====================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

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

           (Mark One)
[X]   Annual report pursuant to section 13 or 15(d) of the Securities Exchange
      Act of 1934 [No Fee Required] For the fiscal year ended December 31, 2002

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

                        Commission file number 000-21430

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

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

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

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

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

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

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

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

           Based on the average bid price for the Registrant's Common Stock as
of March 6, 2003 the aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $13,523,081. As of March 6,
2003 the number of outstanding shares of the
Registrant's Common Stock was 3,606,155.

Documents incorporated by reference:
2003 definitive proxy statement (to be filed pursuant to Regualation 14A)
involving the election of directors: Part III of this Form 10-K.


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                               Page 1 of 44 pages
                    Exhibit Index Appears on Page 37 hereof.


                                                1
<PAGE>
<TABLE>
<CAPTION>
                   RIVIERA HOLDINGS CORPORATION AND SUBSIDIARY
                    ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
                          YEAR ENDED DECEMBER 31, 2002

                                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 Venues.............................9
             Competition.....................................................10
             Employees and Labor Relations...................................12
             Regulation and Licensing........................................12
             Federal Registration............................................20

Item 2.   Properties.........................................................21

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

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

Item 5.   Market for the Registrant's Common Stock and Related Security
          Holder Matters.....................................................21

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

Item 7.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations..............................................23
             Results of Operations...........................................23
             2002 Compared to 2001...........................................23
             2001 Compared to 2000...........................................25
             Liquidity and Capital Resources.................................28
             Critical Accounting Policies....................................30
             Recently and Adopted Accounting Standards.......................31

Item 7A.  Qualitative and Quantitative Disclosure About Market Risk..........33
             Forward Looking Statements......................................33

Item 8.   Financial Statements and Supplementary Data........................35

Item 9.   Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure...............................................35

Item 10.  Directors and Executive Officers of the Registrant.................35

Item 11.  Executive Compensation.............................................35

Item 12.  Principal Shareholders.............................................35

Item 13.  Certain Relationships and Related Transactions ....................35

Item 14.  Controls and Procedures............................................35

Item 15.  Exhibits and Reports on Form 8-K...................................36
</TABLE>

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<PAGE>


         PART I

Item 1.    Business

General

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

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

           The Chief Decision Maker determines segments based upon geographic
gaming markets and also reviews corporate expenses separately. The Company has
two segments, the Las Vegas, Nevada market, the Black Hawk, Colorado market. The
segment information can be found in Note 16 of the Notes to the Consolidated
Financial Statements included in this document.

Riviera Las Vegas

General

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

Gaming

           Riviera Las Vegas has 110,000 square feet of casino space. The casino
currently has approximately 1,450 slot machines and 31 gaming tables, including
blackjack, craps, roulette, pai gow poker, Caribbean Stud(R) poker, Let It
Ride(R) and mini-baccarat. The casino also includes a keno lounge and a 200-seat
race and sports book.

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

           Our current management team redirected our business away from
high-stakes wagerers in favor of the less volatile mid-level gaming customers.
In order to effectively pursue this strategy, we made several strategic changes
including reconfiguring the casino space, installing new slot machines, reducing
the number of gaming tables and eliminating the baccarat room. In addition, we
implemented stricter credit policies. As a result, the percentage of table game
dollar volume represented by credit play declined from approximately 24% in 1993
to 6% in 2002. Also, in 2002, revenues from slots and tables were approximately
77% and 20% of total gaming revenue, respectively, as compared to 60% and 34%,
respectively, in 1993.

           During 2002, 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, and maintaining our slot host program.
Slot hosts are our employees who interact with patrons as goodwill ambassadors
to generate loyalty. Our strategy is to continue to increase slot play through
marketing programs and other improvements, including (i) our ongoing slot
upgrade program, (ii) addition of new signage, (iii) promotion of the Riviera
Las Vegas Player's Club, (iv) sponsorship of slot tournaments, (v) creation of
promotional programs, (vi) marketing of the "Slot Frenzy" and "$40 for $20(R)"
slot promotions, and (vii) "Nickel Town(R)". Nickel Town is comprised primarily
of penny and nickel slot machines, the fastest growing segment of the Las Vegas
slot market.


                                                3
<PAGE>

Hotel

           Riviera Las Vegas' hotel is comprised of five hotel towers with
approximately 2,100 guest rooms, including 169 suites. Built in 1955 as part of
the original casino/hotel, the nine-story North Tower features 391 rooms and 11
suites. In 1967, the 12-story South Tower was built with 147 rooms and 31
suites. Another 220 rooms and 72 suites, including penthouse suites, were added
to the property through the construction of the 17-story Monte Carlo Tower in
1974. In 1977, the six-story San Remo Tower added 243 rooms and six suites to
the south side of the resort. The most recent phase of hotel expansion was
completed in 1988 upon the opening of the 930 room, 49 suite, 24-story Monaco
Tower. By the end of 2001 we completed refurbishment of all of our approximately
2,100 hotel rooms and suites. Despite the significant increase in rooms on the
Las Vegas Strip since 1997, we believe Riviera Las Vegas has attained room
occupancy rates that are among the highest on the Las Vegas Strip with 97.5% for
1994, 97.0% for 1995, 98.2% for 1996, 95.7% for 1997, 95.2% for 1998, 97.5% for
1999, 96.6% for 2000, 91.5% for 2001 and 89.6% for 2002 (based on available
rooms). The average occupancy rate citywide (metropolitan area) was 84.0% in
2002 according to the Las Vegas Convention and Visitors Authority.

Restaurants

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

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

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

Convention Center

           Riviera Las Vegas features 160,000 square feet of convention, meeting
and banquet space. The convention center is one of the largest in Las Vegas and
is an important feature that attracts customers. The facility can be
reconfigured for multiple meetings of small groups or large gatherings of up to
5,000 people. Riviera Las Vegas hosted 378 conventions in 2002. The hotel
currently has over 708,000 convention related advance bookings of rooms through
2006 consisting of approximately 469,000 definite bookings and approximately
239,000 tentative bookings. In 2002 approximately 29.0% of the rooms were
occupied for conventions, and management estimates that 30.1% of its rooms will
be occupied for conventions in 2003.

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

Entertainment

           Riviera Las Vegas has one of the most extensive entertainment
programs in Las Vegas, offering up to eight different regularly scheduled shows
and special appearances by headline entertainers in concert. We believe
entertainment provides an attractive marketing tool to attract customers to the
Riviera. Riviera Las Vegas' entertainment program includes such well received
shows as Splash(R) (a variety show), An Evening at La Cage(R) (a female
impersonation show), Crazy Girls(R) (an adult revue), featured comedians at the
Riviera Comedy Club and up to four different regularly scheduled shows in our
LeBistro Theater. We


                                                4
<PAGE>
update our shows continually in response to customer surveys and to keep them
fresh. Tickets for the shows are offered at reasonable prices in keeping with
our emphasis on mid-level customers. The Riviera Mardi Gras shows of "La Cage"
and the "Comedy Club" received First Place and Third Place awards, respectively,
for "Best Las Vegas Shows" from What's On Magazine.

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

     Name                     Type                         Seating Capacity

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

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

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

Future Expansions

           We continue to explore the possible development of an approximately
60,000 square-foot entertainment complex to be constructed directly over the
casino, which could contain specialty themed entertainment that will appeal to
the Riviera Las Vegas' main target audience, adults aged 45 to 65. The exit from
the complex would deliver patrons to the casino. We would require partners to
finance, develop and operate the entertainment attraction. We have executed a
Letter of Intent with a potential partner and are in the process of negotiating
a formal agreement.

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

Marketing Strategies-Las Vegas

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

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


                                                5
<PAGE>

           Create Repeat Customers

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

           Provide Extensive Entertainment Options

           We also focus on attracting our guests through a range of
entertainment opportunities. Riviera Las Vegas has one of the most extensive
entertainment programs in Las Vegas with up to eight different regularly
scheduled shows and special appearances by headline entertainers. In addition to
providing a positive impact on our profitability, the shows attract additional
gaming revenue. Surveys indicate that approximately 73% of the show patrons come
from outside the hotel and approximately 72% of these individuals gamble at
Riviera Las Vegas before or after the shows.

           Attract Walk-In Traffic

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

           Focus on Convention Customers

           This market consists of two groups: (i) those trade organizations and
groups that hold their events in the banquet and meeting space provided by a
single hotel and (ii) those attending city-wide events, usually held at the Las
Vegas Convention Center. Riviera Las Vegas targets convention business because
it typically provides patrons willing to pay higher room rates and we are able
to provide certain advance planning benefits, since conventions are usually
booked two years in advance of the event date. We focus our marketing efforts on
conventions whose participants have the most active gaming profile and higher
room rate, banquet and function spending habits. Riviera Las Vegas also benefits
from our proximity to the Las Vegas Convention Center which makes us attractive
to city-wide conventioneers looking to avoid the congestion that occurs during a
major convention, particularly at the south end of the Las Vegas Strip. In 2002
we derived 29.1% 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.


                                                6
<PAGE>


           Tour and Travel Operators

           We have found that many of our customers use tour and travel
"package" options to reduce the cost of travel, lodging and entertainment. These
packages are produced by wholesale operators and travel agents and emphasize
mid-week stays. Tour and travel patrons often book at off-peak periods enabling
us to maintain occupancy rates at the highest levels throughout the year. We
have developed specialized marketing programs and cultivated relationships with
wholesale operators, travel agents and major domestic air carriers to expand
this market. Our four largest tour and travel operators currently account for
approximately 20.9% of the available 2,100 room bookings per night. We make an
effort to convert many tour and travel customers who meet our target customer
gaming profile into repeat slot customers.

Riviera Black Hawk

Business

           Our wholly owned subsidiary, Riviera Black Hawk, opened on February
4, 2000. Located in Black Hawk, Colorado, approximately 40 miles west of Denver,
our casino is one of the first three encountered when traveling from Denver to
the adjacent gaming cities of Black Hawk and Central City. Our casino features
the fourth largest number of gaming devices in the market with approximately
1,000 slot machines and 9 blackjack tables. In Colorado, each slot machine and
each table game is considered one gaming device.

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

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

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

         o   a Pizza Hut(R);

         o   two themed bars; and

         o   an entertainment center with seating for approximately 440 people.

           The initial participants in this market were small, privately held
gaming facilities whose inability to offer convenient parking and a full range
of traditional casino amenities limited the growth of this market. Subsequently,
larger casinos offering such amenities have entered the market, have been
gaining market share and have contributed to the consistent growth in the
overall market. As of December 31, 2002, there were 25 casinos in the Black
Hawk/Central City market, with 11 casinos each offering more than 400 gaming
devices. Isle of Capri, located across the street from our casino with
approximately 1,120 gaming machines and 1,000 covered parking spaces, has been
the market leader in terms of win per gaming device.

Marketing strategy

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


                                                7
<PAGE>


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

           We rely on database marketing in order to best identify target
customer segments of the population and to tailor the casino's promotions and
amenities to our core group of customers. We use the current database to
identify and stratify slot players living primarily in Colorado for appropriate
incentives. Approximately 203,000 of these slot players have been identified as
of December 31, 2002. In addition, we promote our casino by advertising in
newspapers, on billboards and on the radio in the local areas.


Geographical Markets

The Las Vegas Market

     Las Vegas is one of the largest and fastest growing  entertainment  markets
in the country.  According to the Las Vegas  Convention and Visitors  Authority,
the number of visitors who traveled to Las Vegas during the 16-year  period from
1986 through 2002 increased at a steady and  significant  rate from 15.2 million
in 1986 to 35.0 million in 2002,  a compound  annual  growth rate of 6.3%.  Just
over 35 million  people  visited Las Vegas in 2001,  a 2.3%  decline  from 2000.
Visitor volume dropped  drastically  following the September  11,2001  terrorist
attacks.  Visitor volume  increased 0.2% to slightly over 35 million in 2002, as
compared  to 2001.  Clark  County  gaming  continued  to be a strong and growing
business  with Clark County  gaming  revenues  increasing  at a compound  annual
growth  rate of 8.7% from $2.4  billion in 1986 to just  under  $7.7  billion in
2000.  Clark County  gaming  revenues  dropped 0.1% to just over $7.6 billion in
2001 and were flat at $7.6 billion in 2002.  The terrorist  attacks of September
11, 2001 have had, and may continue to have, an adverse  effect on the number of
visitors  traveling to Las Vegas.  Additional  terrorist  attacks or a war could
also have an adverse effect on the number of visitors traveling to Las Vegas.

     Gaming and tourism are the major attractions of Las Vegas,  complemented by
warm weather and the  availability of many year-round  recreational  activities.
Although Las Vegas' principal 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.  A  significant
percentage  of visitors  originate  from Latin America and Pacific Rim countries
such as Japan, Taiwan, Hong Kong and Singapore. The events of September 11, 2001
have had,  and may  continue to have,  an adverse  impact on the number of Latin
American  and Pacific Rim visitors  coming to Las Vegas.  Japan Air Lines ceased
its daily non-stop  service  between Tokyo and Las Vegas after  September 11,
2001 but reinstated non-stop service three days per week in March 2002.

           Historically, Las Vegas has had one of the strongest hotel markets in
the country. The number of hotel and motel rooms in Las Vegas has increased by
over 89% from approximately 67,000 at the end of 1989 to 126,787 at the end of
2002, giving Las Vegas the most hotel and motel rooms of any metropolitan area
in the world. Despite this significant increase in the supply of rooms, the Las
Vegas hotel occupancy rate exceeded 84% for each of the years from 1993 through
2002. During the calendar year 2002 1,327 new hotel rooms opened in Las Vegas.

           We believe that the growth in the Las Vegas market has been enhanced
as a result of (i) a dedicated program by the Las Vegas Convention and Visitors
Authority and major Las Vegas casino/hotels to promote Las Vegas as a major
convention site, (ii) the increased capacity of McCarran Airport and (iii) the
introduction of large themed "must see" destination resorts in Las Vegas. In
1988, approximately 1.7 million delegates attended conventions in Las Vegas and
generated approximately $1.3 billion of economic impact. Even though the
terrorist attacks negatively impacted major city-wide conventions, the number of
convention delegates had increased to 5.1 million in 2002 with in excess of $5.9
billion of economic impact.

           During the past nine years, McCarran Airport has expanded its
facilities to accommodate the increased number of airlines and passengers which
it services. The number of passengers traveling through McCarran Airport has
increased from approximately 22.5 million in 1993 to an estimated 35.0 million
in 2002. Construction has recently been completed on numerous roadway
enhancements to improve access to the Airport. McCarran Airport is ranked among
the 11 and 7 busiest airports in the world and North America, respectively,
based on passenger activity.


