25
<PAGE>

      Committee of the Board of Directors authorized grants under the Company's
      Restricted Stock Plan, whereby the officers and employees would receive
      shares equal to the original intended stock options. These grants would
      vest over a five-year term and total 337,500 restricted shares. We have a
      plan to rectify this situation for the directors to whom we intended to
      grant 30,000 options (post split) by also issuing restricted stock under
      certain circumstances.

      Vesting Schedule for Restricted Shares approved March 10, 2005:
<TABLE>
<CAPTION>
<S>                                 <C>        <C>
                              March 10, 2006....20%
                              March 10, 2007....40%
                              March 10, 2008....60%
                              March 10, 2009....80%
                              March 10, 2010...100%
</TABLE>

      The activity of the 1993 Option Plan and the 1996 Option Plan is as
      follows:

<TABLE>
<CAPTION>
                                                                    Weighted-
                                                                     Average
                                                                    Per Share
                                                                     Exercise
Stock Option Plan                                    Shares            Price

<S>                  <C>                              <C>                <C>
Outstanding, January 1, 2002                       1,390,500           $ 2.01
  Grants                                             394,500           $ 2.45
  Canceled                                          (108,000)          $ 2.15
                                                    --------
Outstanding, December 31, 2002                     1,677,000           $ 2.11
  Grants                                             385,500           $ 1.75
  Canceled                                          (223,500)          $ 1.76
                                                    --------
Outstanding, December 31, 2003                     1,839,000           $ 2.21
  Exercised                                        1,048,500)          $ 2.07
  Canceled                                          (397,500)          $ 1.84
                                                     -------
Outstanding, December 31, 2004                       393,000           $ 2.39
                                                     =======
Non-Qualified Stock Option Plan

Outstanding, January  1, 2002                         48,000           $ 2.36
  Automatic grant to directors                        24,000           $ 2.40
  Canceled                                                                                                  -------
                                                      ------
Outstanding, December 31, 2002                        72,000           $ 2.37
  Automatic grant to directors                        18,000           $ 1.87
  Canceled                                           (18,000)          $ 2.56
                                                      ------
Outstanding, December 31, 2003                        72,000           $ 2.07
  Reinstated                                          12,000           $ 4.46
                                                      ------
Outstanding, December 31, 2004                        84,000           $ 2.54
                                                      ======
</TABLE>

                                        F-26
<PAGE>
<TABLE>
<CAPTION>
                       Number        Weighted-               Number
                   Outstanding    Average       Weighted-  Exercisable Weighted-
                       at          Remaining     Average        at      Average
    Range of      December 31,    Contractual   Exercise   December 31, Exercise
Exercise Prices       2004          Life          Price        2004       Price

<S>       <C>       <C>            <C>            <C>         <C>       <C>
 $1.33 to $2.00     393,000        6.9 years      $1.94       477,000   $ 2.42
 $2.18 to $4.50      84,000        6.0 years      $2.52
</TABLE>

14. EARNINGS PER SHARE

      Basic earnings per share ("EPS") are computed by dividing net income by
      the weighted-average number of common shares outstanding for the period.
      Diluted EPS is computed by dividing net income by the weighted number of
      common and common-equivalent shares outstanding for the period. Options to
      purchase common stock, whose exercise price was greater than the average
      market price for the period, have been excluded from the computation of
      diluted EPS. Such antidilutive options outstanding for the years ended
      December 31, 2004, 2003 and 2002 were 417,777, 1,677,000 and 1,344,000
      respectively.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 2004
                                           ------------------------------------
                                           Income        Shares        Per Share
                                         (Numerator)   (Denominator)     Amount

Basic EPS loss available to common
<S>                                      <C>              <C>           <C>
  stockholders                           $ (2,086)        10,671        $(0.20)
Effect of dilutive securities options
                                          ---------       ------        --------
Diluted EPS loss available to common
  stockholders plus assumed conversions  $ (2,086)        10,671        $(0.20)
                                          =========       ======        ========

                                                      Year Ended 2003
                                           ------------------------------------
                                           Income         Shares       Per Share
                                         (Numerator)   (Denominator)     Amount