                                                8
<PAGE>

The Black Hawk/Central City Market

           Gaming was first introduced to the Black Hawk/Central City market in
October 1991 following a state-wide referendum where Colorado voters approved
limited stakes gaming for three historic mining towns, namely Black Hawk,
Central City and Cripple Creek. Limited stakes gaming is defined as a maximum
single bet of $5.00. Black Hawk and Central City are contiguous cities located
approximately 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 has displaced many of the
former tourist-related businesses.

           The first casino in the Black Hawk/Central City market was opened in
October 1991 with 14 casinos open by the end of that year. The pace of expansion
increased further in 1992 with the number of casinos in the market peaking at 42
casinos. However, due to a trend of consolidation in the market and the
displacement of small casinos by the entry of larger, better capitalized
operators, the number of casinos has declined to 25 as of December 31, 2002.

           The Black Hawk/Central City market primarily caters to "day-trip"
customers from Denver, Boulder, Fort Collins and Golden as well as Cheyenne,
Wyoming. We believe an estimated adult population exceeding 2.7 million people
resides within this 100-mile radius of Black Hawk. In addition, we believe that
residents within a 100-mile radius of the City of Black Hawk had an estimated
average household income in excess of $55,000 per annum in 2002.

           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 11,012
devices in 2002. Gaming revenues in the Black Hawk/Central City market grew by
7.3% in 2002 over 2001. The City of Black Hawk itself experienced a 9.6%
increase in gaming revenue in 2002.

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

Management Activities and New Venues

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

New Venues

           Our diversification efforts are proceeding with our endorsement by
Jefferson County, Missouri for a casino/hotel development project located
approximately 22 miles south of downtown St. Louis. We filed our formal
application with the Missouri Gaming Commission on October 9, 2002 and look
forward to presenting our project to the State of Missouri. We expect to make
our formal presentation before the Missouri Gaming Commission sometime in the
first half of 2003 and we anticipate a decision sometime this summer. Assuming
we were to receive approval from the state regulators, construction work should
start in the fall 2003, with a completion date in late 2005.

         We filed an application with the New Mexico Racing Commission in March
of 2002 for a "racino" in Hobbs, New Mexico. The Commission plans to reopen
hearings for a horse-racing license in Hobbs in the spring of 2003 with a
decision to be made shortly thereafter.


                                                9
<PAGE>


Other Management Opportunities

           We are continuously reviewing opportunities to expand and become a
multi-jurisdictional casino company with greater capital resources to enable us
to compete more effectively. The jurisdictions include, but are not limited to,
California, Mississippi, Pennsylvania, Missouri, New Mexico and Iowa. We may
also become involved in financially distressed casino properties where we
believe we may be able to effect a turn-around (similar to that which we
achieved at Riviera Las Vegas) and can obtain a significant equity stake.

Competition

Las Vegas, Nevada

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

           At December 31, 2002, the Las Vegas Convention and Visitors Authority
(LVCVA) indicated that there were 24 casinos on the Las Vegas Strip which had
over 1,000  available  hotel  rooms. Riviera  Las  Vegas  is ranked as the 21st
largest  Las  Vegas  Strip  hotel/casino,  based  upon number of available hotel
rooms.

           Las Vegas gaming square footage and room capacity are continuing to
grow and are expected to continue to increase during the next several years.
During calendar year 2002, approximately 1,327 new hotel rooms opened, and as of
December 31, 2002, there were approximately 1,000 hotel rooms under
construction. Existing and future expansions, additions and enhancements to
existing properties and construction of new properties by our competitors could
divert additional business from our facilities. There can be no assurance that
we will compete successfully in the Las Vegas market in the future.

           During 2002, available room nights in the Las Vegas market increased
from 45.6 million to 46.2 million or 1.3%, while total room nights occupied
increased from 38.6 million to an estimated 38.8 million, or 0.5%. The ending
room inventory at December 31, 2002 was 126,787 compared to 126,610 at December
31, 2001, an increase of 177 rooms or 0.1%. This has had the effect of
intensifying competition. At Riviera Las Vegas, room occupancy decreased from
91.6% in 2001 to 89.6% in 2002 (still higher than the Las Vegas Strip
averageof 88.9%and 88.8%, respectfully). Room rates decreased by $2.53, or 4.1%
from $62.46 in 2001 to $59.93 in 2002.

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

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

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


                                                10
<PAGE>

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, 2002
there were 25 gaming facilities in the Black Hawk market with 11 casinos each
offering more than 400 gaming positions. Additional projects have also been
announced, proposed, discussed or rumored for the Black Hawk/Central City
market.

           The gaming facilities near the intersection of Main and Mill Streets
provide significant competition to our casino. Colorado Central Station, which
has been one of the most successful casinos in Colorado, is located across the
street from our casino and has 754 slot machines, 15 gaming tables and
approximately 700 valet parking spaces. The Isle of Capri Casino, the most
successful casino in Colorado, which opened in December 1998, is located
directly across the street from our casino and features approximately 1,120 slot
machines, 14 table games, 1,000 parking spaces, and 235 hotel rooms. Isle of
Capri has recently announced its acquisition of Colorado Central Station,
pending regulatory approval. Isle of Capri has also announced its plan to
renovate Colorado Central Station with the addition of a 1,400 space parking
garage, a 165 room hotel and a restaurant on land immediately across Main Street
from Colorado Central Station and diagonally across from our casino. We believe
that the completion of the sale and the planned renovations will increase the
probability that more customers will frequent the immediate area serviced by
Isle of Capri, Colorado Central Station and our casino. We do not expect the
planned renovations to be complete until some time in 2004.

           The number of hotel rooms currently in the Black Hawk/Central City
market is approximately 405, with only three gaming facilities providing hotel
accommodations to patrons. These include Harvey's Wagon Wheel Casino Hotel with
approximately 120 rooms, the Lodge at Black Hawk with approximately 50 rooms and
the Isle of Capri Casino with 235 rooms. Casinos offering hotel accommodations
for overnight stay may have a competitive advantage over our casino. However, we
believe that self-parking is a more effective utilization of our available space
and that providing hotel accommodations will not be a significant factor, but
instead will contribute to growth in the overall market.

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

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

           It is also possible that new forms of gaming could compete with our
casino. Currently, Colorado law does not authorize video lottery terminals.
However, Colorado law permits the legislature, with executive approval, to
authorize new types of lottery gaming, such as video lottery terminals. Video
lottery terminals are games of chance, similar to slot machines, in which the
player pushes a button that causes a random set of numbers or characters to be
displayed on a video screen. The player may be awarded a ticket, which can be
exchanged for cash or credit play. A Racing Industry Group has introduced a
proposed initiative for the legalization of Video Lottery Terminals at five
horse and dog racetracks in Colorado. The initiative proposes the authorization
of 500 Video Lottery Terminals per racetrack which would be governed by the
Colorado Lottery. The initiative would permit the Video Lottery Terminals in
three racetracks in Denver, one in Colorado Springs and one in Pueblo. This form
of gaming could compete with slot machine gaming.

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


                                                11
<PAGE>

Employees and Labor Relations

Riviera Las Vegas

     As of December 31, 2002 Riviera Las Vegas had approximately 1,350 full-time
equivalent  employees and had collective  bargaining contracts with eight unions
covering  approximately  800 of  such  employees  including  food  and  beverage
employees,  rooms  department  employees,  carpenters,  engineers,  stage hands,
musicians,  electricians,  painters  and  teamsters.  Our  agreements  with  the
Southern Nevada Culinary and Bartenders Union,  which covers the majority of our
unionized employees,  was renegotiated in 2002 and expires in the year 2007. The
Collective  Bargaining  Agreement with the Stage Hands Union expired in 2002 and
Collective  Bargaining  Agreements  with the  Operating  Engineers and Musicians
expired in 1999. The Operating  Engineers  approved a new agreement that expires
in the year 2004. We are currently in negotiations  with the Musicians and Stage
Hands Unions.  The Agreements with the Carpenters and Painters  expired in 2000.
New agreements,  which expire in 2005, were negotiated with the Painters in 2000
and  Carpenters in 2001. New agreements  were  negotiated  with the Teamsters in
1998  and  Electricians  in 1999  and  expire  on  April  1,  2003  and in 2004,
respectively.  We are currently in  negotiations  with the Teamsters  Union.  On
November  27,  2000,  the  Transport  Workers  Union  filed a petition  with the
National  Labor  Relations  Board to  represent  the  Blackjack,  Dice and Poker
Dealers  (or,  the  "Dealers").  On February 8 and 9, 2001,  the  Dealers  voted
against  representation by this Union by a vote of 107 to 61. This group totaled
190 at the time of the vote.  On June 17,  2002,  the  Teamsters  Union  filed a
petition with the NLRB to represent the clerks in the marketing  department.  On
July 26, 2002,  the  marketing  clerks voted in favor of  representation  by the
Union by a vote of 5 to 1. We are currently negotiating with the Teamsters Union
in this regard.  Although  unions have been active in Las Vegas, we consider our
employee relations to be satisfactory.  There can be no assurance, however, that
new  agreements  will be  reached  without  union  action  or  will be on  terms
satisfactory to us.

Riviera Black Hawk

           Riviera Black Hawk opened on February 4, 2000 with approximately 450
employees. As of December 31, 2002, the total number of employees was 323. The
Black Hawk/Central City labor market is very competitive. Riviera Black Hawk
believes that it will be able to maintain its current employee level. There can
be no assurance, however, that new and existing casinos will not affect Riviera
Black Hawk's ability to maintain its current employee level.

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


Regulation and Licensing

Nevada

Nevada Gaming Authority

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

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


                                                12
<PAGE>


           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, the companies involved
would have to sever all relationships with such person. In addition, the Nevada
Commission may require us or Riviera Operating Corporation to terminate the
employment of any person who refuses to file appropriate applications.
Determinations of suitability or of questions pertaining to licensing are not
subject to judicial review in Nevada.

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

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

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

           The Nevada Act requires any person who acquires more than 5% of a
Registered Corporation's 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.


                                                13
<PAGE>


Under certain circumstances, an "institutional investor," as defined in the
Nevada Act, which acquires more than 10%, but not more than 15%, of our voting
securities may apply to the Nevada Commission for a waiver of such finding of
suitability if such institutional investor holds our voting securities for
investment purposes only. An institutional investor shall not be deemed to hold
our voting securities for investment purposes unless the voting securities were
acquired and are held in the ordinary course of business as an institutional
investor and not for the purpose of causing, directly or indirectly, the
election of a majority of the members of our board of directors, any change in
our corporate charter, bylaws, management, policies or operations, or any of our
gaming affiliates, or any other action which the Nevada Commission finds to be
inconsistent with holding our voting securities for investment purposes only.
Activities which are deemed to be consistent with holding our voting securities
for investment purposes only include: (i) voting on all matters voted on by
stockholders; (ii) making financial and other inquiries of management of the
type normally made by securities analysts for informational purposes and not to
cause a change in its management, policies or operations; and (iii) such other
activities as the Nevada Commission may determine to be consistent with such
investment intent. If the beneficial holder of our voting securities who must be
found suitable is a corporation, partnership or trust, it must submit detailed
business and financial information including a list of beneficial owners. The
applicant is required to pay all costs of investigation.

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

           The Nevada Commission may, in its discretion, require the holder of
any of our debt 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 (i) pay to
the unsuitable person any dividend, interest, or any distribution whatsoever;
(ii) recognize any voting right by such unsuitable person in connection with
such securities; (iii) pay the unsuitable person remuneration in any form; or
(iv) make any payment to the unsuitable person by way of principal, redemption,
conversion, exchange, liquidation, or similar transaction.

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

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


                                                14
<PAGE>

           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 satisfy the Nevada Board and Nevada
Commission in a variety of stringent standards prior to assuming control of such
Registered Corporation. The Nevada Commission may also require controlling
stockholders, officers, directors and other persons having a material
relationship or involvement with the entity proposing to acquire control, to be
investigated and licensed as part of the approval process relating to the
transaction.

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

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

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

Other Nevada Regulation

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



                                                15
<PAGE>

Colorado

Colorado Gaming and Liquor Regulation

Summary

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

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

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

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

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

Regulatory Structure

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



                                                16
<PAGE>


Gaming Licenses

The Colorado Commission may issue:

o        slot machine manufacturer or distributor,

o        operator,

o        retail gaming,

o        support, and

o        key employee gaming licenses.

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

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

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

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

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

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


                                                17
<PAGE>

Duties of licensees

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

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

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

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

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

Taxes, fees and fines

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

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

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

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

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

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

o        20% on amounts over $15 million.

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


                                                18
<PAGE>


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

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

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

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 5 days after their distribution. Licensees to
whom Rule 4.5 applies must include in their charter documents provisions that:
restrict the rights of the licensees to issue voting interests or securities
except in accordance with the Colorado Gaming Act and the Colorado Regulations;
limit the rights of persons to transfer voting interests or securities of
licensees except in accordance with the Colorado Gaming Act and the Colorado
Regulations; and provide that holders of voting interests or securities of
licensees found unsuitable by the Colorado Commission may, within 60 days of
such finding of unsuitability, be required to sell their interests or securities
back to the issuer at the lesser of the cash equivalent of the holders'
investment or the market price as of the date of the finding of unsuitability.
Alternatively, the holders may, within 60 days after the finding of
unsuitability, transfer the voting interests or securities to a suitable person,
as determined by the Colorado Commission. Until the voting interests or
securities are held by suitable persons, the issuer may not pay dividends or
interest, the securities may not be voted, they may not be included in the
voting or securities of the issuer, and the issuer may not pay any remuneration
in any form to the holders of the securities.

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

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

o        5% or more of the beneficial interest in a gaming licensee directly or
         indirectly through any class of voting securities of any holding
         company or intermediary company of a licensee, referred to as
         qualifying persons, shall notify the Division of Gaming within 10 days
         of such acquisition, are required to submit all requested information
         and are subject to a finding of suitability as required by the Division
         of Gaming or the Colorado Commission. Licensees also must notify any


                                                19
<PAGE>
         qualifying persons of these requirements. A qualifying person other
         than an institutional investor whose interest equals 10% or more must
         apply to the Colorado Commission for a finding of suitability within 45
         days after acquiring such securities. Licensees must also notify any
         qualifying persons of these requirements. Whether or not notified,
         qualifying persons are responsible for complying with these
         requirements.

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

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

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

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.

Available Information

     The Company files annual and quarterly  reports and other  information with
the Securities and Exchange Commission.  You may read and copy any document that
the Company files at the Securities and Exchange  Commission's  Public Reference
Room  at  450  Fifth  Street,   N.W.,   Washington,   D.C.  20549.  Please  call
1-800-SEC-0300 for further  information on the operation of the Public Reference
Room.  Reports,  proxy  statements  and  other  information  regarding  issuers,
including the Company, that file electronically with the Securities and Exchange
Commission  are also  available to the public from the  Securities  and Exchange
Commission's Web site at http://www.sec.gov.

     The     Company's      internet      address     is      www.theriviera.com
(http://www.theriviera.com).  Through the  "Investors"  page at the  Company's
internet website, the Company's annual report on Form 10-K, quarterly reports on


                                                20
<PAGE>

Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act, are
available free of charge, as soon as reasonably practical after such information
has been filed or furnished to the SEC.

Item 2.    Properties

           Riviera Hotel and Casino

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

           There are 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 a first deed of trust securing the 11% Notes and the Company's
five-year senior secured credit facility.

           Riviera Black Hawk

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

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

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

Item 3.    Legal Proceedings


           We are a party to several routine lawsuits, either as a plaintiff or
as a 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 the financial position or results of our operations.

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

           Not applicable.

           PART II

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

         The Company's Common Stock began trading on the American Stock Exchange
(AMEX) on May 13, 1996 and was  reported on the NASDAQ  Bulletin  Board prior to
that date.  As of March 6, 2003,  based upon  information  available  to it, the
Company  believes that there were  approximately  425 beneficial  holders of the
Company's Common Stock.

           The Company has never paid any dividends on its Common Stock and does
not currently expect to pay any dividends (cash or otherwise) on its Common
Stock for the foreseeable future. The Company's ability to pay dividends is
primarily dependent upon receipt of dividends and distributions from its
subsidiaries which currently include the operations of Riviera Las Vegas and
Riviera Black Hawk. In addition, the indenture for the 11% Senior Secured Notes
and the Company's senior secured credit facility materially restrict the
Company's ability to pay dividends on its Common Stock.


                                                21
<PAGE>

         The Company has been informed that it does not meet certain AMEX
listing requirements, (due to among other things, the Company's negative equity
and losses) and that, consequently, the AMEX intends to initiate steps that
could ultimately result in the delisting of the Company's common stock from the
American Stock Exchange.

           The table below sets forth the high and low sales prices of the
Company's common stock by quarter for the years ended December 31, 2002 and
2001, based on sales prices reported by AMEX:
<TABLE>
<CAPTION>

                First       Second        Third      Fourth
               Quarter      Quarter      Quarter     Quarter

         2002
<S>              <C>          <C>          <C>          <C>
         HIGH    $5.21        $8.25        $7.09        $5.80
          LOW     4.15         5.20         5.90         4.32

         2001
         HIGH    $7.38        $6.70        $6.35        $4.35
          LOW     6.00         5.96         4.00         3.15
</TABLE>


           On March 6, 2003, 9100 shares were traded. The closing price on AMEX
reported for that date was $3.75 per share.

Equity Compensation Plan Information
<TABLE>
<CAPTION>
---------------------- ------------------------- -------------------- -------------------------
<S>                       <C>                        <C>                   <C>
Plan category          Number of securities      Weighted-average     Number of securities
                       to be issued upon         exercise price of    remaining available for
                       exercise of outstanding   outstanding options, future issuance under
                       options, warrants and     warrants and rights  equity compensation plans
                       rights                                         (excluding securities
                                                                      reflected in column (a))
                       (a)                       (b)                  (c)
---------------------- ------------------------- -------------------- -------------------------
Equity compensation
plans approved by        579,000                 $6.35                99,000
security holders
---------------------- ------------------------- -------------------- -------------------------
Equity compensation
plans not approved by       -0-                       -0-                  -0-
security holders
---------------------- ------------------------- -------------------- -------------------------
Total                    579,000                 $6.35                99,000
---------------------- ------------------------- -------------------- -------------------------
</TABLE>


Item 6.    Selected Financial Data

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

 --------------------- ------------ ---------- --------- ---------- ----------
                           2002        2001       2000      1999       1998
 --------------------- ------------ ---------- --------- ---------- ----------
<S>                          <C>        <C>       <C>        <C>        <C>
 Net Operating Revenue    $188,292   $202,031  $201,531   $157,268   $159,955
 Net Loss                 (24,722)    (6,407)   (4,215)    (2,869)    (4,057)
 Net Loss Per
 Diluted Common Share      ($7.17)    ($1.79)   ($1.05)    ($0.58)    ($0.81)
 Total Assets              235,896    267,818   283,710    288,990    244,909
 Long-Term Debt            220,124    220,439   226,043    229,052    179,439
 Dividends Declared          -0-        -0-       -0-        -0-        -0-
 --------------------- ------------ ---------- --------- ---------- ----------
</TABLE>


                                                22
<PAGE>


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

Results of Operations

2002 Compared to 2001

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

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

Net revenues:
<S>                              <C>           <C>             <C>          <C>
  Riviera Las Vegas             $139,159     $152,985    $ (13,826)      (9.0)%
  Riviera Black Hawk              49,133       49,046           87        0.2 %
                                 -------      -------       ------       -----
         Total Net Revenues     $188,292     $202,031    $ (13,739)      (6.8)%
                                 =======      =======      =======       =====
Operating Income
  Riviera Las Vegas              $ 12,265    $ 13,512     $ (1,247)      (9.2)%
  Riviera Black Hawk                7,350       7,622         (272)      (3.6)%
  Corporate Expenses               (3,762)     (4,163)         401       (9.6)%
                                   ------      ------        -----        -----
         Total Operating Income  $ 15,853    $ 16,971     $ (1,118)      (6.6)%
                                  =======      ======      ========      =====
EBITDA:(1)
  Riviera Las Vegas              $ 23,951    $ 25,655     $ (1,704)      (6.6)%
  Riviera Black Hawk               13,400      12,722          678        5.3 %
  Corporate Expenses               (3,762)     (4,163)         401       (9.6)%
                                   -------     ------       ------       -----
           Total EBITDA          $ 33,589    $ 34,214       $ (625)      (1.8)%
                                   =======     =======        =====      =====
EBITDA margin
  Riviera Las Vegas                17.2 %       16.8 %         0.4 %
  Riviera Black Hawk               27.3 %       25.9 %         1.4 %
                                   -----        -----          -----
           Total EBITDA Margin     17.8 %       16.9 %         0.9 %
                                   ======       ======         =====
</TABLE>

Reconciliation of Income From Operations to EBITDA

                                    2002         2001
Operating Income                  $15,853       $16,971
Depreciation                       17,736        17,243
                                   ------        ------
EBITDA                            $33,589       $34,214
                                   ======        ======


                                                23
<PAGE>

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

Riviera Las Vegas

Revenues

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

Operating Income

      Operating Income decreased $1.2 million or 9.2% from $13.5 million in 2001
to $12.3 million in 2002 due to the  decreased  revenues,  which were  partially
offset by lower  entertainment  contract  expenses,  which are tied to revenues,
reduced casino expense due to lower volumes and reduced executive incentives and
Employee  Stock  Ownership  Plan  expense.  During  2002 the Company changed its
segment  reporting  to  present  corporate  expenses  separately  which  were
previously  included  in  the  expenses  at  Riviera  Las  Vegas in prior years.
Prior  year's expenses have been reclassified for comparison purposes.

EBITDA

         Riviera Las Vegas EBITDA, as defined, decreased by approximately $1.7
million, or 6.6%, from $25.7 million in 2001 to $24.0 million in 2002. During
the same periods, EBITDA margin increased from 16.8% to 17.2% of net revenues.

Riviera Black Hawk

Revenues

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

Operating Income

Operating income decreased $272,000 or 3.6% from $7.6 million in 2001 to $7.4
million in 2002 due to the increased competition and a slower economy in the
Denver area. General and administrative costs decreased $1.2 million. General


                                                24
<PAGE>

and administrative costs were 21.1% of revenues in the current year compared
with 23.5% in 2001 due to decreased health insurance costs. Depreciation
increased $874,000 or 23.3% in 2002 compared with 2001 due to a change to
accelerated depreciation on slot machines.

EBITDA

         Riviera Black Hawk EBITDA, as defined, increased by approximately
$678,000, or 5.3%, from $12.7 million 2001 to $13.4 million in 2002. During the
same periods, EBITDA margin increased from 25.9% to 27.3% of net revenues.

Consolidated Operations

Other Income (Expense)

         On June 26,  2002,  the Company issued 11% Senior Secured  Notes with a
principal amount of $215 million substantially all of which were later exchanged
for  SEC-registered  Notes of the Company having  substantially  the same terms.
Interest  expense on the $215 million 11% Senior  Secured Notes of $12.2 million
plus related  amortization of loan fees totaled  approximately $13.0 million. In
addition  the  interest  expense on the retired 10% First  Mortgage  Notes,  the
retired Black Hawk 13% First  Mortgage  Notes and equipment and other  financing
costs totaled  approximately  $13.8 million in 2002 for combined  total interest
expense of $26.8 million.  This compares with $26.9 million in interest  expense
in 2001. Fiscal 2002 results were affected by the loss on extinguishment of debt
totaling  $11.2 million or $3.25 per share.  The costs included the call premium
on the Company's  refinanced  10% bonds and Riviera Black Hawk's  refinanced 13%
bonds,  the write off of  unamortized  deferred loan costs  associated  with the
refinanced  bonds and the  balance of the  original  issue  discount  on the 10%
bonds.  Furthermore,  the results were affected by approximately $2.7 million or
$0.78 per share of additional interest expense, net, incurred as a result of the
defeasance / retirement of the debt.

Net Loss

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

EBITDA

                Consolidated EBITDA, as defined, decreased approximately
$625,000, or 1.8%, from $34.2 million in 2001 to $33.6 million in 2002. During
the same periods, EBITDA margin increased from 16.9% to 17.8% of net revenues.

Results of Operations

2001 Compared to 2000

Special Factors Affecting Comparability of Results of Operations

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


                                                25
<PAGE>


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

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

Net revenues:
<S>                                  <C>           <C>           <C>        <C>
  Riviera Las Vegas               $ 152,985    $ 166,270    $ (13,285)    (8.0)%
  Riviera Black Hawk                 49,046       35,261       13,785     39.1 %
                                    -------      -------       ------     -----
           Total Net Revenues     $ 202,031    $ 201,531        $ 500      0.2 %
                                    =======      =======       ======     ======
Operating Income (loss)
  Riviera Las Vegas                $ 13,512     $ 19,215     $ (5,703)   (29.7)%
  Riviera Black Hawk                  7,622        1,881        5,741     305.2%
  Corporate Expenses                 (4,163)      (4,217)          54      1.3 %
                                    --------     -------        -----     ------
           Total Operating Income  $ 16,971     $ 16,879         $ 92      0.5 %
                                     =======     =======        =====     ======
EBITDA:(1)
  Riviera Las Vegas                $ 25,655     $ 33,548     $ (7,893)   (23.5)%
  Riviera Black Hawk                 12,722        6,597        6,125     92.8 %
  Corporate Expenses                 (4,163)      (4,217)          54      1.3 %
                                     --------     -------        -----     -----
           Total EBITDA            $ 34,214     $ 35,928     $ (1,714)    (4.8)%
                                     =======     ========       =====      =====
EBITDA margin
  Riviera Las Vegas                   16.8 %       20.2 %      (4.1)%
  Riviera Black Hawk                  25.9 %       18.7 %       7.2 %
                                      ------       ------       -----
           Total EBITDA Margin        16.9 %       17.8 %      (0.5)%
                                      ======       ======      ======
</TABLE>

Reconciliation Income From Operations to EBITDA
<TABLE>
<CAPTION>
                                       2001         2000

<S>                                 <C>          <C>
Operating Income                    $ 16,971     $ 16,879
Depreciation                          17,243       17,827
Preopening Expenses                        0        1,222
                                      ------       ------
Total                               $ 34,214     $ 35,928
                                      ======       ======
</TABLE>



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


                                                26
<PAGE>


Riviera Las Vegas

Revenues

     Riviera Las Vegas net revenues decreased by approximately $13.3 million, or
8.0%, from $166.3 million in 2000 to $153.0 million in 2001 primarily due to the
effects of the recession and the September 11, 2001  terrorist  attacks.  Casino
revenues decreased approximately $6.7 million or 9.0%, from $74.1 million during
2000 to $67.4 million  during 2001.  Slot  revenues were down 7.0%,  while table
games revenues were down 13.6%.  The hold  percentages  were comparable for both
table games and slot machines in 2001 and 2000. Room revenues were comparable to
the prior year,  as the average room rate  increased  $3.50 or 6% from $59.00 to
$62.50 and hotel  occupancy  decreased from 96.6% to 91.6%.  The decrease in air
travel,  especially long-haul flights from the east coast,  affected Riviera Las
Vegas more than many of its  competitors.  The Company's  marketing  efforts had
been concentrated on airline customers who traveled longer distances,  paid more
for their tickets and had a larger gaming and entertainment  budget.  While this
strategy was  successful  in prior years,  the effects of the September 11, 2001
terrorist  attacks  were  devastating  to this  market  segment.  Subsequent  to
September 11, 2001, gaming marketing  expenditures were increased to protect and
promote the slot  customer  base.  Increased  room  marketing  efforts  focus on
customers  in  the  western  United  States  and  these  efforts  appear  to  be
successful,  based  on the  pace of  advance  bookings.  Call  volumes,  booking
patterns and occupancy began to normalize in mid-January  2002. In February 2002
Super Bowl,  Chinese New Year and  Presidents'  Day weekend were  successful and
occupancy is expected to increase  steadily  during the first and second quarter
of 2002. Although occupancy is recovering on the weekends, the midweek occupancy
rates vary significantly from day to day primarily due to competitive pressures.
Entertainment  revenues decreased by approximately $4.1 million,  or 16.7%, from
$24.5 million during 2000 to $20.4 million  during 2001 as attendance  decreased
approximately  27%,  which was  partially  offset by a 13.6%  increase in ticket
price.  Competition  for Riviera show  customers,  while  significant  all year,
intensified  after  September  11,  2001.  Tour and travel  room sales were down
approximately 50% in the fourth quarter of 2001, which is an important  producer
of  show  ticket  sales  and  slot  revenues.   Other   revenues   decreased  by
approximately  $1.4  million,  or 13.9%,  from $9.9 million  during 2000 to $8.5
million during 2001 due primarily to lower telephone revenues.