Basic EPS loss available to common
  stockholders                           $(14,453)        10,422         $(1.39)
Effect of dilutive securities options
                                         ---------        ------         -------
Diluted EPS loss available to common
  stockholders plus assumed conversions  $(14,453)        10,422         $(1.39)
                                         =========        ======         =======

                                                      Year Ended 2002
                                           ------------------------------------
                                           Income         Shares       Per Share
                                         (Numerator)   (Denominator)     Amount

Basic EPS loss available to common
  stockholders                           $(24,722)        10,350         $(2.39)
Effect of dilutive securities options
                                         ---------        ------         -------
Diluted EPS loss available to common
  stockholders plus assumed conversions  $(24,722)        10,350         $(2.39)
                                         =========        ======         ======
</TABLE>
                                        F-27
<PAGE>
      During 2003 and 2002, the Company purchased 5,109 and 36,300 shares of
      treasury stock on the open market for approximately $7,272 and $67,286,
      respectively. Approximately 379,005 shares of treasury stock are held in
      the Deferred Compensation Plan trust at December 31, 2004.

15. SEGMENT DISCLOSURES

      The Company reviews its operations by its geographic gaming market s
      egments: Riviera Las Vegas and Riviera Black Hawk. All inter-segment
      revenues have been eliminated.

<TABLE>
<CAPTION>
(In thousands)                        2004            2003            2002

Net revenues:
<S>                                 <C>             <C>             <C>
   Riviera Las Vegas                $147,949        $140,963        $139,159
   Riviera Black Hawk                 53,401          49,196          49,133
                                     -------         -------         -------
Total net revenues                  $201,350        $190,159        $188,292
                                     =======         =======         =======
EBITDA(1):
   Riviera Las Vegas                $ 27,158        $ 22,678        $ 23,951
   Riviera Black Hawk                 16,884          13,283          13,400
                                    --------         -------         -------
Total property EBITDA               $ 44,042        $ 35,961        $ 37,351
                                    ========         =======         =======
Other costs and expenses:
   Corporate expense                   4,038           4,485           3,762
   Depreciation                       13,852          16,211          17,736
   Development and project costs       1,193           2,365
   Interest expense                   27,079          27,380          26,842
   Interest expense, net bonds
     held for retirement                                               2,692
   Loss on extinguishment of debt                                     11,211
   Interest Income                      (34)            (27)           (200)
   Other-net                                                              30
                                      ------          ------          ------
Total other costs and expenses        46,128          50,414          62,073
                                      ------          ------          ------
Income before benefit for income
    taxes                            (2,086)        (14,453)        (24,722)
Benefit for income taxes
                                     -------        --------        --------
Net loss                           $ (2,086)       $(14,453)       $(24,722)
                                     =======        ========        ========

                                        December 31
                                 ----------------------------
                                      2004            2003

Fixed assets (2):
   Riviera Las Vegas               $115,950        $118,593
   Riviera Black Hawk                61,165          61,700
                                   --------         -------
Total fixed assets                 $177,115        $180,293
                                   ========         =======
</TABLE>

(1)        EBITDA consists of earnings before interest, income taxes,
           depreciation and amortization. EBITDA is presented solely as a
           supplemental disclosure because management believes that it is a
           widely used measure of operating performance in the gaming industry
           and a principal basis for valuation of gaming companies by certain
           investors. The Company uses property-level EBITDA (EBITDA before
           corporate expenses) as the primary measure of operating performance
           of its properties, including the evaluation of operating personnel.

                                        F-28
<PAGE>

           EBITDA should not be construed as an alternative to operating income,
           as an indicator of operating performance, as an alternative to cash
           flow from operating activities, as a measure of liquidity, or as any
           other measure determined in accordance with accounting principles
           generally accepted in the United States of America. The Company has
           significant uses of cash flows, including capital expenditures,
           interest payments, income taxes and debt principal repayments that
           are not reflected in EBITDA. Also, other gaming companies that report
           EBITDA information may calculate EBITDA in a different manner.

(2)        Fixed assets represent property and equipment and intangible assets,
           net of accumulated depreciation and amortization.