Operating Income

     Operating Income decreased $5.7 million or 29.7% from $19.2 million in 2000
to $13.5 million in 2001 due to the  decreased  revenues,  which were  partially
offset  by lower  entertainment  contract  expenses  and a 9.4% or $1.4  million
reduction in depreciation expense.  Entertainment costs are tied to revenues and
as a result of this relationship,  the departmental  results were similar to the
prior year.  Depreciation  decreased,  as $20 million of equipment  purchased in
1993 became fully  depreciated  in 2000.  In addition,  the  September  11, 2001
terrorist  attacks  caused  management to accelerate the timing and magnitude of
staffing  reductions.  In excess of 300 full-time equivalent employees were laid
off, based on the reduction in volumes. These events have caused the industry to
reevaluate  their cost structures and adjust payrolls  accordingly.  During 2002
the Company changed its segment reporting to break out corporate  expenses which
were shown as expenses at Riviera Las Vegas in prior  years.  Expenses  for 2001
and 2000 have been reclassified for comparison purposes.

EBITDA

         Riviera Las Vegas EBITDA, as defined, decreased by approximately $7.9
million, or 23.5%, from $33.5 million in 2000 to $25.7 million in 2001. During
the same periods, EBITDA margin decreased from 20.2% to 16.8% of net revenues.

Riviera Black Hawk

Special Factors Affecting Comparability of Results of Operations

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


                                                27
<PAGE>


Revenues

         Riviera Black Hawk net revenues increased by approximately $13.8
million, or 39.1%, from $35.3 million in the 11 months of 2000 to $49.0 million
in the 12 months ended December 31, 2001 as the operation gained market share
and was, for the most part, unaffected by the events of September 11. Casino
revenues, primarily slot machines, increased by approximately $13.0 million, or
38.7%, from $33.6 million in the 11 months of 2000 to $46.7 million in the 12
months ended December 31, 2001. Average slot machine win per unit increased from
$114 per day in 2000 to $148 in 2001. Food and beverage revenues increased by
approximately $1.5 million, or 38.3%, from $4.0 million in the 11 months of 2000
to $5.6 million in the 12 months ended December 31, 2001. The remodeled buffet
and related marketing efforts resulted in a 45.6% increase in covers (customers)
and a 26.4% increase in average check (price).

Operating Income

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

EBITDA

         Riviera Black Hawk EBITDA, as defined, increased by approximately $6.1
million, or 92.4%, from $6.6 million in the 11 months of 2000 to $12.7 million
in the 12 months ended December 31, 2001. During the same periods, EBITDA margin
increased from 18.7% to 25.9% of net revenues.

Consolidated Operations

Other Income (Expense)

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

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

Net Loss

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

EBITDA

                Consolidated EBITDA, as defined, decreased approximately $1.7
million, or 4.7%, from $35.9 million in 2000 to $34.2 million in 2001. During
the same periods, EBITDA margin decreased from 17.4% to 16.9% of net revenues.

Liquidity and Capital Resources

         The Company had cash and short-term investments of $20.2 million at
December 31, 2002, which was a decrease of $26.4 million from 2001, which is
mainly due to the costs associated with the extinguishment of debt. Cash
balances include amounts that could be required to fund the Chairman's pension
obligation in a rabbi trust with five days notice. (See Note 7 to the financial
statements, Other Long-Term Liabilities.) Effective April 1, 2003, the Company
will begin paying Mr. Westerman $250,000 per quarter from his pension plan. In
exchange for these payments, Mr. Westerman has agreed to continue his
forbearance of his right to receive full transfer of his pension fund balance to
the rabbi trust. This does not limit his ability to give the five-day notice at
anytime. Although there is no current intention to require

                                                28
<PAGE>
additional funding, under certain circumstances, approximately $6.8 million
might have to be disbursed in a short period.

      For 2002, the Company's net cash provided by operating activities was $3.1
million  compared  to $12.5  million  in 2001 due  primarily  to the  payment of
interest to defease the old bonds and the loss from operations.  Cash flow used
in investing  activities  was $5.7 million in 2002  compared to $10.2 million in
2001 due to the decrease in capital expenditures. Net cash used in financing was
$23.7  million in 2002 and $7.9 million in 2001,  primarily  due to the costs of
refinancing our debt.  EBITDA,  as defined,  for 2002 and 2001 was $33.6 million
and  $34.2  million,  respectively.  Management  believes  that  cash  flow from
operations,  combined  with the $20.2  million  cash and the $30 million  senior
secured  credit  facility  discussed  below,  will be  sufficient  to cover  the
Company's debt service and enable investment in budgeted capital expenditures of
$8.0 million for the next twelve months.

       On June 26, 2002, the Company secured new debt in the principal amount of
$215  million in the form of 11% Senior  Secured  Notes with a maturity  date of
June 15, 2010 substantially all of which were later exchanged for SEC-registered
notes having  substantially the same terms (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 with  contingent
interest due 2005. Cash flow from operations is not expected to be sufficient to
pay  100%  of the  principal  of  the  Notes  at  maturity  on  June  15,  2010.
Accordingly, the ability of the Company and its subsidiary to repay the Notes at
maturity will be dependent upon its ability to refinance the Notes. There can be
no assurance that the Company 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.(as defined in the Note indenture)

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

         The 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; (v) sell certain assets; and (vi) enter
into certain mergers and consolidations. As a result of these restrictions, the
ability of the Company and its subsidiaries to incur additional indebtedness to
fund operations or to make capital expenditures is limited. In the event that
cash flow from operations is insufficient to cover cash requirements, the
Company and its subsidiaries would be required to curtail or defer certain of
their capital expenditure programs, which could have an adverse effect on
operations. The Company believes that it is in compliance with the covenants.

         On July 26, 2002, the Company entered into a $30 million, five-year
senior secured credit facility. The credit facility is secured by substantially
the same collateral that secures the Notes. The lien on the collateral securing
the credit facility is senior to the lien on the collateral securing the Notes.
The credit facility contains customary conditions to borrowing and certain
representations and warranties customary in gaming-related finance. The credit
facility also contains financial covenants and restrictions regarding, among
other things, indebtedness, distributions and changes in control. Under the
credit facility, the Company can obtain extensions of credit in the forms of
cash and letters of credit. The Company is required to pay interest on all
outstanding cash advances at the rate of interest announced by Wells Fargo at
its principal office in San Francisco as 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. At
December 31, 2002, there were no amounts outstanding under the senior secured
credit facility.


                                                29
<PAGE>


Contractual Obligations

The following table summarizes our contractual obligations and commitments as of
December 31, 2002:
<TABLE>
<CAPTION>

------------------------ -------------------------------------------------------------
                                       Payments due by period
------------------------ -------------------------------------------------------------
Contractual Obligations    Total    Less than 1  1-3 years    3-5 years  More than 5
                                      year                                   years
------------------------ --------- ----------- ------------ ------------ -------------
<S>                      <C>           <C>         <C>           <C>      <C>
Long-Term Debt           $220,124      3,430       4,300         411      $211,983
------------------------ --------- ----------- ------------ ------------ -------------
Total                    $220,124     $3,430      $4,300        $411      $211,983
------------------------ --------- ----------- ------------ ------------ -------------
</TABLE>

Critical Accounting Policies

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

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

Long-Lived Assets

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

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

Provision for Credit Losses

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


                                                30
<PAGE>

Recently Adopted Accounting Standards


         In July 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 142, Goodwill and Other Intangible Assets, which was effective January
1, 2002. SFAS No. 142 requires, among other things, the discontinuance of
goodwill amortization. In addition, the standard includes provisions for the
reclassification of certain existing recognized intangibles as goodwill,
reassessment of the useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously reported goodwill, and
the identification of reporting units for purposes of assessing potential future
impairments of goodwill. SFAS No. 142 also requires the Company to complete a
transitional goodwill impairment test six months from the date of adoption. The
Company adopted SFAS No. 142 on January 1, 2002 and it had no effect on its
financial position and results of operations.

         In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS No. 144 addresses financial
accounting and reporting for the impairment or disposal of long-lived assets and
supersedes FASB Statement 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of, and the accounting and
reporting provisions of Accounting Principles Board ("APB") Opinion No. 30,
Reporting the Results of Operations--Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions, for the disposal of a segment of a business (as
previously defined in that Opinion). SFAS No. 144 also amends APB No. 51,
Consolidated Financial Statements, to eliminate the exception to consolidation
for a subsidiary for which control is likely to be temporary. The provisions of
SFAS No. 144 are effective for financial statements issued for fiscal years
beginning after December 15, 2001, and interim periods within those fiscal
years. The Company adopted SFAS No. 144 on January 1, 2002 and the adoption had
no effect on its financial position and results of operations.


         In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections. SFAS No. 145 requires that gains and losses from extinguishment of
debt be classified as extraordinary items only if they meet the criteria in APB
Opinion No. 30. Applying the provisions of Opinion No. 30 will distinguish
transactions that are part of an entity's recurring operations from those that
are unusual and infrequent that meet criteria for classification as an
extraordinary item. SFAS No. 145 is effective for the Company beginning January
1, 2003, but the Company adopted the provisions of SFAS No. 145 during fiscal
year 2002, as permitted. The effect on our consolidated financial position and
results of operations of the adoption of SFAS No. 145 was that the Company
recognized and reported bond retirement costs as other expense.

        Recently Issued Accounting Standards

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

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

         In November 2002, the FASB issued Interpretation ("FIN") No. 45,
Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN No. 45 addresses financial


                                                31
<PAGE>

accounting for, and disclosure of, guarantees. FIN 45 requires certain
guarantees to be recorded at fair value, as opposed to the existing standard of
recording a liability only when a loss is probable and reasonably estimable
according to SFAS No. 5, Accounting for Contingencies. The Company believes that
the adoption of FIN No. 45 is not expected to have a material impact on the
Company's financial position and results of operations.

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

         In January 2003, the FASB issued FIN No. 46, Consolidation of Variable
Interest Entities. FIN No. 46 addresses consolidation by business enterprises
where equity investors do not bear the residual economic risks and rewards.
These entities have been commonly referred to as "special purpose entities." If
a business enterprise has the majority financial interest in an entity, which is
defined in the guidance as a variable interest entity, the assets, liabilities
and results of the activities of the variable interest entity should be included
in consolidated financial statements with those of the business enterprise. The
Interpretation also explains how to identify variable interest entities and how
an enterprise should assess its interest in an entity when deciding whether or
not it will consolidate that entity. The provisions of this statement must
follow the new rules in accounting periods beginning after June 15, 2003. The
Company believes that the adoption of FIN No. 46 is not expected to have a
material impact on the Company's financial position and results of operations.

                                                32

<PAGE>


Item 7A.      Disclosure

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 90 days or less. Our equipment loans, leases and Special
Improvement District debt are not subject to significant valuation adjustments
due to interest rate changes. Although substantially all the Company's 11%
Senior Secured Notes can be publicly traded, it is not known how significantly
the trading prices for these Notes will react to market interest rate changes.

<TABLE>
<CAPTION>

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

(Amounts in Thousands)                                                                 Fair Value
                           2003    2004    2005    2006   2007   Thereafter   Total       At
                                                                                        12/31/02
<S>                         <C>     <C>        <C>  <C>    <C>         <C>     <C>        <C>
Long Term Debt
Including Current Portion

Equipment loans and
 capital leases-Las Vegas   $1,283  $1,019     $11                              $2,313     $2,313

Average interest rate         7.8%    7.8%    8.4%


11% First Mortgage Note                                              $211,983 $211,983   $190,785

Average interest rate                                                   11.6%

Capital leases,
 Black Hawk, Colorado       $2,044  $2,263    $658                              $4,965     $4,965

Average interest rate        10.8%   10.8%   10.8%

Special Improvement
 District Bonds-Black Hawk,
 Colorado casino project      $103    $109    $116    $124   $129        $282     $863       $863

Average interest rate         5.5%    5.5%    5.5%    5.5%   5.5%        5.5%
</TABLE>

Forward Looking Statements

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

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

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

                                                33
<PAGE>

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

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

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

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

     *  a decline in the public acceptance of gaming;

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

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

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

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

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

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

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

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

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

     *  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.


                                                34
<PAGE>

Item 8.    Financial Statements and Supplementary Data

           See Financial Statements included in Item 14(a).


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

           None.

                                    PART III


Item 10.   Directors and Executive Officers of the Registrant.

           Information regarding this item is incorporated by reference in the
Company's Proxy Statement to be filed on or about April 18, 2003, relating to
the Annual Meeting of Stockholders to be held on May 20, 2003 and is made a part
hereof.

Item 11.   Executive Compensation

           Information regarding this item is incorporated by reference in the
Company's Proxy Statement to be filed on or about April 18, 2003, relating to
the Annual Meeting of Stockholders to be held on May 20, 2003 and is made a part
hereof.

Item 12.   Principal Shareholders

           Information regarding this item is incorporated by reference in the
Company's Proxy Statement to be filed on or about April 18, 2003, relating to
the Annual Meeting of Stockholders to be held on May 20, 2003 and is made a part
hereof.

Item 13.   Certain Relationships and Related Transactions

           Information regarding this item is incorporated by reference in the
Company's Proxy Statement to be filed on or about April 18, 2003, relating to
the Annual Meeting of Stockholders to be held on May 20, 2003 and is made a part
hereof.

Item 14.   Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

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

Changes in Internal Controls

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



                                                35
<PAGE>


                                            PART IV

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

           (a)(1)   List of Financial Statements

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

         -        Independent Auditors' Report.
         -        Consolidated Balance Sheets as of December 31, 2002 and 2001.
         -        Consolidated Statements of Operations for the Years Ended
December 31, 2002, 2001 and 2000.
         -        Consolidated Statements of Stockholders' Equity (Deficiency)
for the Years Ended December 31, 2002, 2001 and 2000. - Consolidated Statements
of Cash Flows for the Years Ended December 31, 2002, 2001
              and 2000.
         -        Notes to Consolidated Financial Statements.