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

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

16. RELATED PARTY TRANSACTIONS

      Robert R. Barengo, a member of the Board of Directors of the Company, is a
      former director of American Wagering, Inc. ("AWI") and owns approximately
      6.7% of the outstanding stock of AWI, which leases approximately 12,000
      square feet of the Riviera Hotel & Casino's casino floor. AWI is the
      operator of the Riviera Hotel & Casino's sport book operations and has
      operated under that lease arrangement since before Mr. Barengo was
      appointed to the Board. AWI also took over the operation of the Race book
      at the Riviera Las Vegas in January 2004. Those leases provide for rental
      payments based upon the monthly and annual revenues derived by AWI from
      the location. AWI paid aggregate rent to the Company of approximately
      $129,800, $86,300 and $99,400 in each of the years ended December 31,
      2004, 2003 and 2002, respectively. The Company believes that the terms of
      the leases with AWI are at least as favorable to the Company and ROC as
      could have been obtained from unaffiliated third parties and are at least
      as favorable as terms obtained by other casino hotels in Las Vegas.

      Jeffrey A. Silver, a member of the Board, is a shareholder in the law firm
      of Gordon & Silver, Ltd. ("Gordon & Silver"). The Company has engaged
      Gordon & Silver for the defense of various personal injury matters since
      1993 and for general corporate matters since 2002. The Company continues
      to utilize the services of Gordon & Silver and believes that the fee
      arrangement is at least as favorable to the Company as such arrangements
      would have been with a comparable law firm where a relationship of this
      nature did not exist.

                                        F-29

<PAGE>
17. SUBSEQUENT EVENTS

      Riviera Holdings Corporation announced on February 14, 2005 that its Board
      of Directors had approved a three-for-one stock split of the Company's
      Common Stock. As a result of the stock split, shareholders will receive
      two additional shares of Common Stock for every share held on the record
      date of February 25, 2005 and payable on March 11, 2005. The stock split
      increased the number of shares of the Company's Common Stock outstanding
      to approximately 12 million. All periods have been restated to reflect the
      three-for-one stock split. In addition the Company recently engaged its
      financial advisors, Jefferies & Company, Inc., to explore strategic
      alternatives to maximize shareholder value.

      On March 10, 2005, we granted 337,500 shares of Common Stock under our
      Restricted Stock Plan to 19 executives. We granted those shares in
      substitution for stock options that we attempted to grant to them on July
      15, 1993 under our 1993 Employee Stock Option Plan. The 1993 Plan expired
      on July 1, 2003, rendering those options null and void. The grant of
      restricted Common Stock was intended to compensate those executives for
      the value of the options that we attempted to grant to them, based on the
      difference between the intended exercise price of those options and the
      market price of our Common Stock as of March 10, 2005. The restricted
      shares are subject to a five-year vesting schedule, vesting 20% each March
      10, commencing March 10, 2006 (see note 13).  The restricted shares
      immediately vest upon the death, disability, retirement at age 62,
      termination of employment other than for cause, or in the event of a
      change-in-control of the Company.


<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, 2004:
<S>                               <C>         <C>         <C>         <C>
  Net revenues                    $50,460     $52,794     $50,617     $47,479
  Operating income                  7,374       7,563       4,810       5,212
  Income (loss) before tax benefit    540         829     (1,988)      (1,467)
  Net Income (loss)                   540         829     (1,988)      (1,467)
  Income (loss) per share basic     $ 0.05      $ 0.08   $ (0.19)    $ (0.14)
  Income (loss) per share diluted   $ 0.05      $ 0.08   $ (0.19)    $ (0.14)

Year ended December 31, 2003:
  Net revenues                    $47,491     $48,328     $48,973     $45,367
  Operating income                  4,709       4,432       3,641          118
  Loss before tax benefit         (2,159)      (2,436)    (3,153)      (6,705)
  Net loss                        (2,159)      (2,436)    (3,153)      (6,705)
  Loss per share basic           $ (0.21)    $ (0.23)    $ (0.30)    $ (0.65)
  Loss per share diluted         $ (0.21)    $ (0.23)    $ (0.30)    $ (0.65)
</TABLE>

                                        F-30

<PAGE>


                             SUPPLEMENTAL SCHEDULES










                                        F-31
<PAGE>