           (a)(2)   List of Financial Statement Schedules

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

           (a)(3)   List of Exhibits

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

(b) Reports on Form 8-K

     During the last quarter of 2002, the Company filed the following reports on
Form 8-K:

1. October 22, 2002 (filed  October 23,  2002) - Reporting  under Item 5 (Other
    Events) and Item 7 (Financial  Statements,  Pro Forma  Financial Information
    and Exhibits).  Summary financial information (unaudited) as of, and for the
    interim period ending on, September 30, 2002 was included in the filing.
2. October 24, 2002 (filed October 25, 2002) - Reporting under Item 5 (Other
    Events).
3. December 4, 2002 (filed December 5, 2002) - Reporting under Item 5 (Other
    Events)



























                                                36
<PAGE>



                                  EXHIBIT INDEX

Exhibit                                Description
Number

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

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

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

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

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

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

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

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

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

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

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

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

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

                                                37
<PAGE>
10.1*Registration  Rights  Agreement dated as of June 26,  2002 by and among the
     Company,  the Guarantors party thereto,  and Jefferies & Company,  Inc.(see
     Exhibit  10.1  to  Registration  Statement  on  Form  S-4  filed  with  the
     Commission on August 9, 2002, Commission File No. 333-97907)

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

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

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

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

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

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

10.8*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  Registration  Statement on Form S-4 filed with the
     Commission on August 9, 2002, Commission File No. 333-97907)

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

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

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


                                                38
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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



                                                39
<PAGE>


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

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

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

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

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

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

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

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

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

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

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


                `                               40
<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 Registration Statement on Form S-4 filed
     with the Commission on August 9, 2002, Commission File No. 333-97907)

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

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

10.44(A) Second Amendment to Employment Agreement between the Company and Robert
     Vannucci effective July 1, 2002.

10.45(A) Third Amendment to Employment  Agreement between the Company and Robert
     Vannucci effective March 3, 2003.

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

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

(A)  Management contract or compensatory plan or arrangement



                                                41
<PAGE>

                                   SIGNATURES

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

                                        RIVIERA HOLDINGS CORPORATION


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

                                         March 17, 2003


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

Signature                                Title                           Date


/s/ WILLIAM L. WESTERMAN      Chairman of the Board, Chief        March 17, 2003
------------------------      Executive Officer and President
William L. Westerman


/s/ DUANE R. KROHN            Treasurer (Principal Financial      March 17, 2003
------------------------      and Accounting Officer)
Duane R. Krohn

/s/ ROBERT R. BARENGO         Director                            March 17, 2003
------------------------
Robert R. Barengo

/s/ JEFFREY A. SILVER         Director                            March 17, 2003
------------------------
Jeffrey A. Silver

/s/ PAUL A. HARVEY            Director                            March 17, 2003
------------------------
Paul A. Harvey

/s/ VINCENT L. DIVITO         Director                            March 17, 2003
------------------------


                                                42
<PAGE>



                                 CERTIFICATIONS



I, William L. Westerman, the Chief Executive Officer of Riviera Holdings
Corporation, certify that:

1. I have reviewed this annual report on Form 10-K of Riviera Holdings
Corporation;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.





Date: March 17, 2003




    WILLIAM L. WESTERMAN
    --------------------
    William L. Westerman
    Chairman of the Board and
    Chief Executive Officer


                                                43
<PAGE>


I, Duane R. Krohn, the Chief Financial Officer of Riviera Holdings Corporation,
certify that:

1. I have reviewed this annual report on Form 10-K of Riviera Holdings
Corporation;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.




Date: March 17, 2003





  DUANE R. KROHN
 -----------------------------------
  Duane R. Krohn
  Treasurer and Chief Financial Officer


                                                44
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION

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

                                                                         Page

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

CONSOLIDATED FINANCIAL STATEMENTS:

   Balance Sheets as of December 31, 2002 and 2001                        F-2

   Statements of Operations for the Years Ended December 31,
   2002, 2001 and 2000                                                    F-3

   Statements of Stockholders' Equity (Deficiency) for the
   Years Ended December 31, 2002, 2001 and 2000                           F-4

   Statements of Cash Flows for the Years Ended December 31,
   2002, 2001 and 2000                                                    F-5

   Notes to Consolidated Financial Statements                             F-7

   Unaudited Quarterly Financial Data                                     F-30



</TABLE>


<PAGE>
















INDEPENDENT AUDITORS' REPORT


Riviera Holdings Corporation
Las Vegas, Nevada

We have audited the accompanying consolidated balance sheets of Riviera Holdings
Corporation  and  subsidiaries  (the "Company") as of December 31, 2002 and 2001
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, 2002.  These  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

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

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects,  the financial  position of Riviera Holdings  Corporation and
subsidiaries  as of  December  31,  2002  and  2001  and the  results  of  their
operations  and their cash flows for each of the three years in the period ended
December 31, 2002, in conformity with accounting  principles  generally accepted
in the United States of America.





Deloitte & Touche LLP
Las Vegas, Nevada
February 14, 2003


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

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2002 AND 2001
(In Thousands, Except Share Amounts)
------------------------------------------------------------------------------


ASSETS                                                     2002           2001

CURRENT ASSETS:
<S>                                                        <C>            <C>
  Cash and cash equivalents                             $ 20,220       $ 46,606
  Accounts receivable-net                                  4,010          3,528
  Inventories                                              1,824          2,253
  Prepaid expenses and other assets                        3,968          3,083
                                                          ------         ------
           Total current assets                           30,022         55,470

PROPERTY AND EQUIPMENT-Net                               188,233        200,531

OTHER ASSETS-Net                                          14,677          6,728

DEFERRED INCOME TAXES-Net                                  2,964          5,089
                                                        --------        -------
TOTAL                                                  $ 235,896      $ 267,818
                                                        ========        =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

CURRENT LIABILITIES:
  Current portion of long-term debt                      $ 3,430        $ 3,151
  Accounts payable                                         8,338          8,200
  Accrued interest                                         1,065          8,084
  Accrued expenses                                        15,576         14,740
                                                          ------         ------
           Total current liabilities                      28,409         34,175
                                                          ------         ------
OTHER LONG-TERM LIABILITIES                                6,465          7,391
                                                           -----          -----
LONG-TERM DEBT-Net of current portion                    216,694        217,288
                                                         -------        -------
COMMITMENTS AND CONTINGENCIES (Note 12)

STOCKHOLDERS' EQUITY (DEFICIENCY):
  Common stock ($.001 par value-20,000,000 shares
   authorized; 5,135,773 and 5,106,776 shares
   issued at December 31, 2002 and 2001, respectively)         5             5
  Additional paid-in capital                              13,638        13,485
  Treasury stock (1,686,244 and 1,674,144 shares at
   December 31, 2002 and 2001, respectively)             (11,313)      (11,246)
  Retained earnings (accumulated deficit)                (18,002)        6,720
                                                         --------       -------
     Total stockholders' equity (deficiency)             (15,672)        8,964
                                                         --------       -------
TOTAL                                                  $ 235,896     $ 267,818
                                                        =========      ========

See notes to consolidated financial statements.

</TABLE>


                                                F-2
<PAGE>
<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
(In Thousands, Except Per Share Amounts)
------------------------------------------------------------------------------

                                              2002          2001          2000
REVENUES:
<S>                                           <C>           <C>           <C>
  Casino                                  $ 106,122     $ 114,039     $ 107,693
  Rooms                                      42,343        44,255        43,819
  Food and beverage                          32,367        31,256        30,756
  Entertainment                              17,918        20,692        24,526
  Other                                       7,945         9,119        10,538
                                             ------         -----        ------
          Total revenues                    206,695       219,361       217,332
  Less promotional allowances                18,403        17,330        15,801
                                             ------        ------        ------
          Net revenues                      188,292       202,031       201,531
                                            -------       -------       -------
COSTS AND EXPENSES:
  Direct costs and expenses of
   operating departments:
    Casino                                   58,061        62,845        57,450
    Rooms                                    23,127        23,339        23,364
    Food and beverage                        21,207        21,426        21,372
    Entertainment                            12,324        14,900        18,959
    Other                                     2,771         3,068         3,146
  Other operating expenses:
    General and administrative               37,213        42,239        41,312
    Preopening expenses-Black Hawk,
     Colorado project                                                     1,222
    Depreciation and amortization            17,736        17,243        17,827
                                             ------        ------        ------
         Total costs and expenses           172,439       185,060       184,652
                                            -------       -------       -------
INCOME FROM OPERATIONS                       15,853        16,971        16,879
                                            -------       -------       -------
OTHER (EXPENSE) INCOME:
  Interest expense                          (26,842)      (26,864)      (27,805)
  Interest expense, net-bonds held for
   retirement                                (2,692)
  Loss on extinguishment of debt            (11,211)
  Interest income                               200         1,274         2,429
  Interest capitalized                                                      616
  Other-net                                     (30)          (28)        1,171
                                              ------        ------       ------
          Total other expense               (40,575)      (25,618)      (23,589)
                                            --------       -------       ------
LOSS BEFORE BENEFIT FOR INCOME TAXES        (24,722)       (8,647)       (6,710)

BENEFIT FOR INCOME TAXES                                   (2,240)       (2,495)
                                            ---------     --------       -------
NET LOSS                                  $ (24,722)     $ (6,407)     $ (4,215)
                                            =========     ========       =======
EARNINGS PER SHARE DATA-Loss per share,
 Basic and diluted                          $ (7.17)      $ (1.79)      $ (1.05)
                                             ========      =======       =======
  Weighted-average common and common
   equivalent shares                          3,450         3,573         4,013
                                             ========      =======       =======
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, 2002, 2001 AND 2000
(In Thousands)
--------------------------------------------------------------------------------------------------------------------------


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


<S>              <C>                      <C>         <C>       <C>          <C>          <C>       <C>        <C>
BALANCE, JANUARY 1, 2000                 5,107       $ 5     $ 13,446     $ 17,342       (584)   $ (3,115)    $ 27,678

  Purchase of treasury stock                                                             (848)     (6,518)      (6,518)

  Net loss                                                                 (4,215)                              (4,215)
                                         -----        --       ------      ------       ------     -------      -------
BALANCE, DECEMBER 31, 2000               5,107         5       13,446      13,127      (1,432)     (9,633)      16,945

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

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

  Issuance of restricted stock                                    39                       34         166          205

  Net loss                                                                 (6,407)                              (6,407)
                                         ------       --      ------       ------      -------     -------      ------
BALANCE, DECEMBER 31, 2001               5,107         5      13,485        6,720      (1,674)    (11,246)       8,964

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

  Issuance of restricted stock              29         -         153                                              153

  Net loss                                                                (24,722)                            (24,722)
                                        ------        --      ------      -------      ------     -------     --------
BALANCE, DECEMBER 31, 2002               5,136       $ 5    $ 13,638     $(18,002)     (1,686)   $(11,313)   $(15,672)
                                        ======        ==      ======      =======      =======    ========    ========

See notes to consolidated financial statements.

</TABLE>

                                                F-4
<PAGE>
<TABLE>
<CAPTION>

RIVIERA HOLDINGS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
(In Thousands)
----------------------------------------------------------------------------------

                                                     2002       2001        2000

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                    <C>         <C>        <C>
  Net loss                                         $(24,722)   $ (6,407)  $ (4,215)
  Adjustments to reconcile net loss to net cash
   provided by operating activities:
    Depreciation and amortization                    17,736      17,243     17,827
    Provision for bad debts                             518         225        326
    Provision for gaming discounts                                  (70)        45
    Interest expense                                 26,842      26,864     27,805
    Interest paid                                   (31,075)    (23,490)   (24,410)
    Interest expense-net, bonds held for retirement   2,692
    Loss on extinguishment of debt                   11,211
    Interest capitalized on construction projects                             (616)
    Changes in operating assets and liabilities:
      Decrease (increase) in accounts receivable       (999)      1,865       (877)
      Decrease (increase) in inventories                429       1,089         90
      Decrease (increase) in prepaid expenses and
        other assets                                   (885)      1,516       (607)
      Increase (decrease) in accounts payable           139      (1,748)    (2,071)
      Increase (decrease) in accrued expenses           836      (2,420)     7,348
      Increase (decrease) in other long-term
        liabilities deferred compensation plan
        obligation                                      134         579
      Decrease (increase) in deferred tax asset       2,125      (2,200)    (2,534)
      Increase (decrease) in other long-term
        liabilities slot annuities payable                                      (3)
      Increase (decrease) in other long-term
        liabilities non-qualified pension plan
        obligation to CEO upon retirement            (1,900)       (500)      1,247
                                                      -----      -------     ------
           Net cash provided by operating activities  3,081      12,546      19,355
                                                      -----      -------     ------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures for property and equipment
    -Las Vegas                                       (3,869)     (7,622)     (7,465)
  Capital expenditures for property and equipment
    -Black Hawk                                      (1,565)     (2,640)    (16,969)
  Interest capitalized on construction projects                                 616
  Decrease (increase) in short-term investments                               5,258
  Decrease (increase) in restricted funds                                    15,060
  Decrease (increase) in other assets                  (310)        85         (661)
                                                      ------      -----      -------
           Net cash used in investing activities     (5,744)    (10,177)     (4,161)
                                                     -------     ------      -------

                                                                     (Continued)

</TABLE>
                                                F-5
<PAGE>
<TABLE>
<CAPTION>

RIVIERA HOLDINGS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
(In Thousands)
-----------------------------------------------------------------------------------


                                                    2002        2001        2000

CASH FLOWS FROM FINANCING ACTIVITIES:
<S>                                                <C>          <C>           <C>
  Proceeds from long-term borrowings               211,781                 $ 9,552
  Increase in deferred loan fees                   (13,291)
  Payments on long-term borrowings                (222,299)  $ (2,865)      (2,299)
  Purchase of treasury stock, general                            (993)      (6,518)
  Purchase of treasury stock, deferred
    compensation trust                                 (67)      (786)
  Purchase of 13% Mortgage Notes-Black Hawk                    (3,500)      (6,559)
  Issuance of restricted stock, deferred
    compensation                                       153        166
  Exercise of employee stock options                               41
                                                    -------     -----       ------
           Net cash used in financing activities   (23,723)    (7,937)      (5,824)
                                                   --------    -------      ------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   (26,386)    (5,568)       9,370

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR        46,606     52,174       42,804
                                                    -------    ------       ------
CASH AND CASH EQUIVALENTS, END OF YEAR            $ 20,220    $46,606     $ 52,174
                                                    ======     ======       ======

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION-
  Income taxes (refunded) paid, State of Colorado              $ (110)      $ 110
                                                                 ====         ===
SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING ACTIVITIES:
  Property acquired with accounts payable-Las Vegas,
    Nevada                                            $ 94      $ 132
                                                      ====      =====
  Property acquired with debt-Black Hawk, Colorado              $ 454
                                                                =====
  Property acquired with accounts payable-Black Hawk,
    Colorado                                                     $ 90       $ 304
                                                                =====         ===

See notes to consolidated financial statements.                      (Concluded)

</TABLE>


                                                F-6
<PAGE>


RIVIERA HOLDINGS CORPORATION

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


1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Basis  of  Presentation  and  Nature  of  Operations--Riviera  Holdings
      Corporation and its  subsidiaries  is referred to as the Company.  Riviera
      Holdings Corporation and its wholly owned  subsidiary,  Riviera  Operating
      Corporation (ROC), 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.  The  Company,  through  its  gaming
      management subsidiary,  provided services to Peninsula Gaming Partners LLC
      through September 2000 with respect to that company's  riverboat,  Diamond
      Jo, operating in Dubuque, Iowa.

      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.  was
      incorporated in the State of New Mexico.  On June 5, 2002, Riviera Gaming
      Management of Missouri, Inc. was incorporated in the State of Missouri.

      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, including its wholly owned subsidiaries,  ROC
      and RGM, and their related subsidiary entities.  All material intercompany
      accounts and transactions have been eliminated.

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


                                                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, 2002 and 2001,
      securities classified as held to maturity comprised debt securities issued
      by the U.S. Treasury and other U.S.  government  corporations and agencies
      or mutual funds invested in these  securities  and repurchase  agreements,
      with  an  amortized  cost of  $4,086,785  and  $27,449,767,  respectively,
      maturing in three months or less.

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

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

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

      Other  Assets--Other  assets include bond offering costs and  commissions,
      which are amortized over the life of the debt.  Such  amortized  costs are
      included in interest expense.  The Company also capitalizes gaming license
      costs associated with new jurisdictions.

      Stock-Based  Compensation--As  of  December  31,  2002 the Company has two
      stock based employee  compensation plans which are more fully discussed in
      Note 15. The effect of stock  options in the income  statement is reported
      in  accordance  with  Accounting Principles Board (APB) Statement 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. 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 stock on the date of grant.

      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


                                                F-8

<PAGE>

      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>

                                            2002           2001          2000

<S>                                        <C>             <C>           <C>
Net loss-as reported                     $  (24,722)    $  (6,407)      $(4,215)
Deduct:  Total stock-based employee
compensation expense determined under
fair value based methods for
awards net of related tax effects        $     (295)    $    (143)      $  (251)
Net loss-pro forma                       $  (25,017)    $  (6,550)      $(4,466)
Basic loss per common share-as reported  $    (7.17)    $   (1.79)      $ (1.05)
Basic loss per common share-pro forma    $    (7.25)    $   (1.83)      $ (1.11)
Diluted loss per common and common
  share equivalent-as reported           $    (7.17)    $   (1.79)      $ (1.05)
Diluted loss per common and common share
  equivalent-pro forma                   $    (7.25)    $   (1.83)      $ (1.11)

</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 2002,  2001 and  2000,
      respectively:  dividend yield of 0% for all years;  expected volatility of
      52%, 44% and 60%;  risk-free interest rates of 4.49%, 5.00% and 5.00%; and
      expected  lives of ten years for all  years.  The  weighted  fair value of
      options  granted  in  2002,  2001 and 2000 was  $4.96,  $2.34  and  $3.56,
      respectively.

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

      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
      $198,926,000 and $186,246,000 in 2002 and 2001, respectively.

      Revenue Recognition:

      Casino Revenue--The Company recognizes, as gross revenue, the net win from
      gaming activities, which is the difference between gaming wins and losses.
      Net win is also adjusted for the effects of slot club cash points and cash
      vouchers and other related customer cash incentives.

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

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

                                                F-9

<PAGE>

      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)                                  2002          2001          2000

<S>                                             <C>           <C>           <C>
Food and beverage                            $ 9,037       $ 9,560       $ 9,007
Rooms                                          1,174         1,195         1,297
Entertainment                                  1,670         1,950         1,319
                                               -----         -----         -----
Total costs allocated to casino departments  $11,881       $12,705      $ 11,623
                                              ======        ======        ======
</TABLE>


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

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

      Recently  Adopted  Accounting   Standards--In  July  2001,  the  Financial
      Accounting  Standards  Board  ("FASB")  issued SFAS No. 142,  Goodwill and
      Other Intangible Assets, which was effective January 1, 2002. SFAS No. 142
      requires, among other things, the discontinuance of goodwill amortization.
      In addition,  the standard includes provisions for the reclassification of
      certain existing recognized  intangibles as goodwill,  reassessment of the
      useful  lives of  existing  recognized  intangibles,  reclassification  of
      certain  intangibles  out  of  previously   reported  goodwill,   and  the
      identification  of reporting  units for  purposes of  assessing  potential
      future impairments of goodwill.  SFAS No. 142 also requires the Company to
      complete a transitional  goodwill impairment test six months from the date
      of  adoption.  The Company  adopted SFAS No. 142 on January 1, 2002 and it
      had no effect on its financial position and results of operations.

      In  August  2001,  the  FASB  issued  SFAS  No.  144,  Accounting  for the
      Impairment  or  Disposal  of  Long-Lived  Assets.  SFAS No. 144  addresses
      financial  accounting  and  reporting  for the  impairment  or disposal of
      long-lived  assets and supersedes  FASB Statement 121,  Accounting for the
      Impairment of Long-Lived  Assets and for Long-Lived  Assets to Be Disposed
      Of, and the accounting and reporting  provisions of Accounting  Principles
      Board    ("APB")    Opinion   No.   30,    Reporting    the   Results   of
      Operations--Reporting  the Effects of Disposal of a Segment of a Business,
      and   Extraordinary,   Unusual  and  Infrequently   Occurring  Events  and
      Transactions,  for the disposal of a segment of a business (as  previously
      defined  in  that  Opinion).   SFAS  No.  144  also  amends  APB  No.  51,


                                                F-10

<PAGE>

      Consolidated   Financial   Statements,   to  eliminate  the  exception  to
      consolidation  for  a  subsidiary  for  which  control  is  likely  to  be
      temporary.  The  provisions  of SFAS No. 144 are  effective  for financial
      statements  issued for fiscal years  beginning after December 15, 2001 and
      interim  periods within those fiscal years.  The Company  adopted SFAS No.
      144 on January  1, 2002 and the  adoption  had no effect on its  financial
      position and results of operations.

      In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements
      No. 4, 44 and 64,  Amendment  of FASB  Statement  No.  13,  and  Technical
      Corrections.   SFAS  No.  145   requires   that  gains  and  losses   from
      extinguishment  of debt be classified as extraordinary  items only if they
      meet the  criteria in APB  Opinion  No. 30.  Applying  the  provisions  of
      Opinion No. 30 will distinguish  transactions that are part of an entity's
      recurring  operations from those that are unusual and infrequent that meet
      criteria for  classification  as an  extraordinary  item.  SFAS No. 145 is
      effective  for the  Company  beginning  January 1, 2003,  but the  Company
      adopted  the  provisions  of SFAS No. 145  during  fiscal  year  2002,  as
      permitted.  The effect on our consolidated  financial position and results
      of  operations  of the  adoption  of SFAS No.  145 was  that  the  Company
      recognized and reported bond retirement costs as other expense.

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

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

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

      In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
      Compensation--Transition  and  Disclosure--an  Amendment of FASB Statement
      No.  123.  SFAS No. 148 amends FASB  Statement  No.  123,  Accounting  for


                                                F-11

<PAGE>

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

      In January  2003,  the FASB issued FIN No. 46,  Consolidation  of Variable
      Interest  Entities.  FIN  No.  46  addresses   consolidation  by  business
      enterprises where equity investors do not bear the residual economic risks
      and rewards.  These  entities have been  commonly  referred to as "special
      purpose  entities." If a business  enterprise  has the majority  financial
      interest  in an entity,  which is defined  in the  guidance  as a variable
      interest entity, the assets,  liabilities and results of the activities of
      the variable interest entity should be included in consolidated  financial
      statements with those of the business enterprise.  The Interpretation also
      explains how to identify  variable interest entities and how an enterprise
      should  assess its interest in an entity when  deciding  whether or not it
      will  consolidate  that entity.  The Company must follow the provisions of
      this statement in accounting  periods  beginning  after June 15, 2003. The
      Company believes that the adoption of FIN No. 46 is not expected to have a
      material  impact  on the  Company's  financial  position  and  results  of
      operations.

2.    ACCOUNTS RECEIVABLE

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

                                                     2002          2001

<S>                                                   <C>           <C>
Casino                                             $ 1,129       $ 1,761
Hotel                                                3,871         3,252
                                                     -----         -----
Total                                                5,000         5,013
Allowance for bad debts and discounts                 (990)       (1,485)
                                                     ------        -----
Ending balance                                     $ 4,010       $ 3,528
                                                     ======       ======
</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>

                                                2002          2001         2000

<S>                                            <C>          <C>          <C>
Beginning balance                              $1,485       $1,330       $1,611
Write-offs                                     (1,037)        (122)        (220)
Recoveries                                         24           45           29
Provision for bad debts and gaming discounts      518          232          (90)
                                                 ----        -----        -----
Ending balance                                  $ 990       $1,485       $1,330
                                                =====        =====        =====
</TABLE>



                                                F-12
<PAGE>

3.    PREPAID EXPENSES AND OTHER ASSETS

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

                                                2002        2001

<S>                                            <C>          <C>
Prepaid gaming taxes                           $ 841        $ 939
Prepaid insurance                                934          413
Other prepaid expenses                         2,193        1,731
                                               -----        -----
Total                                         $3,968      $ 3,083
                                               =====        =====
</TABLE>

4.    PROPERTY AND EQUIPMENT

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

                                                2002            2001

<S>                                             <C>              <C>
Land and improvements                        $ 38,130         $ 38,130
Buildings and improvements                    143,417          143,414
Equipment, furniture and fixtures             118,800          113,366
                                              -------          -------
Total property and equipment                  300,347          294,910
Accumulated depreciation                     (112,114)         (94,379)
                                             --------          -------
Net property and equipment                  $ 188,233        $ 200,531
                                             ========          =======
</TABLE>


      Approximately  $0, $0 and $616,000 in interest  costs were  capitalized on
      construction projects in 2002, 2001 and 2000, respectively.  Substantially
      all of the  Company's  property and  equipment is pledged as collateral to
      secure  debt  (see  Note  8).   Repairs  and   maintenance   that  do  not
      significantly  improve the life of fixed  assets are expensed as incurred.
      Costs for significant  improvements that extend the expected life of fixed
      assets  more  than one  year  are  capitalized  and  depreciated  over the
      remaining  extended life, using straight-line and double declining methods
      of depreciation.

5.    OTHER ASSETS

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

                                                            2002         2001

<S>                                                         <C>          <C>
Deposits                                                    $ 54         $ 177
Bond offering costs and commissions-net of accumulated
  amortization of $995 and $6,756, respectively           10,917         4,916
Other                                                      3,706         1,635
                                                          ------         -----
Total                                                    $14,677        $6,728
                                                          ======         =====
</TABLE>

        Other includes capitalized costs associated with the Missouri venture of
        $1.2 million and the New Mexico venture of $1.1 million in 2002.

                                                F-13
<PAGE>

6.    ACCOUNTS PAYABLE AND ACCRUED EXPENSES

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

                                                         2002          2001

<S>                                                      <C>          <C>
Outstanding chip and token liability                     $ 537        $ 597
Slot club liabilities                                      968        1,283
Progressive liabilities                                    329          312
Casino account deposits and miscellaneous gaming           281          139
                                                          ----         ----
Total liabilities related to gaming activities           2,115        2,331
Accounts payable to vendors                              4,291        4,406
Insurance contracts                                        595
Hotel deposits                                             953        1,032
Other                                                      384          431
                                                          ----         ----
Total                                                   $8,338       $8,200
                                                         =====        =====
</TABLE>

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


<S>                                                       <C>          <C>
Payroll, related payroll taxes, and employee benefits  $ 8,513      $ 7,907
Incentive, retention and ESOP                            1,396        2,639
Current portion of CEO pension obligation, unfunded      1,000
Other                                                    4,667        4,194
                                                         -----        -----
Total                                                  $15,576      $14,740
                                                        ======       ======
</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 Notes 13 & 14 for a description of these plans.
<TABLE>
<CAPTION>

(in thousands)                                               2002        2001

<S>                                                           <C>          <C>
Non-qualified pension obligation-CEO, unfunded             $ 3,263      $ 4,163
Accrued interest on pension-CEO, unfunded                    3,489        2,649
Deferred compensation-funded                                   713          579
                                                              ----         ----
Subtotal                                                     7,465        7,391
Less current portion of CEO pension obligation, unfunded     1,000            0
                                                             -----        -----
Total                                                      $ 6,465      $ 7,391
                                                             =====        =====
</TABLE>

                                                F-14
<PAGE>

8.    LONG-TERM DEBT

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

                                                                         2002         2001

<S>                                                                      <C>         <C>
11% Senior Secured Notes maturing on June 15, 2010, bearing
  interest, payable semiannually on June 15 and December 15 of
  each year, redeemable beginning June 15, 2005 at 111%; 2006
  at 105.5%; 2007 at 103.7%, 2008 at 101.8%, 2009 and thereafter
  at 100%. These notes are collateralized by the land and physical
  structures comprising the Riviera Hotel and Casino and secondarily
  the assets of Riviera Black Hawk                                     $ 211,983

10% First Mortgage Notes maturing on August 15, 2004, collateralized
  by Riviera Las Vegas and secondarily by Riviera Black Hawk.  The                 $ 174,193
  Notes were retired on August 15, 2002

13% First Mortgage Notes maturing on June 3, 2005, collateralized
  by Riviera Black Hawk Casino.  The Bonds were retired on July 26, 2002              34,941

5.6% to 9% Notes collateralized by equipment and vehicles, payable
  monthly, including interest, maturing through October 2004               1,550       2,424

Capitalized lease obligations (Note 9)                                     5,728       7,921

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                                            863         960
                                                                          ------     -------
Total long-term debt                                                     220,124     220,439
Current maturities by terms of debt                                       (3,430)     (3,151)
                                                                         -------     -------
Total                                                                  $ 216,694   $ 217,288
                                                                         =======     =======
</TABLE>


      Maturities  of  long-term  debt for the years  ending  December  31 are as
follows (in thousands):
<TABLE>
<CAPTION>
<S>                                                                    <C>
2003                                                                 $ 3,430
2004                                                                   3,391
2005                                                                     785
2006                                                                     124
2007                                                                     129
Thereafter                                                           212,265
                                                                     -------
Total                                                              $ 220,124
                                                                     =======
</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  subsequently
     exchanged for SEC-registered notes having substantially the same terms (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. In connection with the defeasance, the Company recorded a loss on


                                                F-15
<PAGE>

     extinguishments of debt totaling $11.2 million relating to the call premium
     on the Company's  refinanced  10% bonds and Riviera Black Hawk's refinanced
     13% bonds,  the write off of  unamortized  deferred loan costs  associated
     with the refinanced  bonds and the  balance of the  original issue discount
     on the 10% bonds.  Furthermore,  the results were affected by approximately
     $2.7 million of additional  interest  expense,  net,  incurred as a result
     of the  defeasance  / retirement  of  the  debt.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 to
     repay the Notes at maturity will be dependent upon its ability to refinance
     the Notes.  There can be no assurance that the Company will be able to
     refinance the principal amount of the Notes at maturity.  On or after June
     15, 2006,  the Company may redeem the Notes from time to time at a premium
     beginning at 105.5% and declining each subsequent year to par in 2009.

     The Note Indenture  provides that, in  certain  circumstances, the  Company
     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 would be unable  to
     pay the principal amount of the Notes without a refinancing.

      The Note Indenture contains certain covenants, which limit the ability of
      the  Company  and  its  restricted  subsidiaries,  subject  to  certain
      exceptions,  to: (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;  (v) sell certain assets;  and (vi)
      enter into  certain  mergers  and  consolidations.  As a  result  of these
      restrictions, the ability of the Company to incur additional  indebtedness
      to fund operations or  to  make  capital expenditures is  limited. In  the
      event  that  cash  flow  from  operations  is  insufficient  to cover cash
      requirements, the Company would be required to curtail or defer certain of
      their capital expenditure programs under these circumstances, which could
      have an adverse effect on operations. At December 31, 2002, the Company
      believes that it is in compliance with the covenants.

      On July 26,  2002,  the  Company  entered  into a $30  million,  five-year
      senior  secured  credit  facility.  The  credit  facility  is  secured  by
      substantially the same collateral that secures the Notes.  The lien on the
      collateral securing  the  credit  facility  is senior  to  the lien on the
      collateral securing  the Notes. The  credit  facility  contains  customary
      conditions  to  borrowing  and  certain  representations  and  warranties
      customary in gaming-related  finance. The  credit facility  also  contains
      financial  covenants  and  restrictions  regarding,  among  other  things,
      indebtedness,  distributions  and  changes  in  control.  Under the credit
      facility, the Company can obtain extensions of credit in the forms of cash
      and  letters  of  credit.  The Company is required to pay interest on all
      outstanding cash advances at the rate of interest announced by Wells Fargo
      at its principal office in San Francisco as 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 that the Company will be charged on outstanding cash advances is
      4.50%. The Company is required to pay a fee on all  outstanding  letters
      of credit equal to their face value times an annual percentage rate of
      2.50%. Additionally,  in the event of a default,  the credit  facility
      lender may increase the interest  rate and letter of credit fee by an
      additional  2.00% per year during the period of default. At December 31,
      2002, there were no amounts outstanding under the secured credit facility.

      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



                                                F-16
<PAGE>

      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.

      The  following  is a schedule by year of the minimum  rental  payments due
      under capital leases as of December 31, 2002 (in thousands):
<TABLE>
<CAPTION>

<S>                                                                 <C>
2003                                                                $ 2,980
2004                                                                  2,964
2005                                                                    674
                                                                       ----
Total minimum lease payments                                        $ 6,618
Taxes, maintenance and insurance                                       (194)
Interest portion of payments                                           (696)
                                                                       ----
Present value of net minimum lease payments                         $ 5,728
                                                                      =====
</TABLE>

      Rental  expense under  operating  leases for the years ended  December 31,
      2002, 2001 and 2000 was approximately $1,177,382, $903,555 and $1,133,983,
      respectively. Such leases were year to year in nature.

      In addition,  the Company  leases retail space  (primarily to retail shops
      and fast food  vendors)  to third  parties  under  terms of  noncancelable
      operating leases that expire in various years through 2007. Rental income,
      which is included in other income,  for the years ended December 31, 2002,
      2001 and 2000 was  approximately  $1,810,700,  $1,806,900 and  $1,584,300,
      respectively.

      At December 31, 2002,  the Company had future minimum annual rental income
      due under noncancelable operating leases as follows (in thousands):
<TABLE>
<CAPTION>

          <S>                                                         <C>
         2003                                                       $ 1,342
         2004                                                         1,130
         2005                                                           455
         2006                                                           227
         2007                                                           134
                                                                        ---
        Total                                                       $ 3,288
                                                                      =====
</TABLE>

10.   FEDERAL INCOME TAXES

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


                                                F-17
<PAGE>

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

<TABLE>
<CAPTION>

                               2002               2001                2000
                          ----------------  -----------------  ------------------
                           Amount    Rate     Amount   Rate     Amount       Rate

Benefit for income taxes
<S>                         <C>      <C>     <C>       <C>       <C>        <C>
 at federal statutory
 rate                   $ (8,652)  (35.0)%  $ (3,026) (35.0)%  $ (2,349)   (35.0)%
Taxes, state, other                              392    4.5
Other                       (439)   (1.8)%       394    4.6        (146)    (2.2)
Valuation allowance        9,091    36.8 %
                           -----    ----       -----    ----       -----    -----
Benefit for income taxes    $ -      0.0 %  $ (2,240) (25.9)%  $ (2,495)   (37.2)%
                           =====   =====      =======  =====      ======   ======
</TABLE>

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

                                    2002          2001          2000

<S>                               <C>              <C>         <C>
Current                           $(2,124)         $ 157       $ 1,223
Deferred                            2,124         (2,397)       (3,718)
                                    -----         -------       ------
Total                                $ -         $(2,240)      $(2,495)
                                    =====         =======       ======
</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>

                                                                2002      2001

Deferred tax liabilities:
<S>                                                            <C>        <C>
  Reserve differential for hospitality and gaming activities   $ 918      $ 559
  Difference between book and tax-depreciable property         5,060      4,845
  Other                                                          511        579
                                                                 ---        ---
Total                                                          6,489      5,983
                                                               -----      -----
Deferred tax assets:
  Net operating loss carryforward                             12,878      4,383
  Reserves not currently deductible                            2,619      2,647
  Bad debt reserves                                              364        583
  AMT and other credits                                        2,684      3,459
                                                               -----      -----
Total                                                         18,545     11,072

Valuation allowance                                           (9,091)
                                                              -------     -----
Net deferred tax asset                                       $ 2,964    $ 5,089
                                                              =======     =====
</TABLE>

      The Company has $2.7 million of alternative minimum tax ("AMT") credit and
      general business credit available to offset future income tax liabilities.
      The AMT  credit  of $2.7  million  has no  expiration  date.  The  general
      business credit will not begin to expire until 2012.


                                                F-18
<PAGE>

      The Company performed an analysis of the realizability of its deferred tax
      assets at December 31, 2002.  The  realizability  of the assets related to
      Rivera Las Vegas is  dependent  upon  future  earnings.  In the absence of
      operating income,  the Company can sell assets to realize the deferred tax
      assets.

11.   COMMITMENTS AND CONTINGENCIES

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

      Employees and Labor  Relations--As  of December 31, 2002,  the Company had
      approximately  1,673  full-time  equivalent  employees and had  collective
      bargaining contracts with eight unions covering  approximately 769 of such
      employees,   including  food  and  beverage  employees,  rooms  department
      employees,  carpenters,  engineers, stage hands, musicians,  electricians,
      painters and teamsters.  The Company's agreements with the Southern Nevada
      Culinary  and  Bartenders  Union and Stage  Hands  Union,  which cover the
      majority of the Company's unionized  employees,  were renegotiated in 2002
      and expire in the year 2007.  Collective  bargaining  agreements  with the
      operating  engineers,  painters and electricians were renegotiated in 2000
      and  expire in 2004,  2005 and 2004,  respectively.  A new  agreement  was
      negotiated with the carpenters  which expires in 2005. The Company is also
      in negotiations  with the Musicians  Union. A new agreement was negotiated
      with the  Teamsters,  which  expires in 2003.  Although  unions  have been
      active in Las Vegas,  management  considers  its employee  relations to be
      satisfactory. There can be no assurance, however, that new agreements will
      be reached  without union action or will be on terms  satisfactory  to the
      Company.

12.   MANAGEMENT AGREEMENTS

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

13.   EMPLOYMENT AGREEMENTS AND EMPLOYEE BENEFIT PLANS

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

      Under Mr.  Westerman's  existing  employment  agreement  with the Company,
      which was last  amended  on  December  6,  2000,  Mr.  Westerman  shall be
      employed by the Company for an indefinite  period,  subject to termination
      by  either  Mr.  Westerman  upon at least 180 days  written  notice or the
      Company  upon at least 90  days.  Mr.  Westerman's  base  compensation  is
      $600,000.


                                                F-19
<PAGE>

      Under his employment  agreement,  Mr. Westerman is entitled to participate
      in the  Company's  Senior  Management  Compensation  Plan  or  such  other
      executive  bonus plan as shall be  established  by the Company's  Board of
      Directors  (collectively the "Plan").  If at least 80% of certain targeted
      operating results, as defined by the Plan, is met, Mr. Westerman shall be
      entitled to receive a bonus under the Plan  expressed as a percentage  of
      his $600,000 base salary depending on the percentage of certain targeted
      operating results realized by the Company  in a  particular  year,  with a
      maximum  bonus of  $900,000. Pursuant to the December 6, 2000 amendment,
      to the extent Mr. Westerman's bonus  exceeds  $400,000  in 2002 and each
      succeeding year, such excess amount shall be deducted  from the  principal
      balance  of  his  retirement  account  at  the  time  the  bonus is  paid.
      Mr. Westerman received an incentive bonus of  $900,000  for 2002, $900,000
      of which was deducted from the principal balance of his retirement
      account,  resulting in a net bonus of $0.

      The  employment  agreement  provides  that the Company  fund a  retirement
      account  for Mr.  Westerman.  Pursuant  to the  employment  agreement,  an
      aggregate of $6,752,000 had been credited to the  retirement  account from
      its inception  through December 31, 2002. Under the employment  agreement,
      each year that Mr. Westerman continues to be employed,  an amount equal to
      Mr.  Westerman's  base  salary for that year is credited to the account on
      January 1 of that year.  Pursuant to the December 6, 2000 amendment to Mr.
      Westerman's employment agreement, the January 1, 2001 contribution was the
      final principal contribution to the retirement account. As of December 31,
      2002, none of this account has been funded.

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

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

      In the event  that Mr.  Westerman  is no longer  employed  by the  Company
      (except  for  termination  for cause,  in which case Mr.  Westerman  would
      forfeit all rights to monies in the  retirement  account),  Mr.  Westerman
      will  be  entitled  to  receive  the  amount  in  the  retirement  account
      (principal and current interest) in 20 equal quarterly  installments as of
      the date he ceases to be  employed by the  Company.  In the event that Mr.
      Westerman's Rabbi Trust has not yet been funded,  the balance of principal
      and  interest  of the  retirement  account  shall be paid  directly to Mr.
      Westerman upon his retirement,  termination  (except for cause), or upon a
      change in control of the Company.  As of December  31,  2002,  none of the
      Trust has been funded.



                                                F-20
<PAGE>

      Pursuant to the employment agreement,  the retirement account was credited
      quarterly with interest and shall be credited with  additional  amounts on
      the first day of each succeeding  calendar quarter equal to the product of
      (i) the Company's  average  borrowing cost for the  immediately  preceding
      fiscal year, as determined by the Company's chief financial  officer,  and
      (ii) the average  outstanding balance in the retirement account during the
      preceding calendar quarter.  This interest continues to accrue pursuant to
      the December 6, 2000  amendment.  Total  interest  earned was $840,150 for
      2002,  $779,000 for 2001 and $647,418 for 2000. At the  recommendation  of
      the Compensation  Committee of the Riviera Holdings  Corporation  Board of
      Directors, in order to reduce the amount that would be payable immediately
      upon Mr. Westerman's separation from the Company, it was requested that he
      begin taking "principal payments"  (distributions) of $250,000 per quarter
      effective  April 1, 2003.  In  addition,  retroactive  to January 1, 2003,
      interest accruals for the current quarter will be paid to Mr. Westerman on
      the first day of the following  quarter.  In exchange for these  payments,
      Mr.  Westerman  agrees to continue his forbearance of his right to receive
      full  transfer of the  pension  fund  balance to the rabbi  trust  pending
      further developments. This does not limit his ability to give the five-day
      notice  at  any  time. Although  there  is no current intention to require
      additional  funding,  under  certain  circumstances,  approximately  $6.8
      million might have to be disbursed in a short  period. In  the  event  the
      Rabbi Trust has been funded, upon Mr. Westerman's death, an  amount  equal
      to the applicable federal estate tax on the  retirement  account  will  be
      pre-paid  prior to the date or dates such taxes are due.

      Mr.  Westerman's  employment  agreement  provides  (a) that the sum of Mr.
      Westerman's base salary,  bonus, and credits to his retirement  account in
      any one year shall not exceed that which would have been payable under his
      previous employment agreement with the Company, and (b) that Mr. Westerman
      shall  instruct the Company of any reductions in base salary,  bonus,  and
      credits  to  his  retirement   account   necessary  to  comply  with  this
      limitation.  The Company determined that for the year 1999, a reduction of
      $467,000 was necessary to comply with this provision. For 1998 the Company
      determined  that a reduction of $194,000 was necessary to comply with this
      provision.  Prior to December 31, 1999 and 1998, Mr. Westerman  instructed
      the  Company  that this be applied to reduce the amount to be  credited to
      his  retirement  account  from  $600,000  to  $133,000  and  to  $406,000,
      respectively.  No such  reductions  under this  provision were required in
      2002 , 2001 or 2000.

      Incentive  Plan--The  Company has an incentive  compensation plan covering
      employees of the Company who, in the opinion of the Chairman of the Board,
      either serve in key executive,  administrative,  professional or technical
      capacities  with the  Company,  or other  employees  who also  have made a
      significant contribution to the successful and profitable operation of the
      Company.  The amount of the bonus is based on  operating  earnings  before
      depreciation,  amortization, interest expense, provision for income taxes,
      extraordinary  losses and gains,  any provisions or payments made pursuant
      to the plan, and any provisions or payments made pursuant to the incentive
      compensation of the Chairman and Chief Executive Officer. During the years
      ended  December  31, 2002,  2001 and 2000,  the Company  recorded  accrued
      bonuses of $1,160,440, $1,873,939 and $2,258,500, respectively, based upon
      the above incentive compensation plan and the other incentive compensation
      plan  established  for  the  Chairman  of  the  Board under his employment
      agreement.

      Pension Plan  Contributions--The  Company  contributes  to  multi-employer
      pension  plans under  various  union  agreements to which the Company is a
      party.  Contributions,  based on wages  paid to  covered  employees,  were
      approximately  $1,599,000,  $1,672,000  and $1,688,000 for the years ended
      December 31, 2002, 2001 and 2000,  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.


                                                F-21
<PAGE>

      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 were at least 21 years
      of age and who are not  covered  by a  collective bargaining agreement are
      immediately eligible to participate in the Profit Sharing and 401(k)Plans.
      The amendment  provides  further  that  all  current  employees  who  were
      employed by Riviera Las Vegas after April 1, 1992,  who are  at  least  21
      years  of  age  and  who  are  not  covered  by  a  collective  bargaining
      agreement  are  eligible  to  participate after one year of service at the
      Riviera Las Vegas.

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

      The Company may make a contribution to the 401(k) component of the Plans
      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 also
      paid administrative costs of the Plan of $16,888,  $21,851 and $25,000 for
      the years ended December 31, 2002,  2001 and 2000, respectively.

      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 Plan and  substituted  contributions  to an Employee Stock
      Ownership Plan (see "Employee Stock Ownership Plan," directly below).

      Employee Stock Ownership  Plan--On October 2, 2000, the Board of Directors
      adopted  an  Employee  Stock   Ownership  Plan  ("ESOP").   The  ESOP  was
      established  effective  January 1, 2000 and  replaced  the profit  sharing
      contribution  component of the Profit Sharing and 401(k) Plans. The 401(k)
      component  remains  unchanged.  The ESOP  provides  that all  employees of
      Riviera Las Vegas and Riviera Black Hawk employed in the plan year who had
      completed  a  minimum  of  one 1000  hours  of service in that plan year,
      were  employed  through  December  31 of that plan year,  were at least 21
      years of age and were not covered by a collective bargaining agreement are
      eligible to  participate  in the ESOP.  The ESOP provides that the Company
      will make a contribution  to the ESOP's  participants of its Las Vegas and
      Black  Hawk  properties  relative  to the  economic  performance  of  each
      property.  For Riviera Las Vegas,  the  Company  will make a  contribution
      equal  to  1%  of  each  eligible  employee's  annual  compensation  if  a
      prescribed annual operating  earnings target is attained and an additional
      1% thereof for each $2 million by which operating earnings is exceeded, up
      to a maximum of 4% for 2000 and 5% thereafter. For Riviera Black Hawk, the



                                                F-22
<PAGE>

      Company will make a contribution  equal to 1% of each eligible  employee's
      annual  compensation if a prescribed  annual operating  earnings target is
      attained  and an  additional  1%  thereof  for  each $1  million  by which
      operating  earnings  is  exceeded,  up to a maximum  of 4% for 2000 and 5%
      thereafter.  Under the ESOP, Company contributions are made in cash, which
      will  be  used  to  buy  Company  common  stock.  The  Company  also  paid
      administrative costs of the Plan of $120,286, $198,834 and $12,125 for the
      years ended December 31, 2002, 2001 and 2000, respectively.

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

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

      Key  Employee  Retention  Plan--As a result of the  scheduled  openings of
      several  new Las  Vegas  Strip  properties  in  1998,  1999 and  2000,  an
      estimated  38,000 jobs had to be filled on the Las Vegas Strip,  including
      approximately  5,000  supervisory  positions.  Because  of  the  Riviera's
      performance  and reputation,  its employees were prime  candidates to fill
      these positions.  In the third quarter of 1998,  management  instituted an
      employee   retention  plan  which  covered   approximately  85  executive,
      supervisory and technical  support positions and includes a combination of
      employment contracts, stay put agreements, bonus arrangements,  and salary
      adjustments which expired June 30, 2001.

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

      Salary Continuation Agreements--Approximately 75  executive  officers  and
      significant  employees  (excluding  Mr.  Westerman)  of  ROC  have  salary
      continuation agreements effective through December 2003, pursuant to which
      each of such  employees will be entitled to receive (1) either six months'
      or one  year's base  salary  if  their  employment  with  the  Company  is
      terminated, without cause, within 12 or 24 months of a change  of  control
      of the Company or ROC; and (2)group health insurance for periods of either


                                                F-23
<PAGE>

      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 new employment.  The estimated total amount
      payable under all such agreements was approximately  $6 million, including
      $1.4 million in benefits, as of December 31, 2002.

14.   STOCK OPTION PLANS

      Stock  Compensation  Plans--At  December 31,  2002,  the Company has three
      stock-based  compensation  plans,  which are described  below. The Company
      accounts for the fair value of its grants under those plans in  accordance
      with APB Opinion No.  25.  The  compensation  cost that  would  have been
      charged against income for those plans was $295,454, $142,977 and $250,988
      for 2002,  2001 and 2000,  respectively.  Under the 1993 Employee Stock
      Option Plan, the Company may grant options to its employees for up to one
      million shares of common stock.  Under the 1996 Non-Qualified Stock Option
      Plan, the Company may grant options to  non-employee  directors for up to
      50,000 shares of  common  stock. Under these plans, the exercise  price of
      each option  equals the market  price of the  Company's stock on the date
      of grant  and an  option's  maximum  term is 10 years (5 years in the case
      of an incentive  option granted to a stockholder  owning more than 10% of
      the common stock).  Under the 1993 plan, options vest 25% on the date of
      grant and 25% each subsequent  year.  Under the 1996 plans, options vest
      over 5 years.

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

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

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

      The activity of the Stock Option Plan and the  Non-Qualified  Stock Option
      Plan is as follows:

                                                F-24
<PAGE>
<TABLE>
<CAPTION>

                                                         Average
                                                        Per Share
                                                         Exercise
Stock Option Plan                         Shares           Price

<S>                  <C>                  <C>             <C>
Outstanding, January 1, 2001              712,000         $ 10.35
  Grants                                  170,500          $ 6.00
  Canceled                               (423,000)        $ 13.28
                                          -------
Outstanding, December 31, 2001            459,500          $ 6.04
  Grants                                  131,500          $ 7.35
  Canceled                                (36,000)         $ 6.45
                                          -------
Outstanding, December 31, 2002            555,000          $ 6.32
                                          =======
Non-Qualified Stock Option Plan

Outstanding, January 1, 2001               14,000          $ 9.09
  Automatic grant to directors              6,000          $ 6.55
  Canceled                                 (4,000)        $ 13.37
                                           ------
Outstanding, December 31, 2001             16,000          $ 7.07
  Automatic grant to directors              8,000          $ 7.21
                                           ------
Outstanding, December 31, 2002             24,000          $ 7.12
                                           ======
</TABLE>
<TABLE>
<CAPTION>


                           Options Outstanding              Options Exercisable
                  --------------------------------------  ----------------------
                     Number        Weighted-                Number
                   Outstanding     Average     Weighted-  Exercisable  Weighted-
                        at         Remaining    Average       at        Average
     Range of      December 31,   Contractual   Exercise  December 31,  Exercise
 Exercise Prices      2002          Life         Price        2002        Price

<S>        <C>       <C>           <C>           <C>        <C>          <C>
  $4.00 to $6.00     271,500       6.2 years     $5.08      22,000       $ 2.27
  $6.55 to $9.00     307,500       7.6 years     $7.35
</TABLE>


15.   EARNINGS PER SHARE

      Basic EPS is  computed  by  dividing  net  income by the  weighted-average
      number  of  common  shares  outstanding  for the  period.  Diluted  EPS is
      computed  by  dividing  net  income by the  weighted  number of common and
      common equivalent shares  outstanding for the period.  Options to purchase
      common stock,  whose  exercise  price was greater than the average  market
      price for the period,  have been excluded from the  computation of diluted
      EPS. Such  antidilutive  options  outstanding for the years ended December
      31, 2002, 2001 and 2000 were 448,000, 495,500 and 732,000, respectively.

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

                                                F-25
<PAGE>
<TABLE>
<CAPTION>

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

Basic EPS-Loss available to common
<S>                                     <C>                <C>           <C>
  stockholders                          $(24,722)         3,450          $(7.17)
Effect of dilutive securities-Options
                                         --------          -----          -----
Diluted EPS-Loss available to common
  stockholders plus assumed conversions $(24,722)         3,450          $(7.17)
                                          =======         =====           ======
                                                     Year Ended 2001
                                        ----------------------------------------
                                           Income         Shares       Per Share
                                        (Numerator)     (Denominator)     Amount

Basic EPS-Loss available to common
  stockholders                          $ (6,407)         3,573          $(1.79)
Effect of dilutive securities-Options
                                          -------         ------          -----
Diluted EPS-Loss available to common
  stockholders plus assumed conversions $ (6,407)         3,573          $(1.79)
                                          =======         =====           ======
                                                    Year Ended 2000
                                        ----------------------------------------
                                           Income         Shares       Per Share
                                        (Numerator)     (Denominator)     Amount

Basic EPS-Loss available to common
  stockholders                          $ (4,215)         4,013          $(1.05)
Effect of dilutive securities-Options
                                           ------         -----           ------
Diluted EPS-Loss available to common
  stockholders plus assumed conversions $ (4,215)         4,013          $(1.05)
                                          =======         =====           ======
</TABLE>

      During 2002,  2001 and 2000,  the Company  purchased  12,100,  276,528 and
      257,893  shares of  treasury  stock on the open  market for  approximately
      $67,286,  $1,779,000 and $2,093,000,  respectively.  Approximately 130,191
      shares of treasury  stock are held in the deferred  compensation  trust at
      December 31, 2002.


                                                F-26
<PAGE>

16.   SEGMENT DISCLOSURES

      The  Company  reviews  its  operations  by its  geographic  gaming  market
      segments:  Riviera  Las Vegas  and  Riviera  Black  Hawk.  The  management
      division  is  included  in other  revenue  and is  included in Riviera Las
      Vegas. All intersegment revenues have been eliminated.
<TABLE>
<CAPTION>

(In thousands)                           2002            2001            2000

Net revenues:
<S>                                    <C>             <C>             <C>
   Riviera Las Vegas                   $139,159        $152,985        $166,270
   Riviera Black Hawk                    49,133          49,046          35,261
                                        -------         -------         -------
Total net revenues                     $188,292        $202,031        $201,531
                                        =======         =======         =======
Income (loss) from operations:
  Riviera Las Vegas                    $ 12,265        $ 13,512        $ 19,215
  Riviera Black Hawk                      7,350           7,622           1,881
  Corporate Expenses                     (3,762)         (4,163)         (4,217)
                                         ------         -------          ------
Total income from operations           $ 15,853        $ 16,971        $ 16,879
                                         ======          ======          ======
EBITDA:
   Riviera Las Vegas                   $ 23,951        $ 25,655        $ 33,548
   Riviera Black Hawk                    13,400          12,722           6,597
   Corporate Expenses                    (3,762)         (4,163)         (4,217)
                                         ------          ------          ------
Total EBITDA                           $ 33,589        $ 34,214        $ 35,928
                                         ======          ======          ======
EBITDA margin (1):
   Riviera Las Vegas                      17.2 %          16.8 %          20.2 %
   Riviera Black Hawk                     27.3 %          25.9 %          18.7 %
                                          -----           -----           -----
Total EBITDA                              17.8 %          16.9 %          17.8 %

                                            December 31
                                  --------------------------------
                                       2002            2001

Fixed Assets (2):
   Riviera Las Vegas (3)             $123,740        $132,982
   Riviera Black Hawk                  64,493          67,549
                                       ------         -------
Total fixed assets                   $188,233        $200,531
                                      =======         =======
(1) Shown as a percentage of corresponding segment net revenue.
(2) Assets represent property and equipment and intangible assets, net of
    accumulated depreciation and amortization.
(3) Includes the building held at corporate.
</TABLE>



                                                F-27
<PAGE>


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

      RIVIERA LAS VEGAS

      The  primary  marketing  of the  Riviera  Las  Vegas is not  aimed  toward
      residents of Las Vegas,  Nevada.  Significantly  all revenues derived from
      patrons  visiting the Riviera Las Vegas are from other parts of the United
      States and other  countries.  Revenues  for the  Riviera  Las Vegas from a
      foreign country or region may exceed 10% 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.

17.   RELATED PARTY TRANSACTIONS

      Robert R. Barengo, a member of the Board of Directors of the Company, is a
      former  director of  American  Wagering,  Inc.  ("AWI") and owns 7% 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  sports book operations  and has operated under a
      lease arrangement since before Mr. Barengo was appointed to the Board. The
      lease  provides  for rental  payments  based upon the  monthly  and annual
      revenues derived by AWI from the location.  AWI paid aggregate rent to ROC
      of approximately $99,400, $141,500 and $188,000 in each of the years ended
      December 31, 2002, 2001 and 2000, respectively.  The Company believes that
      the terms of the lease with AWI are at least as  favorable  to the Company
      and ROC as could have been  obtained from  unaffiliated  third parties and
      are at least as favorable as terms  obtained by other casino hotels in Las
      Vegas.

      The Company entered into a letter agreement with Mr. Barengo,  a member of
      the  Bar  of  the  State  of Nevada,  pursuant  to which Mr.  Barengo  was
      assisting  the Company and its outside  counsel in enforcing the Company's
      rights  under  litigation  related to various  matters.  Under such letter
      agreement,  Mr.  Barengo  received  a fee of  $120,000  for the year ended
      December  31, 2000.  Mr.  Barengo  became an employee  director in January
      2001.  He and the Company  mutually  terminated  the  agreement  effective
      December 31, 2000.


                                                F-28
<PAGE>


      Jeffrey A. Silver, a member of the Board, is a shareholder in the law firm
      of Gordon & Silver, Ltd. which has been engaged by the Company for various
      legal matters.

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

                                       ******









                                                F-29
<PAGE>

<TABLE>
<CAPTION>

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


                               March 31     June 30   September 30   December 31

Year Ended December 31, 2002:
<S>                             <C>         <C>          <C>           <C>
  Net Revenues                  $46,498     $49,854      $48,612       $43,328
  Operating Income                3,687       5,711        3,510         2,945
  Loss Before Tax Benefit        (2,834)     (1,088)     (16,895)       (3,905)
  Net Loss                       (2,834)     (1,088)     (16,895)       (3,905)
  Loss Per Share, Basic         $ (0.82)    $ (0.32)     $ (4.89)      $ (1.13)
  Loss Per Share, Diluted       $ (0.82)    $ (0.32)     $ (4.89)      $ (1.13)

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




(19096)


                                                F-30